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As filed with the Securities and Exchange Commission on January 14, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
CHECKFREE HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 7374 58-2360335
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
------------------------
4411 East Jones Bridge Road
Norcross, Georgia 30092
(678) 375-3387
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
Peter F. Sinisgalli
President and Chief Operating Officer
CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
(678) 375-3387
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies of Correspondence to:
Robert J. Tannous, Esq.
Porter, Wright, Morris & Arthur LLP
41 South High Street
Columbus, Ohio 43215
(614) 227-1953
------------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
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 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, please 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. [ ]
<TABLE>
<CAPTION>
Calculation of Registration Fee
- ------------------------- ---------------------- ------------------------ ------------------------ -------------------
Title of Each Class of
Securities to be Proposed Maximum Proposed Maximum Amount of
Registered Amount to be Registered Offering Price Per Aggregate Offering Price* Registration Fee*
Security(1)
- ------------------------- ---------------------- ------------------------ ------------------------ -------------------
<S> <C> <C> <C> <C>
6.5% Convertible Notes
due 2006 172,500,000 100% 172,500,000 $45,540
- ------------------------- ---------------------- ------------------------ ------------------------ -------------------
Subsidiary Guarantees N/A N/A N/A N/A(2)
- ------------------------- ---------------------- ------------------------ ------------------------ -------------------
Common stock, $.01 par
value 2,356,557(3) N/A N/A N/A(4)
- ------------------------- ---------------------- ------------------------ ------------------------ -------------------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933 there is no filing
fee with respect to the subsidiary guarantees.
(3) Plus such additional indeterminate number of shares of Common Stock as may
become issuable upon conversion of the 6.5% Notes being registered hereunder
by reason of adjustment of the conversion price.
(4) Pursuant to Rule 457(i) under the Securities Act of 1933 there is no filing
fee with respect to the Common Stock issuable upon conversion of the 6.5%
Notes because no additional consideration will be received in connection
with the exercise of the conversion privilege.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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TABLE OF CONTENTS
PAGE
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Summary.....................................................................4
Risk Factors................................................................8
Forward-Looking Statements.................................................19
Ratio of Earnings to Fixed Charges.........................................19
Use of Proceeds............................................................20
Description of Notes.......................................................20
Description of Certain Indebtedness........................................34
Certain Federal Income Tax Consequences....................................35
Selling Securityholders....................................................38
Plan of Distribution.......................................................38
Legal Matters..............................................................39
Experts....................................................................39
Where You Can Find More Information........................................40
Incorporation of Documents by Reference....................................41
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SUMMARY
The information in this summary may not contain all of the information
that may be important to you. You should read the entire prospectus and the
information incorporated by reference in this prospectus, including the
financial statements and related notes, before making an investment decision.
All references to "we," "us," "our," "CheckFree" or the "Company" in this
prospectus mean CheckFree Holdings Corporation and all entities owned or
controlled by CheckFree Holdings Corporation, except where it is made clear that
the term only means the parent company.
OUR COMPANY
We are the leading provider of electronic billing and payment services.
Our Electronic Commerce business provides services that allow consumers to:
- Receive electronic bills through the Internet;
- Pay any bill--electronic or paper--to anyone; and
- Perform customary banking transactions, including balance inquiries,
transfers between accounts and on-line statement reconciliations.
We currently provide electronic billing and payment services for
approximately 3 million consumers. Our services are available through over 350
sources, including:
- 23 of the 25 largest U.S. banks;
- 8 of the top 10 U.S. brokerage firms;
- Yahoo!, a leading Internet portal;
- WingspanBank.com, a leading Internet-based full-service bank;
- Internet financial sites like Quicken.com; and
- Personal financial management software like Quicken and Microsoft
Money.
We have developed relationships with over 1,100 merchants nationwide
that enable us to remit more than 50% of all of our bill payments
electronically. During the three-month period ended September 30, 1999, we
processed an average of nearly 13 million transactions per month and, for the
year ended June 30, 1999, we processed more than 125 million transactions.
In March 1997, we introduced electronic billing--"E-Bill"--which
enables merchants to deliver billing as well as marketing materials
interactively to their customers over the Internet. As of September 30, 1999, we
have signed contracts for E-Bill services with 77 of the country's largest
billers, who together deliver more than 500 million bills each month. In
September 1999, we presented more than 20,000 electronic bills through more than
53 financial institutions and Internet portals, double the number of bills
presented through E-Bill services in March 1999.
We also are a leading provider of institutional portfolio management
and information services and financial application software. Our Investment
Services business offers portfolio management and information services for
fee-based money managers and financial planners within investment advisory
firms, brokerage firms, banks and insurance companies. Our fee-based money
manager clients are typically sponsors or managers of wrap money management
products or traditional money managers, managing investments of institutions and
high net worth individuals. Our Software businesses provide electronic commerce
and financial applications software and services for businesses and financial
institutions. We design, market, license and support software products for
automated clearinghouse, or ACH, processing, reconciliation and regulatory
compliance.
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During the fiscal year ended June 30, 1999, Electronic Commerce
accounted for 68% of our revenues and Software and Investment Services each
accounted for 16% of our revenues.
OUR BUSINESS STRATEGY
Our business strategy is to provide an expanding range of convenient,
secure and cost-effective electronic commerce services to financial
institutions, businesses and their customers. The key elements of our business
strategy are to:
- Drive increased adoption of electronic commerce services by
consumers;
- Continue to distribute electronic commerce services through multiple
channels;
- Focus on customer care and technical support;
- Continue to improve operational efficiency and effectiveness; and
- Drive new forms of electronic commerce services.
OUR ADDRESS
Our principal executive offices are located at 4411 East Jones Bridge
Road, Norcross, Georgia 30092 and our telephone number is (678) 375-3387. We
maintain a web site at www.checkfree.com. This reference to our web site address
does not constitute incorporation by reference of the information contained on
our web site.
RECENT DEVELOPMENTS
We did not experience any material problems or issues with the Year
2000 rollover and began the year with fully operational systems and
infrastructure. The Year 2000 transition was non-eventful for all of our
operating divisions. Our systems generally remained available throughout the
course of the Year 2000 rollover and, to date, continue to be available within
historical operating parameters. Our management team believes that any future
Year 2000-related problems are unlikely and would not be material to our
business, financial condition and results of operations. See "Risk Factors" and
"Forward-Looking Statements."
Our Year 2000 costs remained in-line with our projections and no
incremental funding was required to successfully complete the effort. Continuing
costs are related only to administrative program wrap up work and are not
material to our financial condition and results of operations.
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THE NOTES
Issuer........................ CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
(678) 375-3387
Notes......................... $172,500,000 aggregate principal amount of
Convertible Subordinated Notes due 2006.
Issue Price................... 100% plus accrued interest, if any, from the
date of issue.
Interest...................... 6 1/2% per annum on the principal amount,
payable semiannually in arrears on June 1 and
December 1 of each year commencing on June 1,
2000.
Denominations................. The notes are issued in denominations of $1,000
principal amount and integral multiples thereof.
Conversion Rights............. Each note is convertible, at the option of the
holder, at anytime prior to maturity, unless
previously redeemed or otherwise purchased, into
shares of our common stock at a conversion rate
of 13.6612 shares per note. The conversion rate
is subject to adjustment upon the occurrence of
certain events affecting our common stock.
Subject to certain exceptions, upon conversion,
the holder will not receive any cash payment
representing any further interest; such accrued
cash interest will be deemed paid by the shares
of our common stock received by the holder on
conversion. See "Description of
Notes--Conversion Rights."
Maturity Date................. December 1, 2006.
Subsidiary Guarantee.......... Each of our subsidiaries has fully and
unconditionally guaranteed the notes on a
subordinated basis. Future subsidiaries also may
be required to guarantee the notes. See
"Description of Notes--Subsidiary Guarantee."
Ranking....................... The notes are our unsecured obligations and are
subordinated to our existing and future senior
indebtedness. The subsidiary guarantee is
subordinated to all existing and future senior
indebtedness of our subsidiaries. At September
30, 1999, we had no senior indebtedness
outstanding, and our subsidiaries had $7.2
million of senior indebtedness outstanding. The
indenture does not restrict the incurrence by us
or our subsidiaries of indebtedness or other
obligations.
Change in Control............. If a change in control of our Company occurs,
you may require us to purchase your notes at a
price equal to the principal amount of the
notes. We will also be required to pay accrued
and unpaid interest.
Sinking Fund.................. No sinking fund is provided for the notes.
Optional Redemption........... We may not redeem the notes prior to December 1,
2002. On and after such date, the notes are
redeemable for cash at any time at our option,
in whole or in part, at redemption prices set
forth in the indenture, plus
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accrued and unpaid interest to the date of
redemption. See "Description of
Notes--Redemption of the Notes at Our Option."
Use of Proceeds............... We will not receive any of the proceeds from
this offering. See "Use of Proceeds."
DTC Eligibility............... Except as described in this prospectus, the
notes are issued in fully registered book-entry
form and are represented by one or more
permanent global notes without coupons deposited
with a custodian for and registered in the name
of a nominee of The Depository Trust Company
("DTC") in New York, New York. Beneficial
interests in any of the global notes are shown
on, and transfers thereof will be effected only
through, records maintained by DTC and its
direct and indirect participants, and any such
interest may not be exchanged for certificated
notes, except in limited circumstances described
in this prospectus. Settlement and all secondary
market trading activity for the notes will be in
same day funds. See "Description of Notes--Form,
Denomination and Registration" and "--Book Entry
System."
Transfer Restrictions......... The notes and our common stock issuable upon
conversion may not be offered, sold, pledged or
otherwise transferred except as described in
this prospectus.
Registration Rights........... We have agreed:
- To file as soon as practicable, but in any
event within 60 days of the date of
issuance of the notes, a shelf
registration statement under the
Securities Act of 1933 to cover resales of
the notes and shares of our common stock
issuable on conversion thereof;
- To use our reasonable best efforts to
cause the shelf registration statement to
be declared effective by the Commission
within 120 days of the date of issuance of
the notes; and
- To use our best efforts to keep the shelf
registration statement effective and
usable until the notes, and the common
stock issuable upon conversion of the
notes, (i) have been registered and sold
pursuant to the shelf registration, (ii)
have been distributed to the public
pursuant to Rule 144 under the Securities
Act of 1933 or (iii) are saleable pursuant
to Rule 144(k) under the Securities Act of
1933 or successor provisions.
We are subject to the payment of additional
interest if we are not in compliance with these
requirements. See "Description of
Notes--Registration Rights."
Trading....................... We can provide no assurance as to the liquidity
of the trading market for the notes. The notes
are currently traded on The Portal(TM) Market.
Our common stock is listed on the Nasdaq
National Market under the symbol "CKFR."
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RISK FACTORS
An investment in the notes or the shares of our common stock issuable
upon conversion of the notes offered by this prospectus involves a high degree
of risk. You should carefully consider the following factors as well as the
other information contained and incorporated by reference in this prospectus
before deciding to invest in the notes. You should also consider these risk
factors when you read forward-looking statements elsewhere in this prospectus.
THE MARKET FOR OUR ELECTRONIC COMMERCE SERVICES IS EVOLVING AND MAY NOT CONTINUE
TO DEVELOP OR GROW RAPIDLY ENOUGH FOR US TO REMAIN CONSISTENTLY PROFITABLE.
The electronic commerce market is still evolving and currently growing
at a rapid rate. We believe future growth in the electronic commerce market will
be driven by the cost, ease-of-use and quality of products and services offered
to consumers and businesses. In order to consistently increase and maintain our
profitability, consumers and businesses must continue to adopt our services. If
the number of electronic commerce transactions does not continue to grow or if
consumers or businesses do not continue to adopt our services, it could have a
material adverse effect on our business, financial condition and results of
operations.
OUR FUTURE PROFITABILITY IS DEPENDENT UPON OUR ABILITY TO IMPLEMENT OUR STRATEGY
SUCCESSFULLY TO INCREASE ADOPTION OF ELECTRONIC BILLING AND PAYMENT METHODS.
Our future profitability will depend, in part, on our ability to
implement our strategy successfully to increase adoption of electronic billing
and payment methods. Our strategy includes substantial investments in programs
designed to:
- Drive consumer awareness of electronic billing and payment;
- Encourage consumers to sign up for and use our electronic billing and
payment services offered by our distribution partners;
- Build our infrastructure to handle seamless processing of
transactions;
- Continue to develop state of the art, easy-to-use technology; and
- Increase the number of billers whose bills we can present and pay
electronically.
Our investment in these programs will have a negative impact on our
short-term profitability. Additionally, our failure to implement these programs
successfully or to increase substantially adoption of electronic commerce
billing and payment methods by consumers who pay for the services could have a
material adverse effect on our business, financial condition and results of
operations.
WE MAY BE UNABLE TO REMAIN CONSISTENTLY PROFITABLE.
We have not consistently operated profitably to date. We incurred:
- A loss from operations of $7.2 million and a net loss of $3.7 million
in the fiscal year ended June 30, 1998;
- A loss from operations of $3.7 million and net income of $10.5
million for the fiscal year ended June 30, 1999; and
- A loss from operations of $6.4 million and a net loss of $3.9 million
for the three months ended September 30, 1999.
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We intend to continue to make significant investments in our research and
development, sales and marketing and customer care operations. As a result, we
anticipate having a net loss from operations in fiscal 2000 and may experience
net losses and may not be able to sustain or increase our profitability in the
future.
COMPETITIVE PRESSURES WE FACE MAY HAVE A MATERIAL ADVERSE EFFECT ON US.
The electronic commerce market is new and evolving rapidly, resulting
in a dynamic competitive environment. We face significant competition in all of
our customer markets. Increased competition or other competitive pressures may
result in price reductions, reduced margins or loss of market share, any of
which could have a material adverse effect on our business, financial condition
and results of operations. Further, we expect competition to persist, increase
and intensify in the future. A number of financial institutions have developed,
and others in the future may develop, in-house home banking services similar to
ours. For example, Chase Manhattan Corporation, First Union Corporation and
Wells Fargo & Co. recently announced the formation of a new venture called
Spectrum that will allow individuals and businesses to receive and pay bills
electronically. Additionally, TransPoint LLC, a joint venture among Microsoft
Corporation, First Data Corporation and Citibank N.A., has announced its own
agreements with financial institutions to offer on-line home banking and
electronic billing and payment services to consumers. We also face increased
competition from new competitors offering billing and payment services utilizing
scan and pay technology. We cannot assure you that we will be able to compete
effectively against financial institutions, Spectrum, TransPoint, scan and pay
companies or other current and future electronic commerce competitors.
The markets for our investment services and software products are also
highly competitive. In Investment Services, our competition comes from service
bureaus and providers of portfolio accounting software. In Software, our
competition comes from several different market segments, including large
diversified computer software and service companies and independent suppliers of
software products. Because there are relatively low barriers to entry, we expect
competition in the software market to increase significantly in the future. We
cannot assure you that we will be able to compete effectively against current
and future competitors in these markets.
Across all of our market segments, many of our current and potential
competitors have longer operating histories, significantly greater financial,
technical, marketing, customer service and other resources, greater name
recognition and a larger installed base of customers than we do. As a result,
these competitors may be able to respond to new or emerging technologies and
changes in customer requirements faster and more effectively than we can, or to
devote greater resources to the development, promotion and sale of products than
we can. If these competitors were to acquire significant market share, it could
have a material adverse effect on our business, financial condition and results
of operations.
SECURITY AND PRIVACY BREACHES IN OUR ELECTRONIC TRANSACTIONS MAY DAMAGE CUSTOMER
RELATIONS AND INHIBIT OUR GROWTH.
If we are unable to protect the security and privacy of our electronic
transactions, our growth and the growth of the electronic commerce market in
general could be materially adversely affected. A security or privacy breach
may:
- Cause our customers to lose confidence in our services;
- Deter consumers from using our services;
- Harm our reputation;
- Expose us to liability;
- Increase our expenses from potential remediation costs; and
- Decrease market acceptance of electronic commerce transactions.
While we believe that we utilize proven applications designed for
premium data security and integrity to process electronic transactions, there
can be no assurance that our use of these applications will be sufficient to
address
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changing market conditions or the security and privacy concerns of existing and
potential subscribers. Any failures in our security and privacy measures could
have a material adverse effect on our business, financial condition and results
of operations.
WE RELY ON THIRD PARTIES TO DISTRIBUTE OUR ELECTRONIC COMMERCE SERVICES, WHICH
MAY NOT RESULT IN WIDESPREAD ADOPTION.
We rely on our relationships with financial institutions, businesses,
billers, Internet portals and other third parties like Intuit Inc. to provide
branding for our electronic commerce services and to market our services to
their customers. These relationships are an important source of the growth in
demand for our electronic commerce services. If any of these parties abandons,
curtails or insufficiently increases its marketing efforts, it could have a
material adverse effect on our business, financial condition and results of
operations.
CONSOLIDATION IN THE BANKING INDUSTRY MAY ADVERSELY AFFECT OUR ABILITY TO SELL
OUR ELECTRONIC COMMERCE SERVICES, INVESTMENT SERVICES AND SOFTWARE.
Mergers, acquisitions and personnel changes at key financial
institutions have the potential adversely to affect our business, financial
condition and results of operations. Currently, the banking industry is
undergoing large-scale consolidation, causing the number of financial
institutions to decline. This consolidation could cause us to lose:
- Current and potential customers;
- Market share, if combined financial institutions were to determine
that it is more efficient to develop in-house home banking services
similar to ours or offer our competitors' products or services; and
- Revenue, if combined financial institutions were able to negotiate a
greater volume discount for, or to discontinue the use of, our
products and services.
WE ARE DEPENDENT UPON A SMALL NUMBER OF FINANCIAL INSTITUTION CUSTOMERS FOR A
SIGNIFICANT PERCENTAGE OF OUR SUBSCRIBERS.
We rely on our relationships with three key financial institutions for
a substantial portion of our subscriber base and the volume of electronic
transactions that we process. As of September 30, 1999, these three financial
institutions accounted for approximately 1.3 million subscribers, or
approximately 43% of our total subscriber base. No single customer, however,
accounts for more than 10% of our revenues. The loss of the relationship with
any of these key financial institutions or a significant decline in the number
of transactions processed through them could have a material adverse effect on
our business, financial condition and results of operations.
IF WE DO NOT SUCCESSFULLY RENEW OR RENEGOTIATE OUR AGREEMENTS WITH OUR
CUSTOMERS, OUR BUSINESS MAY SUFFER.
Our agreements for electronic commerce services with financial
institutions generally provide for terms of three to five years. These
agreements are renegotiated from time to time when financial institutions
migrate from our PC-based platform to our web-based platform. If we are not able
to renew or renegotiate these agreements on favorable terms, it could have a
material adverse effect on our business, financial condition and results of
operations.
The profitability of our Software business depends, to a substantial
degree, upon our software customers electing to periodically renew their
maintenance agreements. In the event that a substantial number of our software
customers declined to renew these agreements, our revenues and profits in this
business segment would be materially adversely affected.
OUR FUTURE PROFITABILITY IS DEPENDENT UPON AN INCREASE IN THE PROPORTION OF
TRANSACTIONS WE PROCESS ELECTRONICALLY.
Our future profitability will depend, in part, on our ability to
increase the percentage of transactions we process electronically. Compared with
conventional paper-based transactions, electronic transactions:
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- Cost much less to complete;
- Give rise to far fewer errors, which are costly to resolve; and
- Generate far fewer subscriber inquiries and, therefore, consume far
fewer customer care resources.
Accordingly, if we are unable to increase the percentage of
transactions that we process electronically, our margins could decrease, which
could have a material adverse effect on our business, financial condition and
results of operations.
THE TRANSACTIONS WE PROCESS EXPOSE US TO CREDIT RISKS.
The electronic and conventional paper-based transactions we process
expose us to credit risks. These credits risks include risks arising from
returned transactions caused by:
- Insufficient funds; - Closed accounts;
- Unauthorized use; - Theft;
- Stop payment orders; - Frozen accounts; and
- Payment disputes; - Fraud.
We are also exposed to credit risk from merchant fraud and erroneous
transmissions. We attempt to manage all of these risks through our sophisticated
risk management systems, which include our patented billing and payment
processing system and agreements with some customers to guarantee our losses or
to grant us reversal rights. There can be no assurance, however, that these
efforts will be successful. Any losses resulting from returned transactions,
merchant fraud or erroneous transmissions could result in liability to financial
institutions, merchants or subscribers, which could have a material adverse
effect on our business, financial condition and results of operations.
WE MAY EXPERIENCE BREAKDOWNS IN OUR PAYMENT PROCESSING SYSTEM THAT COULD DAMAGE
CUSTOMER RELATIONS AND EXPOSE US TO LIABILITY.
A system outage or data loss could have a material adverse effect on
our business, financial condition and results of operations. To successfully
operate our business, we must be able to protect our payment processing and
other systems from interruption by events that are beyond our control. Events
that could cause system interruptions include:
- Fire; - Telecommunications failure;
- Natural disaster; - Unauthorized entry; and
- Power loss; - Computer viruses.
Although we completed the initial migration of subscribers from our
pre-existing data processing platforms to a new system that we call the Genesis
Platform, we will continue to migrate subscribers from non-Genesis Platforms to
the Genesis Platform at the request of our customers. Our main processing
facility is located in Norcross, Georgia, and we have other processing
facilities located in Ohio, Illinois and Texas. During the transition from the
pre-existing platforms to the Genesis Platform, we may be exposed to loss of
data or unavailability of systems due to inadequate back-ups, reduced or
eliminated redundancy, or both. Although we regularly back-up data from our
operations and take other measures to protect against data loss and system
failures, there is still some risk that we may lose critical data or experience
system failures. As a precautionary measure, we have entered into disaster
recovery agreements for the
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processing systems at all our sites, and we conduct business resumption tests on
a scheduled basis. Our property and business interruption insurance may not be
adequate to compensate us for all losses or failures that may occur.
WE MAY EXPERIENCE SOFTWARE DEFECTS AND DEVELOPMENT DELAYS, DAMAGING CUSTOMER
RELATIONS, DECREASING OUR POTENTIAL PROFITABILITY AND EXPOSING US TO LIABILITY.
Our electronic commerce services and our software products are based on
sophisticated software and computing systems which often encounter development
delays, and the underlying software may contain undetected errors or defects.
Defects in our software products and errors or delays in our processing of
electronic transactions could result in:
- Additional development costs;
- Diversion of technical and other resources from our other development
efforts;
- Loss of credibility with current or potential customers;
- Harm to our reputation; or
- Exposure to liability claims.
In addition, we rely on technologies supplied to us by third parties that may
also contain undetected errors or defects that could have a material adverse
effect on our business, financial condition and results of operations. Although
we attempt to limit our potential liability for warranty claims through
disclaimers in our software documentation and limitation-of-liability provisions
in our license and customer agreements, there can be no assurance that these
measures will be successful in limiting our liability.
OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND MAY NOT ACCURATELY PREDICT OUR
FUTURE PERFORMANCE.
Our quarterly results of operations have varied significantly and
probably will continue to do so in the future as a result of a variety of
factors, many of which are outside our control. These factors include:
- Changes in our pricing policies or those of our competitors;
- Relative rates of acquisition of new customers;
- Seasonal patterns;
- Delays in the introduction of new or enhanced services, software and
related products by us or our competitors or market acceptance of
these products and services; and
- Other changes in operating expenses, personnel and general economic
conditions.
As a result, we believe that period-to-period comparisons of our operating
results are not necessarily meaningful, and you should not rely on them as an
indication of our future performance. In addition, our operating results in a
future quarter or quarters may fall below expectations of securities analysts or
investors and, as a result, the price of our common stock may fluctuate.
WE EXPERIENCE SEASONAL FLUCTUATIONS IN OUR NET SALES CAUSING OUR OPERATING
RESULTS TO FLUCTUATE.
We have historically experienced and expect to continue to experience
seasonal fluctuations in our net sales. If our net sales are below the
expectations of securities analysts and investors due to seasonal fluctuations,
our stock price could decrease unexpectedly. Our growth in new electronic
commerce subscribers is affected by seasonal factors such as holiday-based
personal computer sales. These seasonal factors may impact our operating results
by concentrating subscriber acquisition and set-up costs, which may not be
immediately offset by revenue increases
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primarily due to introductory service price discounts. Additionally, on-line
interactive service subscribers generally tend to be less active users during
the summer months, resulting in lower revenue during this period.
Our software sales also have historically displayed seasonal
variability, with sales and earnings generally stronger in the quarters ended
December 31 and June 30 of each year and generally weaker in the quarters ended
September 30 and March 31 of each year. The seasonality in software sales is
due, in part, to calendar year-end buying patterns of financial institution
customers and our software sales compensation structure, which measures sales
performance at our June 30 fiscal year end.
OUR INABILITY TO MANAGE GROWTH COULD ADVERSELY AFFECT OUR BUSINESS.
We have experienced rapid growth in our revenues, from $76.8 million in
the twelve months ended June 30, 1996 to $250.1 million in the fiscal year ended
June 30, 1999, and we intend to continue to grow our business significantly. To
support our growth plans, we will have to expand significantly our existing
management, operational, financial and human resources and management
information systems and controls. If we are not able to manage our growth
successfully, we will not grow as planned, which could have a material adverse
effect on our business, financial condition and results of operations.
IF WE ARE UNABLE TO RECRUIT AND RETAIN ADDITIONAL SKILLED PERSONNEL, OUR
BUSINESS COULD BE ADVERSELY AFFECTED.
Our future success depends upon our ability to attract, train,
assimilate and retain additional skilled personnel. Competition for qualified
employees in all of our business segments is intense. A significant increase in
our customer base would necessitate the hiring of a significant number of
additional customer care and technical support personnel, as well as software
developers and technicians, qualified candidates for which are currently in
short supply. We cannot assure you that we will be able to retain our key
employees or that we can attract, train, assimilate or retain other skilled
personnel in the future, and the failure to do so could have a material adverse
effect on our business, financial condition and results of operations.
IF WE DO NOT RESPOND TO RAPID TECHNOLOGICAL CHANGE OR CHANGES IN INDUSTRY
STANDARDS, OUR SERVICES COULD BECOME OBSOLETE AND WE COULD LOSE OUR CUSTOMERS.
The electronic commerce industry is changing rapidly. To remain
competitive, we must continue to enhance and improve the functionality and
features of our products, services and technologies. For example, we are
currently migrating our products and services from a PC-based platform to a
web-based platform. If competitors introduce new products and services embodying
new technologies, or if new industry standards and practices emerge, our
existing product and service offerings, proprietary technology and systems may
become obsolete. Further, if we fail to adopt or develop new technologies or to
adapt our products and services to emerging industry standards, we may lose
current and future customers, which could have a material adverse effect on our
business, financial condition and results of operations.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, PERMITTING COMPETITORS
TO DUPLICATE OUR PRODUCTS AND SERVICES.
Our success and ability to compete in our markets are dependent, in
part, upon our proprietary technology. We rely primarily on patent, copyright,
trade secret and trademark laws to protect our technology. In addition, we have
been granted a patent for some features of our electronic billing and payment
processing system, which we believe provides some measure of security for our
technologies. If challenged, we cannot assure you that our patent will prove to
be valid or provide the protection that we need. Further, the source code for
our proprietary software is protected both as a trade secret and as a
copyrighted work. We generally enter into confidentiality and assignment
agreements with our employees, consultants and vendors, and generally control
access to and distribution of our software, documentation and other proprietary
information.
Because our means of protecting our proprietary rights may not be
adequate, it may be possible for a third party to copy or otherwise obtain and
use our technology without authorization. In addition, the laws of some
countries in which we sell our products do not protect software and intellectual
property rights to the same extent as the laws of
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<PAGE> 14
the U.S. Unauthorized copying, use or reverse engineering of our products could
have a material adverse effect on our business, financial condition and results
of operations.
A third party could also claim that our technology infringes its
proprietary rights. As the number of software products in our target markets
increases and the functionality of these products overlap, we believe that
software developers may increasingly face infringement claims. These claims,
even if without merit, can be time-consuming and expensive to defend. A third
party asserting infringement claims against us in the future may require us to
enter into costly royalty arrangements or litigation.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS SUBORDINATED TO ALL OF OUR
EXISTING AND FUTURE SENIOR INDEBTEDNESS AND THE EXISTING AND FUTURE SENIOR
INDEBTEDNESS OF OUR SUBSIDIARIES.
The notes and the subsidiary guarantee are unsecured obligations and
are subordinated in right of payment, as provided in the indenture, to the prior
payment in full in cash, or other payment satisfactory to holders of senior
indebtedness, of all our existing and future senior indebtedness and that of our
subsidiaries. Senior indebtedness includes, among other things, all indebtedness
for money borrowed and indebtedness evidenced by securities, debentures, bonds
or similar instruments, other than indebtedness that is expressly junior in
right of payment to the notes and the subsidiary guarantee or ranks pari passu
in right of payment to the notes and the subsidiary guarantee. At September 30,
1999, we had no senior indebtedness, and our subsidiaries had approximately $7.2
million of senior indebtedness. The terms of the notes and the subsidiary
guarantee do not limit the amount of additional indebtedness, including senior
indebtedness, which we and our subsidiaries can create, incur, assume or
guarantee. Upon any distribution of our assets or the assets of our subsidiaries
pursuant to any insolvency, bankruptcy, dissolution, winding up, liquidation or
reorganization, the payment on the notes and the subsidiary guarantee will be
subordinated to the extent provided in the indenture to the prior payment in
full of all our senior indebtedness and that of our subsidiaries, and there may
not be sufficient assets remaining to pay the amounts due on any or all the
notes and the subsidiary guarantee then outstanding. In addition, we may not
repurchase any notes in certain circumstances involving a change in control if
at such time the subordination provision of the indenture would prohibit us from
making payment in respect of the notes. The failure to repurchase the notes when
required would result in an event of default under the indenture and may
constitute a default under the terms of our senior indebtedness and that of our
subsidiaries. See "Description of Notes--Subordination of the Notes," and
"--Subsidiary Guarantee" and "Description of Certain Indebtedness."
WE ARE A HOLDING COMPANY AND RELY ON DIVIDENDS FROM OUR SUBSIDIARIES TO MAKE
INTEREST AND PRINCIPAL PAYMENTS.
We are a holding company that derives all of our operating income, if
any, from our subsidiaries. We rely on dividends and other payments from our
subsidiaries or must raise funds in public or private equity or debt offerings
or sales of assets to generate the funds necessary to meet our obligations,
including the payment of principal and interest on the notes. There can be no
assurance that we would be able to obtain such funds on acceptable terms or at
all.
THE TERMS OF OUR AND OUR SUBSIDIARIES' SENIOR INDEBTEDNESS COULD RESTRICT OUR
FLEXIBILITY AND LIMIT OUR ABILITY TO SATISFY OUR OBLIGATIONS UNDER THE NOTES AND
OUR SUBSIDIARY GUARANTEE.
We and our subsidiaries are subject to operational and financial
covenants and other restrictions contained in the bank loan documents evidencing
the senior indebtedness. These covenants could limit our operational flexibility
and restrict our ability to borrow additional funds, if necessary, to finance
our operations and to make principal and interest payments on the notes.
Additionally, our failure to comply with these operational and financial
covenants could result in an event of default under the terms of the senior
indebtedness which, if not cured or waived, could result in a substantial amount
of the senior indebtedness becoming due and payable. The effect of these
covenants, or our failure to comply with them, could have a material adverse
effect on our business, financial condition and results of operations.
THE SUBSIDIARY GUARANTEE MAY BE UNENFORCEABLE DUE TO FRAUDULENT CONVEYANCE
STATUTES.
Although laws differ among various jurisdictions, a court could, under
fraudulent conveyance laws, further subordinate or avoid the subsidiary
guarantee if it found that the subsidiary guarantee was incurred with actual
intent to
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<PAGE> 15
hinder, delay or defraud creditors or the subsidiary guarantor did not receive
fair consideration or reasonably equivalent value for the subsidiary guarantee
and that the subsidiary guarantor was any of the following:
- Insolvent or was rendered insolvent because of the subsidiary
guarantee;
- Engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
- Intended to incur, or believed that it would incur, debts beyond its
ability to pay at maturity.
If a court voided a subsidiary guarantee by one or more of our
subsidiaries as the result of a fraudulent conveyance, or held it unenforceable
for any other reason, holders of the notes would cease to have a claim against
the subsidiary based on the subsidiary guarantee and would be solely creditors
of CheckFree Holdings Corporation.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
IN CONTROL OFFER REQUIRED BY OUR INDENTURE.
Upon the occurrence of certain specific kinds of change in control
events specified in the indenture, we may be required to repurchase all
outstanding notes. It is possible, however, that we will not have sufficient
funds at the time of a change in control to make the required repurchase of the
notes or that restrictions in our existing or future senior indebtedness will
not allow such repurchases. Also, we or our subsidiaries may be required to
prepay certain senior indebtedness or obligations having financial covenant
provisions in favor of the holders thereof. In addition, certain important
corporate events, such as leveraged recapitalizations that would increase the
level of our indebtedness, may not constitute a change in control under the
indenture.
The exercise by the holders of the notes of their right to require us
to repurchase the notes could cause a default under other senior indebtedness
which we may enter into in the future, even if the change in control itself does
not, due to the financial effect on us of such repurchase.
THERE MAY NOT BE A TRADING MARKET FOR THE NOTES.
Although the notes are currently traded in The Portal(TM) Market, there
is no assurance that such trading will continue. Accordingly, you may not be
able to sell your notes or sell them at an acceptable price. Further, the notes
could trade at prices higher or lower than the initial offering price depending
on many factors, including:
- Prevailing interest rates;
- The market price for our common stock;
- Our operating results; and
- The market for similar securities or the securities market in
general.
WE MAY NOT BE ABLE TO OBTAIN ADEQUATE FINANCING TO IMPLEMENT OUR GROWTH
STRATEGY.
Successful implementation of our growth strategy will likely require
continued access to capital. If we do not generate sufficient cash from
operations, our growth could be limited unless we are able to obtain capital
through additional debt or equity financings. We cannot assure you that debt or
equity financings will be available as required for acquisitions or other needs.
If additional funds are raised through the issuance of equity securities, the
percentage ownership of our then current stockholders may be reduced. In
addition, we may issue equity securities that have rights, preferences or
privileges senior to those of the holders of our common stock. Even if financing
is available, it may not be on terms that are favorable to us or sufficient for
our needs. If we are unable to obtain sufficient financing, we may be unable to
fully implement our growth strategy.
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<PAGE> 16
OUR COMMON STOCK PRICE IS VOLATILE.
The market price of our common stock has been volatile in the past and
may change rapidly in the future. The following factors, among others, may cause
significant volatility in our stock price:
- Actual or anticipated fluctuations in our operating results;
- Actual or anticipated fluctuations in our subscriber growth;
- Announcements by us, our competitors or our customers;
- Announcements of the introduction of new or enhanced products and
services by us or our competitors;
- Announcements of joint development efforts or corporate partnerships
in the electronic commerce market;
- Market conditions in the banking, telecommunications, technology and
other emerging growth sectors;
- Rumors relating to our competitors or us; and
- General market or economic conditions.
Historically, the stock market has experienced significant price and
volume fluctuations, which have particularly affected the trading prices of
equity securities of many technology companies. These price and volume
fluctuations often have been unrelated to the operating performance of the
affected companies. In the past, following periods of volatility in the market
price of a company's securities, securities class action litigation has often
been instituted against that company. This type of litigation, regardless of the
outcome, could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on our
business, financial condition and results of operations.
AVAILABILITY OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK FOR SALE IN THE FUTURE
COULD ADVERSELY AFFECT OUR STOCK PRICE.
The availability for future sale of a substantial number of shares of
our common stock in the public market, or issuance of common stock upon the
exercise of stock options, warrants or conversion of the notes or otherwise
could adversely affect the market price for our common stock. As of November 10,
1999, we had outstanding 52,211,714 shares of our common stock, of which
34,310,346 shares of our issued and outstanding common stock were held by
nonaffiliates and the holders of the remaining 17,901,368 shares were entitled
to resell them only pursuant to a registration statement under the Securities
Act of 1933 or an applicable exemption from registration thereunder such as an
exemption provided by Rule 144, Rule 145 or Rule 701 under the Securities Act of
1933. As of November 10, 1999, we had outstanding options to purchase 5,162,098
shares of our common stock, of which options for 1,452,193 shares were fully
vested and exercisable at an average weighted exercise price of approximately
$9.11 per share. As of November 10, 1999, we had issued warrants to purchase
11,700,000 shares of our common stock, of which warrants for 3,025,000 shares
were fully vested and exercisable at a weighted exercise price of approximately
$20.87 per share. We may also issue up to an additional 2,000,000 warrants
pursuant to our recent agreement with Bank One. In addition, our employees are
entitled to purchase up to 756,538 shares under our Associate Stock Purchase
Plan and receive up to 799,943 shares under our 401(k) Plan. Any shares
purchased thereunder will be eligible for future sale following the expiration
of applicable holding periods. In addition, up to 2,356,557 shares of our common
stock may be issued upon conversion of the notes.
Intuit Inc., which holds 10,175,000 shares of our common stock,
Integrion Financial Network, L.L.C., its members and former members, which
collectively hold warrants to purchase up to 10,000,000 shares of our common
stock, of which warrants for 3,000,000 shares are fully vested and exercisable,
and Bank One, which holds warrants to purchase 1,000,000 shares of our common
stock and may be entitled to receive warrants to purchase up to an additional
16
<PAGE> 17
2,000,000 of our common stock, none of which are currently vested or
exercisable, are entitled to "piggy-back" and demand registration rights subject
to specified conditions and restrictions. If Intuit, Integrion or Bank One, by
exercising their registration rights, cause a large number of shares to be
registered and sold in the public market, such sales may have an adverse effect
on the market price of our common stock.
THE LOSS OF KEY EXECUTIVES COULD ADVERSELY AFFECT OUR BUSINESS.
Our success depends to a significant degree upon the continued
contributions of our key management, including:
- Peter J. Kight, our founder, Chairman and Chief Executive Officer;
- Mark A. Johnson, our Vice Chairman, Corporate Development;
- Peter F. Sinisgalli, our President; and
- Ravi Ganesan, our Executive Vice President and Chief Technology
Officer.
If for any reason any of these officers ceased to be active in our
management, it could have a material adverse effect on our business, financial
condition and results of operations.
WE MAY NOT BE SUCCESSFUL IN MAKING ACQUISITIONS AND, EVEN IF WE ARE, RISKS
ARISING FROM THOSE ACQUISITIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
We have expanded, and plan to continue to expand, our operations
through the acquisition of additional businesses that complement our core skills
and have the potential to increase our overall value. We may not be able to
identify and acquire compatible businesses. Acquisitions involve many risks,
which could have a material adverse effect on our business, financial condition
and results of operations, including:
- Acquired businesses may not achieve anticipated revenues, earnings or
cash flow;
- Integration of acquired businesses and technologies may not be
successful and we may not realize anticipated economic, operational
and other benefits in a timely manner, particularly if we acquire a
business in a market in which we have limited or no current expertise
or with a corporate culture different from our own;
- Financing of future acquisitions may require issuing common stock or
debt for some or all of the purchase price, which could result in
dilution of the ownership interests of our stockholders or
recognizing amortization expense related to goodwill and other
intangible assets;
- Competing with other companies, many of which have greater financial
and other resources, to acquire attractive companies makes it more
difficult to acquire suitable companies on acceptable terms; and
- Disruption of our existing business, distraction of management and
other resources and difficulty in maintaining our current business
standards, controls and procedures.
WE ARE SUBJECT TO SIGNIFICANT INFLUENCE BY SOME STOCKHOLDERS THAT MAY HAVE THE
EFFECT OF DELAYING OR PREVENTING A CHANGE IN CONTROL.
At November 10, 1999, our directors, executive officers and principal
stockholders and their affiliates collectively owned approximately 34% of the
outstanding shares of our common stock. As a result, these stockholders are able
to exercise significant influence over matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may have the effect of delaying or
preventing a change in control.
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<PAGE> 18
ANTI-TAKEOVER PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAKE
ANY CHANGE IN CONTROL MORE DIFFICULT.
Our certificate of incorporation and by-laws contain provisions that
may have the effect of delaying or preventing a change in control, may
discourage bids at a premium over the market price of our common stock and may
adversely affect the market price of our common stock and the voting and other
rights of the holders of our common stock. These provisions include:
- Division of our board of directors into three classes serving
staggered three-year terms;
- Removal of our directors by the stockholders only for cause upon 80%
stockholder approval;
- Prohibiting our stockholders from calling a special meeting of
stockholders;
- Ability to issue additional shares of our common stock or preferred
stock without stockholder approval;
- Prohibiting our stockholders from unilaterally amending our
certificate of incorporation or by-laws except with 80% stockholder
approval; and
- Advance notice requirements for raising business or making
nominations at stockholders' meetings.
We have also adopted a stockholder rights plan that allows us to issue
preferred stock with rights senior to those of our common stock without any
further vote or action by our stockholders. The issuance of our preferred stock
under the stockholder rights plan could decrease the amount of earnings and
assets available for distribution to the holders of our common stock or could
adversely affect the rights and powers, including voting rights, of the holders
of our common stock. In some circumstances, the issuance of preferred stock
could have the effect of decreasing the market price of our common stock.
We are also subject to provisions of the Delaware corporation law that,
in general, prohibit any business combination with a beneficial owner of 15% or
more of our common stock for five years unless the holder's acquisition of our
stock was approved in advance by our board of directors.
OUR BUSINESS COULD BECOME SUBJECT TO INCREASED GOVERNMENT REGULATION, WHICH
COULD MAKE OUR BUSINESS MORE EXPENSIVE TO OPERATE.
We believe that we are not required to be licensed by the Office of the
Comptroller of the Currency, or OCC, the Federal Reserve Board or other federal
agencies that regulate or monitor banks or other types of providers of
electronic commerce services. A number of states have legislation regulating or
licensing check sellers, money transmitters or service providers to banks, and
we have registered under this legislation in specific instances. Because
electronic commerce in general, and most of our products and services in
particular, are so new, the application of many of these laws and regulations is
uncertain and difficult to interpret. The entities responsible for interpreting
and enforcing these laws and regulations could amend these laws or regulations
or issue new interpretations of existing laws or regulations. Any of these
changes could lead to increased operating costs and reduce the convenience and
functionality of our products or services, possibly resulting in reduced market
acceptance. It is also possible that new laws and regulations may be enacted
with respect to the Internet. The adoption of any of these laws or regulations
may decrease the growth of the Internet, which could in turn decrease the demand
for our products or services, increase our cost of doing business or could
otherwise have a material adverse effect on our business, financial condition
and results of operations.
The Federal Reserve rules provide that we can only access the Federal
Reserve's ACH through a bank. If the Federal Reserve rules were to change to
further restrict our access to the ACH or limit our ability to provide ACH
transaction processing services, it could have a material adverse effect on our
business, financial condition and results of operations.
ALTHOUGH WE HAVE NOT EXPERIENCED ANY MATERIAL PROBLEMS RELATED TO THE YEAR 2000
ISSUE, WE MAY EXPERIENCE DELAYED EFFECTS OF THE YEAR 2000 ISSUE IN THE NEXT
SEVERAL MONTHS WHICH MAY ADVERSELY AFFECT OUR INFORMATION TECHNOLOGY SYSTEMS OR
CAUSE OUR CURRENT OR POTENTIAL CUSTOMERS TO DELAY IMPLEMENTING OUR PRODUCTS AND
SERVICES.
To date, we have not experienced any material problems related to the
Year 2000 issue. We may, however, experience delayed effects of Year 2000 issue
due to degradation in the next several months which may adversely affect our
information technology systems. If our efforts or the efforts of our customers
and suppliers, failed to address adequately the Year 2000 issue, we will likely
incur a substantial loss of revenue and suffer irreparable harm to our
reputation. We use computer software, operating systems and embedded
micro-processors containing date-related programs in the development and
delivery of our products and services and in our own internal information
technology systems. In order to process transactions accurately, we also rely on
technologies provided by our customers and suppliers. Transaction processing
relies on transmissions of data from PCs, through financial institutions and
business web servers and the Internet, over third-party data and voice
communication lines and through the Federal Funds System. The software we use in
our products and in the delivery of our services contains, in addition to code
written by our programmers, some software that we license from third parties.
We have completed testing our internal management information and other
critical business systems to identify any Year 2000 issues. We also have
inquired of our resellers, vendors and key suppliers about their Year 2000
readiness. To date, we are not aware of any significant resellers, vendors or
key suppliers with Year 2000 issues that would materially adversely affect us.
We cannot guarantee, however, that our information technology systems or those
of other companies on which we rely will successfully address the Year 2000
issue. Any failure by us or other third parties that we rely on to address the
Year 2000 issue could have a material adverse effect on our business, financial
condition and results of operations.
We believe that the adoption of our products and services by existing
and potential customers and subscribers may be adversely affected by the Year
2000 issue. As companies expend significant resources to correct or upgrade
their current software systems for Year 2000 compliance, they may delay or
cancel decisions to adopt our products and services. If this occurs, it could
have a material adverse effect on our business, financial condition and results
of operations.
A significant number of subscribers to our electronic bill payment
service use personal financial management software which is not, or may not be,
suitable for further use due to the Year 2000 issue. Although steps are being
taken by the software publisher, and by our customers, to encourage upgrading to
a Year 2000 compliant version of the software, in some cases, the subscriber
will not upgrade and will instead have his account deleted. These circumstances
will result in some loss of subscriber count and of revenue to us, and may also
subject us to claims by subscribers whose access to the service is interrupted.
We estimate that many of our subscribers are currently using software that was
not originally Year 2000 compliant, and that about 200,000 of our subscribers
may not upgrade their software and will subsequently be deleted as accounts. If
these deleted subscriber accounts do not reapply for service, we would lose
their associated revenue, which could have a material adverse effect on our
business, financial condition and results of operations.
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<PAGE> 19
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements often, although not always, include words or phrases
such as "will likely result," "expect," "will continue," "anticipate,"
"estimate," "intend," "plan," "project," "outlook" or similar expressions. We
have based these forward-looking statements on our current expectations and
assumptions about future events. These forward-looking statements are subject to
various risks and uncertainties that could cause actual results to differ
materially from those statements. These risks and uncertainties include those
set forth under "Risk Factors." The forward-looking statements contained in this
prospectus include statements about the following:
- Anticipated trends in our business, including trends in the
electronic commerce, investment services, and software segments;
- Our intention to develop and introduce new products and services;
- Our anticipated growth and growth strategies; and
- Anticipated levels of adoption of electronic billing and payment.
We have no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
The ratio of earnings to fixed charges and deficiency of earnings to cover fixed
charges presented below should be read together with the financial statements
and the notes accompanying them and "Management's Discussions and Analysis of
Financial Condition and Results of Operations" found in our Annual Report on
Form 10-K for the year ended June 30, 1999 and Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, incorporated into this registration
statement by reference. In calculating the ratio of earnings to fixed charges,
earnings consist of income (loss) before income taxes after excluding fixed
charges. Fixed charges consist of interest expense and one third of rental
expense, deemed representative of that portion of rental expense estimated to be
attributable to interest.
<TABLE>
<CAPTION>
Six Three months
Year ended months Year ended ended
December 31, ended June 30, September 30,
------------- June 30, ----------------------------- -------------
1994 1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Deficiency N/A $175 $146,165 $173,830 $4,344 $1,552 $2,669 $6,120
Ratio of Earnings
to Fixed Charges 1.9 N/A N/A N/A N/A N/A N/A N/A
</TABLE>
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<PAGE> 20
USE OF PROCEEDS
The proceeds from the sale of the securities offered by this prospectus
are solely for the security holders who currently own and are selling the
securities. We will not receive any of the proceeds from the sale of these
securities.
DESCRIPTION OF NOTES
The notes were issued under an indenture between us and Fifth Third
Bank, as trustee (the "Trustee"), dated as of November 29, 1999, as supplemented
by a supplemental indenture dated as of November 29, 1999, among us, our
subsidiaries and the Trustee (together, the "Indenture"). A copy of the
Indenture will be made available to prospective investors in the notes upon
request to us, and will be available for inspection during normal business hours
at the corporate trust office of the Trustee. The following summaries of certain
provisions of the notes and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the notes and the Indenture, including the definitions therein of
certain terms which are not otherwise defined in this prospectus. Wherever
particular provisions or defined terms of the Indenture (or of the form of note
that is a part thereof) are referred to, the provisions or defined terms are
incorporated herein by reference. Unless the context suggests otherwise,
references in this "Description of Notes" to "we" or "us" refer to CheckFree
Holdings Corporation and not to our subsidiaries.
GENERAL
The notes are our unsecured, subordinated obligations to $172,500,000
aggregate principal amount and will mature on December 1, 2006. The principal
amount of each note is $1,000 and will be payable at the office of the Paying
Agent, which initially will be the Trustee, or an office or agency maintained by
us for that purpose in the Borough of Manhattan, New York, New York.
The notes bear interest at the rate of 6 1/2% per annum on the
principal amount from the Issue Date, or from the most recent date to which
interest has been paid or provided for until the notes are paid in full or funds
are made available for payment in full of the notes in accordance with the
Indenture. Interest is payable at maturity (or earlier purchase, redemption or,
in certain circumstances, conversion) and semiannually on June 1 and December 1
of each year (each an "Interest Payment Date"), commencing on June 1, 2000, to
holders of record at the close of business on May 15 or November 15 (whether or
not a business day) immediately preceding each Interest Payment Date (each a
"Regular Record Date"). Each payment of interest on the notes will include
interest accrued through the day before the applicable Interest Payment Date or
the date of maturity (or earlier purchase, redemption or, in certain
circumstances, conversion), as the case may be. Any payment of principal and
cash interest required to be made on any day that is not a business day will be
made on the next succeeding business day. We currently expect to fund interest
payments through our working capital. We cannot assure you that our working
capital will be adequate to fund the interest payments or that alternative
sources of financing will be available to fund the interest payments.
In the event of the maturity, conversion, purchase by us at the option
of a holder or redemption of a note, interest will cease to accrue on the note,
under the terms and subject to the conditions of the Indenture. We may not
reissue a note that has matured or been converted, redeemed or otherwise
cancelled (except for registration of transfer, exchange or replacement
thereof).
You may present the notes for conversion at the office of the
Conversion Agent and for exchange or registration of transfer at the office of
the Registrar. Each agent shall initially be the Trustee.
FORM, DENOMINATION AND REGISTRATION
We initially issued the notes in the form of global notes. The global
notes are deposited with, or on behalf of, the clearing agency registered under
the Securities Exchange Act of 1934 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 ("DTC") is the initial depositary.
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<PAGE> 21
BOOK ENTRY SYSTEM
Upon the issuance of a global note, the depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the debt securities represented by the global note to the accounts of
institutions or persons, commonly known as participants, that have accounts with
the depositary or its nominee. The accounts to be credited will be designated by
the initial purchasers, dealers or agents. Ownership of beneficial interests in
a global note will be limited to participants or persons that may hold interests
through participants. Ownership of interests in the global note will be shown
on, and the transfer of those ownership interests will be effected only through,
records maintained by the depositary (with respect to participants' interests)
and the participants (with respect to the owners of beneficial interests in the
global note). The laws of some jurisdictions may require that certain purchasers
of securities take physical delivery of the securities in definitive form. These
limits and laws may impair the ability to transfer beneficial interests in a
global note.
So long as the depositary, or its nominee, is the registered holder and
owner of the global note, the depositary or such nominee, as the case may be,
will be considered the sole owner and holder for all purposes of the debt
securities and for all purposes under the Indenture. Except as set forth below,
owners of beneficial interests in a global note will not be entitled to have the
notes registered in their names, will not receive or be entitled to receive
physical delivery of the notes in definitive form and will not be considered to
be the owners or holders of any notes or the global note. Accordingly, each
person owning a beneficial interest in a global note must rely on the procedures
of the depositary and, if the person is not a participant, on the procedures of
the participant through which the person owns its interest, to exercise any
rights of a holder of the notes. We understand that under existing industry
practice, in the event we request any action of holders of the notes or if an
owner of a beneficial interest in a global note desires to take any action that
the depositary, as the holder of the global note, is entitled to take, the
depositary would authorize the participants to take that action, and that the
participants would authorize beneficial owners owning through the participants
to take the actions or would otherwise act upon the instructions of beneficial
owners owning through them.
Payments of principal of and premium, if any, and interest, if any, on
the notes represented by a global note will be made to the depositary or its
nominee, as the case may be, as the registered owner and holder of the global
note, against surrender of the notes at the principal corporate trust office of
the Trustee. Interest payments will be made at the principal corporate trust
office of the Trustee or by a check mailed to the holder at its registered
address.
We expect that the depositary, upon receipt of any payment of
principal, premium, if any, of interest, if any, in respect of a global note,
will credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global note as shown on the records of the depositary. We 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, as is now the case with securities held for accounts of customers in
bearer-form or registered in "street name," and will be the responsibility of
the participant. Neither we nor the Trustee nor any of our agents or the Trustee
will have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in a global
note or for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests or for any other aspect of the relationship
between the depositary and its participants or the relationship between the
participants and the owners of beneficial interests in the global note owning
through the participants.
Unless and until it is exchanged in whole or in part for the notes in
definitive form, a global note 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
the depositary or another nominee of the depositary.
Notes represented by a global note will be exchangeable for the notes
in definitive form of like tenor as the global note in denominations of $1,000
and in any greater amount that is an integral multiple thereof if:
- The depositary notifies us and the Trustee that it is unwilling or
unable to continue as depositary for the global note or if at any
time the depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 and a successor depositary is not
appointed by us within 90 days;
- We, in our sole discretion, determine not to have all of the notes
represented by a global note and notify the Trustee thereof; or
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- There shall have occurred and be continuing an event of default or an
event which, with the giving of notice or lapse of time, or both,
would constitute an event of default with respect to the notes.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for the notes registered in the names as the depositary shall
instruct the Trustee. It is expected that such instructions may be based upon
directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global note. Subject to the foregoing,
a global note is not exchangeable except for a global note or global notes of
the same aggregate denominations to be registered in the name of the depositary
or its nominee.
SUBSIDIARY GUARANTEE
All subsidiaries have jointly and severally guaranteed, on a
subordinated basis, our obligations under the notes. The subsidiary guarantee is
subordinated to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness (as that term is defined below) of that subsidiary. The
subordination provisions applicable to the subsidiary guarantee will be
substantially similar to the subordination provisions applicable to the notes as
set forth below under "--Subordination of the Notes." The obligations of each
subsidiary under the subsidiary guarantee are limited as necessary to seek to
prevent that subsidiary guarantee from constituting a fraudulent conveyance
under applicable law. See "Risk Factors--The subsidiary guarantee may be
unenforceable due to fraudulent conveyance statutes."
A subsidiary guarantor may not sell or otherwise dispose of all or
substantially all of its assets, or consolidate with or merge with or into
(whether or not the subsidiary is the surviving person), another person unless:
- Immediately after giving effect to that transaction, no default or
event of default exists under the Indenture; and
- The person acquiring the property in any such sale or disposition or
the person formed by or surviving any such consolidation or merger
assumes all the obligations of that subsidiary guarantor pursuant to
a supplemental indenture satisfactory to the Trustee.
A subsidiary will be released from the subsidiary guarantee:
- In connection with any sale or other disposition of all or
substantially all of the assets of that subsidiary (including by way
of merger or consolidation), if the disposition is to us or another
subsidiary guarantor; or
- In connection with any sale of all of the capital stock of a
subsidiary guarantor, if the person acquiring the capital stock
assumes all the obligations of that subsidiary guarantor pursuant to
a supplemental indenture satisfactory to the Trustee.
Since we have no assets separate from our investment in our subsidiaries, except
for an insignificant amount of cash, and no operations, we have not included
audited financial information of our subsidiary guarantors in this filing.
SUBORDINATION OF THE NOTES
The notes and the subsidiary guarantee are unsecured obligations of our
Company and are subordinated in right of payment, as set forth in the Indenture,
to the prior payment in full in cash or other payment satisfactory to holders of
Senior Indebtedness of all our existing and future Senior Indebtedness and that
of our subsidiaries.
At September 30, 1999, we had no Senior Indebtedness outstanding and
our subsidiaries had $7.2 million of Senior Indebtedness outstanding. The
Indenture does not restrict the incurrence by us or our subsidiaries of Senior
Indebtedness or other obligations.
The term "Senior Indebtedness" means:
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(1) The principal, premium, if any, interest and all other
amounts owed in respect of all our (A) indebtedness
for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds or other similar
instruments;
(2) All our capital lease obligations;
(3) All our obligations issued or assumed as the deferred
purchase price of property, all our conditional sale
obligations and all our obligations under any title
retention agreement (but excluding trade accounts
payable arising in the ordinary course of business);
(4) All our obligations for the reimbursement of any
letter of credit, banker's acceptance, security
purchase facility or similar credit transaction;
(5) All obligations of the type referred to in clauses (1)
through (4) above of other persons for the payment of
which we are responsible or liable as obligor,
guarantor or otherwise; and
(6) All obligations of the type referred to in clauses (1)
through (5) above of other persons secured by any lien
on any property or asset of ours (whether or not such
obligation is assumed by us), except for (x) any such
indebtedness that is by its terms subordinated to or
pari passu with the notes and (y) any indebtedness
between or among us or our affiliates, including all
other debt securities and guarantees in respect of
those debt securities issued to any trust, or trustee
of such trust, partnership or other entity affiliated
with us that is, directly or indirectly, a financing
vehicle of ours (a "Financing Entity") in connection
with the issuance by such Financing Entity of
preferred securities or other securities that rank
pari passu with, or junior to, the notes or the
subsidiary guarantee.
The Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of that Senior Indebtedness.
By reason of such subordination, in the event of dissolution,
insolvency, bankruptcy or other similar proceedings, upon any distribution of
our assets:
- The holders of the notes are required to pay over their share of such
distribution to the trustee in bankruptcy, receiver or other person
distributing our assets for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
holders of Senior Indebtedness in full in cash or other payment
satisfactory to the holders of Senior Indebtedness; and
- Unsecured creditors of ours who are not holders of the notes or
holders of Senior Indebtedness of ours may recover less, ratably,
than holders of Senior Indebtedness of ours and may recover more,
ratably, than the holders of the notes.
In addition, no payment of the principal amount, Redemption Price, Change in
Control Purchase Price or interest with respect to any of the notes may be made
by us, nor may we acquire any of the notes for cash or property, except as set
forth in the Indenture, if:
- Any payment default on any Senior Indebtedness has occurred and is
continuing beyond any applicable grace period; or
- Any default (other than a payment default) with respect to Senior
Indebtedness occurs and is continuing that permits the acceleration
of the maturity thereof and the default is either the subject of
judicial proceedings or we receive a written notice of the default (a
"Senior Indebtedness Default Notice").
Notwithstanding the foregoing, payments with respect to the notes may resume and
we may acquire the notes for cash when:
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- The default with respect to the Senior Indebtedness is cured or
waived or ceases to exist; or
- We receive a Senior Indebtedness Default Notice and 179 or more days
pass after notice of the default is received by us, provided that the
terms of the Indenture otherwise permit the payment or acquisition of
the notes at that time.
If we receive a Senior Indebtedness Default Notice, then a similar
notice received within nine months thereafter relating to the same default on
the same issue of Senior Indebtedness shall not be effective to prevent the
payment or acquisition of the notes as provided above. In addition, no payment
may be made on the notes if any notes are declared due and payable prior to
their Stated Maturity by reason of the occurrence of an Event of Default until
the earlier of:
- 120 days after the date of such acceleration; or
- The payment in full of all Senior Indebtedness, but only if the
payment is then otherwise permitted under the terms of the Indenture.
Upon any payment or distribution of our assets or those of our
subsidiaries to creditors upon any dissolution, winding up, liquidation or
reorganization of us, whether voluntary or involuntary, or in bankruptcy,
insolvency, receivership or other similar proceedings, the holders of all Senior
Indebtedness shall first be entitled to receive payment in full, in cash or
other payment satisfactory to the holders of Senior Indebtedness, of all amounts
due or to become due thereon, or payment of the amounts shall have been provided
for, before the holders of the notes shall be entitled to receive any payment or
distribution with respect to any of the notes or the subsidiary guarantee.
CONVERSION RIGHTS
A holder of a note is entitled to convert the note into shares of our
common stock at any time before the close of business on November 30, 2006;
provided, however, that if a note is called for redemption, the holder is
entitled to convert it at any time before the close of business on the
Redemption Date. A note in respect of which a holder has delivered a Change in
Control Purchase Notice (as defined below) exercising the holder's option to
require us to purchase the holder's note may be converted only if such notice is
withdrawn by a written notice of withdrawal delivered by the holder to the
Paying Agent prior to the close of business on the Change in Control Purchase
Date, in accordance with the terms of the Indenture.
The initial Conversion Rate for the notes is 13.6612 shares of our
common stock per $1,000 principal amount (equivalent to a conversion price of
$73.20 per share of our common stock) subject to adjustment upon the occurrence
of certain events described below. A holder otherwise entitled to a fractional
share of our common stock will receive cash in an amount equal to the market
value of the fractional share based on the closing sale price on the trading day
immediately preceding the Conversion Date. A holder may convert a portion of its
notes so long as the portion is $1,000 principal amount or an integral multiple
thereof.
To convert a note, a holder must:
(1) Complete and manually sign the conversion notice on the
back of the note (or complete and manually sign a facsimile
thereof) and deliver the notice to the Conversion Agent
(initially the Trustee) at the office maintained by the
Conversion Agent for that purpose;
(2) Surrender the note to the Conversion Agent;
(3) If required, furnish appropriate endorsements and transfer
documents; and
(4) If required, pay all transfer or similar taxes.
Pursuant to the Indenture, the date on which all of the foregoing requirements
have been satisfied is the Conversion Date.
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Upon conversion of a note, a holder will not receive (except as
provided below) any cash payment representing accrued interest thereon. Our
delivery to the holder of the fixed number of shares of our common stock into
which the note is convertible (together with the cash payment, if any, in lieu
of any fractional shares) will satisfy our obligation to pay the principal
amount of the note, and the accrued and unpaid interest to the Conversion Date.
Thus, the accrued interest will be deemed to be paid in full rather than
cancelled, extinguished or forfeited. Notwithstanding the foregoing, accrued but
unpaid cash interest will be payable upon any conversion of the notes at the
option of the holder made concurrently with or after acceleration of the notes
following an Event of Default described under "--Events of Default; Notice and
Waiver" below. The notes surrendered for conversion during the period from the
close of business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business on the Interest Payment Date (except the notes
to be redeemed on a date within that period) must be accompanied by payment of
an amount equal to the interest thereon that the registered holder is to
receive. Except where the notes surrendered for conversion must be accompanied
by payment as described above, no interest on the converted notes will be
payable by us on any Interest Payment Date subsequent to the date of conversion.
The Conversion Rate will not be adjusted at any time during the term of the
notes for accrued interest.
A certificate for the number of full shares of our common stock into
which any note is converted (and cash in lieu of any fractional shares) will be
delivered as soon as practicable, but in any event no later than the seventh
Business Day following the Conversion Date. For a summary of the U.S. Federal
income tax treatment of a holder receiving our common stock upon conversion, see
"Certain Federal Income Tax Considerations--Conversion of the Notes."
The Conversion Rate is subject to adjustment in certain events,
including:
- The issuance of shares of our common stock as a dividend or a
distribution with respect to our common stock;
- Subdivisions, combinations and reclassification of our common stock;
- The issuance to all holders of our common stock of rights or warrants
entitling them (for a period not exceeding 45 days) to subscribe for
shares of our common stock at less than the then Market Price (as
defined below) of our common stock;
- The distribution to holders of our common stock of evidences of our
indebtedness, securities or capital stock, cash or assets (including
securities, but excluding those rights, warrants, dividends and
distributions referred to above and dividends and distributions paid
exclusively in cash);
- The payment of dividends (and other distributions) on our common
stock paid exclusively in cash, excluding cash dividends if the
aggregate amount thereof, when taken together with (1) other all-cash
distributions made within the preceding 12 months not triggering a
Conversion Rate adjustment and (2) any cash and the fair market
value, 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 us or one of our subsidiaries for our common stock
concluded within the preceding 12 months not triggering a Conversion
Rate adjustment, does not exceed 10% of our aggregate market
capitalization (the aggregate market capitalization being the product
of the current market price of our common stock as of the trading day
immediately preceding the date of declaration of the dividend
multiplied by the number of shares of our common stock then
outstanding) on the date of the distribution; and
- Payment to holders of our common stock in respect of a tender or
exchange offer (other than an odd-lot offer) by us or one of our
subsidiaries for our common stock as of the trading day next
succeeding the last date tenders or exchanges may be made pursuant to
the tender or exchange offer which involves an aggregate
consideration that, together with (1) any cash and the fair market
value of 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 (2) the aggregate amount
of any all-cash distributions to all holders of our common stock made
within the preceding 12 months, exceeds 10% of our aggregate market
capitalization.
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No adjustment, however, need be made if holders may participate in the
transactions otherwise giving rise to an adjustment on a basis and with notice
that our board of directors determines to be fair and appropriate, or in certain
other cases specified in the Indenture. In cases where the fair market value of
the portion of assets, debt securities or rights, warrants or options to
purchase our securities applicable to one share of our common stock distributed
to stockholders exceeds the Average Sale Price, as defined, in the Indenture per
share of our common stock, or the Average Sale Price exceeds the fair market
value of the portion of assets, debt securities or rights, warrants or options
so distributed by less than $1.00, rather than being entitled to an adjustment
in the Conversion Rate, the holder of a note upon conversion thereof will be
entitled to receive, in addition to the shares of our common stock into which
the note is convertible, the kind and amounts of assets, debt securities or
rights, options or warrants comprising the distribution that the holder would
have received if the holder had converted the note immediately prior to the
record date for determining the stockholders entitled to receive the
distribution. The Indenture permits us to increase the Conversion Rate from time
to time.
In the event that we become a party to any transaction (including, and
with certain exceptions,
- Any recapitalization or reclassification of our common stock;
- Any consolidation of us with, or merger of us into, any other Person,
or any merger of another Person into us;
- Any sale, transfer or lease of all or substantially all of our
assets; or
- Any compulsory share exchange),
pursuant to which our common stock is converted into the right to receive other
securities, cash or other property (each of the foregoing being referred to as a
"Transaction"), then the holders of the notes then outstanding will have the
right to convert the notes into the kind and amount of securities, cash or other
property receivable upon the consummation of the Transaction by a holder of the
number of shares of our common stock issuable upon conversion of the notes
immediately prior to the Transaction.
In the case of a Transaction, each note will become convertible into
the securities, cash or property receivable by a holder of the number of shares
of our common stock into which the note was convertible immediately prior to the
Transaction. This change could substantially lessen or eliminate the value of
the conversion privilege associated with the notes in the future. For example,
if we were acquired in a cash merger, each note would become convertible solely
into cash and would no longer be convertible into securities whose value would
vary depending on our future prospects and other factors.
In the event of a taxable distribution to holders of our common stock
which results in an adjustment of the Conversion Rate (or in which holders
otherwise participate) or in the event the Conversion Rate is increased at our
discretion, the holders of the notes may, in certain circumstances, be deemed to
have received a distribution subject to United States Federal income tax as a
dividend. Moreover, in certain other circumstances, the absence of an adjustment
to the Conversion Rate may result in a taxable dividend to holders of our common
stock. See "Certain Federal Income Tax Considerations--Constructive Dividends."
REDEMPTION OF THE NOTES AT OUR OPTION
No sinking fund is provided for the notes. Prior to December 1, 2002,
we will not be entitled at our option to redeem the notes. On and after that
date, we will be entitled to redeem the notes for cash as a whole at any time,
or from time to time in part, upon not less than 30 days' nor more than 60 days'
notice of redemption given by mail to holders of the notes (unless a shorter
notice shall be satisfactory to the Trustee) at the Redemption Prices set forth
below plus accrued cash interest to the Redemption Date. Any redemption must be
in integral multiples of $1,000 principal amount.
The table below shows Redemption Prices of a note per $1,000 principal
amount if redeemed during the twelve-month periods set forth below.
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PERIOD REDEMPTION PRICE
------ ----------------
December 1, 2002 through November 30, 2003........... 103.71%
December 1, 2003 through November 30, 2004........... 102.79%
December 1, 2004 through November 30, 2005........... 101.86%
Thereafter........................................... 100.93%
If fewer than all of the notes are to be redeemed, the Trustee will
select the notes to be redeemed in principal amounts at maturity of $1,000 or
integral multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a holder's notes is selected for
partial redemption and that holder converts a portion of those notes prior to
the redemption, the converted portion shall be deemed, solely for purposes of
determining the aggregate principal amount of the notes to be redeemed by us, to
be of the portion selected for redemption.
CHANGE IN CONTROL PERMITS PURCHASE OF THE NOTES AT THE OPTION OF THE HOLDER
In the event of any Change in Control (as defined below) of our
Company, each holder of the notes will have the right, at the holder's option,
subject to the terms and conditions of the Indenture, to require us to purchase
all or any part (provided that the principal amount must be $1,000 or an
integral multiple thereof) of the holder's notes on the date that is 30 business
days after the occurrence of the Change in Control (the "Change in Control
Purchase Date") at a cash price equal to 100% of the principal amount of the
holder's notes plus accrued cash interest to the Change in Control Purchase Date
(the "Change in Control Purchase Price").
Within 15 business days after the Change in Control, we will mail to
the Trustee and to each holder (and to beneficial owners as required by
applicable law) a notice regarding the Change in Control, which notice shall
state, among other things:
- The date of the Change in Control and, briefly, the events causing
the Change in Control;
- The date of which the Change in Control Purchase Notice (as defined
below) must be given;
- The Change in Control Purchase Date;
- The Change in Control Purchase Price;
- The name and address of the Paying Agent and the Conversion Agent;
- The Conversion Rate and any adjustments thereto;
- The procedures that holders must follow to exercise these rights;
- The procedures for withdrawing a Change in Control Purchase Notice;
- That holders who want to convert notes must satisfy the requirements
set forth in the notes; and
- Briefly, the conversion rights of the holders of the notes.
We will cause a copy of this notice to be published in The Wall Street Journal
or another daily newspaper of national circulation.
To exercise the purchase right, the holder must deliver written notice
of the exercise of the right (a "Change in Control Purchase Notice") to the
Paying Agent or an office or agency maintained by us for that purpose in the
Borough of Manhattan, New York, New York, prior to the close of business, on the
Change in Control Purchase Date. Any Change in Control Purchase Notice must
state:
- The certificate numbers of the notes to be delivered by the holder
thereof for purchase by us;
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- The portion of the principal amount of the notes to be purchased,
which portion must be $1,000 or an integral multiple thereof; and
- That the notes are to be purchased by us pursuant to the applicable
provisions of the notes.
Any Change in Control Purchase Notice may be withdrawn by the holder by
a written notice of withdrawal delivered to the Paying Agent prior to the close
of business on the Change in Control Purchase Date. The notice of withdrawal
shall state the principal amount and the certificate numbers of the notes as to
which the withdrawal notice relates and the principal amount, if any, which
remains subject to a Change in Control Purchase Notice.
Payment of the Change in Control Purchase Price for a note for which a
Change in Control Purchase Notice has been delivered and not withdrawn is
conditioned upon delivery of the note (together with necessary endorsements) to
the Paying Agent or an office or agency maintained by us for that purpose in the
Borough of Manhattan, New York, New York, at anytime (whether prior to, on or
after the Change in Control Purchase Date) after the delivery of such Change in
Control Purchase Notice. Payment of the Change in Control Purchase Price for the
note will be made promptly following the later of the business day following the
Change in Control Purchase Date and the time of delivery of the note. If the
Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Change in Control Purchase Price of the note on the
Business Day following the Change in Control Purchase Date, then, immediately
after the Change in Control Purchase Date, the note will cease to be outstanding
and interest on the note will cease to accrue and will be deemed paid, whether
or not the note is delivered to the Paying Agent, and all other rights of the
holder shall terminate (other than the right to receive the Change in Control
Purchase Price upon delivery of the note).
Under the Indenture, a "Change in Control" is deemed to have occurred
upon the occurrence of any of the following events:
- Any "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934), other than Permitted
Holder, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, except
that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 40% of our total outstanding
voting stock;
- We consolidate with, or merge with or into another Person or convey,
transfer, lease or otherwise dispose of all or substantially all of
our assets to any Person, or any person consolidates with or merges
with or into us, in any event pursuant to a transaction in which our
outstanding voting stock is converted into or exchanged for cash,
securities or other property, other than any such transaction where:
- Our voting stock is not converted or exchanged at all (except to
the extent necessary to reflect a change in our jurisdiction of
incorporation) or is converted into or exchanged for (i) voting
stock (other than Redeemable Capital Stock) of the surviving or
transferee corporation or (ii) voting stock (other than Redeemable
Capital Stock) of the surviving or transferee corporation; and
- Immediately after such transaction, no "person" or "group" (as
these terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person shall be deemed to have "beneficial ownership"
of all securities that the person has the right to acquire, whether
that right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of our total
outstanding voting stock of the surviving or transferee
corporation;
- During any consecutive two-year period, individuals who at the
beginning of that period constituted our board of directors (together
with any new directors whose election to our board of directors, or
whose nomination for election by our stockholders, was approved by a
vote of 66 2/3% of the
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directors then still in office who were either directors at the
beginning of the period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of our board of directors then in office; or
- We are liquidated or dissolved or a special resolution is passed by
our stockholders approving the plan of liquidation or dissolution
other than in a transaction which complies with the provisions
described under "--Consolidation, Merger and Sale or Lease of
Assets."
"Redeemable Capital Stock" means any class or series of capital stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the final
stated maturity of the notes or is redeemable at the option of the holder
thereof at any time prior to the final stated maturity, or is convertible into
or exchangeable for debt securities at anytime prior to the final stated
maturity; provided, however, that Redeemable Capital stock shall not include any
of our common stock the holder of which has a right to put to us upon certain
terminations of employment.
The Indenture does not permit our board of directors to waive our
obligation to purchase the notes at the option of a holder in the event of a
Change in Control.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Securities Exchange Act of 1934 which may
then be applicable, and will file Schedule 13E-4 or any other schedule required
thereunder in connection with any offer by us to purchase the notes at the
option of the holders thereof upon a Change in Control. In certain
circumstances, the Change in Control purchase feature of the notes may make more
difficult or discourage a takeover of us and, thus, the removal of incumbent
management. The Change in Control purchase feature, however, is not the result
of our knowledge of any specific effort to accumulate shares of our common stock
or to obtain control of us by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, the Change in Control purchase feature is the result from
negotiations between us and the initial purchasers.
If a Change in Control were to occur, there can be no assurance that we
would have funds sufficient to pay the Change in Control Purchase Price for all
of the notes that might be delivered by holders seeking to exercise the purchase
right, because we or our subsidiaries might also be required to prepay certain
indebtedness or obligations having financial covenants with change of control
provisions in favor of the holders thereof. In addition, our other indebtedness
may have cross-default provisions that could be triggered by a default under the
Change in Control provisions thereby possibly accelerating the maturity of such
indebtedness. In that case, the holders of the notes, would be subordinated to
the prior claims of the holders of such indebtedness. In addition, our ability
to purchase the notes with cash may be limited by the terms of our then-existing
borrowing agreements. None of the notes may be purchased pursuant to the
provisions described above if there has occurred and is continuing an Event of
Default described under "--Events of Default; Notice and Waiver" below (other
than a default in the payment of the Change in Control Purchase Price with
respect to the notes).
CONSOLIDATION, MERGER, AND SALE OR LEASE OF ASSETS
We, without the consent of any holders of the outstanding notes, are
entitled to consolidate with or merge into or transfer or lease our assets
substantially as an entirety to, any individual, corporation, partnership,
limited liability company, joint venture, association joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof (each a "Person"), and any Person is entitled to consolidate
with or merge into, or transfer or lease its assets substantially as an entirety
to us, provided that:
- The Person (if other than us) formed by such consolidation or into
which we are merged or the Person which acquires or leases our assets
substantially as an entirety is a corporation, partnership, limited
liability company or trust organized and existing under the laws of
any United States jurisdiction and expressly assumes our obligations
on the notes and under the Indenture;
- Immediately after giving effect to such transaction no Event of
Default (as defined below), and no event which, after notice or lapse
of time or both, would become an Event of Default, happened and is
continuing; and
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- Certain other conditions described in the Indenture are met.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein
occurs and is continuing, either the Trustee or the holders of not less than 25%
in aggregate principal amount of the notes then outstanding may declare the
principal amount of and accrued interest to the date of such declaration of all
the notes to be immediately due and payable. In the case of certain events of
bankruptcy or insolvency, the principal amount of and accrued interest on all
the notes to the date of the occurrence of the event shall automatically become
and be immediately due and payable. Upon any acceleration, the subordination
provisions of the Indenture preclude any payment being made to holders of the
notes until the earlier of:
- 120 days or more after the date of the acceleration; and
- The payment in full of all Senior Indebtedness, but only if the
payment is then otherwise permitted under the terms of the Indenture.
See "--Subordination of the Notes" above.
Under certain circumstances, the holders of a majority in aggregate principal
amount of the outstanding notes may rescind any acceleration with respect to the
notes and its consequences. Interest shall accrue and be payable on demand upon
a default in the payment of principal interest when due, Redemption Price,
Change in Control Purchase Price or shares of our common stock (or cash in lieu
of fractional shares) to be delivered on conversion of the notes, in each case
to the extent that the payment of the interest shall be legally enforceable.
Under the Indenture, Events of Default include:
- Default in payment of the principal amount, interest when due (if
such default in payment of interest shall continue for 31 days),
Redemption Price, or Change in Control Purchase Price with respect to
any note, when the same becomes due and payable (whether or not any
payment is prohibited by the provisions of the Indenture);
- Failure by us to deliver shares of our common stock (together with
cash in lieu of fractional shares) when our common stock (or cash in
lieu of fractional shares) is required to be delivered following the
conversion of a note and continuation of the default for 10 days;
- Failure by us to comply with any of our other agreements in the notes
or the Indenture upon our receipt of notice of our default from the
Trustee or from holders of not less than 25% in aggregate principal
amount of the notes then outstanding and our failure to cure the
default within 90 days after our receipt of the notice;
- Default under any bond, note or other evidence of indebtedness for
money borrowed by us having an aggregate outstanding principal amount
of in excess $10 million, which default shall have resulted in the
indebtedness being accelerated, without the indebtedness being
discharged or the acceleration having been rescinded or annulled
within 20 days after receipt of notice thereof by us from the Trustee
or us and the Trustee from the holders of not less than 25% in
aggregate principal amount of the notes then outstanding (unless such
default has been cured or waived); or
- Certain events of bankruptcy or insolvency.
The Trustee will, within 90 days after the occurrence of any default,
mail to all holders of the notes notice of all defaults of which the Trustee is
aware, unless the defaults have been cured or waived before the giving of the
notice; provided that the Trustee may withhold the notice as to any default
other than the payment default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in aggregate principal amount of the
outstanding notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power
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conferred on the Trustee, provided that such direction shall not be in conflict
with any law or the Indenture and subject to certain other limitations. The
Trustee may refuse to perform any duty or exercise any right of power or extend
or risk its own funds or otherwise incur any financial liability unless it
receives indemnity satisfactory to it against any loss, liability or expense. No
holder of any note will have any right to pursue any remedy with respect to the
Indenture or the notes, unless:
- The holder shall have previously given the Trustee written notice of
a continuing Event of Default;
- The holders of at least 25% in aggregate principal amount of the
outstanding notes shall have made written request to the Trustee to
pursue the remedy;
- The holder or holders shall have offered to the Trustee reasonable
security or indemnity against any loss, liability or expense
satisfactory to it;
- The Trustee shall have failed to comply with the request within 60
days after receipt of the notice, request and offer of security or
indemnity; and
- The holders of a majority in aggregate principal amount of the
outstanding notes shall not have given the Trustee a direction
inconsistent with the request within 60 days after receipt of the
request.
The right of any holder (a) to receive payment of principal, the
Redemption Price, Change in Control Purchase Price or interest in respect of the
notes held by the holder on or after the respective due dates expressed in the
notes, (b) to convert the notes, or (c) to bring suit for the enforcement of any
payment on or after the respective dates or the right to convert, shall not be
impaired or adversely affected without the holder's consent.
The holders of a majority in aggregate principal amount of the notes at
the time outstanding may waive any existing default and its consequences except:
- Any default in any payment on the notes;
- Any default with respect to the conversion of the notes; or
- Any default in respect of certain covenants or provisions in the
Indenture which may not be modified without the consent of the holder
of each Note as described in "--Modification" below.
When a default is waived, it is deemed cured and will cease to exist, but no
waiver shall extend to any subsequent or other default or impair any consequent
right.
We will be required to furnish to the Trustee annually a statement as
to any default by us in the performance and observance of our obligations under
the Indenture. In addition, we will be required to file with the Trustee written
notice of the occurrence of any default or Event of Default within five business
days of our becoming aware of the default or Event of Default.
MODIFICATION
The Indenture or the notes may be modified or amended by us and the
Trustee with the consent of the holders of not less than a majority in aggregate
principal amount of the notes then outstanding. Without the consent of each
holder affected thereby, however, no amendment may, among other things:
- Reduce the principal amount, Change in Control Purchase Price or
Redemption Price with respect to any note, or extend the stated
maturity of any note or alter the manner of payment or rate of
interest or any note or make any note payable in money or securities
other than that stated in the note;
- Make any reduction in the principal amount of notes whose holders
must consent to an amendment or any waiver under the Indenture or
modify the Indenture provisions relating to the amendments or
waivers;
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- Make any change that adversely affects the right of a holder to
convert any note;
- Modify the provisions of the Indenture relating to the ranking of the
notes in a manner adverse to the holders of the notes; or
- Impair the right to institute suit for enforcement of any payment
with respect to, or conversion of, the notes.
Without the consent of any holder of notes, we and the Trustee may
amend the Indenture to:
- Cure any ambiguity, defect or inconsistency; provided, however, that
the amendment does not materially adversely affect the rights of any
holder of the notes;
- Provide for the assumption by a successor to us of our obligations
under the Indenture;
- Provide for uncertificated notes in addition to certificated notes,
as long as such uncertificated notes are in registered form for
United States Federal income tax purposes;
- Make any change that does not adversely affect the rights of any
holder of the notes;
- Make any change to comply with any requirement of the Commission in
connection with the qualification of the Indenture under the Trust
Indenture Act of 1939; or
- Add to our covenants or obligations under the Indenture for the
protection of the holders of the notes or surrender any right, power
or option conferred by the Indenture on us.
DISCHARGE OF THE INDENTURE
We may satisfy and discharge our obligations under the Indenture by
delivering to the Trustee for cancellation all of the outstanding notes or by
depositing with the Trustee, the Paying Agent or the Conversion Agent, if
applicable, after the notes have become due and payable, whether at stated
maturity, or any Redemption Date, or any Purchase Date, or a Change in Control
Purchase Date, or upon conversion or otherwise, cash sufficient to pay all of
the outstanding notes and paying all other sums payable under the Indenture by
us.
NO RECOURSE AGAINST OTHERS
The Indenture provides that our directors, officers, employees,
representatives, advisors or stockholders, as such, shall not have any liability
for any of our obligations under the notes or the Indenture or for any claim
based on, in respect of or by reason of the obligations or their creation.
REGISTRATION RIGHTS
We and our subsidiaries have entered into a registration rights
agreement with the initial purchasers for the benefit of the holders of the
notes and our common stock issuable upon their conversion. The registration
rights agreement obligates us, at our sole expense, as follows:
- To file a shelf registration statement as soon as practicable, but in
no event more than 60 days after the closing of the issue of the
notes, covering resales of our registrable securities. We use the
term "registrable securities" to refer to all outstanding notes, and
our common stock issuable upon conversion of the notes, that have not
been registered and sold pursuant to the shelf registration
statement, that have not been distributed to the public pursuant to
Rule 144 under the Securities Act of 1933 or that are not saleable
pursuant to Rule 144(k) under the Securities Act of 1933 or successor
provisions;
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- To use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act of 1933
within 120 days after the closing; and
- To use our reasonable best efforts to keep the shelf registration
statement effective and usable until the time that all the notes, and
our common stock issuable upon conversion of the notes, shall no
longer qualify as registrable securities. We will be permitted to
suspend the use of the shelf registration statement for limited
periods of time under some circumstances if we provide the holders of
the registrable securities with written notice of the suspension.
We will, when the shelf registration is filed:
- Provide each holder of registrable securities with copies of the
prospectus that is part of the shelf registration statement;
- Notify each holder when the shelf registration statement for the
registrable securities has become effective; and
- Take other actions as are required to permit unrestricted resales of
the registrable securities.
A holder that sells registrable securities pursuant to a shelf
registration statement (a) will usually be required to be named as a selling
security holder in the related prospectus and to deliver the prospectus to the
purchasers, (b) will be subject to certain of the civil liability provisions of
the Securities Act of 1933 in connection with those sales, and (c) will be bound
by the provisions of the registration rights agreement that are applicable to a
holder, including indemnification rights and obligations. Holders who wish to
sell registrable securities will be required to make representations and to
provide some information to us, as described in the registration rights
agreement.
If a registration default occurs, then additional cash interest will
accrue and become payable on the notes at a rate equal to 0.50% per annum, which
rate will be increased by an additional 0.25% per annum for each 90-day period
that the registration default has not been cured. The aggregate additional cash
interest shall in no event exceed one percent per annum. All additional interest
payments shall be paid to the holders of the registrable securities in the same
manner as regular interest payments on the notes on semi-annual payment dates
which correspond to interest payment dates on the notes. Following the cure of a
registration default, additional interest will no longer accrue in connection
with that registration default. We use the term "registration default" to mean
if:
- We fail to timely file the shelf registration statement with the
Commission within 60 days of closing;
- The Commission has not declared the shelf registration statement
effective within 120 days of closing; or
- During the specified period, we fail to keep the shelf registration
statement that has been declared effective continuously effective and
usable, for more than 30 days during any three-month period or 60
days during any twelve-month period.
Each registrable security will contain a legend to the effect that the
holder will be deemed to have agreed to be bound by the provisions of the
registration rights agreement.
This summary of the certain provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a form of which is available upon request to us.
INFORMATION CONCERNING THE TRUSTEE
Fifth Third Bank is the Trustee, Registrar, Paying Agent and Conversion
Agent under the Indenture.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The description below summarizes the more important terms of our bank
borrowing arrangement with KeyBank, NA. Those arrangements primarily consist of
a loan agreement by our principal operating subsidiary, CheckFree Corporation.
We referred to loan agreement as the "credit facility."
The credit facility and its associated documents contain the full legal
text of the matters described in this section. The credit facility and its
associated documents are governed by Ohio law. The following statements are
subject to the detailed provisions of the loan agreement and are qualified in
their entirety by reference to the loan agreement, copies of the forms of which
are on file and available at our principal executive offices. Wherever
particular provisions of the loan agreements are referred to, those provisions
are incorporated by reference as part of the statement made and the statements
are qualified in their entirety by that reference.
In order to provide additional working capital and funds for general
corporate purposes, CheckFree Corporation has entered into a revolving loan
credit facility for an amount up to $30 million that matures on December 30,
2002. Currently we have no indebtedness under the credit facility. The credit
facility provides for interest rates determined, at our option, at either LIBOR
rate or the prime rate.
CheckFree Corporation may borrow for working capital and general
corporate purposes. We are required to maintain the following financial ratio:
debt to capitalization ratio of less than or equal to 50% for each fiscal
quarter ended March 31, 2000 and thereafter.
The credit facility contains certain financial and operating covenants
and other restrictions with which we must comply, whether or not any borrowings
are outstanding. These include restrictions on:
- Acquisitions;
- Additional indebtedness;
- EBITDA; and
- Capital Expenditures and Capitalized Software.
We and CheckFree Investment Corporation guarantee the credit facility.
The credit facility is collateralized by liens on CheckFree Corporation's cash,
accountants receivable, our building in Dublin Ohio, and all books and records
relating to accounts receivable in the proceeds on all the foregoing.
<PAGE> 35
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussions summarizes certain United States Federal
income tax considerations that may be relevant to the purchase, ownership and
disposition of the notes and our common stock into which the notes may be
converted, but does not purport to be a complete analysis of the potential tax
considerations relating thereto. This summary deals only with holders that are
United States Persons (as defined below) that will hold the notes and our common
stock as capital assets and does not address tax considerations applicable to
investors that may be subject to special tax rules such as dealers in securities
or currencies, financial institutions, real estate investment trusts, regulated
investment companies, banks, insurance companies, tax-exempt entities, persons
holding the notes as part of a hedging or conversion transaction, a straddle or
a constructive sale, persons whose functional currency is not the U.S. dollar,
and holders of the notes that did not acquire the notes in the initial
distribution thereof at their original issue price. In addition, this discussion
does not consider the effect of any alternative minimum, estate, gift, foreign,
state, local or other tax laws.
As used herein, "United States Person" means a beneficial owner of the
notes or our common stock into which the notes may be converted, who or that is:
- A citizen or resident of the United States for Federal income tax
purposes;
- A corporation or other entity taxable as a corporation created or
organized in or under the laws of the United States or political
subdivision thereof;
- An estate the income of which is subject to U.S. Federal income
taxation regardless of its source; or
- A trust if (1) a U.S. court is able to exercise primary supervision
over the administration of the trust and (2) one or more U.S.
fiduciaries have authority to control all substantial decisions of
the trust.
THE DISCUSSION OF THE UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
BELOW IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE APPLICABLE TREASURY REGULATIONS PROMULGATED
AND PROPOSED UNDER THE CODE, JUDICIAL DECISIONS AND ADMINISTRATIVE
INTERPRETATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE
BASIS. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER YOU ARE STRONGLY URGED TO
CONSULT YOUR TAX ADVISOR WITH RESPECT TO YOUR PARTICULAR TAX SITUATION AND THE
PARTICULAR TAX EFFECTS OF ANY STATE, LOCAL, NON-UNITED STATES OR OTHER TAX LAWS
AND POSSIBLE CHANGES IN THE TAX LAWS.
NOTES
Stated Interest. Generally, a holder will be required to include in
gross income, as ordinary income, the stated interest on a note at the time that
the interest accrues or is received, in accordance with the holder's regular
method of accounting for Federal income tax purposes.
Interest Deduction on the Notes. The Taxpayer Relief Act of 1997
enacted Section 163(1) of the Code, which disallows any interest paid or accrued
on indebtedness payable in equity of the issuer. Indebtedness is treated as
payable in equity of the issuer if (i) a substantial portion of the principal or
interest is required to be paid or converted into the equity, (ii) a substantial
amount of the principal or interest is required to be determined by reference to
the value of the equity, or (iii) the indebtedness is part of an arrangement
which is reasonably expected to result in a transaction in (i) or (ii).
Principal or interest is treated as required to be so paid, converted or
determined if it may be required at the option of the holder of the debt
instrument and there is a substantial certainty that the option will be
exercised. We do not believe that deductions for interest paid or accrued on the
notes should be disallowed under Section 163(l) but there can be no assurance
that such position will not be challenged successfully by the Internal Revenue
Service.
Sale, Exchange or Retirement of the Notes. A holder's tax basis in a
note will be its cost. A holder generally will recognize gain or loss on the
sale, exchange or retirement (including a redemption by us) of a note in an
amount equal to the difference between the amount of cash plus the net fair
market value of any property received, other than any such amount received in
respect of accrued interest (which will be taxable as such if not previously
included in income), and the holder's adjusted tax basis in the note. Gain or
loss recognized on the sale, exchange or retirement of a
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note generally will be a capital gain or loss. In the case of a non-corporate
holder, the Federal tax rate applicable to capital gains will depend upon the
holder's holding period for the notes, with a preferential rate available for
the notes held for more than twelve months. The deductibility of capital losses
is subject to limitations.
CONVERSION OF THE NOTES
A holder generally will not recognize any income, gain, or loss upon
conversion of a note into our common stock (except with respect to cash received
in lieu of a fractional share of our common stock). The holder's basis in our
common stock received on conversion of a note will be the same as the holder's
adjusted tax basis in the note at the time of conversion (reduced by any basis
allocable to a fractional share interest as described below), and the holding
period for our common stock received on conversion will generally include the
holding period of the note converted.
Cash received in lieu of a fractional share of our common stock will be
treated as a payment in exchange for the fractional share interest in our common
stock. Accordingly, the receipt of cash in lieu of a fractional share of our
common stock will generally result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the holder's
adjusted tax basis in the fractional share).
CONSTRUCTIVE DIVIDENDS
The conversion price of the notes is subject to adjustment under
certain circumstances. See "Description of Notes--Conversion Rights." Under
Section 305 of the Code and the Treasury Regulations issued thereunder, certain
adjustments to the conversion price may be treated as a taxable distribution
resulting in ordinary income (subject to a possible dividends-received deduction
for corporate holders) to the extent of our current and accumulated earnings and
profits if, and to the extent that, adjustments in the conversion price increase
such holder's proportionate interest in our earnings, profits and assets. Such
adjustments may occur in limited circumstances (particularly adjustments to
reflect taxable dividends to holders of our common stock) and in such a case a
constructive distribution would arise, whether or not the holders ever convert
the notes. Holders of the notes, therefore, could have taxable income as a
result of an event in which they received no cash or property. A holder's tax
basis in a note, however, generally will be increased by the amount of any
constructive dividend included in taxable income. Similarly, a failure to adjust
the Conversion Rate to reflect a stock dividend or other event increasing the
proportionate interest of the holders of our outstanding common stock could, in
some circumstances, give rise to deemed dividend income to holders of our common
stock.
DIVIDENDS ON COMMON STOCK
Dividends paid on our common stock generally will be includable in the
income of a holder as ordinary income to the extent of our current or
accumulated earnings and profits. Subject to certain limitations, a corporate
taxpayer holding common stock that receives dividends thereon generally will be
eligible for a dividends-received deduction equal to 70% of the dividends
received. The dividends-received deduction is subject, however, to certain
holding period, taxable income and other limitations. In addition, corporate
holders should consider the rules under Section 1059 of the Code that may reduce
their basis in our common stock.
SALE, EXCHANGE OR REDEMPTION OF COMMON STOCK
Upon the sale, exchange or redemption of our common stock, a holder
generally will recognize capital gain or loss equal to the difference between
the amount realized on the sale, exchange or redemption and the holder's
adjusted tax basis in our common stock. In the case of a non-corporate holder,
the Federal tax rate applicable to capital gains will depend upon the holder's
holding period for our common stock, with a preferential rate available for our
common stock held for more than twelve months. The deductibility of capital
losses is subject to limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments
of principal, premium, if any, and interest on a note, payments of actual or
constructive dividends on our common stock, and payment of the proceeds of
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the sale of a note or our common stock to certain non-corporate, not otherwise
exempt holders, and a 31% backup withholding tax may apply to the payments if
such non-corporate holder (i) fails to furnish or certify its correct taxpayer
identification number to the payor in the manner required or establish an
exemption from backup withholding, (ii) is notified by the Internal Revenue
Service that it has failed to report payments of interest and dividends
properly, or (iii) under certain circumstances, fails to certify under penalties
of perjury, that it has not been notified by the Internal Revenue Service that
it is subject to backup withholding for failure to report interest and dividend
payments. Any amounts withheld under the backup withholding rules from a payment
to a holder will be allowed as a credit against the holder's United States
Federal income tax liability and may entitle the holder to a refund.
THE ABOVE SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF ITS PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER SHOULD CONSULT ITS TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO THE HOLDER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND TREATIES,
OR SUBSEQUENT REVISIONS OF THESE TAX LAWS.
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SELLING SECURITYHOLDERS
The notes were originally issued by us and sold by the initial
purchasers in private transactions exempt from the registration requirements of
the Securities Act to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act). The selling securityholders, which term includes
their transferees, pledgees, donees or their successors, may from time to time
offer and sell pursuant to this prospectus any or all of the notes and common
stock issuable upon conversion of the notes.
Prior to any use of this prospectus in connection with a resale of the
notes and/or the common stock issuable upon conversion of the notes, this
prospectus will be supplemented to set forth the name and number of shares
beneficially owned by the selling securityholder intending to sell notes and/or
common stock and the principal amount of notes and/or number of shares of common
stock to be offered. The prospectus supplement will also disclose whether any
selling securityholder selling in connection with the prospectus supplement has
held any position or office with, been employed by or otherwise has had a
material relationship with us or any of our affiliates during the three years
prior to the date of the prospectus supplement.
PLAN OF DISTRIBUTION
The notes and our common stock may be sold from time to time to
purchasers directly by the selling securityholders. Alternatively, the selling
securityholders may from time to time offer the notes with discounts,
concessions or commissions from the selling securityholders and/or the
purchasers of the notes and our common stock for whom they may act as agent. The
selling securityholders and any such brokers, dealers or agents who participate
in the distribution of the notes and our common stock may be deemed to be
"underwriters," and any profits on the sale of the notes and our common stock by
them and any discounts, commissions or concessions received by any such brokers,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. To the extent the selling securityholder may be deemed
to be underwriters, the selling securityholders may be subject to certain
statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of
the Securities Act and Rule 10b-5 under the Exchange Act.
The notes and our underlying common stock may be sold from time to time
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. The notes and our common stock may be sold by one or more of the
following methods:
- A block trade in which the broker or dealer so engaged will attempt
to sell the notes and our common stock issuable upon conversion
thereof as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- an exchange distribution in accordance with the rules of such
exchange;
- face-to-face transactions between sellers and purchasers without a
broker-dealer;
- through the writing of options; and
- other transactions.
At any time a particular offer of the notes and our common stock is
made, a revised prospectus or prospectus supplement, if required, will be
distributed which will set forth the aggregate amount and type of securities
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions, concessions and
other items constituting compensation from the selling securityholders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.
The
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prospectus supplement and, if necessary, a post-effective amendment to the
registration statement of which this prospectus is a part, will be filed with
the SEC to reflect the disclosure of additional information with respect to the
distribution of the notes and our common stock. In addition, the notes and our
common stock covered by this prospectus may be sold in private transactions or
under Rule 144 rather than pursuant to this prospectus.
We have agreed in the registration rights agreement to keep this
prospectus useable until the notes or the Common Stock issuable upon conversion
thereof are no longer registrable securities, as described under "Registration
Rights Agreement". To our knowledge currently no plans, arrangements or
understandings exist between any selling securityholders and any broker, dealer,
agent or underwriter regarding the sale of the securities by the selling
securityholders. We cannot assure you that any selling securityholder will sell
any or all of the securities offered by it under this prospectus or that any
selling securityholder will not transfer, devise or gift such securities by
other means not described in this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M. That regulation may limit the timing of purchases and sales of any of the
notes and our common stock by the selling securityholders and any other
participating person. Furthermore, Regulation M of the Exchange Act may restrict
the ability of any person engaged in the distribution of the notes and our
common stock to engage in market-making activities with respect to the
particular notes and our common stock being distributed for a period of up to
five business days prior to the commencement of the distribution. All of the
foregoing may affect the marketability of the notes and our common stock and the
ability of any person or entity to engage in market-making activities with
respect to the notes and our common stock.
Pursuant to the registration rights agreement entered into in
connection with our initial private placement, we and each of the selling
securityholders will be indemnified by the other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with these matters.
We have agreed to pay substantially all of the expenses incidental to
the registration, offering and resale by the selling securityholders of the
notes to the public other than commissions, fees and discounts of underwriters,
brokers, dealers and agents.
We will not receive any of the proceeds of the sale of the notes and
our underlying common stock covered by this prospectus.
LEGAL MATTERS
The validity of the notes and any shares of our common stock issuable
upon conversion of the notes offered in connection with this prospectus will be
passed upon for us by Porter, Wright, Morris & Arthur LLP, Columbus, Ohio.
Partners of Porter, Wright, Morris & Arthur LLP who participated in the
preparation of this prospectus beneficially own an aggregate of 25,607 shares of
our common stock consisting of a combination of stock and options exercisable
within 60 days after the date of this prospectus.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from our Annual
Report on Form 10-K for the year ended June 30, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of BlueGill Technologies, Inc.
incorporated in this prospectus by reference from the Form 8-K of CheckFree
Holdings Corporation filed January 11, 2000 have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
39
<PAGE> 40
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, therefore, we file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission. You can inspect and copy any document we file with the Commission at
the following locations:
- At the Public Reference Room of the Commission, Room 1024-Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
- At the Public Reference Room of the Commission's regional office at
Seven World Trade Center, 13th Floor, New York, New York 10048;
- At the Public Reference Room of the Commission's regional office at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661;
- By writing the Commission, Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;
- At the offices of the National Association of Securities Dealers,
Inc., Reports Section, 1735 K Street, N.W., Washington, D.C. 20006;
or
- From the Commission's web site at www.sec.gov.
Some of these locations may charge a prescribed fee or modest fee for
copies.
We have filed with the Commission a registration statement and related
exhibits under the Securities Act of 1933. The registration statement relates to
the securities offered by the selling securityholders. As permitted by the
Commission, this prospectus, which constitutes a part of the registration
statement, does not contain all the information included in the registration
statement. Such additional information may be obtained from the locations
described above. Statement contained in this prospectus as to contents of any
contract or other document are not necessarily complete. You should refer to the
contract or other document for all the details.
40
<PAGE> 41
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, previously filed by us with the Commission
pursuant to the Securities Exchange Act of 1934, are incorporated by reference
into this prospectus and should be considered a part of the prospectus.
Information that we later file with the Commission will automatically update and
supersede the information contained in this prospectus and is incorporated by
reference.
- Our Annual Report on Form 10-K for the fiscal year ended June 30,
1999 (filed September 28, 1999);
- Our Proxy Statement for the Annual Meeting of Stockholders held on
November 4, 1999 (filed October 8, 1999);
- Our Quarterly Report on Form 10-Q for the quarter ended September 30,
1999 (filed November 15, 1999);
- Our Current Reports on Form 8-K dated November 29, 1999 (filed
December 2, 1999), December 20, 1999 (filed December 23,
1999), and dated January 11, 2000 (filed January 11, 2000);
- The description of our common stock, contained in the registration
statement on Form 8-A filed with the Commission pursuant to Section
12 of the Securities Exchange Act of 1934 and all amendments thereto
and reports filed for the purpose of updating such description; and
- All documents filed by us with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
after the date of this prospectus and before the offering of the
notes thereby is completed (other than portions of such documents
described in paragraphs (i), (k) and (l) of Item 402 of Regulation
S-K promulgated by the Commission).
These documents are or will be available for inspection or copying at
the locations identified above under the caption "Where You Can Find More
Information." We will provide without charge to each to whom this prospectus is
delivered, upon written or oral request, a copy of any and all of the documents
that have been incorporated by reference in this prospectus (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference). You should direct requests for documents to:
CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
Attention: Investor Relations
Telephone Number: (678) 375-3387
41
<PAGE> 42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Company in connection with the sale and distribution of the securities being
registered hereby, other than underwriting discounts and commissions. All
amounts shown are estimates, except the SEC registration fee and the Nasdaq
National Market listing fee:
SEC Registration Fee.............................. $ 45,540
Nasdaq National Market listing fee................ $ 17,500
Printing and engraving fee........................ $235,000
Legal fees and expenses........................... $150,000
Accounting fees and expenses...................... $ 70,000
Transfer agent and registrar's fees and expenses.. $ 5,000
Miscellaneous expenses............................ $ 1,960
--------
Total........................................ $525,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Article IX of the Registrant's By-Laws (the "By-Laws") provides
that the Registrant shall, to the fullest extent permitted by applicable law as
then in effect, indemnify any person who is or was involved or threatened to be
made so involved in any action by reason of the fact that he is or was a
director or officer of the Registrant, or is or was serving at the request of
the Registrant as a director or officer of another entity. The right to
indemnification includes the right to receive payment of expenses in advance of
the final disposition of the proceeding. All indemnification rights in Article
IX are contract rights. The Registrant also may provide indemnification for
employees, agents, attorneys and representatives of the Registrant by action of
its board of directors. Article IX expressly states that no amendment to the
By-Laws or the Certificate of Incorporation shall adversely affect any right to
indemnification for acts occurring prior to such amendment. The right of
indemnification is not exclusive of any other rights of indemnification that may
be available.
In determining the right to indemnification under Article IX, the
Registrant has the burden of proof that the indemnitee has not met the
applicable standard of conduct. If successful in whole or in part in such a
proceeding, the indemnitee is entitled to be indemnified for expenses incurred
in connection with such proceeding. All reasonable expenses incurred by an
indemnitee in connection with any proceeding shall be advanced by the Registrant
after receipt of a statement from the indemnitee requesting such advance.
Article IX provides that the Registrant may purchase and maintain
insurance in connection with any expenses, liability or loss relating to any
proceeding, whether or not the Registrant would have the power to indemnify the
officer, director, employee, agent, attorney, trustee or representative. The
Registrant also may enter into indemnification contracts with any of the
foregoing persons, which contracts are deemed specifically approved and
authorized by the stockholders and not subject to invalidity by reason of any
interested directors.
If any provision of Article IX is held invalid, illegal or
unenforceable, the remaining provisions of Article IX shall not be affected. An
indemnitee also may elect, as an alternative to the Article IX procedures, to
follow procedures authorized by applicable corporate law or statute. Article IX
sets forth specific procedures for the advancement of expenses and for the
determination of entitlement to indemnification. Entitlement to indemnification
shall be determined by a majority vote of disinterested directors, by a written
opinion of independent counsel under certain circumstances, by the Registrant's
stockholders, if a majority of the disinterested directors determines the issue
should be submitted to the stockholders, or, if none of the persons empowered to
make a determination have been appointed and have made a determination within 60
days after the receipt of a request for indemnification, the indemnitee is
deemed to be entitled to indemnification unless the indemnitee misrepresented or
omitted a material fact in making or supporting his request for indemnification
or the indemnification is prohibited by law. The termination of an action by
judgment, order, settlement or conviction or
42
<PAGE> 43
upon a plea of nolo contendere does not adversely affect the right of an
indemnitee to indemnification or create any presumption with respect to any
standard of conduct. An indemnitee is entitled to indemnification for expenses
if he is successful on the merits, if the action is terminated without a
determination of liability on the part of the indemnitee or if the indemnitee
was not a party to the action. An indemnitee who is determined not to be
entitled to indemnification may appeal such determination either through the
courts or by arbitration.
(b) Under Section 145 of the Delaware General Corporation Law,
indemnification of any person who is or was a party or threatened to be made so
in any action by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or was serving as such of another
corporation or enterprise at the request of the corporation is permitted against
expenses (including attorneys' fees), judgments fines and amounts paid in
settlement actually and reasonably incurred by the indemnified person in such
proceeding where the indemnified person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, in criminal actions, where he had no reasonable cause to
believe his conduct was unlawful. Indemnification is also permitted in lawsuits
brought by or on behalf of the corporation if the standards of conduct described
above are met, except that no indemnification is permitted in respect to any
matter in which the person is adjudged to be liable to the corporation unless a
court shall determine that indemnification is fair and reasonable in view of all
the circumstances of the case. Indemnification against expenses (including
attorneys' fees) actually and reasonably incurred by directors, officers,
employees and agents is required under Section 145 of the Delaware Law in those
cases where the person to be indemnified has been successful on the merits or
otherwise in defense of a lawsuit of the type described above. In cases where
indemnification is permissive, a determination as to whether the person met the
applicable standard of conduct must be made (unless ordered by a court) by
majority vote of the disinterested directors, by a committee of the
disinterested directors designated by a majority vote of such directors, even
though less than a quorum, by independent legal counsel, or by the stockholders.
Such indemnification rights are specifically not deemed to be exclusive of other
rights of indemnification by agreement or otherwise and the corporation is
authorized to advance expenses incurred prior to the final disposition of a
matter upon receipt of an undertaking to repay such amounts on a determination
that indemnification was not permitted in the circumstances of the case.
(c) Under Section 145 of the Delaware Law and Article IX of the
By-Laws, the Registrant may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Registrant,
or who, while serving in such capacity, is or was at the request of the
Registrant, a director, officer, employee or agent of another corporation or
other enterprise, against liability asserted against or incurred by such person
in any such capacity whether or not the Registrant would have the power to
provide indemnity under Section 145 or the By-Laws. The Registrant has obtained
insurance that, subject to certain exceptions, insures the directors and
officers of the Registrant and its subsidiary.
(d) The Registrant has entered into indemnification contracts with its
directors and certain officers which provides that such directors and officers
will be indemnified to the fullest extent provided by Section 145 of the
Delaware Law (or such other future statutory provision authorizing or permitting
indemnification) against all expenses (including attorneys' fees), judgments,
fines and settlement amounts, actually and reasonably paid or incurred by them
in any action or proceeding, including any action by or in the right of the
Registrant, by reason of the fact that they were a director, officer, employee
or agent of the Registrant, or were serving at the request of the Registrant as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
No indemnity will be provided under such indemnification contracts
(i) except to the extent that the aggregate losses to be indemnified pursuant
thereto exceed the amount for which the indemnitee is indemnified pursuant to
any directors and officers liability insurance purchased and maintained by the
Registrant; (ii) in respect to remuneration paid to an indemnitee if it shall be
determined by a final judgment that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered against an indemnitee
for an accounting of profits made from the purchase or sale by indemnitee of
securities of the Registrant pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; (iv) on account of the indemnitee's
act or omission being finally adjudged to have been not in good faith or
involving intentional misconduct or a knowing violation of law; or (v) if a
final decision by a court having jurisdiction in the matter shall determine that
such indemnification is not lawful.
43
<PAGE> 44
(e) Article EIGHTH of the Registrant's Restated Certificate of
Incorporation provides that a director of the Registrant shall not be personally
liable to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for any unlawful payment of a dividend or
unlawful stock purchase or redemption; or (iv) for any transaction from which
the director derived any improper personal benefit.
The above discussion of the Registrant's By-Laws, Restated
Certificate of Incorporation, indemnification agreements, and of Section 145 of
the Delaware Law is not intended to be exhaustive and is respectively qualified
in its entirety by such By-Laws, Restated Certificate of Incorporation and
statutes.
ITEM 16. EXHIBITS
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
------ -----------
2(a) Asset Purchase Agreement, dated as of July 1, 1997,
among CheckFree Corporation, Servantis Systems
Holdings, Inc., Servantis Systems, Inc., London
Bridge Software Holdings plc, and LBSS, Inc.
(Reference is made to Exhibit 2 to the Current Report
on Form 8-K, dated July 1, 1997, filed with the
Securities and Exchange Commission on July 3, 1997,
and incorporated herein by reference.)
2(b) Agreement and Plan of Merger, dated as of December
22, 1997, among the Company, CheckFree Corporation,
and CheckFree Merger Corporation. (Reference is made
to Exhibit 2 to the Current Report on Form 8-K, dated
December 22, 1997, filed with the Securities and
Exchange Commission on December 30, 1997, and
incorporated herein by reference.)
3(a) Restated Certificate of Incorporation of the Company.
(Reference is made to Exhibit 3(a) to the Current
Report on Form 8-K, dated December 22, 1997, filed
with the Securities and Exchange Commission on
December 30, 1997, and incorporated herein by
reference.)
3(b) By-Laws of the Company. (Reference is made to Exhibit
3(b) to the Current Report on Form 8-K, dated
December 22, 1997, filed with the Securities and
Exchange Commission on December 30, 1997, and
incorporated herein by reference.)
3(c) Form of Specimen Stock Certificate. (Reference is
made to Exhibit 3(c) to the Current Report on Form
8-K, dated December 22, 1997, filed with the
Securities and Exchange Commission on December 30,
1997, and incorporated herein by reference.)
4(a) Articles FOURTH, FIFTH, SEVENTH, EIGHTH, TENTH AND
ELEVENTH of the Company's Restated Certificate of
Incorporation (contained in the Company's Restated
Certificate of Incorporation filed as Exhibit 3(a)
hereto) and Articles II, III, IV, VI and VIII of the
Company's By-Laws (contained in the Company's By-Laws
filed as Exhibit 3(b) hereto).
4(b) Rights Agreement, dated as of December 16, 1997, by
and between the Company and The Fifth Third Bank, as
Rights Agent. (Reference is made to Exhibit 4.1 to
Amendment No. 1 to Registration Statement on Form
8-A, filed with the Securities and Exchange
Commission on May 12, 1999, and incorporated herein
by reference.)
4(c) * Form of Guarantee.
44
<PAGE> 45
4(d) * Indenture, by and between the Company and Fifth Third
Bank as Trustee, for the 6.5% Convertible
Subordinated Notes due 2006, dated as of November 29,
1999, including the form of the 6.5% Note.
4(f) * First Supplemental Indenture by and between the
Company and Fifth Third Bank as Trustee, for the 6.5%
Convertible Subordinated Notes due 2006, dated as of
November 29, 1999.
4(g) * Form of the Global Note.
4(h) * Registration Rights Agreement, dated as of November
29, 1999, among the Company, CheckFree Corporation,
CheckFree Investment Corporation, CheckFree
Management Corporation, CheckFree Investment
Services, Inc., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Deutsche Bank
Securities Inc., and Hambrecht & Quist LLC.
5 * Opinion of Porter, Wright, Morris & Arthur LLP.
23.1 Consent of Porter, Wright, Morris & Arthur LLP
(included in Exhibit 5).
23.2 * Consent of Deloitte & Touche LLP.
23.3 * Consent of Arthur Andersen LLP.
24 * Power of Attorney.
- ------------------
* Filed with this report.
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) 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 or securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) that for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
45
<PAGE> 46
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
46
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this.
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Norcross, State of Georgia, on January 13, 2000.
CHECKFREE HOLDINGS CORPORATION
By: /s/Allen L. Shulman
-----------------------------------------
Allen L. Shulman,
Executive Vice President, Chief Financial
Officer and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this.
Registration Statement has been signed below by the following persons in the
capacities indicated on the 13th day of January, 2000.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
/s/ *Peter J. Kight Chairman of the Board and Chief Executive Officer
- ------------------------------------------------------ (Principal Executive Officer)
Peter J. Kight
/s/ *Mark A. Johnson Vice Chairman and Director
- ------------------------------------------------------
Mark A. Johnson
/s/ Allen L. Shulman Executive Vice President, Chief Financial Officer and
- ------------------------------------------------------ General Counsel
Allen L. Shulman (Principal Financial Officer)
/s/ *Gary A. Luoma, Jr. Vice President, Chief Accounting Officer and Assistant
- ------------------------------------------------------ Secretary
Gary A. Luoma, Jr. (Principal Accounting Officer)
/s/ *William P. Boardman Director
- ------------------------------------------------------
William P. Boardman
/s/ *George R. Manser Director
- ------------------------------------------------------
George R. Manser
/s/ *Eugene F. Quinn Director
- ------------------------------------------------------
Eugene F. Quinn
/s/ *Jeffrey M. Wilkins Director
- ------------------------------------------------------
Jeffrey M. Wilkins
*By: /s/Curtis A. Loveland
- ------------------------------------------------------
Curtis A. Loveland, Attorney-in-Fact
</TABLE>
47
<PAGE> 1
EXHIBIT 4(c)
SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture and the First Supplemental Indenture) has, jointly
and severally, unconditionally guaranteed, to the extent set forth in the
Indenture and the First Supplemental Indenture and subject to the provisions in
the Indenture and the First Supplemental Indenture, dated as of November
29, 1999, among CheckFree Holdings Corporation, the Guarantors party thereto and
Fifth Third Bank as trustee (the "Trustee"), (a) the due and punctual payment of
the principal of, premium, if any, and interest on the Series 6-1/2% Notes (as
defined in the Indenture), whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, as the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Series 6-1/2% Notes or any such
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Series 6-1/2% Notes and to the Trustee pursuant to this Subsidiary
Guarantee, the Indenture are expressly set forth in Article V-A of the First
Supplemental Indenture and reference is hereby made to the First Supplemental
Indenture for the precise terms of the Subsidiary Guarantee. The obligations of
the Guarantors will be released only in accordance with the provisions of
Article V-A of the First Supplemental Indenture. Each Holder of a Series 6-1/2%
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
indebtedness evidenced by this Subsidiary Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture and the First Supplemental
Indenture.
<PAGE> 2
CHECKFREE CORPORATION
/s/ Allen L. Shulman
----------------------------------------
By: Allen L. Shulman
Title: Executive Vice President and
Chief Financial Officer
CHECKFREE MANAGEMENT CORPORATION
/s/ Allen L. Shulman
----------------------------------------
By: Allen L. Shulman
Title: Executive Vice President and
Treasurer
CHECKFREE INVESTMENT CORPORATION
/s/ Allen L. Shulman
----------------------------------------
By: Allen L. Shulman
Title: Executive Vice President and
Chief Financial Officer
CHECKFREE INVESTMENT SERVICES, INC.
/s/ Allen L. Shulman
----------------------------------------
By: Allen L. Shulman
Title: Vice President
<PAGE> 1
Exhibit 4(d)
EXECUTION COPY
--------------
CHECKFREE HOLDINGS CORPORATION
AND
FIFTH THIRD BANK
INDENTURE
Dated as of November 29, 1999
Subordinated Indebtedness Securities
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................................................2
SECTION 1.1 Definitions.......................................................................2
SECTION 1.2 Compliance Certificates and Opinions.............................................11
SECTION 1.3 Form of Documents Delivered to Trustee...........................................12
SECTION 1.4 Acts of Holders..................................................................12
SECTION 1.6 Notice to Holders; Waiver........................................................15
SECTION 1.7 Effect of Headings and Table of Contents.........................................16
SECTION 1.8 Successors and Assigns...........................................................17
SECTION 1.9 Separability Clause..............................................................17
SECTION 1.10 Benefits of Indenture............................................................17
SECTION 1.11 Governing Law....................................................................17
SECTION 1.12 Legal Holidays...................................................................17
SECTION 1.13 Personal Immunity from Liability for Incorporators,
Stockholders, Etc.......................................................17
SECTION 1.14 Conflict with Trust Indenture Act................................................18
ARTICLE 2
SECURITIES FORMS.............................................................................................18
SECTION 2.1 Forms of Securities..............................................................18
SECTION 2.2 Form of Trustee's Certificate of Authentication. ................................18
SECTION 2.3 Securities Issuable in Global Form. .............................................18
ARTICLE 3
THE SECURITIES...............................................................................................19
SECTION 3.1 Amount Unlimited; Issuable in Series.............................................19
SECTION 3.2 Denominations....................................................................24
SECTION 3.3 Execution, Authentication, Delivery and Dating...................................24
SECTION 3.4 Temporary Securities.............................................................26
SECTION 3.5 Registration, Registration of Transfer and Exchange..............................29
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.................................32
SECTION 3.7 Payment of Interest; Interest Rights Preserved...................................33
SECTION 3.8 Persons Deemed Owners............................................................35
SECTION 3.9 Cancellation.....................................................................36
SECTION 3.10 Computation of Interest..........................................................37
ARTICLE 4
SATISFACTION AND DISCHARGE...................................................................................37
SECTION 4.1 Satisfaction and Discharge of Indenture..........................................37
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 5
REMEDIES....................................................................................................38
SECTION 5.1 Events of Default...............................................................39
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment..............................40
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee.................................................41
SECTION 5.4 Trustee May File Proofs of Claim................................................42
SECTION 5.5 Trustee May Enforce Claims Without Possession of
Securities or Coupons..................................................43
SECTION 5.6 Application of Money Collected..................................................43
SECTION 5.7 Limitation on Suits.............................................................43
SECTION 5.8 Unconditional Right of Holders to Receive Principal,
Premium, if any, Interest and Additional Amounts................................44
SECTION 5.9 Restoration of Rights and Remedies..............................................44
SECTION 5.10 Rights and Remedies Cumulative..................................................44
SECTION 5.11 Delay or Omission Not Waiver....................................................45
SECTION 5.12 Control by Holders of Securities................................................45
SECTION 5.13 Waiver of Past Defaults.........................................................45
SECTION 5.14 Waiver of Usury, Stay or Extension Laws.........................................46
SECTION 5.15 Undertaking for Costs...........................................................46
ARTICLE 6
THE TRUSTEE.................................................................................................46
SECTION 6.1 Certain Duties and Responsibilities.............................................46
SECTION 6.2 Notice of Defaults..............................................................48
SECTION 6.3 Certain Rights of Trustee.......................................................48
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities..........................49
SECTION 6.5 May Hold Securities.............................................................50
SECTION 6.6 Money Held in Trust.............................................................50
SECTION 6.7 Compensation and Reimbursement..................................................50
SECTION 6.8 Corporate Trustee Required; Eligibility;
Conflicting Interests...........................................................51
SECTION 6.9 Resignation and Removal; Appointment of Successor...............................51
SECTION 6.10 Acceptance of Appointment by Successor..........................................52
SECTION 6.11 Merger, Conversion, Consolidation or
Succession to Business..........................................................54
SECTION 6.12 Appointment of Authenticating Agent.............................................54
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...........................................................56
SECTION 7.1 Disclosure of Names and Addresses of Holders....................................56
SECTION 7.2 Reports by Trustee..............................................................56
SECTION 7.3 Reports by Company..............................................................56
SECTION 7.4 Company to Furnish Trustee Names and
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<CAPTION>
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Addresses of Holders...................................................57
ARTICLE 8
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE............................................................58
SECTION 8.1 Consolidations and Mergers of Company and Sales,
Leases and Conveyances Permitted Subject to Certain Conditions..................58
SECTION 8.2 Rights and Duties of Successor Person...........................................58
SECTION 8.3 Officers' Certificate and Opinion of Counsel....................................59
ARTICLE 9
SUPPLEMENTAL INDENTURES.....................................................................................59
SECTION 9.1 Supplemental Indentures without Consent of Holders..............................59
SECTION 9.2 Supplemental Indentures with Consent of Holders.................................61
SECTION 9.3 Execution of Supplemental Indentures............................................62
SECTION 9.4 Effect of Supplemental Indentures...............................................62
SECTION 9.5 Conformity with Trust Indenture Act.............................................62
SECTION 9.6 Reference in Securities to Supplemental Indentures..............................62
ARTICLE 10
COVENANTS...................................................................................................63
SECTION 10.1 Payment of Principal, Premium, if any, Interest and
Additional Amounts..............................................................63
SECTION 10.2 Maintenance of Office or Agency.................................................63
SECTION 10.3 Money for Securities Payments to Be Held in Trust...............................65
SECTION 10.4 Existence.......................................................................66
SECTION 10.5 Maintenance of Properties.......................................................66
SECTION 10.6 Payment of Taxes and Other Claims...............................................67
SECTION 10.7 Statement as to Compliance......................................................67
SECTION 10.8 Additional Amounts..............................................................67
SECTION 10.9 Waiver of Certain Covenants.....................................................68
ARTICLE 11
REDEMPTION OF SECURITIES....................................................................................68
SECTION 11.1 Applicability of Article........................................................68
SECTION 11.2 Election to Redeem; Notice to Trustee...........................................69
SECTION 11.3 Selection by Trustee of Securities to Be Redeemed...............................69
SECTION 11.4 Notice of Redemption............................................................69
SECTION 11.5 Deposit of Redemption Price.....................................................71
SECTION 11.6 Securities Payable on Redemption Date...........................................71
SECTION 11.7 Securities Redeemed in Part.....................................................72
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ARTICLE 12
SINKING FUNDS............................................................................................72
SECTION 12.1 Applicability of Article.........................................................72
SECTION 12.2 Satisfaction of Sinking Fund Payments with
Securities.......................................................................72
SECTION 12.3 Redemption of Securities for Sinking Fund........................................73
ARTICLE 13
REPURCHASE AT THE OPTION OF HOLDERS..........................................................................73
SECTION 13.1 Applicability of Article.........................................................73
SECTION 13.2 Repurchase of Securities.........................................................73
SECTION 13.3 Notice; Exercise of Repurchase Right.............................................74
SECTION 13.4 When Securities Presented for Repurchase
Become Due and Payable...........................................................75
SECTION 13.5 Securities Not Repurchased on Repurchase Date....................................76
SECTION 13.6 Securities Repaid in Part........................................................76
ARTICLE 14
DEFEASANCE AND COVENANT DEFEASANCE...........................................................................76
SECTION 14.1 Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance................................................76
SECTION 14.2 Defeasance and Discharge.........................................................76
SECTION 14.3 Covenant Defeasance..............................................................77
SECTION 14.4 Conditions to Defeasance or Covenant Defeasance..................................77
SECTION 14.5 Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions....................................79
SECTION 14.6 Reinstatement....................................................................80
ARTICLE 15
SUBORDINATION................................................................................................81
SECTION 15.1 Agreement to Subordinate.........................................................81
SECTION 15.2 Liquidation; Dissolution; Bankruptcy.............................................81
SECTION 15.3 Default on Senior Indebtedness...................................................81
SECTION 15.4 Acceleration of Securities.......................................................82
SECTION 15.5 When Distribution Must Be Paid Over..............................................82
SECTION 15.6 Notice by Company................................................................82
SECTION 15.7 Subrogation..................................................................... 82
SECTION 15.8 Relative Rights................................................................. 82
SECTION 15.9 Subordination May Not Be Impaired by Trust...................................... 83
SECTION 15.10 Distribution or Notice to Representative........................................ 83
SECTION 15.11 Rights of Trustee and Paying Agent.............................................. 83
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<PAGE> 6
CHECKFREE HOLDINGS CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 (the "TIA")
and Indenture, dated as of November 29, 1999.
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
310(a)(1)................................................ 6.7
(b)(2)................................................ 6.7
(b)................................................... 6.7, 6.8
312(a)................................................... 7.4
312(c)................................................... 7.1
313(a)................................................... 7.2
(c)................................................... 7.2
314(a)................................................... 7.3
(a)(4)................................................ 10.9
(c)(1) ............................................... 1.2
(c)(2)................................................ 1.2
(e)................................................... 1.2
315(b) .................................................. 6.1
316(a) (last sentence)................................... 1.1("Outstanding")
(a)(1)(A)............................................. 5.12
(a)(1)(B) ............................................ 5.13
(b) .................................................. 5.8
317(a)(1)................................................ 5.3
(a)(2)................................................ 5.4
318(a)................................................... 1.11
(c) .................................................. 1.11
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
Attention should also be directed to Section 318(c) of the TIA, which
provides that the provisions of Sections 310 through 317 of the TIA are a part
of and govern every qualified indenture, whether or not physically contained in
the Indenture.
<PAGE> 7
INDENTURE, dated as of November 29, 1999, between CHECKFREE HOLDINGS
CORPORATION, a Delaware corporation (hereinafter called the "Company"), having
its principal office at 4411 East Jones Bridge Road, Norcross, Georgia 30092 and
Fifth Third Bank, a state banking corporation organized under the laws of the
State of Ohio, as Trustee hereunder (hereinafter called the "Trustee"), having
its Corporate Trust Office at Cincinnati, Ohio.
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for its
lawful purposes subordinated debt securities (hereinafter called the
"Securities") evidencing its subordinated indebtedness, and has duly authorized
the execution and delivery of this Indenture to provide for the issuance from
time to time of the Securities, unlimited as to principal amount, to bear
interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust Indenture Act
of 1939 that are deemed to be incorporated into this Indenture and shall, to the
extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all the holders of the Securities, as
follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them therein,
and the terms "cash transaction" and "self-liquidating paper," as used in TIA
Section 311, shall have the meanings assigned to them in the rules of the
Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
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<PAGE> 8
(4) the word "including" means "including without limitation," and
(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.
"Act," when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Additional Amounts" means any additional amounts which are required by
a Security or by or pursuant to a Board Resolution, under circumstances
specified therein, to be paid by the Company in respect of certain taxes imposed
on certain Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee pursuant to Section 6.12.
"Authorized Newspaper" means a newspaper, printed in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 5.1.
"Bearer Security" means any Security established pursuant to Section
2.1 which is payable to bearer.
"Board of Directors" means the board of directors of the Company, the
executive committee of that board or any committee of that board duly authorized
to act hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Securities,
means, unless otherwise specified with
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<PAGE> 9
respect to any Securities pursuant to Section 3.1, any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in that Place of Payment or particular location are authorized or
required by law, regulation or executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
successor.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934 as
amended, or, if at any time after 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 on such date.
"Common Depositary" has the meaning specified in Section 3.4.
"Common Stock" means, with respect to any Person, capital stock issued
by such Person other than Preferred Stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chief Executive
Officer, Chief Financial Officer, the President or a Vice President of the
Company and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Cincinnati, Ohio.
"corporation" means a corporation, association, partnership, companies
(including limited liability companies) joint-stock company or business trust.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Currency Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any currency
unit (or composite currency) other than the ECU for the purposes for which it
was established.
"Custodian" has the meaning specified in Section 5.1.
"Defaulted Interest" has the meaning specified in Section 3.7.
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<PAGE> 10
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"DTC" has the meaning specified in Section 3.4.
"ECU" means the European Currency Unit as defined and revised from time
to time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Article 5.
"Foreign Currency" means any currency, currency unit or composite
currency, including the ECU, issued by the government of one or more countries
other than the United States of America or by any recognized confederation or
association of such governments.
"GAAP" means generally accepted accounting principles, as in effect
from time to time, as used in the United States, applied on a consistent basis.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, 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 or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
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<PAGE> 11
"Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case of
a Bearer Security, the bearer thereof and, when used with respect to any coupon,
shall mean the bearer thereof.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular series of Securities established as
contemplated by Section 3.1; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
the particular series of Securities for which such Person is Trustee established
as contemplated by Section 3.1, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and, when used with respect to a Security which
provides for the payment of Additional Amounts pursuant to Section 10.8,
includes such Additional Amounts.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Material Adverse Effect" has the meaning specified in Section 10.4.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board of Directors, the President or a Vice President and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
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<PAGE> 12
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or who may be an employee of or other counsel for the
Company and who shall be reasonably satisfactory to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
or repayment at the option of the Holder money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Securities
and any coupons appertaining thereto; provided that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections 14.2 and
14.3, with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article 14;
(iv) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and
(v) Securities converted into Common Stock or Preferred Stock pursuant
to or in accordance with this Indenture if the terms of such Securities provide
for convertibility pursuant to Section 3.1;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (A) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
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<PAGE> 13
pursuant to Section 5.2, (B) the principal amount of any Security denominated in
a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined pursuant to Section 3.1 as of the date such
Security is originally issued by the Company, of the principal amount (or, in
the case of an Original Issue Discount Security, the Dollar equivalent as of
such date of original issuance of the amount determined as provided in clause
(A) above) of such Security, (C) the principal amount of any Indexed Security
that may be counted in making such determination or calculation and that shall
be deemed outstanding for such purpose shall be equal to the principal face
amount of such Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 3.1, and (D) Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or 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 or coupons on
behalf of the Company.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment," when used with respect to the Securities of or
within any series, means the place or places where the principal of (and
premium, if any) and interest on such Securities are payable as specified as
contemplated by Sections 3.1 and 10.2.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
"Preferred Stock" means, with respect to any Person, capital shares
issued by such Person that are entitled to a preference or priority over any
other capital shares issued by such Person upon any distribution of such
Person's assets, whether by dividend or upon liquidation, dissolution or winding
up.
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<PAGE> 14
"Redemption Date," when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture as set forth in such Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" shall mean any Security which is registered in
the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 3.1, whether or not a
Business Day.
"Repurchase Date" means, when used with respect to any Security to be
repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"Repurchase Price" means, when used with respect to any Security to be
repaid at the option of the Holder, the price at which it is to be repaid by or
pursuant to this Indenture.
"Representative" means the indenture trustee or other trustee, agent or
representative for an issue of Senior Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or vice-chairman of the Board of Directors, the chairman or
vice-chairman of the executive committee of the Board of Directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president,") the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any corporate trust
officer, the controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of such officer's
knowledge and familiarity with the particular subject.
"Security" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided, however, that, if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
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<PAGE> 15
"Senior Indebtedness" means: (1) the principal, premium, if any,
interest and all other amounts owed in respect of all the Company's (A)
indebtedness for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments, (2) all of the Company's capital
lease obligations, (3) all obligations issued or assumed by the Company as the
deferred purchase price of property, all of the Company's conditional sale
obligations and all of the Company's obligations under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business), (4) all of the Company's obligations for the reimbursement of any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction, (5) all obligations of the type referred to in clauses (1)
through (4) above of other persons for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise, and (6) all
obligations of the type referred to in clauses (1) through (5) above of other
persons secured by any lien on any of the Company's properties or assets
(whether or not such obligation is assumed by the Company), except for (x) any
such indebtedness that is by its terms subordinated to or pari passu with the
Securities and (y) any indebtedness between or among the Company or affiliates
of the Company, including all other debt securities and guarantees in respect of
those debt securities issued to any trust, or trustees of such trust,
partnership or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities or
other securities that rank pari passu with, or junior to, the Securities.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
under the Securities Act of 1933) of the Company.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the Trustee
pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
"Subsidiary" means a corporation a majority of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries of the Company, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
that ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations promulgated thereunder, as in force at
the date hereof; provided, however, that in the event the Trust Indenture Act of
1939 or such rules and regulations are
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<PAGE> 16
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 Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall
mean only the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with respect to any
Securities pursuant to Section 3.1, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with respect
to any Securities pursuant to Section 3.1, an individual who is a citizen or
resident of the United States, a corporation, partnership, limited liability
company or other entity created or organized in or under the laws of the United
States or an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
"Yield to Maturity" means the yield to maturity, computed at the time
of issuance of a Security (or, if applicable, at the most recent redetermination
of interest on such Security) and as set forth in such Security in accordance
with generally accepted United States bond yield computation principles.
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
delivered pursuant to Section 10.8) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein relating
thereto;
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(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such condition or covenant has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 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 as 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 an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations 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 as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as 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 1.4 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of Securities of such series may, alternatively, be embodied in and
evidenced by the record of Holders of Securities of such series voting in favor
thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders of Securities of such series duly called and held in
accordance with the provisions of the
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supplemental indenture with respect to such series, or a combination of such
instruments and any such record. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments or record
or both are delivered to the Trustee and, where it is hereby expressly required,
to the Company. Such instrument or instruments and any such record (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments or so voting
at any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company and any agent of the Trustee or the Company, if made in
the manner provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the
Security Register.
(d) The ownership of Bearer Securities may be proved by the production
of such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited, the Bearer Securities therein described; or such facts may be proved
by the certificate or affidavit of the Person holding such Bearer Securities, if
such certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security
continues until (1) another certificate or affidavit bearing a later date issued
in respect of the same Bearer Security is produced, or (2) such Bearer Security
is produced to the Trustee by some other Person, or (3) such Bearer Security is
surrendered in exchange for a Registered Security, or (4) such Bearer Security
is no longer Outstanding. The ownership of Bearer Securities may also be proved
in any other manner which the Trustee deems sufficient.
(e) (i) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, in
or pursuant to a Board Resolution, fix in advance a record date
for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so;
provided that the
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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 clause
(e)(iii) below. Notwithstanding TIA Section 316(c), such record date
shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection
therewith and not later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or
after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions
of this Indenture not later than eleven months after the record date.
(ii) Subject to clause (e)(iii) below, in the absence of any such
record date fixed by the Company, regardless as to whether a
solicitation of the Holders is occurring on behalf of the Company or
any Holder, the Trustee may, at its option, fix in advance a record
date for the determination of such Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Trustee shall have no obligation to do so. Any such
record date shall be a date not more than 30 days prior to the first
solicitation of Holders generally in connection therewith and no later
than the date of such solicitation.
(iii) 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 (A) any Notice of Default, (B) any declaration
of acceleration referred to in Section 5.2, (C) any request to
institute proceedings referred to in Section 5.7(2), or (D) 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
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such action shall be effective hereunder unless taken on or prior to
any applicable expiration date by Holders of the requisite principal
amount of Outstanding Securities on such record date. 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 canceled
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 1.6.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, any
Security Registrar, any Paying Agent, any Authenticating Agent or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration; provided that notices to the Trustee shall only be deemed given
when actually received by the Trustee,
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
Indenture or at any other address previously furnished in writing to the Trustee
by the Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture provides
for notice of any event to Holders of Registered Securities by the Company or
the Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders of Registered Securities is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
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Holders of Registered Securities or the sufficiency of any notice to Holders of
Bearer Securities given as provided herein. Any notice mailed to a Holder in the
manner herein prescribed shall be conclusively deemed to have been received by
such Holder, whether or not such Holder actually receives such notice.
If by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification to Holders of Registered Securities as
shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 3.1, where this Indenture
provides for notice to Holders of Bearer Securities of any event, such notice
shall be sufficiently given if published in an Authorized Newspaper in New York
City and in such other city or cities as may be specified in such Securities on
a Business Day, such publication to be not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
If by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 1.7 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.
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SECTION 1.8 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 1.9 SEPARABILITY CLAUSE. In case any provision in this
Indenture or in any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1.10 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities or coupons, express or implied, shall give to any Person, other than
the parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.11 GOVERNING LAW. This Indenture and the Securities and
coupons shall be governed by and construed in accordance with the law of the
State of New York without regard to conflicts of laws principles. This Indenture
is subject to the provisions of the TIA that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 1.12 LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date, sinking fund payment date, Stated
Maturity or 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 at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or coupon other than a provision in the Securities of any series which
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Repurchase Date or
sinking fund payment date, or at the Stated Maturity or Maturity or on such last
day for conversion; provided that no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date, Redemption
Date, Repurchase Date, sinking fund payment date, Stated Maturity or Maturity or
on such last day for conversion, as the case may be.
SECTION 1.13 PERSONAL IMMUNITY FROM LIABILITY FOR INCORPORATORS,
STOCKHOLDERS, ETC. No recourse shall be had for the payment of the principal of
or premium, if any, or interest, if any, on any Security, or for any claim based
thereon, or otherwise in respect of any Security, or based on or in respect of
this Indenture or any indenture supplemental hereto, against any incorporator,
or against any past, present or future stockholder, director or officer, as
such, of the Company or of any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being expressly waived and released as
a condition of, and as consideration for, the execution of this Indenture and
the issue of Securities.
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SECTION 1.14 CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA 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 TIA 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.
ARTICLE 2
SECURITIES FORMS
SECTION 2.1 FORMS OF SECURITIES. The Registered Securities, if any, of
each series and the Bearer Securities, if any, of each series and related
coupons shall be in substantially the forms as shall be established in one or
more indentures supplemental hereto or approved from time to time by or pursuant
to a Board Resolution in accordance with Section 3.1, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as may be required
to comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any securities exchange on which the Securities
may be listed or any depositary therefor, or to conform to usage or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
Unless otherwise specified as contemplated by Section 3.1, Bearer
Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
order or steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities or coupons, as evidenced by
their execution of such Securities or coupons.
SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. Subject to
Section 6.12, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
FIFTH THIRD BANK
as Trustee
Authorized Signatory
SECTION 2.3 SECURITIES ISSUABLE IN GLOBAL FORM. If Securities of or
within a series are issuable in global form, as specified as contemplated by
Section 3.1, then, notwithstanding clause (10) of Section 3.1 and the provisions
of Section 3.2, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide
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that it shall represent the aggregate amount of Outstanding Securities of such
series from time to time endorsed thereon and that the aggregate amount of
Outstanding Securities of such series represented thereby may from time to time
be increased or decreased to reflect exchanges. Any endorsement of a Security in
global form to reflect the amount, or any increase or decrease in the amount, of
Outstanding Securities represented thereby shall be made by the Trustee in such
manner and upon instructions given by such Person or Persons as shall be
specified therein or in the Company Order to be delivered to the Trustee
pursuant to Section 3.3 or 3.4. Subject to the provisions of Section 3.3 and, if
applicable, Section 3.4, the Trustee shall deliver and redeliver any Security in
permanent global form in the manner and upon instructions given by the Person or
Persons specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 3.3 or 3.4 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 1.2 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 3.3 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 1.2 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 3.3.
Notwithstanding the provisions of Section 3.7, unless otherwise
specified as contemplated by Section 3.1, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Person or Persons specified therein.
Notwithstanding the provisions of Section 3.8 and except as provided in
the preceding paragraph, the Company, the Trustee and any agent of the Company
and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
ARTICLE 3
THE SECURITIES
SECTION 3.1 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted by
one or more Board Resolutions and, subject to Section 3.3, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set
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forth in clauses (1), (2) and (22) below) if so provided, may be determined from
time to time by the Company with respect to unissued Securities of the series
when issued from time to time):
(1) the title of the Securities of the series (which shall distinguish
the Securities of such series from all other series of Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 3.4, 3.5, 3.6, 9.6, 11.7 or 13.6);
(3) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, the manner in which, or the Person
to whom, any interest on any Bearer Security of the series shall be payable, if
otherwise than upon presentation and surrender of the coupons appertaining
thereto as they severally mature, and the extent to which, or the manner in
which, any interest payable on a temporary global Security on an Interest
Payment Date will be paid if other than in the manner provided in Section 3.4;
(4) the date or dates, or the method by which such date or dates will
be determined, on which the principal and premium, if any, of the Securities of
the series shall be payable or the method of that determination or the right to
defer any interest payments;
(5) the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the method by which
such rate or rates shall be determined, the date or dates from which such
interest shall accrue or the method by which such date or dates shall be
determined, the Interest Payment Dates on which such interest will be payable
and the Regular Record Date, if any, for the interest payable on any Registered
Security on any Interest Payment Date, or the method by which such date shall be
determined, and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;
(6) the place or places, if any, other than or in addition to the
Borough of Manhattan, New York City, where the principal of (and premium, if
any), interest, if any, on, and Additional Amounts, if any, payable in respect
of, Securities of the series shall be payable, any Registered Securities of the
series may be surrendered for registration of transfer, exchange or conversion
and notices or demands to or upon the Company in respect of the Securities of
the series and this Indenture may be served;
(7) the period or periods within which, the date or dates on which, the
price or prices at which, the currency or currencies, currency unit or units or
composite currency or currencies in which, and other terms and conditions upon
which Securities of the series may be redeemed, in whole or in part, at the
option of the Company, if the Company is to have the option;
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(8) the obligation, if any, of the Company to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous provision or
at the option of a Holder thereof, and the period or periods within which or the
date or dates on which, the price or prices at which, the currency or
currencies, currency unit or units or composite currency or currencies in which,
and other terms and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such obligation;
(9) the terms, if any, upon which the Securities of the series may be
convertible into or exchanged for Securities of another series, Common Stock or
Preferred Stock, as the case may be, and the terms and conditions upon which
such conversion shall be effected (including the initial conversion or exchange
price or rate, the conversion or exchange period, any adjustment of the
applicable conversion price and any requirements relative to the reservation of
such shares for purposes of conversion or exchange);
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of the series
shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Securities of the series shall
be issuable;
(11) if other than Dollars, the Foreign Currency or Currencies in which
payment of the principal of (and premium, if any) or interest or Additional
Amounts, if any, on the Securities of the series shall be payable or in which
the Securities of the series shall be denominated;
(12) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Securities of the series may be determined with
reference to an index, formula or other method (which index, formula or method
may be based, without limitation, on one or more currencies, currency units,
composite currencies, commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(13) if the principal amount payable at the stated maturity of the
Securities of the series will not be determinable as of any one or more dates
before the Stated Maturity, the amount that will be deemed to be the principal
amount as of any date for any purpose, including the principal amount thereof
which will be due and payable upon any Maturity other than the Stated Maturity
or which will be deemed to be outstanding as of any date (or, in any such case,
the manner in which the deemed principal amount is to be determined), and if
necessary, the manner of determining the equivalent thereof in United States
currency;
(14) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series are to be payable,
at the election of the Company or a Holder thereof, in a currency or currencies,
currency unit or units or composite currency or currencies other than that in
which such Securities are denominated or stated to be payable, the period or
periods within which, and the terms and conditions upon which, such election may
be made, and the time and manner of, and identity of the exchange rate agent
with responsibility for,
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determining the exchange rate between the currency or currencies, currency unit
or units or composite currency or currencies in which such Securities are
denominated or stated to be payable and the currency or currencies, currency
unit or units or composite currency or currencies in which such Securities are
to be so payable;
(15) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.2 or,
if applicable, the portion of the principal amount of Securities of the series
that is convertible in accordance with the provisions of this Indenture, or the
method by which such portion shall be determined;
(16) the applicability of, and any addition to or change in, the
covenants and definitions then set forth in the Indenture or in the terms then
set forth in such Indenture relating to permitted consolidations, mergers or
sales of assets;
(17) the applicability, if any, of Section 14.2 and/or Section 14.3 to
the Securities of the series and any provisions in modification of, in addition
to or in lieu of any of the provisions of Article 14;
(18) (a) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without
coupons) or both, any restrictions applicable to the offer, sale
or delivery of Bearer Securities and the terms upon which Bearer
Securities of the series may be exchanged for Registered
Securities of the series and vice versa (if permitted by
applicable laws and regulations), whether any Securities of the
series are to be issuable initially in temporary global form and
whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such
series and of like tenor of any authorized form and denomination
and the circumstances under which any such exchanges may occur,
if other than in the manner provided in Section 3.5, and, if
Registered Securities of the series are to be issuable as a
global Security, the identity of the depositary for such series;
(b) the date as of which any Bearer Securities of the series and
any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(c) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
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temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other
conditions, then the form and/or terms of such
certificates, documents or conditions;
(19) the appointment of any trustee, any authenticating or paying
agents, transfer agent or registrars;
(20) the terms, if any, of any guarantee of the payment of principal,
premium and interest with respect to the Securities of the series and any
corresponding changes to the provisions of the applicable indenture as then in
effect;
(21) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Securities of the series of any properties, assets, moneys,
proceeds, securities or other collateral, including whether certain provisions
of the TIA are applicable and any corresponding changes to provisions of the
applicable indenture as then in effect and including provisions addressing
priority, perfection and escrow arrangements related to the security interest;
(22) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Securities of the series,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth herein, and any change in the right of
the Trustee or the Holders of the Securities to declare the principal, premium
and interest with respect to debt securities due and payable;
(23) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be specified;
(24) if the Securities of the series are to be issued upon the exercise
of warrants, the time, manner and place for such Securities to be authenticated
and delivered;
(25) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 10.8 on the Securities of the
series to any Holder who is not a United States person (including any
modification to the definition of such term) in respect of any tax, assessment
or governmental charge and, if so, whether the Company will have the option to
redeem such Securities rather than pay such Additional Amounts (and the terms of
any such option); and
(26) any other terms of the series.
Securities of any one series and the coupons appertaining to any Bearer
Securities of such series shall be substantially identical except, in the case
of Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolution (subject to Section 3.3) and
set forth in such Officers' Certificate or in any such indenture supplemental
hereto. All Securities of any one series need not be issued at the same time
and,
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unless otherwise provided, a series may be reopened, without the consent of the
Holders, for issuances of additional Securities of such series.
If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions, a copy of an appropriate
record of such action(s) shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers' Certificate setting forth the terms of the Securities
of such series.
SECTION 3.2 DENOMINATIONS. The Securities of each series shall be
issuable in such denominations as shall be specified as contemplated by Section
3.1. With respect to Securities of any series denominated in Dollars, in the
absence of any such provisions with respect to the Securities of any series, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in a denomination of
$5,000.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities and any coupons appertaining thereto shall be executed on behalf of
the Company by the Chief Executive Officer, Chief Financial Officer, the
President or a Vice President of the Company and attested by its Secretary or
one of its Assistant Secretaries. The signature of any of these individuals on
the Securities and coupons may be manual or facsimile signatures of the present
or any future such authorized officer and may be imprinted or otherwise
reproduced on the Securities.
Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities or coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series, together with
any coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided further
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 3.1, a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate to Euroclear or CEDEL, as the case
may be, in the form set forth in Exhibit A-1 to this Indenture or such other
certificate as may be specified with respect to any series of Securities
pursuant to Section 3.1, dated no earlier than 15 days prior to the earlier
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of the date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then, for
purposes of this Section and Section 3.4, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such permanent global Security. Except as permitted by Section 3.6, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and canceled.
If all the Securities of any series are not to be issued at one time
and if the Board Resolution or supplemental indenture establishing such series
shall so permit, such Company Order may set forth procedures acceptable to the
Trustee for the issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or formula, maturity
date, date of issuance and date from which interest shall accrue. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be
fully protected in relying upon,
(i) an Opinion of Counsel stating that:
(a) the form or forms of such Securities and any coupons have
been established in conformity with the provisions of this Indenture;
(b) the terms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture; and
(c) such Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and
delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization and other
similar laws of general applicability relating to or affecting the
enforcement of creditors' rights generally and to general equitable
principles; and
(ii) an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the issuance of the Securities have
been complied with and that, to the best of the knowledge of the signers of such
certificate, no Event of Default with respect to any of the Securities shall
have occurred and be continuing. If such form or terms have been so established,
the Trustee shall not be required to authenticate such Securities if the issue
of such Securities
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pursuant to this Indenture will affect the Trustee's own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver an Officers' Certificate otherwise required
pursuant to Section 3.1 or a Company Order, or an Opinion of Counsel or an
Officers' Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series; provided that such order,
opinion and certificates, with appropriate modifications to cover such future
issuances, shall be delivered at or before the time of issuance of the first
Security of such series.
Each Registered Security shall be dated the date of its authentication
and each Bearer Security shall be dated as of the date specified as contemplated
by Section 3.1.
No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized signatory, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9 together with a written statement (which
need not comply with Section 1.2 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 3.4 TEMPORARY SECURITIES.
(a) Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with Section 3.4(b) or as otherwise provided in or
pursuant to a Board Resolution) if
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temporary Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or agency of
the Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series (accompanied by any non-matured coupons appertaining thereto) the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of the same series of
authorized denominations; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and provided
further that a definitive Bearer Security shall be delivered in exchange for a
temporary Bearer Security only in compliance with the conditions set forth in
Section 3.3. Until so exchanged, the temporary Securities of any series shall be
entitled to in all respects the same benefits under this Indenture as definitive
Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board Resolution,
this Section 3.4(b) shall govern the exchange of temporary Securities issued in
global form other than through the facilities of The Depository Trust Company
("DTC"). If any such temporary Security is issued in global form, then such
temporary global Security shall, unless otherwise provided therein, be delivered
to the London office of a depositary or common depositary (the "Common
Depositary"), for the benefit of Euroclear and CEDEL, for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date, such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 3.1, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof; provided,
however, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depositary, such temporary global Security
is accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Security held for
its account then to be exchanged and a certificate dated the Exchange Date or a
subsequent date and signed by CEDEL as to the portion of such temporary global
Security held for its account then to be exchanged, each in the form set
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forth in Exhibit A-2 to this Indenture or in such other form as may be
established pursuant to Section 3.1; and provided further that definitive Bearer
Securities shall be delivered in exchange for a portion of a temporary global
Security only in compliance with the requirements of Section 3.3.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL, as the case may be, to request such exchange on his behalf
and delivers to Euroclear or CEDEL, as the case may be, a certificate in the
form set forth in Exhibit A-1 to this Indenture (or in such other form as may be
established pursuant to Section 3.1), dated no earlier than 15 days prior to the
Exchange Date, copies of which certificate shall be available from the offices
of Euroclear and CEDEL, the Trustee, any Authenticating Agent appointed for such
series of Securities and each Paying Agent. Unless otherwise specified in such
temporary global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Securities in person at the offices of Euroclear or CEDEL. Definitive Securities
in bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 3.1, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL on
such Interest Payment Date upon delivery by Euroclear and CEDEL to the Trustee
of a certificate or certificates in the form set forth in Exhibit A-2 to this
Indenture (or in such other forms as may be established pursuant to Section
3.1), for credit without further interest on or after such Interest Payment Date
to the respective accounts of Persons who are the beneficial owners of such
temporary global Security on such Interest Payment Date and who have each
delivered to Euroclear or CEDEL, as the case may be, a certificate dated no
earlier than 15 days prior to the Interest Payment Date occurring prior to such
Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or in such
other forms as may be established pursuant to Section 3.1). Notwithstanding
anything to the contrary herein contained, the certifications made pursuant to
this paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section 3.4(b) and of the third paragraph of Section 3.3 of
this Indenture and the interests of the Persons who are the beneficial owners of
the temporary global Security with respect to which such certification was made
will be exchanged for definitive Securities of the same series and of like tenor
on the Exchange Date or the date of certification if such date occurs after the
Exchange Date, without further act or deed by such beneficial owners. Except as
otherwise provided in this paragraph, no payments of principal or interest owing
with respect to a beneficial interest in a temporary global Security will
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be made unless and until such interest in such temporary global Security shall
have been exchanged for an interest in a definitive Security. Any interest so
received by Euroclear and CEDEL and not paid as herein provided shall be
returned to the Trustee prior to the expiration of two years after such Interest
Payment Date in order to be repaid to the Company.
SECTION 3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Securities (the registers maintained in such office or in any such
office or agency of the Company in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. The
Trustee, at its Corporate Trust Office, is hereby appointed "Security Registrar"
for the purpose of registering Registered Securities and transfers of Registered
Securities on such Security Register as herein provided. In the event that the
Trustee shall cease to be Security Registrar, it shall have the right to examine
the Security Register at all reasonable times.
Subject to the provisions of this Section 3.5, upon surrender for
registration of transfer of any Registered Security of any series at any office
or agency of the Company in a Place of Payment for that series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount, bearing a number not contemporaneously outstanding, and
containing identical terms and provisions.
Subject to the provisions of this Section 3.5, at the option of the
Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such Registered Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Registered Securities which the Holder
making the exchange is entitled to receive. Unless otherwise specified with
respect to any series of Securities as contemplated by Section 3.1, Bearer
Securities may not be issued in exchange for Registered Securities.
If (but only if) permitted by the applicable Board Resolution and
(subject to Section 3.3) set forth in the applicable Officers' Certificate, or
in any indenture supplemental hereto, delivered as contemplated by Section 3.1,
at the option of the Holder, Bearer Securities of any series may be exchanged
for Registered Securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor, upon surrender of the Bearer
Securities to be
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exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default thereto appertaining. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security shall surrender to any Paying Agent any such missing
coupon in respect of which such a payment shall have been made, such Holder
shall be entitled to receive the amount of such payment; provided, however,
that, except as otherwise provided in Section 10.2, interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in a permitted exchange for a
Registered Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 3.1, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depositary for any permanent global
Security is DTC, then, unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for definitive
Securities, a global Security may be transferred, in whole but not in part, only
to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor depositary
to DTC for such global Security selected or approved by the Company or to a
nominee of such successor depositary to DTC. If at any time DTC notifies the
Company that it is unwilling or unable to continue as depositary for the
applicable global Security or Securities or if at any time DTC ceases to be a
clearing agency registered under the Securities Exchange Act of 1934 if so
required by applicable law or regulation, the Company shall appoint a successor
depositary with respect to such global Security or Securities. If (x) a
successor depositary for such global Security or Securities is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such unwillingness, inability or ineligibility, (y) an Event of Default
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has occurred and is continuing and the beneficial owners representing a majority
in principal amount of the applicable series of Securities represented by such
global Security or Securities advise DTC to cease acting as depositary for such
global Security or Securities or (z) the Company, in its sole discretion,
determines at any time that all Outstanding Securities (but not less than all)
of any series issued or issuable in the form of one or more global Securities
shall no longer be represented by such global Security or Securities, then the
Company shall execute, and the Trustee shall authenticate and deliver,
definitive Securities of like series, rank, tenor and terms in definitive form
in an aggregate principal amount equal to the principal amount of such global
Security or Securities. If any beneficial owner of an interest in a permanent
global Security is otherwise entitled to exchange such interest for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified as contemplated by Section 3.1 and provided that
any applicable notice provided in the permanent global Security shall have been
given, then without unnecessary delay but in any event not later than the
earliest date on which such interest may be so exchanged, the Company shall
execute, and the Trustee shall authenticate and deliver, definitive Securities
in aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Security. On or after the earliest
date on which such interests may be so exchanged, such permanent global Security
shall be surrendered for exchange by DTC or such other depositary as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose; provided, however, that no such exchanges may
occur during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption; and provided further that no Bearer Security delivered in
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date or (ii) any Special Record Date
and the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange or redemption shall (if so required by the Company or
the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the
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Company and the Security Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6, 11.7 or 13.6 not involving any transfer.
The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
11.3 and ending at the close of business on (A) if such Securities are issuable
only as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if such Securities are issuable as Bearer Securities, the day
of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Registered Security
to be redeemed in part, the portion thereof not to be redeemed, or (iii) to
exchange any Bearer Security so selected for redemption except that such a
Bearer Security may be exchanged for a Registered Security of that series and
like tenor, provided that such Registered Security shall be simultaneously
surrendered for redemption or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any
mutilated Security or a Security with a mutilated coupon appertaining to it is
surrendered to the Trustee or the Company, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee to save
each of them or any agent of either of them harmless, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
or coupon and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security or coupon has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series
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and principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Security or to
the Security to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case
any such mutilated, destroyed, lost or stolen Security or coupon has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium, if any),
any interest on and any Additional Amounts with respect to, Bearer Securities
shall, except as otherwise provided in Section 10.2, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 3.1, any interest on Bearer Securities
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Security, or
in exchange for a Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Except as
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 3.1, interest on any Registered Security that is
payable, and is punctually paid or duly provided for, on any interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose pursuant to Section 10.2; provided, however, that each
installment of interest on any Registered Security may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 3.8, to the address of
such
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Person as it appears on the Security Register or (ii) transfer to an account
maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 3.1 with respect
to the Securities of any series, payment of interest may be made, in the case of
a Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.
Unless otherwise provided as contemplated by Section 3.1, every
permanent global Security will provide that interest, if any, payable on any
Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case
may be, with respect to that portion of such permanent global Security held for
its account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an office
or agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 3.1, any interest on any Registered
Security of any series that 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 registered Holder thereof 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 Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Registered
Security of such series and the date of the proposed payment (which shall not be
less than 30 days after such notice is received by the Trustee) and at the same
time the Company shall deposit with the Trustee an amount of money in the
currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 3.1 for the Securities of such series)
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to
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such Defaulted Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder of
Registered Securities of such series at his address as it appears in the
Security Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the Company,
cause a similar notice to be published at least once in an Authorized Newspaper
in each place of payment, but such publications shall not be a condition
precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2). In case a Bearer Security of any series is surrendered at
the office or agency in a Place of Payment for such series in exchange for a
Registered Security of such series after the close of business at such office or
agency on any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon or coupons relating
to such proposed date of payment and Defaulted Interest will not be payable on
such proposed date of payment in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon or coupons when due in accordance with the provisions of this
Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 3.8 PERSONS DEEMED OWNERS. Prior to due presentment of a
Registered Security for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any), and (subject to
Sections 3.5 and 3.7) interest on, such Registered Security and for all other
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purposes whatsoever, whether or not such Registered 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.
Title to any Bearer Security and any coupons appertaining thereto shall
pass by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the Holder of any Bearer Security and the Holder of any coupon
as the absolute owner of such Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Security or coupon 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.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by any depositary, as a Holder, with respect to
such global Security or impair, as between such depositary and owners of
beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 3.9 CANCELLATION. All Securities and coupons surrendered for
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and coupons and Securities and coupons surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it;
provided, however, where the Place of Payment is located outside of the United
States, the Paying Agent at such Place of Payment may cancel the Securities
surrendered to it for such purposes prior to delivering the Securities to the
Trustee. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. Canceled Securities and coupons held by
the Trustee shall be destroyed by the
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Trustee and the Trustee shall deliver a certificate of such destruction to the
Company, unless by a Company Order the Company directs their return to it.
SECTION 3.10 COMPUTATION OF INTEREST. Except as otherwise specified as
contemplated by Section 3.1 with respect to Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall upon Company Request cease to be of further effect with respect to any
series of Securities specified in such Company Request (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities of such series herein expressly provided for and any right to receive
Additional Amounts), and the Trustee, upon receipt of a Company Order, and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when:
(1) either
(A) all Securities of such series theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender is not required or
has been waived as provided in Section 3.5, (ii) Securities and coupons of such
series which have been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.6, (iii) coupons appertaining to Securities called
for redemption and maturing after the relevant Redemption Date, whose surrender
has been waived as provided in Section 11.6, and (iv) Securities and coupons of
such series 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 10.3) have been delivered
to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii)
below, any coupons appertaining thereto not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii)if redeemable at the option of the Company, are to
be called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
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and the Company, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust
for the purpose (A) an amount of money in the
currency or currencies, currency unit or units or
composite currency or currencies in which the
Securities of such series are payable, (B)
Government Obligations that 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
combination thereof, sufficient in each case to pay
and discharge the entire indebtedness on such
Securities and such coupons not theretofore
delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, and
any Additional Amounts with respect thereto, to the
date of such deposit (in the case of Securities
which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture as to
such series have been complied with. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee and
any predecessor Trustee under Section 6.7, the obligations of the Company to any
Authenticating Agent under Section 6.12 and, if money shall have been deposited
with and held by the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 4.2 and the last paragraph
of Section 10.3 shall survive.
SECTION 4.1 APPLICATION OF TRUST FUNDS. Subject to the provisions of
the last paragraph of Section 10.3, all amounts deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any), and any interest and
Additional Amounts for whose payment such amounts have been deposited with or
received by the Trustee, but such amounts need not be segregated from other
funds except to the extent required by law. 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 5
REMEDIES
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SECTION 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used herein
with respect to any particular series of Securities, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be occasioned by the provisions of Article 15 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 upon or any Additional
Amounts payable in respect of any Security of that series or of any coupon
appertaining thereto, when such interest, Additional Amounts or coupon 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 15); or
(2) default in the payment of the principal of (or premium, if any, on)
any Security of that series when it becomes due and payable at its Maturity
(whether or not such payment is prohibited by the provisions of Article 15); or
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of any Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture with respect to any Security of that series
(other than a covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with) and continuance of
such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series 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) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A)commences a voluntary case,
(B)consents to the entry of an order for relief against it in an
involuntary case,
(C)consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D)makes a general assignment for the benefit of its creditors;
or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
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(A)is for relief against the Company or any Significant
Subsidiary in an involuntary case,
(B)appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the property of
any of them, or
(C)orders the winding up or liquidation of the Company or any
Significant Subsidiary, and the order or decree remains
unstayed and in effect for 60 days; or
(7) any other Event of Default provided with respect to Securities of
that series.
As used in this Section 5.1, the term "Bankruptcy Law" means title 11,
U.S. Code or any similar Federal or State law for the relief of debtors and the
term "Custodian" means any receiver, trustee, assignee, liquidator or other
similar official under any Bankruptcy Law.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal (or, if any Securities are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal or specified portion thereof shall become immediately
due and payable. If an Event of Default specified in Section 5.1(5) or 5.1(6)
occurs, the principal of, and accrued interest (including Additional Amounts)
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 with respect to
Securities of any series 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 provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay in the currency or currency unit or composite currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 3.1 for the Securities of such series):
(A) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Securities
of that series and any related coupons,
(B) the principal of (and premium, if any, on) any Outstanding
Securities of that series which have become due otherwise
than by such declaration of
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acceleration and interest thereon at the rate or rates
borne by or provided for in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and any
Additional Amounts at the rate or rates borne by or
provided for in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of (or premium, if any) or interest
on Securities of that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if:
(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Security of any series and any related coupon
when such interest or Additional Amount 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 of any series at its Maturity, then the Company will, upon
demand of the Trustee, pay to the Trustee, for the benefit of the Holders of
such Securities of such series and coupons, the whole amount then due and
payable on such Securities and coupons for principal (and premium, if any) and
interest and Additional Amounts, with interest upon any overdue principal (and
premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, upon any overdue installments of interest or Additional
Amounts, if any, at the rate or rates borne by or provided for in such
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities of such series and
collect the moneys adjudged or decreed to be payable in the manner provided by
law
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out of the property of the Company or any other obligor upon such Securities of
such series, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
and any related coupons by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities of any series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of principal
(and premium, if any) and interest and Additional Amounts, if any, owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby directed by each Holder of
Securities of such series and coupons to make such payments to the Trustee, and
in the event that the Trustee shall request the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding; provided; however, that the Trustee
may, on behalf
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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 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
OR COUPONS. All rights of action and claims under this Indenture or any of the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest and any
Additional Amounts, upon presentation of the Securities or coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: To the holders of Senior Indebtedness to the extent required by
the provisions of Article 15;
THIRD: To the payment of the amounts then due and unpaid upon the
Securities and coupons for principal (and premium, if any) and interest and any
Additional Amounts payable, 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 aggregate amounts due and payable on such Securities and
coupons for principal (and premium, if any), interest and Additional Amounts,
respectively; and
FOURTH: To the payment of the remainder, if any, to the Company.
SECTION 5.7 LIMITATION ON SUITS. No Holder of any Security of any
series or any related coupon shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
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(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee 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 of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any other
provision in this Indenture, the Holder of any Security or coupon shall have the
right which is absolute and unconditional to receive payment of the principal of
(and premium, if any) and (subject to Sections 3.5 and 3.7) interest on, and any
Additional Amounts in respect of, such Security or payment of such coupon on the
respective due dates expressed in such Security or coupon (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be) and, if applicable, to convert such Security in accordance with the
provisions of the applicable supplemental indenture or Board Resolutions and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder of a Security or coupon 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, the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such
proceeding, 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 or coupons in the last paragraph of Section 3.6, no
right or remedy herein conferred upon or
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reserved to the Trustee or to the Holders of Securities or coupons is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Security or coupon to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities or coupons, as the
case may be.
SECTION 5.12 CONTROL BY HOLDERS OF SECURITIES. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series,
provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of Securities of such
series not joining therein.
SECTION 5.13 WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series and any related
coupons waive any past default hereunder with respect to such series and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or interest
on or Additional Amounts payable in respect of any Security of such series or
any related coupons, or
(2) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
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
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waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 5.14 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.
SECTION 5.15 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
ARTICLE 6
THE TRUSTEE
SECTION 6.1 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
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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.
(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 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 6.2 NOTICE OF DEFAULTS. Within 90 days after the occurrence
of any default hereunder with respect to the Securities of any series, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in
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the case of a default in the payment of the principal of (or premium, if any) or
interest on or any Additional Amounts with respect to any Security of such
series, or in the payment of any sinking fund installment with respect to the
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities and coupons of such series; and provided further that in the
case of any default or breach of the character specified in Section 5.1(4) with
respect to the Securities and coupons of such series, no such notice to Holders
shall be given until at least 90 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Securities of such series.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of TIA
Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
coupon or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security, together with any coupons appertaining thereto, to the
Trustee for authentication and delivery pursuant to Section 3.3 which shall be
sufficiently evidenced as provided therein) and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may request and, in the absence of bad faith
on its part, rely upon an Officers' Certificate and Opinion of Counsel;
(4) the Trustee may consult with counsel 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;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities of any series or any related coupons pursuant
to this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request,
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direction, consent, order, bond, debenture, note, coupon 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 make reasonable examination of the books, records and premises of
the Company, personally or by agent or attorney following reasonable notice to
the Company;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the Trustee
undertakes to perform 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.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The
recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. 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 6.5 MAY HOLD SECURITIES. The Trustee, any Paying Agent,
Security Registrar, Authenticating Agent or any other agent of the Company, in
its individual or any other capacity, may become the owner or pledgee of
Securities and coupons and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 6.6 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
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under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse each of
the Trustee and any predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel)
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its own part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.l(5) or Section 5.1(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium, if any), interest on or
Additional Amounts payable with respect to particular Securities or any coupons.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 6.8 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation or association
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation or association shall be deemed to be its
combined capital and surplus as set forth in
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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. If the Trustee has or shall acquire a conflicting interest
within the meaning of the TIA, 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 TIA and this Indenture.
SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee 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 with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of TIA Section 310(b) after written
request therefor by the Company or by any Holder of
a Security 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 6.8 and shall fail to resign after written
request therefor by the Company or by any Holder of
a Security who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge
or control of the Trustee or of its property or
affairs for the purpose of rehabilitation,
conservation or liquidation, then, in
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any such case, (i) the Company by or pursuant to a Board
Resolution may remove the Trustee and appoint a successor
Trustee with respect to all Securities, or (ii) subject to TIA
Section 315(e), any Holder of a Security who has been a bona
fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of
a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by or pursuant to
a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series). If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee with respect to the Securities
of such series and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders of Securities
and accepted appointment in the manner hereinafter provided, any Holder of a
Security who has been a bona fide Holder of a Security of such series for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series in the
manner provided for notices to the Holders of Securities in Section 1.6. Each
notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee 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,
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trusts and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto,
pursuant to Article 9 hereof, wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall constitute such
Trustees co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation
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to which the Trustee shall be a party, or any corporation or association
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or association shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities or coupons 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 or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities or coupons. In case any Securities or coupons
shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Securities or coupons, in
either its own name or that of its predecessor Trustee, with the full force and
effect which this Indenture provides for the certificate of authentication of
the Trustee.
SECTION 6.12 APPOINTMENT OF AUTHENTICATING AGENT. At any time when any
of the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption or
repayment thereof, 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. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instrument shall be promptly furnished to the Company.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a bank or trust company or corporation organized and doing business and in
good standing under the laws of the United States of America or of any State or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation or association into which an Authenticating Agent may
be merged or converted or with which it may be consolidated, or any corporation
or association resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation or association
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such
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corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or further act on the part of the Trustee or
the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time
resign by giving written notice of resignation to the Trustee for such series
and to the Company. The Trustee for any series of Securities may at any time
terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth in
Section 1.6. 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 herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation including reimbursement of its reasonable expenses
for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
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This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
[NAME OF TRUSTEE]
as Trustee
By: __________________________________
as Authenticating Agent
By: _________________________________
Authorized Signatory
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every Holder
of Securities or coupons, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with TIA Section 312,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under TIA Section 312(b).
SECTION 7.2 REPORTS BY TRUSTEE. Within 60 days after May 15 of each
year commencing with the first May 15 after the first issuance of Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in TIA Section 313(c) a brief report dated as of such May
15 if required by TIA Section 313(a). 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 any Securities are listed with the Commission and the
Company. The Company will notify the Trustee when any Securities are listed on
any stock exchange and of any delisting thereof.
SECTION 7.3 REPORTS BY COMPANY. THE COMPANY WILL:
(1) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Sections 13(a) or 13(b) or Section 15(d) of the Securities Exchange
Act
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of 1934; or, if the Company is not required to file information, documents or
reports pursuant to either of such Sections, then it will file with the Trustee,
in accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Securities Exchange
Act of 1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(3) file with the Trustee and the Commission, if applicable, and
transmit by mail to the Holders of Securities, within 30 days after the filing
thereof with the Trustee, in the manner and to the extent provided in TIA
Section 313(c), such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission and other information as may be required pursuant to the TIA
at the time and in the manner provided pursuant to such Act.
SECTION 7.4 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
(a) the Company will furnish or cause to be furnished to the Trustee:
(i) semi-annually, not later than 10 days after the Regular
Record Date for interest for each series of Securities, a
list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders of Registered
Securities of such series as of such Regular Record Date,
or if there is no Regular Record Date for interest for
such series of Securities, semi-annually, upon such dates
as are set forth in the Board Resolution or indenture
supplemental hereto authorizing such series, and such
information, if any, concerning the holders of Bearer
Securities that is known to the Company or any Paying
Agent other than the Company; provided, however, that the
Company and such Paying Agents shall have no obligation to
investigate any matter relating to any holder of a Bearer
Security or a coupon appertaining thereto; and
(ii) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any
such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is
furnished, provided, however, that, so long as the Trustee
is the Security Registrar, no such list shall be required
to be furnished.
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(b) The Company shall provide the Trustee with at least 30 days' prior
notice of any change in location of its principal executive offices or other
principal place of business.
ARTICLE 8
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 8.1 CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES
AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. The Company may
consolidate with, or sell, lease, transfer, convey or otherwise dispose of all
or substantially all of its assets to, or merge with or into any other Person,
provided that in any such case, (1) either the Company shall be the continuing
corporation, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
or leases the Company's assets substantially as an entirety is a corporation,
partnership, limited liability company or trust organized and existing under the
laws of any United States jurisdiction and expressly assumes the due and
punctual payment of the principal of (and premium, if any) and any interest
(including all Additional Amounts, if any, payable pursuant to this Indenture on
all of the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by the Company and shall have provided for conversion
rights, if applicable, in accordance with the relevant supplemental indenture or
Board Resolution, by supplemental indenture, complying with Article 9 hereof,
satisfactory to the Trustee, executed and delivered to the Trustee by such
Person and (2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or such Person or
any Subsidiary as a result thereof as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or the lapse of time, or both, would become an Event
of Default, shall have occurred and be continuing.
SECTION 8.2 RIGHTS AND DUTIES OF SUCCESSOR PERSON. In case of any
such consolidation, merger, sale, lease or conveyance and upon any such
assumption by the successor Person, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the Company, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such successor
Person, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication, and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee for that purpose. All the Securities so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Securities theretofore or thereafter issued in accordance with the terms
of this Indenture as though all of such Securities had been issued at the date
of the execution hereof.
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In case of any such consolidation, merger, sale, lease or conveyance,
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 8.3 OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease, transfer, conveyance or other disposition
permitted under Section 8.1 is also subject to the condition that the Trustee
receive an Officers' Certificate and an Opinion of Counsel to the effect that
any such consolidation, merger, sale, lease, transfer or conveyance or other
disposition and the assumption by any successor Person, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities contained; or
(2) to add to the covenants of the Company for the equal and ratable
benefit of the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such Events of Default are to
be for the benefit of less than all series of Securities, stating that such
Events of Default are expressly being included solely for the benefit of such
series); provided, however, that in respect of any such additional Events of
Default such supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such default or
may limit the right of the Holders of a majority in aggregate principal amount
of that or those series of Securities to which such additional Events of Default
apply to waive such default; or
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(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal of or any premium or
interest on Bearer Securities, to permit Bearer Securities to be issued in
exchange for Registered Securities, to permit Bearer Securities to be issued in
exchange for Bearer Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form, provided that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and
any related coupons as permitted by Sections 2.1 and 3.1, including the
provisions and procedures relating to Securities convertible into Common Stock
or Preferred Stock, as the case may be; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
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 such provisions shall not adversely affect the interests of
the Holders of Securities of any series or any related coupons in any material
respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 4.1, 14.2 and 14.3;
provided that any such action shall not adversely affect the interests of the
Holders of Securities of such series and any related coupons or any other series
of Securities in any material respect; or
(11) to make any change that does not adversely affect the rights of
any holder of Securities of the applicable series; or
(12) to make any change to comply with any requirement of the
Commission in connection with the qualification of the Indenture under TIA; or
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(13) to provide for the issuance of uncertificated Securities of one
or more series in addition to or in place of certificated Securities; provided,
however, that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by or pursuant to a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of or interest on, any Security; or
reduce the principal amount thereof or the rate or amount of interest thereon or
any Additional Amounts payable in respect thereof, or any premium payable upon
the redemption thereof, or change any obligation of the Company to pay
Additional Amounts pursuant to Section 10.8 (except as contemplated by Section
8.1(1) and permitted by Section 9.1(1)), or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2 or
the amount thereof provable in bankruptcy pursuant to Section 5.4, or adversely
affect any right of repayment at the option of the Holder of any Security, or
change any Place of Payment where, or the currency or currencies, currency unit
or units or composite currency or currencies in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption or repayment at the option of the Holder,
on or after the Redemption Date or the Repurchase Date, as the case may be); or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver with respect to such series (or compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture;
(3) make any change that adversely affects the right to convert any
Security;
(4) modify the provisions of the Indenture relating to the ranking of
the Securities in a manner adverse to the Holders of the Securities;
(5) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Securities; or
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(6) modify any of the provisions of this Section, Section 5.13 or
Section 10.8, except to increase the required percentage to effect such action
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.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.1) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder and of any coupon appertaining
thereto shall be bound thereby.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 9.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
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ARTICLE 10
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
ADDITIONAL AMOUNTS. The Company covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually pay the
principal of (and premium, if any) and interest on and any Additional Amounts
payable in respect of the Securities of that series in accordance with the terms
of such series of Securities, any coupons appertaining thereto and this
Indenture. Unless otherwise specified as contemplated by Section 3.1 with
respect to any series of Securities, any interest due on and any Additional
Amounts payable in respect of Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 10.8 in respect
of principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 3.1, at
the option of the Company, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. If Securities of a
series are issuable only as Registered Securities, the Company shall maintain in
each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment or
conversion, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency.
If Securities of a series are issuable as Bearer Securities, the
Company will maintain: (A) in the Borough of Manhattan, The City of New York, an
office or agency where any Registered Securities of that series may be presented
or surrendered for payment or conversion, where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served and where Bearer Securities of that series and related coupons may
be presented or surrendered for payment or conversion in the circumstances
described in the following paragraph (and not otherwise); (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Securities
of that series and related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Securities of that
series pursuant to Section 10.8) or conversion; provided, however, that if the
Securities of that series are listed on the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent for the Securities of
that series in Luxembourg or any other required city located outside the United
States, as the case
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may be, so long as the Securities of that series are listed on such exchange;
and (C) subject to any laws or regulations applicable thereto, in a Place of
Payment for that series located outside the United States an office or agency
where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange and where notices and demand to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of each such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee
(except that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any Additional
Amounts payable on Bearer Securities of that series pursuant to Section 10.8) or
conversion at the offices specified in the Security, in London, England, and the
Company hereby appoints the same as its agent to receive such presentations,
surrenders, notices and demands), and the Company hereby appoints the Trustee
its agent to receive all such presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 3.1, no payment of principal, premium or interest on or Additional
Amounts in respect of Bearer Securities shall be made at any office or agency of
the Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States; provided, however, that, if the Securities of a series are payable in
Dollars, payment of principal of and any premium and interest on any Bearer
Security (including any Additional Amounts payable on Securities of such series
pursuant to Section 10.8) shall be made at the office of the Company's Paying
Agent in the Borough of Manhattan, The City of New York, if (but only if)
payment in Dollars of the full amount of such principal, premium, interest or
Additional Amounts, as the case may be, at all offices or agencies outside the
United States maintained for the purpose by the Company in accordance with this
Indenture, is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all of 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 accordance with the requirements set forth above for Securities of
any series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency. Unless otherwise specified with respect to
any Securities pursuant to Section 3.1 with respect to a series of Securities,
the Company hereby designates as a Place of Payment for each series of
Securities the office or agency of the Company in the Borough of Manhattan, The
City of New York, and initially appoints the Trustee at its Corporate Trust
Office as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notice and demands.
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Unless otherwise specified with respect to any Securities pursuant to
Section 3.1, if and so long as the Securities of any series (i) are denominated
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of the Indenture, then the Company
will maintain with respect to each such series of Securities, or as so required,
at least one exchange rate agent.
SECTION 10.3 MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If
the Company shall at any time act as its own Paying Agent with respect to any
series of any Securities and any related coupons, it will, on or before each due
date of the principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any of the Securities of that series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum in the currency
or currencies, currency unit or units or composite currency or currencies in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 3.1 for the Securities of such series) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons, it will, before each due date of
the principal of (and premium, if any), or interest on or Additional Amounts in
respect of, any Securities of that series, deposit with a Paying Agent a sum (in
the currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the principal
(and premium, if any) or interest or Additional Amounts, so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest or Additional Amounts and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (1) hold all sums held by it for the payment of principal
of (and premium, if any) or interest on Securities or Additional Amounts in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided; (2) give the
Trustee notice of any default by the Company (or any other obligor upon the
Securities) in the making of any such payment of principal (and premium, if any)
or interest or Additional Amounts; and (3) at any time during the continuance of
any Event of Default upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent.
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
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held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such sums.
Except as otherwise provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on,
or any Additional Amounts in respect of, any Security of any series and
remaining unclaimed for two years after such principal (and premium, if any),
interest or Additional Amounts has become due and payable shall be paid to the
Company upon 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 of such
principal of (and premium, if any) or interest on, or any Additional Amounts in
respect of, any Security, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 10.4 EXISTENCE. Subject to Article 8, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory) and franchises,
except to the extent that the Board of Directors shall determine that the
failure to do so would not have a material adverse effect on the business,
assets, financial condition or results of operation of the Company (a "Material
Adverse Effect"); provided, however, that the Company shall not be required to
preserve any 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 10.5 MAINTENANCE OF PROPERTIES. The Company will cause all of
it properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as 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, except to the extent that the failure to do so would not have a
Material Adverse Effect on the Company; provided, however, that the Company
shall not be required to continue the operation or maintenance of any such
property or be prevented from disposing of such property if the Board of
Directors shall determine that such discontinuance or disposal is desirable in
the conduct of the business of the Company or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
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SECTION 10.6 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon it 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 and have a Material Adverse Effect; 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 10.7 STATEMENT AS TO COMPLIANCE. The Company will deliver to
the Trustee, within 120 days after the end of each fiscal year of the Company, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all terms, conditions and provisions under this Indenture and,
in the event of any noncompliance, specifying such noncompliance and the nature
and status thereof. For purposes of this Section 10.7, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 10.8 ADDITIONAL AMOUNTS. If any Securities of a series
provide for the payment of Additional Amounts, the Company will pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 3.1. Whenever
in this Indenture there is mentioned, in any context except in the case of
Section 5.2(1), the payment of the principal of or any premium or interest on,
or in respect of, any Security of any series or payment of any related coupon or
the net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established pursuant to Section 3.1
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
Except as otherwise specified as contemplated by Section 3.1, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal and any premium is made,
and at least 10 days prior to each date of payment of principal and any premium
or interest if there has been any change with respect to the matters set forth
in the below-mentioned Officers' Certificate, the Company will furnish the
Trustee and the Company's principal Paying Agent or Paying Agents, if other than
the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of and any
premium or interest on the Securities of that series shall be made to Holders of
Securities of that series or any related coupons who are not United States
persons without
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withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of the series. If any such withholding shall
be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Securities of that series or related coupons and the Company will pay to the
Trustee or such Paying Agent the Additional Amounts required by the terms of
such Securities. In the event that the Trustee or any Paying Agent, as the case
may be, shall not so receive the above-mentioned certificate, then the Trustee
or such Paying Agent shall be entitled (i) to assume that no such withholding or
deduction is required with respect to any payment of principal or interest with
respect to any Securities of a series or related coupons until it shall have
received a certificate advising otherwise and (ii) to make all payments of
principal and interest with respect to the Securities of a series or related
coupons without withholding or deductions until otherwise advised. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them or in reliance on any Officers'
Certificate furnished pursuant to this Section or in reliance on the Company's
not furnishing such an Officers' Certificate.
The obligations of the Company under this Section shall survive any
termination, defeasance or discharge of the Indenture or applicable Security.
SECTION 10.9 WAIVER OF CERTAIN COVENANTS. The Company may omit in any
particular instance to comply with any term, provision or condition set forth in
Sections 10.4 to 10.6, inclusive, with respect to such series, if before the
time for such compliance the Holders of at least a majority in principal amount
of all outstanding Securities of such series, 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 term, provision or condition shall remain in
full force and effect.
ARTICLE 11
REDEMPTION OF SECURITIES
SECTION 11.1 APPLICABILITY OF ARTICLE. Securities of any series which
are redeemable before their Stated Maturity shall be redeemable in accordance
with their terms and (except as otherwise specified as contemplated by Section
3.1 for Securities of any series) in accordance with this Article.
SECTION 11.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company of
all or any part of the Securities of any series, the Company shall, at least 45
days prior to the giving of the notice of redemption in Section 11.4 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
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Redemption Date and of the principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 11.3 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If
less than all the Securities of any series issued on the same day with the same
terms are to be redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series issued on such date with the same
terms not previously called for redemption, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) 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 Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 11.4 NOTICE OF REDEMPTION. Notice of redemption shall be
given in the manner provided in Section 1.6, not less than 30 days nor more than
60 days prior to the Redemption Date, unless a shorter period is specified by
the terms of such series established pursuant to Section 3.1, to each Holder of
Securities to be redeemed, but failure to give such notice in the manner herein
provided to the Holder of any Security designated for redemption as a whole or
in part, or any defect in the notice to any such Holder, shall not affect the
validity of the proceedings for the redemption of any other such Security or
portion thereof.
Any notice that is mailed to the Holders of Registered Securities in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption Date
payable as provided in Section 11.6, if any, and Additional Amounts, if any,
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(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the holder will receive, without a
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 11.6, if any,
will become due and payable upon each such Security, or the portion thereof, to
be redeemed and, if applicable, that interest thereon shall cease to accrue on
and after said date,
(6) the Place or Places of Payment where such Securities, together in
the case of Bearer Securities with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for payment of the
Redemption Price and accrued interest, if any, or for conversion,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be accompanied
by all coupons maturing subsequent to the date fixed for redemption or the
amount of any such missing coupon or coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the Company, the
Trustee for such series and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such Bearer
Securities may be exchanged for Registered Securities not subject to redemption
on this Redemption Date pursuant to Section 3.5 or otherwise, the last date, as
determined by the Company, on which such exchanges may be made,
(10) the CUSIP number of such Security, if any, and
(11) if applicable, that a Holder of Securities who desires to
convert Securities for redemption must satisfy the requirements for conversion
contained in such Securities, the then existing conversion price or rate and the
date and time when the option to convert shall expire.
Notice of redemption of Securities to be redeemed 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.
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SECTION 11.5 DEPOSIT OF REDEMPTION PRICE. Not later than 11:00 a.m.
on the 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, which it may
not do in the case of a sinking fund payment under Article 12, segregate and
hold in trust as provided in Section 10.3) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 3.1 for the Securities of such series) sufficient to pay on
the Redemption Date the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date.
SECTION 11.6 SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 3.1 for the
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 10.2)
and, unless otherwise specified as contemplated by Section 3.1, only upon
presentation and surrender of coupons for such interest; and provided further
that, except as otherwise provided with respect to Securities convertible into
Common Stock or Preferred Stock, installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.7.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that interest represented by coupons shall be payable only at an office
or agency located outside the United States (except as otherwise
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provided in Section 10.2) and, unless otherwise specified as contemplated by
Section 3.1, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 11.7 SECURITIES REDEEMED IN PART. Any Registered Security
which is to be redeemed only in part (pursuant to the provisions of this Article
or of Article 12) shall be surrendered at a Place of Payment therefor (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing) and
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge a new Security or Securities of
the same series, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE 12
SINKING FUNDS
SECTION 12.1 APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 3.1 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of such Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of any Securities of any
series, the cash amount of any mandatory sinking fund payment may be subject to
reduction as provided in Section 12.2. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 12.2 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company may, in satisfaction of all or any part of any mandatory sinking
fund payment with respect to the Securities of a series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series, (1) deliver Outstanding Securities of such series (other than any
previously called for redemption) together, in the case of any Bearer Securities
of such series, with all unmatured coupons appertaining thereto and (2) apply as
a credit Securities of such series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, as provided for by the terms of such Securities, or which have
otherwise been acquired by the Company; provided that such Securities so
delivered or applied
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as a credit have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the applicable
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such mandatory sinking fund payment shall
be reduced accordingly.
SECTION 12.3 REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than
60 days prior to each sinking fund payment date for Securities of any series,
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 3.1 for the
Securities of such series) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 12.2, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and will also deliver to the Trustee any
Securities to be so delivered and credited. If such Officers' Certificate shall
specify an optional amount to be added in cash to the next ensuing mandatory
sinking fund payment, the Company shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.4. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.6 and 11.7.
ARTICLE 13
REPURCHASE AT THE OPTION OF HOLDERS
SECTION 13.1 APPLICABILITY OF ARTICLE. Repurchase of Securities of
any series before their Stated Maturity at the option of Holders thereof shall
be made in accordance with the terms of such Securities, if any, and (except as
otherwise specified by the terms of such series established pursuant to Section
3.1) in accordance with this Article.
SECTION 13.2 REPURCHASE OF SECURITIES. Securities of any series
subject to repayment in whole or in part at the option of the Holders thereof
will, unless otherwise provided in the terms of such Securities, be repaid at a
price equal to the principal amount thereof, together with interest, if any,
thereon accrued to the Repurchase Date specified in or pursuant to the terms of
such Securities. The Company covenants that not later than 12:00 noon on the
Repurchase Date it will deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3) an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 3.1 for the Securities of such series) sufficient to pay the principal
(or, if so provided by the terms of the Securities of any series, a percentage
of the principal) of, and (except if the Repurchase Date
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shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.
SECTION 13.3 NOTICE; EXERCISE OF REPURCHASE RIGHT. (a) On or before
the 15th day after the Company knows or reasonably should know an event giving
rise to a repurchase right 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 such event and of the repurchase 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 repurchase
right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its
repurchase right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred such an event.
(b) To exercise a repurchase 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 repurchased, and a statement that an election to exercise the
repurchase right is being made thereby, and (ii) the Security or Securities with
respect to which the repurchase right is being exercised, duly endorsed for
transfer to the Company. Such written notice shall be irrevocable. If the
Repurchase Date falls between any Regular Record Date and the corresponding
succeeding Interest Payment Date, Securities to be repurchased 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.
SECTION 13.4 WHEN SECURITIES PRESENTED FOR REPURCHASE BECOME DUE AND
PAYABLE. If Securities of any series providing for repayment at the option of
the Holders thereof shall have been surrendered as provided in this Article and
as provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become
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due and payable and shall be paid by the Company on the Repurchase Date therein
specified, and on and after such Repurchase Date (unless the Company shall
default in the payment of such Securities on such Repurchase Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repurchase
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repurchase Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repurchase Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 10.2) and, unless
otherwise specified pursuant to Section 3.1, only upon presentation and
surrender of such coupons; and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repurchase Date shall be payable (but without interest thereon,
unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repurchase Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 13.2 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 10.2) and, unless
otherwise specified as contemplated by Section 3.1, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for repayment shall
not be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repurchase Date) shall, until paid,
bear interest from the Repurchase Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 13.5 SECURITIES NOT REPURCHASED ON REPURCHASE DATE. If any
Security surrendered for repurchase shall not be so paid on the Repurchase Date,
the principal of such Security shall, until paid, bear interest from the
Repurchase Date at a rate borne by such Security.
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SECTION 13.6 SECURITIES REPAID IN PART. Upon surrender of any
Registered Security which is to be repaid in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge and at the expense of the Company, a new
Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.
ARTICLE 14
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 14.1 APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. The Company may at its option by Board
Resolution, at any time, with respect to such Securities and any coupons
appertaining thereto, elect to have Section 14.2 (if applicable) or Section 14.3
(if applicable) be applied to such Outstanding Securities and any coupons
appertaining thereto upon compliance with the conditions set forth below in this
Article.
SECTION 14.2 DEFEASANCE AND DISCHARGE. Upon the Company's exercise of
the above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any coupons
appertaining thereto and the provisions of Article 15 hereof shall cease to be
effective on the date the conditions set forth in Section 14.4 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by such Outstanding Securities and any coupons appertaining thereto,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 14.5 and the other Sections of this Indenture referred to in clauses (A)
and (B) below, and to have satisfied all of its other obligations under such
Securities and any coupons appertaining thereto and this Indenture insofar as
such Securities and any coupons appertaining thereto are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any coupons appertaining thereto to receive, solely
from the trust fund described in Section 14.4 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any) and
interest, if any, on such Securities and any coupons appertaining thereto when
such payments are due, (B) the Company's obligations with respect to such
Securities under Sections 3.5, 3.6, 10.2 and 10.3 and with respect to the
payment of Additional Amounts, if any, on such Securities as contemplated by
Section 10.8, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article. Subject to compliance with this Article
14, the Company may exercise its option under this Section notwithstanding the
prior exercise of its option under Section 14.3 with respect to such Securities
and any coupons appertaining thereto.
SECTION 14.3 COVENANT DEFEASANCE. Upon the Company's exercise of the
above option applicable to this Section with respect to any Securities of or
within a series, the Company
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shall be released from its obligations under Sections 10.4 to 10.6, inclusive,
and, if specified pursuant to Section 3.1, its obligations under any other
covenant, with respect to such Outstanding Securities and any coupons
appertaining thereto and the provisions of Article 15 hereof shall cease to be
effective, on and after the date the conditions set forth in Section 14.4 are
satisfied (hereinafter, "covenant defeasance"), and such Securities and any
coupons appertaining thereto shall thereafter be deemed to be not "Outstanding"
for the purposes of any direction, waiver, consent or declaration or Act of
Holders (and the consequences of any thereof) in connection with Sections 10.4
to 10.6, inclusive, or such other covenant, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Securities and any
coupons appertaining thereto, 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 such other covenant, whether directly or indirectly, by reason
of any reference elsewhere herein to any such Section or such other covenant or
by reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 5.1(4) (with respect
to any of Sections 10.4, 10.5 or 10.6) or 5.1(7) or otherwise, as the case may
be, but, except as specified above, the remainder of this Indenture and such
Securities and any coupons appertaining thereto shall be unaffected thereby.
SECTION 14.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of Section 14.2 or Section 14.3
to any Outstanding Securities of or within a series and any coupons appertaining
thereto:
(a)The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 6.8 who shall agree to comply with the provisions of this Article 14
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities and any coupons appertaining
thereto, (1) an amount in such currency, currencies or currency unit or units or
composite currency or currencies in which such Securities and any coupons
appertaining thereto are then specified as payable at Stated Maturity, or (2)
Government Obligations applicable to such Securities and coupons appertaining
thereto (determined on the basis of the currency, currencies or currency unit or
units or composite currency or currencies in which such Securities and coupons
appertaining thereto are then specified as payable at Stated Maturity) which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment of principal of (and premium, if any) and interest and
Additional Amounts, if any, on such Securities and any coupons appertaining
thereto, money in an amount, or (3) a combination thereof, in any case, in an
amount, sufficient, without consideration of any reinvestment of such principal
and interest, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, (i) the principal of (and
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<PAGE> 83
premium, if any) and interest, if any, on such Outstanding Securities and any
coupons appertaining thereto on the Stated Maturity of such principal or
installment of principal or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to such Outstanding Securities and any
coupons appertaining thereto on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such Securities
and any coupons appertaining thereto.
(b)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.
(c)Such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a party or by which it
is bound.
(d)No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to such Securities and any
coupons appertaining thereto shall have occurred and be continuing on the date
of such deposit or, insofar as Sections 5.1(5) and 5.1(6) are concerned, at any
time during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period).
(e)In the case of an election under Section 14.2, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) since the date of execution of this Indenture, there has been
a change in the applicable Federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Outstanding Securities and any coupons appertaining thereto will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred.
(f)In the case of an election under Section 14.3, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto will
not recognize income, gain or loss for
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Federal income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred.
(g)The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 14.2 or the covenant defeasance under
Section 14.3 (as the case may be) have been complied with and an Opinion of
Counsel to the effect that either (i) as a result of a deposit pursuant to
subsection (a) above and the related exercise of the Company's option under
Section 14.2 or Section 14.3 (as the case may be), registration is not required
under the Investment Company Act of 1940, as amended, by the Company, with
respect to the trust funds representing such deposit or by the Trustee for such
trust funds or (ii) all necessary registrations under said Act have been
effected.
(h)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.
(i) Such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest as defined in Article 6 and for purposes of the
TIA with respect to any securities of the Company.
(j)Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be imposed
on the Company in connection therewith pursuant to Section 3.1.
SECTION 14.5 DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 10.3, all money and Government Obligations (or other
property as may be provided pursuant to Section 3.1) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 14.5, the "Trustee") pursuant to Section 14.4 in
respect of any Outstanding Securities of any series and any coupons appertaining
thereto shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and any coupons appertaining thereto and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
Money so held in trust shall not be subject to the provisions of Article 15.
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Unless otherwise specified with respect to any Security pursuant to
Section 3.1, if, after a deposit referred to in Section 14.4(a) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 3.1 or the terms of such
Security to receive payment in a currency or currency unit other than that in
which the deposit pursuant to Section 14.4(a) has been made in respect of such
Security, or (b) a Currency Conversion Event occurs in respect of the currency
or currency unit in which the deposit pursuant to Section 14.4(a) has been made,
the indebtedness represented by such Security and any coupons appertaining
thereto shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any), and
interest, if any, on such Security as the same becomes due out of the proceeds
yielded by converting (from time to time in the case of any such election) the
amount or other property deposited in respect of such Security into the currency
or currency unit in which such Security becomes payable as a result of such
election or Currency Conversion Event based on the applicable market exchange
rate for such currency or currency unit in effect on the second Business Day
prior to each payment date, except, with respect to a Currency Conversion Event,
for such currency or currency unit in effect (as nearly as feasible) at the time
of the Currency Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 14.4 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, subject to
Section 6.7, the Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or Government Obligations (or other property and
any proceeds therefrom) held by it as provided in Section 14.4 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 14.6 REINSTATEMENT. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 14.2 or 14.3 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 until such
time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 14.2 or 14.3; 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 15
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SUBORDINATION
SECTION 15.1 AGREEMENT TO SUBORDINATE. The Company agrees, and each
Holder of Securities by accepting a Security agrees, that the indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article, to the prior payment in full of all
Senior Indebtedness and that the subordination is for the benefit of the holders
of Senior Indebtedness.
SECTION 15.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of the principal of and interest (including interest
accruing after the commencement of any such proceeding) to the date of payment
on the Senior Indebtedness before Holders of Securities shall be entitled to
receive any payment of principal of or interest on Securities; and
(2) until the Senior Indebtedness is paid in full in cash, any
distribution to which Holders of Securities would be entitled but for this
Article shall be made to holders of Senior Indebtedness as their interests may
appear, except that Holders of Securities may receive securities that are
subordinated to Senior Indebtedness to at least the same extent as the
Securities.
SECTION 15.3 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not pay
principal of or interest on the Securities and may not acquire any Securities
for cash or property other than capital stock of the Company if:
(1) a default on Senior Indebtedness occurs and is continuing that
permits holders of such Senior Indebtedness to accelerate its maturity, and (2)
the default is the subject of judicial proceedings or the Company receives a
notice of the default from a person who may give it pursuant to Section 15.11.
If the Company receives any such notice, a similar notice received within nine
months thereafter relating to the same default on the same issue of Senior Debt
shall not be effective for purposes of this Section.
The Company may resume payments on the Securities and may acquire them
when:
(1) the default is cured or waived, or
(2) 120 days pass after the notice is given if the default is not the
subject of judicial proceedings, if this Article otherwise permits the payment
or acquisition at that time.
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SECTION 15.4 ACCELERATION OF SECURITIES. If payment of the Securities
is accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the acceleration. The Company may pay the
Securities when 120 days pass after the acceleration occurs if this Article
permits the payment at that time.
SECTION 15.5 WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
is made to Holders of Securities that because of this Article should not have
been made to them, the Holders of Securities who receive the distribution shall
hold it in trust for holders of Senior Indebtedness and pay it over to them as
their interests may appear.
SECTION 15.6 NOTICE BY COMPANY. The Company shall promptly notify the
Trustee and any Paying Agent of any facts known to the Company that would cause
a payment of principal of or interest on Securities to violate this Article.
SECTION 15.7 SUBROGATION. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Holders of Securities shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders of Securities have been applied to the payment
of Senior Indebtedness. A distribution made under this Article to holders of
Senior Indebtedness which otherwise would have been made to Holders of
Securities is not, as between the Company and Holders of Securities, a payment
by the Company on Senior Indebtedness.
SECTION 15.8 RELATIVE RIGHTS. This Article defines the relative
rights of Holders of Securities and holders of Senior Indebtedness. Nothing in
this Indenture shall:
(1) impair, as between the Company and Holders of Securities, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Securities in accordance with their terms;
(2) affect the relative rights of Holders of Securities and creditors
of the Company other than holders of Senior Indebtedness; or
(3) prevent the Trustee or any Holders of Securities from exercising
its available remedies upon an Event of Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise payable to
Holders of Securities.
If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still an Event of Default
as provided elsewhere herein.
SECTION 15.9 SUBORDINATION MAY NOT BE IMPAIRED BY TRUST. No right of
any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
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SECTION 15.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative.
SECTION 15.11 RIGHTS OF TRUSTEE AND PAYING AGENT. The Trustee or any
Paying Agent may continue to make payments on the Securities until it receives
notice of facts that would cause a payment of principal of or interest on the
Securities to violate this Article. Only the Company, a Representative or a
holder of an issue of Senior Indebtedness that has no Representative may give
the notice.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
CHECKFREE HOLDINGS CORPORATION
By:/s/ Allan L. Shulman
----------------------------------------
Title: Executive Vice President & Chief
Financial Officer
Attest:/s/ Robert J. Tannous
------------------------------------
Title: Assistant Secretary
<PAGE> 90
STATE OF Georgia )
) ss:
COUNTY OF Cobb )
On the 20th day of November, 1999, before me personally came Allen
L. Schulman to me known, who, being by me duly sworn, did depose and say that
he resides at Norcross, GA, that he is Executive Vice President and CFO of
CHECKFREE HOLDINGS CORPORATION, one of the parties described in and which
executed the foregoing instrument, and that he/she signed his/her name thereto
by authority of the Board of Trustees.
[Notarial Seal]
/s/M. L. Shulman
Notary Public, Cobb County, GA
My Commission Expires
June 12, 2000
<PAGE> 91
FIFTH THIRD BANK
as Trustee
By: /s/ Kerry Byrne
---------------------------------------
Title: Vice President
Attest:/s/ Gregory Hahn
------------------------------------
Title: Assistant Vice President
<PAGE> 92
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
On the 29th day of November, before me personally came Kerry Byrne,
to me known, who, being by me duly sworn, did depose and say that he resides at
Cincinnati, OH that he is Vice President of Fifth Third Bank, one of the
parties described in and which executed the foregoing instrument, and that
he/she signed his/her name thereto by authority of the Board of Directors.
[Notarial Seal]
/s/ Amy L. Hartung
Notary Public, State of Ohio
My Commission Expires
Apr. 7, 2003
<PAGE> 93
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
On the 29th day of November, before me personally came Gregory Hahn,
to me known, who, being by me duly sworn, did depose and say that he resides at
Cincinnati, OH, that he is Assistant Vice President of Fifth Third Bank, one of
the parties described in and which executed the foregoing instrument, and that
he signed his name thereto by authority of Board of Directors.
[Notarial Seal]
/s/ Amy L. Hartung
Notary Public, State of Ohio
My Commission Expires
Apr. 7, 2003
<PAGE> 94
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
1.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise CheckFree Holdings Corporation or its agent that such
financial institution will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the United States Internal Revenue Code of 1986, as amended, and
the regulations thereunder), or (iii) are owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not
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correct on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] __________ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: , 19
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii)
the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Name of Person Making Certification]
(Authorized Signatory)
Name:
Title:
<PAGE> 96
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CEDEL IN CONNECTION WITH
THE EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO OBTAIN
INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] _____________
principal amount of the above-captioned Securities (i) is owned by person(s)
that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein
referred to as "financial institutions") purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof
(and in either case (a) or (b), each such financial institution has agreed, on
its own behalf or through its agent, that we may advise CheckFree Holdings
Corporation or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations
<PAGE> 97
with respect to any portion of the part submitted herewith for exchange (or, if
relevant, collection of any interest) are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: , 19
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[Morgan Guaranty Trust Company of New York, Brussels Office,] as Operator of the
Euroclear System [Cedel]
By:
<PAGE> 1
Exhibit 4(f)
EXECUTION COPY
================================================================================
CHECKFREE HOLDINGS CORPORATION,
THE GUARANTORS
Signatories Hereto
AND
FIFTH THIRD BANK
as Trustee
----------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 29, 1999
to
INDENTURE
Dated as of November 29, 1999
----------------------
6-1/2% Convertible Subordinated Notes due 2006
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
General Terms and Conditions of the Series 6-1/2% Notes..............................1
SECTION 1.01. Title and Terms.............................................1
SECTION 1.02. Registration Rights Agreement...............................2
ARTICLE II
Redemption of the Series 6-1/2% Notes................................................2
SECTION 2.01. Redemption in Part..........................................2
SECTION 2.02. Redemption at Option of Company.............................2
ARTICLE III
Repurchase at Option of Holders upon Change In Control ..............................2
SECTION 3.01. Right to Require Repurchase.................................2
SECTION 3.02. Notices; Method of Exercising Repurchase Right, Etc.........2
SECTION 3.03. Certain Definitions.........................................5
SECTION 3.04. Change in Control...........................................5
SECTION 3.05. References to Repurchase Price..............................6
ARTICLE IV
Conversion...........................................................................7
SECTION 4.01. Conversion Privilege and Conversion Price...................7
SECTION 4.02. Exercise of Conversion Privilege............................8
SECTION 4.03. Fractions of Shares.........................................9
SECTION 4.04. Adjustment of Conversion Price..............................9
SECTION 4.05. Notice of Adjustments of Conversion Price..................15
SECTION 4.06. Notice of Certain Corporate Action.........................16
SECTION 4.07. Company's Obligation Regarding Common Stock................17
SECTION 4.08. Taxes on Conversions.......................................17
SECTION 4.09. Covenant as to Common Stock................................17
SECTION 4.10. Cancellation of Converted Securities.......................18
SECTION 4.11. Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets...........................18
SECTION 4.12. Company's Obligation.......................................18
ARTICLE V
Subordination of Series 6-1/2% Notes................................................18
SECTION 5.01. Series 6-1/2% Notes Subordinate to Senior
Indebtedness.......................................18
SECTION 5.02. Payment over of Proceeds Upon Dissolution, Etc.............19
SECTION 5.03. No Payment When Senior Indebtedness in Default.............20
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 5.04. Payment Permitted If No Default............................21
SECTION 5.05. Subrogation to Rights of Holders of Senior
Indebtedness...............................21
SECTION 5.06. Provisions Solely To Define Relative Rights................21
SECTION 5.07. Trustee to Effectuate Subordination........................22
SECTION 5.08. No Waiver of Subordination Provisions......................22
SECTION 5.09. Notice to Trustee..........................................23
SECTION 5.10. Reliance on Judicial Order or Certificate of
Liquidating Agent..........................23
SECTION 5.11. Trustee Not Fiduciary for Holders of Senior
Indebtedness...............................24
SECTION 5.12. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights...........24
SECTION 5.13. Article Applicable to Paying Agents........................24
SECTION 5.14. Certain Conversions Deemed Payment.........................24
ARTICLE V
Subsidiary Guarantee..............................................................25
SECTION 5A.01 Guarantee..................................................25
SECTION 5A.02. Subordination of Subsidiary Guarantee......................26
SECTION 5A.03. Limitation on Guarantor Liability..........................26
SECTION 5A.04. Execution and Delivery of Subsidiary Guarantee.............27
SECTION 5A.05. Guarantors May Consolidate, Etc., on Certain Terms.........27
SECTION 5A.06. Releases Following Sale of Assets..........................28
ARTICLE VI
Defaults and Remedies.............................................................29
SECTION 6.01. Events of Default..........................................29
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment.........30
SECTION 6.03. Company Notice to Trustee..................................31
SECTION 6.04. Liquidated Damages.........................................31
ARTICLE VII
Form of Series 6-1/2% Notes.......................................................32
SECTION 7.01. Form of Face of Series 6-1/2% Note.........................32
SECTION 7.02. Form of Reverse of Series 6-1/2% Note......................34
SECTION 7.03. Form of Trustee's Certificate of Authentication............39
SECTION 7.04. Form of Conversion Notice..................................40
ARTICLE VIII
Original Issue of Series 6-1/2% Notes.............................................41
SECTION 8.01. Original Issue.............................................41
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IX
Defeasance and Covenant Defeasance.................................................41
SECTION 9.01. Applicability..............................................41
SECTION 9.02. References.................................................41
ARTICLE X
Supplemental Indentures............................................................41
SECTION 10.01. Amendment to Section 9.1 of Indenture......................41
SECTION 10.02. Amendment of Section 9.2 of Indenture......................41
ARTICLE XI
Miscellaneous Provisions...........................................................42
SECTION 11.01. Defined terms..............................................42
SECTION 11.02. Indenture..................................................42
SECTION 11.03. Trustee ...................................................42
SECTION 11.04. Execution in Counterparts..................................42
</TABLE>
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<PAGE> 5
FIRST SUPPLEMENTAL INDENTURE, dated as of the 29th day of November,
1999 (this "First Supplemental Indenture"), among CheckFree Holdings
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (the "Company"), the Guarantors signatories hereto and Fifth
Third Bank, a state banking corporation organized under the laws of the State of
Ohio, as trustee (the "Trustee"), under the Indenture dated as of November 29,
1999, between the Company and the Trustee (the "Indenture"); as set forth in
Section 11.01 hereof and except as otherwise set forth herein, all terms used
and not defined herein are used as defined in the Indenture.
The Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of its Securities, to be issued from time to
time in series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered
thereunder as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of a new series of its Securities to be known as its
6-1/2% Convertible Subordinated Notes due 2006 (the "Series 6-1/2% Notes"), the
form of such Series 6-1/2% Notes and the terms, provisions and conditions
thereof to be as provided in the Indenture and this First Supplemental
Indenture.
The Company has requested the Trustee to join with it in the execution
and delivery of this First Supplemental Indenture. All requirements necessary to
make this First Supplemental Indenture a valid instrument, enforceable in
accordance with its terms, and to make the Series 6-1/2% Notes, when executed by
the Company and the Guarantors and authenticated and delivered by the Trustee,
the valid obligations of the Company and the Guarantors, have been performed and
fulfilled, and the execution and delivery of this First Supplemental Indenture
and the Series 6-1/2% Notes, have been in all respects duly authorized.
NOW, THEREFORE, in consideration of the purchase and
acceptance of the Series 6-1/2% Notes by the Holders thereof, and for the
purpose of setting forth, as provided in the Indenture, the form of the Series
6-1/2% Notes and the terms, provisions and conditions thereof, the Company and
the Guarantors covenant and agree with the Trustee as follows:
ARTICLE I
General Terms and Conditions of the Series 6-1/2% Notes.
SECTION 1.01. TITLE AND TERMS. There shall be and is hereby authorized
a series of Securities designated the "Series 6-1/2% Convertible Subordinated
Notes due 2006", limited in aggregate principal amount to $172,500,000. The
Series 6-1/2% Notes shall mature and the principal thereof shall be due and
payable, together with all accrued and unpaid interest thereon, on November 29,
2006. The Series 6-1/2% Notes shall be convertible into shares of Common
<PAGE> 6
Stock, $0.01 par value, of the Company, as such shares shall be constituted at
the time of conversion ("Common Stock"), in accordance with Article IV hereof.
SECTION 1.02. REGISTRATION RIGHTS AGREEMENT. The Company has executed,
as of November 22, 1999, a registration rights agreement by and among certain
initial Holders, the Company and the Guarantors, in the form as filed with the
Trustee ("REGISTRATION RIGHTS AGREEMENT"). The Company shall file with the
Trustee a true copy of any amendment of or supplement to the Registration Rights
Agreement.
ARTICLE II
Redemption of the Series 6-1/2% Notes
SECTION 2.01. REDEMPTION IN PART. If fewer than all of the Series
6-1/2% Notes are to be redeemed, the Trustee will select the Series 6-1/2% Notes
to be redeemed in principal amounts of $1,000 or integral multiples thereof by
lot, pro rata or by another method the Trustee considers fair and appropriate.
If a portion of a Holder's Series 6-1/2% Notes is selected for partial
redemption and that Holder converts a portion of those Series 6-1/2% Notes prior
to the applicable Redemption Date, the converted portion shall be deemed, solely
for purposes of determining the aggregate principal amount of the Series 6-1/2%
Notes to be redeemed by the Company, to remain outstanding and to be of the
portion selected for redemption.
SECTION 2.02. REDEMPTION AT OPTION OF COMPANY. Series 6-1/2% Notes are
subject to redemption at the option of the Company as provided in Section 7.02
hereof.
ARTICLE III
Repurchase at Option of Holders upon Change In Control
SECTION 3.01. RIGHT TO REQUIRE REPURCHASE. In the event that a Change
in Control, as defined in Section 3.04 hereof, shall occur, each Holder shall
have the right, at the Holder's option, to require the Company to repurchase
(subject to the provisions of Section 5.03 hereof), and upon the exercise of
such right the Company shall repurchase, all of such Holder's Series 6-1/2%
Notes, or any portion of the principal amount thereof that is an integral
multiple of $1,000 (provided that no single Series 6-1/2% Note may be
repurchased in part unless the portion of the principal amount of such Series
6-1/2% Note to be outstanding after such repurchase is equal to $1,000 or an
integral multiple of $1,000), on the date (the "Repurchase Date") that is not
later than 30 Business Days after the date of the occurrence of a Change in
Control for cash at a purchase price equal to 100% of the principal amount plus
interest accrued and unpaid to the Repurchase Date (subject to the right of
Holders of record on the Regular Record Date to receive interest on the relevant
Interest Payment Date) (the "Repurchase Price").
SECTION 3.02. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC. (a)
Unless the Company shall have theretofore called for redemption all of the
outstanding Series 6 1/2% Notes, on or before the 15th day after the occurrence
of a Change in Control, the Company or, at
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<PAGE> 7
the written request of the Company, on or before the tenth (10th) day after
receipt of such request, the Trustee, at the Company's expense, shall give
notice to all Holders of Series 6-1/2% Notes (the "Company Notice") of the
occurrence of the Change in Control and of the repurchase right set forth herein
arising as a result thereof. If the Company gives such notice of a repurchase
right, the Company shall also deliver a copy of such notice of a repurchase
right to the Trustee.
Each Company Notice shall state:
(1) the date of such Change in Control and,
briefly, the events causing such Change in
Control;
(2) the date by which the Change in Control
Purchase Notice (as defined below) must be
delivered;
(3) the Repurchase Date;
(4) the Repurchase Price;
(5) a description of the procedure which a
Holder must follow to exercise a repurchase
right;
(6) the procedures for withdrawing a Change in
Control Purchase Notice;
(7) the place or places where such Series 6-1/2%
Notes are to be surrendered for payment of
the Repurchase Price and accrued interest,
if any;
(8) briefly, the conversion rights of Holders of
Series 6-1/2% Notes;
(9) the conversion price and any adjustments
thereto, the date on which the right to
convert the Series 6-1/2% Notes will
terminate and the places where such Series
6-1/2% Notes may be surrendered for
conversion; and
(10) that Holders who want to convert Series
6-1/2% Notes must satisfy the requirements
set forth in the Series 6-1/2% Notes.
(a) No failure of the Company to give the foregoing notice or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Series 6-1/2% Notes.
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<PAGE> 8
(b) To exercise a repurchase right, a Holder shall deliver to the
Paying Agent or an office or agency maintained by the Company for such purpose
in the Borough of Manhattan, The City of New York, prior to the close of
business on the Repurchase Date written notice of the Holder's exercise of such
right (the "Change in Control Purchase Notice"), which notice shall set forth
(i) the name of the Holder, the principal amount of the Series 6-1/2% Notes to
be repurchased (and, if any Series 6-1/2% Note is to be repurchased in part, the
portion of the principal amount thereof to be repurchased and the name of the
Person in which the portion thereof to remain outstanding after such repurchase
is to be registered) and a statement that an election to exercise the repurchase
right is being made thereby pursuant to the applicable provisions of the Series
6-1/2% Notes, and (ii) the certificate numbers of the Series 6-1/2% Notes with
respect to which the repurchase right is being exercised.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Paying
Agent the Repurchase Price in cash, for payment to the Holder on the Repurchase
Date, payable with respect to the Series 6-1/2% Notes (or portion thereof) as to
which the repurchase right has been exercised; provided, however, that such
Series 6-1/2% Note for which a repurchase right has been exercised has been
delivered to the Paying Agent at any time after the notice of exercise of a
repurchase right shall have been given. Payment of the Repurchase Price for such
Series 6-1/2% Note shall be made promptly following the later of the Business
Day following the Repurchase Date and time of delivery of the Series 6-% Note.
If the Paying Agent holds money sufficient to pay the Repurchase Price on the
Business Day following the Repurchase Date, then, immediately after the
Repurchase Date, such Series 6-1/2% Note shall cease to be outstanding and
interest will cease to accrue and will be deemed paid regardless of whether such
Series 6-1/2% Note has been delivered to the Paying Agent, and all other rights
of the Holder shall terminate (other than the right of such Holder to receive
the Repurchase Price upon delivery of such Series 6-1/2% Note).
(d) On or prior to the Repurchase 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 6.6 of the
Indenture) an amount of money sufficient to pay the Repurchase Price of the
Series 6-1/2% Notes which are to be repaid on the Repurchase Date.
(e) If any Series 6-1/2% Note (or portion thereof) surrendered for
repurchase shall not be so paid on the Business Day following the Repurchase
Date, the principal amount of such Series 6-1/2% Note (or portion thereof, as
the case may be) shall, until paid, bear interest from the Repurchase Date at
the rate of 6-1/2% per annum, and each Series 6-1/2% Note shall remain
convertible into Common Stock in accordance with Article IV hereof until the
principal of such Series 6-1/2% Note (or portion thereof, as the case may be)
shall have been paid or duly provided for.
(f) Any Series 6-1/2% Note which is to be repurchased only in part
shall be surrendered to the Trustee (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
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<PAGE> 9
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 Series 6-1/2% Note without service charge, a new Series 6-1/2%
Note or Series 6-1/2% Notes, containing identical terms and conditions, each in
an authorized denomination in aggregate principal amount equal to and in
exchange for the portion of the principal of the Series 6-1/2% Note so
surrendered that was not repurchased.
(g) Any Holder that has delivered to the Trustee a Change in Control
Purchase Notice shall have the right to withdraw such notice at any time prior
to the close of business on the Repurchase Date by delivery of a written notice
of withdrawal to the Paying Agent prior to the close of business on such date.
The notice of withdrawal shall state the principal amount and the certificate
numbers of the Series 6-1/2% Notes as to which the withdrawal notice relates and
the principal amount, if any, which remains subject to the notice of exercise of
a repurchase right. A Series 6-1/2% Note in respect of which a Holder has
exercised its option to require repurchase upon a Change in Control may
thereafter be converted into Common Stock only if such Holder withdraws its
notice in accordance with the preceding sentence.
SECTION 3.03. CERTAIN DEFINITIONS. For purposes of this Article III:
(a) the term "beneficial owner" shall be determined in accordance with
Rules l3d-3 and 13d-5 promulgated by the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except that a Person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time; and
(b) the term "Person" shall include any syndicate or group which would
be deemed to be a "Person" under Section 13(d)(3) of the Exchange Act.
SECTION 3.04. CHANGE IN CONTROL. A "Change in Control" shall be deemed
to have occurred at such time after the original issuance of the Series 6-1/2%
Notes as:
(a) any Person is or becomes the beneficial owner, directly or
indirectly, of shares of capital stock of the Company entitling such Person to
exercise in excess of 40% of the total outstanding voting power of all classes
of the Company's capital stock entitled to vote generally in the election of
directors;
(b) the Company shall consolidate with, or merge with or into another
Person or convey, transfer, lease or otherwise dispose of all or substantially
all of its assets to any Person, or any Person consolidates with or merges with
or into the Company, in any event pursuant to a transaction in which the
Company's outstanding voting stock is converted into or exchanged for cash,
securities or other property, other than any such transactions where:
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<PAGE> 10
(1) the Company's voting stock is not converted or
exchanged at all (except to the extent necessary to
reflect a change in the Company's jurisdiction of
incorporation) or is converted into or exchanged for
voting stock (other than Redeemable Capital Stock) of
the surviving or transferee corporation and
(2) immediately after such transaction, no Person is the
beneficial owner, directly or indirectly, of more
than 40% of the total outstanding voting stock of the
surviving or transferee corporation;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election to such Board of Directors, or whose nomination for
election by the Company's stockholders, was approved by a vote of 66-2/3% of the
directors then still in office who were either directors at the beginning of
such period of whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office;
(d) the Company is liquidated or dissolved or a special resolution is
passed by the Company's stockholders approving the plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described in Article VIII of the Indenture.
"Redeemable Capital Stock" means any class or series of capital stock
that, either by its terms, by the terms of any security into which it is
convertible or exchangeable or by contract or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final stated maturity of the Series 6-1/2% Notes or is redeemable at the
option of the holder thereof at any time prior to such final stated maturity, or
is convertible into or exchangeable for debt securities at any time prior to
such final stated maturity; provided, however, that Redeemable Capital Stock
shall not include any common stock the holder of which has the right to put to
the Company upon certain terminations of employment.
SECTION 3.05. REFERENCES TO REPURCHASE PRICE. Whenever in this First
Supplemental Indenture there is a reference, in any context, to the principal of
any Series 6-1/2% Note as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Series 6-1/2% Note
to the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this First
Supplemental Indenture shall not be construed as excluding the Repurchase Price
in those provisions of this First Supplemental Indenture when such express
mention is not made.
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ARTICLE IV
Conversion
SECTION 4.01. CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article IV,
at the option of the Holder thereof, any Series 6-1/2% Note or any portion of
the principal amount thereof which is $1,000 or an integral multiple of $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 (the
"Conversion Shares") at any time following the date of original issuance of
Series 6-1/2% Notes 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 November 30, 2006, subject, in the case of conversion of
any global security, to any rules and procedures of the depositary for such
security in effect from time to time (the "Applicable Procedures"). In case a
Series 6-1/2% Note or portion thereof has previously been called for redemption
at the election of the Company, such conversion right in respect of the Series
6-1/2% Note or portion so called shall expire at the close of business, New York
City time, on the Redemption Date, unless the Company defaults in making the
payment due upon redemption (in each case subject as aforesaid to any Applicable
Procedures with respect to any global security). A Series 6-1/2% Note in respect
of which a Holder has delivered a Change in Control Purchase Notice (as defined
in Article III hereof) exercising the option of such Holder to require the
Company to purchase such Series 6-1/2% Note may be converted only if such notice
is withdrawn by a written notice of withdrawal delivered by the Holder to the
Paying Agent prior to the close of business on the Repurchase Date, in
accordance with the terms of this First Supplemental Indenture and the
Indenture.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $$73.20 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in Section 4.04.
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
4.04 (including dividends or distributions referred to in the last sentence of
paragraph (4) of Section 4.04), the Holder of each Series 6-1/2% Note, upon the
conversion thereof pursuant to this Article IV subsequent to the close of
business on the date fixed for the determination of stockholders 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 4.04, shall also be entitled to receive for each share of Common Stock
into which such Series 6-1/2% Note 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 to
the fair market value thereof (as determined in good faith by the Board of
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<PAGE> 12
Directors, whose determination shall be conclusive and described in a Board
Resolution). If any conversion of a Series 6-1/2% Note 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 Series 6-1/2%
Note 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 4.02. EXERCISE OF CONVERSION PRIVILEGE. In order to exercise
the conversion privilege, the Holder of any Series 6-1/2% Note to be converted
shall surrender such Series 6-1/2% Note, duly endorsed or assigned to the
Company or in blank, at any office or agency maintained by the Company pursuant
to Section 10.2 of the Indenture, accompanied by (a) written notice to the
Company at such office or agency that the Holder elects to convert such Series
6-1/2% Note 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 Series 6-1/2% Note not to be converted are to be issued in the name of a
Person other than the Holder thereof, the name of the Person in which to issue
such shares.
Except as provided in Section 5.2 of the Indenture, no Holder of Series
6-1/2% Notes 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. Series
6-1/2% Notes 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 Series 6-1/2% Notes called for
redemption on a Redemption Date within such period between and including such
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.
Series 6-1/2% Notes shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Series 6-1/2%
Notes for conversion in accordance with the foregoing provisions (the
"Conversion Date"), and at such time the rights of the Holders of such Series
6-1/2% Notes 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, but in any event no
later than the seventh Business Day following 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 4.03.
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In the case of any Series 6-1/2% Note 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 Series 6-1/2% Note or Series 6-1/2% Notes of authorized denominations in
aggregate principal amount equal to the unconverted portion of the principal
amount of such Series 6-1/2% Note. Any requirements for notice, surrender or
delivery of Series 6-1/2% Notes pursuant to this Article IV shall, with respect
to any global security, be subject to any Applicable Procedures.
SECTION 4.03. FRACTIONS OF SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series 6-1/2% Notes. If more than one Series
6-1/2% Note 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 Series 6-1/2%
Notes (or specified portions thereof) so surrendered. Instead of any fractional
share of Common Stock which would otherwise be issuable upon conversion of any
Series 6-1/2% Note (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 Trading Day immediately preceding such day or, alternatively, the Company
shall round up to the next higher whole share.
"Trading Day" shall mean each day on which the primary securities
exchange or quotation system which is used to determine the Closing Price is
open for trading or quotation.
"Closing Price" of a single share of Common Stock on any Trading Day
shall mean the closing per share sale price for the Common Stock (or if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid prices and the
average ask prices) on such Trading Day as reported in composite transactions
for the principal United States securities exchange on which the Common Stock is
traded or, if the Common Stock is not listed on a United States national or
regional stock exchange, as reported by the National Association of Securities
Dealers Automated Quotation System.
SECTION 4.04. 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 on the day next following the date fixed for the determination of
stockholders 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
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<PAGE> 14
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, for a period not exceeding 45 days, 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
4.04) of the Common Stock on the date fixed for the determination of
stockholders 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.
(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 4.04, any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 4.04), 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
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<PAGE> 15
numerator shall be the current market price per share (determined as provided in
paragraph (7) of this Section 4.04) 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 4.06(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 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 4.04, 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 stockholders
entitled to receive such dividend or other distributions", "the date fixed for
the determination of stockholders 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 4.04 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 4.04).
(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
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of payment of such distribution and in respect of which no conversion price
adjustment pursuant to paragraph (6) of this Section 4.04 has been made, exceeds
10% of the product of the current market price per share (determined as provided
in paragraph (7) of this Section 4.04) of the Common Stock as of the Trading Day
immediately preceding the record date fixed for stockholders entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
record 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 provided in paragraph (7) of this Section
4.04) of the Common Stock on the date of such effectiveness less an amount equal
to the quotient of (x) the excess of such combined amount over such 10% and (y)
the number of shares of Common Stock outstanding on the record date and (ii) the
denominator of which shall be equal to the current market price on such record
date, such reduction to become effective immediately prior to the opening of
business on the later of (a) the day following the record 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 4.06(a).
(6) In case a successful tender or exchange offer made by the Company
or any Guarantor 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 Guarantor 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 4.04 has been made,
exceeds 10% of the product of the current market price per share (determined as
provided in paragraph (7) of this Section 4.04) 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 4.04) of the Common Stock on the Trading Day next
succeeding 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 stockholders 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
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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 on the Trading
Day next succeeding the Expiration Time times (ii) such number of outstanding
shares at the Expiration Time less the number of Purchased Shares, such
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 4.04, 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 4.04, 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
4.04, 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 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 Trading Day next succeeding the Expiration Time of
such tender or exchange offer (or, if such Expiration Time occurs before the
close of trading on a
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<PAGE> 18
Trading Day, not later than the Trading Day during which the Expiration Time
occurs); 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 Trading Day next succeeding 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) 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 (9) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(10) In the event that the Company or any Guarantor distributes assets,
debt securities, rights, warrants or options (other than those referred to in
paragraph (2) above) pro rata to holders of Common Stock, and the fair market
value of the portion of assets, debt securities, rights, warrants or options
applicable to one share of Common Stock distributed to holders of Common Stock
exceeds the Average Sale Price (as defined below) per share of Common Stock, or
such Average Sale Price exceeds such fair market value by less than $1.00, then
so long as any such assets, debt securities, rights, options or warrants have
not expired or been redeemed by the Company or any Guarantor, the Company shall
make proper provision so that the Holder of any Series 6-1/2% Note upon
conversion, rather than being entitled to an adjustment in the conversion price,
will be entitled to receive upon such conversion, in addition to the Conversion
Shares, a number of assets, debt securities, rights, warrants and options to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of assets, debt securities, rights, warrants or
options of separate certificates evidencing such assets, debt securities,
rights, warrants or options (the "Distribution Date"), the same number of
assets, debt securities, rights, warrants or options 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
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<PAGE> 19
with the terms and provisions of and applicable to the assets, debt securities,
rights, warrants or options being distributed, and (ii) if such conversion
occurs after such Distribution Date, the same number of assets, debt securities,
rights, warrants or options to which a holder of the number of shares of Common
Stock into which the principal amount of such Series 6-1/2% Note 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 assets, debt securities, rights, warrants or options.
"Average Sale Price" means the average of the Closing Prices of the
Common Stock for the shorter of (i) 30 consecutive Trading Days ending on the
last full Trading Day prior to the Time of Determination (as defined below) with
respect to the rights, options, warrants or distribution in respect of which the
Average Sale Price is being calculated, or (ii) the period (x) commencing on the
date next succeeding the first public announcement of (a) the issuance of
rights, options or warrants or (b) the distribution, in each case, in respect of
which the Average Sale Price is being calculated and (y) proceeding through the
last full Trading Day prior to the Time of Determination with respect to the
rights, options, warrants or distribution in respect of which the Average Sale
Price is being calculated, or (iii) the period, if any, (x) commencing on the
date next succeeding the Ex-Dividend Time (as defined below) with respect to the
next preceding (a) issuance of rights, warrants or options or (b) distribution,
in each case, for which an adjustment is required by the provisions of Section
4.04(2) or (10) and (y) proceeding through the last full Trading Day prior to
the Time of Determination with respect to the rights, options, warrants, or
distribution in respect of which the Average Sale Price is being calculated. If
the Ex-Dividend Time (or in the case of a subdivision, combination or
reclassification, the effective date with respect thereto) with respect to a
dividend, subdivision, combination or reclassification to which Section 4.04(1)
or (3) applies occurs during the period applicable for calculating "Average Sale
Price" pursuant to the definition in the preceding sentence, "Average Sale
Price" shall be calculated for such period in a manner determined in good faith
by the Board of Directors to reflect the impact of such dividend, subdivision,
combination or reclassification on the Closing Price of the Common Stock during
such period.
"Time of Determination" means the time and date of the earlier of (i)
the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which this Section 4.04(10) applies
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, options, warrants or distribution on the
New York Stock Exchange or such other national or regional exchange or market on
which the shares of Common Stock are listed or quoted.
SECTION 4.05. 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 4.04 and shall prepare a certificate signed by the Chief
Financial Officer of the Company
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<PAGE> 20
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 Series 6-1/2% Notes pursuant to Section 10.2 of the
Indenture; 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.
SECTION 4.06. 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 4.04; or
(b) the Company or any Guarantor 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 stockholder 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 or any Guarantor is a party
and for which approval of any stockholders of the Company or such Guarantors is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Guarantor; or (d) of the voluntary or involuntary
dissolution, liquidation or winding, up of the Company; or (e) the Company or
any Guarantor 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 Series 6-1/2% Notes pursuant
to Section 10.2 of the Indenture, 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, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or (z) the date on
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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 4.07. COMPANY'S OBLIGATION REGARDING 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 Series 6-1/2% Notes, the whole number of shares of Common
Stock then issuable upon the conversion in full of all outstanding Series 6-1/2%
Notes.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Series 6-1/2% Notes, the Company will take all
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue shares of such Common Stock at
such adjusted Conversion Price.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Series 6-1/2% Notes hereunder require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly issued upon conversion, the Company
will in good faith and as expeditiously as practicable endeavor to secure such
registration or approval, as the case may be.
The Company further covenants that so long as the Common Stock shall be
listed or quoted on the New York Stock Exchange, the Nasdaq Stock Market
(National Market), or any other national securities exchange the Company will,
if permitted by the rules of such exchange, list and keep listed so long as the
Common Stock shall be so listed on such market or exchange, all Common Stock
issuable upon conversion of the Series 6-1/2% Notes.
SECTION 4.08. 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 Series 6-1/2% Notes 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 Series 6-1/2% Note or Series 6-1/2%
Notes 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 4.09. COVENANT AS TO COMMON STOCK. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Series 6-1/2%
Notes shall 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 4.08, the Company shall pay all taxes, liens and charges with respect
to the issue thereof.
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SECTION 4.10. CANCELLATION OF CONVERTED SECURITIES. All Series 6-1/2%
Notes delivered for conversion shall be delivered to the Trustee to be canceled
by or at the direction of the Trustee, which shall dispose of the same as
provided in Section 3.9 of the Indenture.
SECTION 4.11. 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 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) any 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) any sale or transfer of all or substantially all of the
assets of the Company or (iv) any compulsory share exchange) 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 Series 6-1/2% Note then Outstanding
shall have the right thereafter to convert such Series 6-1/2% Note 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 Series 6-1/2% Note 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 of Common Stock, 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 4.11 shall similarly apply to successive transactions of the foregoing
type.
SECTION 4.12. COMPANY'S OBLIGATION. All calculations, adjustments,
conversions and other determinations under this Article IV shall be the sole
responsibility and obligation of the Company. The Trustee (a) shall have no
obligation to review, challenge or contest any such calculation, adjustment,
conversion or other determination and (b) shall not be liable for any default or
error by the Company under this Article IV.
ARTICLE V
Subordination of Series 6-1/2% Notes
SECTION 5.01. SERIES 6-1/2% NOTES SUBORDINATE TO SENIOR INDEBTEDNEss.
The Company covenants and agrees, and each Holder of a Series 6-1/2% Note, by
such Holder's acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article V, the
indebtedness represented by the Series 6-1/2% Notes and the payment of the
principal of (and premium, if any) and interest on each and all of the Series
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6-1/2% Notes and all obligations of the Company under the Indenture are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness.
SECTION 5.02. 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 Series 6-1/2% Notes are entitled to
receive any payment on account of principal of (or premium, if any) or interest
on the Series 6-1/2% Notes, 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 Series 6-1/2%
Notes in any such case, proceeding, dissolution, liquidation or other winding-up
or event.
In the event that, notwithstanding the foregoing provisions of this
Section 5.02, the Trustee or the Holder of any Series 6-1/2% Note 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 is paid in full or payment thereof
provided for, and if, at or prior to the time of such payment or distribution,
written notice that such payment or distribution is prohibited by the foregoing
paragraph shall have been actually given 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 V 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 Series 6-1/2% Notes are so subordinated as provided
in this Article V. 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
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<PAGE> 24
substantially as an entirety to another Person upon the terms and conditions set
forth in Article VIII of the Indenture shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the benefit of creditors
or marshalling of assets and liabilities of the Company for the purposes of this
Section 5.02 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 of the Indenture.
SECTION 5.03. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT. In the
event and during the continuation of (a) 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) any default (other than a payment default) with respect to
Senior Indebtedness occurs and is continuing that permits the acceleration of
the maturity thereof and judicial proceedings shall be pending with respect to
any such default or the Company receives written notice of such default (a
"Senior Indebtedness Default Notice"), then no payment shall be made by the
Company on account of principal of (or premium, if any) or interest on the
Series 6-1/2% Notes or on account of the purchase or other acquisition of Series
6-1/2% Notes (including pursuant to Article II of the Indenture and Articles II,
III and IV herein). Notwithstanding the foregoing, payments with respect to the
Series 6-1/2% Notes may resume and the Company may acquire Series 6-1/2% Notes
for cash when (x) the default with respect to the Senior Indebtedness is cured
or waived or ceases to exist or (y) in the case of a default described in (b)
above, 179 or more days pass after the Senior Indebtedness Default Notice is
received by the Company; provided, that the terms of the Indenture and this
First Supplemental Indenture otherwise permit the payment or acquisition of the
Series 6-1/2% Notes at that time. If the Company receives a Senior Indebtedness
Default Notice, then a similar notice received within nine months thereafter
relating to the same default on the same issue of Senior Indebtedness shall not
be effective to prevent the payment or acquisition of the Series 6-1/2% Notes as
described in the first sentence of this Section 5.03. In addition, no payment
may be made on the Series 6-1/2% Notes if any Series 6-1/2% Notes are declared
due and payable prior to their Stated Maturity by reason of the occurrence of an
Event of Default until the earlier of (1) 120 days after the date of such
acceleration or (2) the payment in full of all Senior Indebtedness, but only if
such payment is then otherwise permitted under the terms of the Indenture and
this First Supplemental Indenture.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Series 6-1/2% Note
prohibited by the foregoing provisions of this Section 5.03, and if, at or prior
to the time of such payment, written notice that such payment is prohibited by
the foregoing paragraph shall have been actually given 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.
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The provisions of this Section 5.03 shall not apply to any payment with
respect to which Section 5.02 would be applicable.
SECTION 5.04. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in
this Article V or elsewhere herein or in the Indenture or in any of the Series
6-1/2% Notes 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 5.02 or except under the
conditions described in Section 5.03, from making payments at any time of
principal of (and premium, if any) or interest on the Series 6-1/2% Notes, 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 Series 6-1/2% Notes or the retention of such payment by the
Holders, if, two Business Days prior to such application by the Trustee, the
Trustee had not received written notice that such payment would be prohibited by
the provisions of this Article V.
SECTION 5.05. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness, and until the Series
6-1/2% Notes are paid in full, the Holders of the Series 6-1/2% Notes 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 Series 6-1/2% Notes 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 Series
6-1/2% Notes have been applied to the payment of Senior Indebtedness as provided
by this Article V. 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 Series 6-1/2% Notes or the Trustee would
be entitled, except for the provisions of this Article V, and no payments over
pursuant to the provisions of this Article V to the holders of Senior
Indebtedness by Holders of the Series 6-1/2% Notes or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness and
the Holders of the Series 6-1/2% Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 5.06. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article V are and are intended solely for the purpose of
defining the relative rights of the Holders of the Series 6-1/2% Notes on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article V or elsewhere herein or in the Indenture or in the
Series 6-1/2% Notes is intended to or shall (a) impair, as among the Company,
its creditors other than holders of Senior Indebtedness and the Holders of the
Series 6-1/2% Notes, the obligation of the Company, which is absolute and
unconditional (and which, subject to the rights under this Article V 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 Series 6-1/2%
Notes the principal of (and premium, if any) and interest on the Series 6-1/2%
Notes as and when the same shall become
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due and payable in accordance with their terms; or (b) affect the relative
rights against the Company of the Holders of the Series 6-1/2% Notes and
creditors of the Company other than the holders of Senior Indebtedness; or (c)
prevent the Trustee or the Holder of any Series 6-1/2% Notes from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture
and this First Supplemental Indenture, subject to the rights, if any, under this
Article V of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 5.07. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a
Series 6-1/2% Note 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 V and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 5.08. 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 noncompliance by the Company
with the terms, provisions and covenants of the Indenture and this First
Supplemental Indenture, regardless of any knowledge thereof any such holder may
have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Series
6-1/2% Notes, without incurring responsibility to the Holders of the Series
6-1/2% Notes and without impairing or releasing the subordination provided in
this Article V or the obligations hereunder of the Holders of the Series 6-1/2%
Notes 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.
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SECTION 5.09. NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee if, to the Company's knowledge, any payment to or by the
Trustee in respect of the Series 6-1/2% Notes is prohibited by this Article V.
Notwithstanding the provisions of this Article V or any other provision of the
Indenture or this First Supplemental Indenture, the Trustee shall not be charged
with knowledge that any payment to or by the Trustee in respect of the Series
6-1/2% Notes is prohibited by this Article V, 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 6.1 of the
Indenture, shall be entitled in all respects to assume that no facts exist that
would prohibit any payment in respect of the Series 6-1/2% Notes; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 5.09 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including the payment
of the principal of (and premium, if any) or interest on any Series 6-1/2%
Note), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money 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 6.1 of the Indenture, 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 V, 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 V, 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 5.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article V, the Trustee, subject to the provisions of Section 6.1 of the
Indenture, and the Holders of the Series 6-1/2% Notes 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
Series 6-1/2% Notes, 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 V.
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SECTION 5.11. 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 Series 6-1/2% Notes
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article V
or otherwise.
SECTION 5.12. 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 V 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 the Indenture or this
First Supplemental Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article V shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7 of the Indenture.
SECTION 5.13. 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 V 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 V in addition to
or in place of the Trustee; provided, however, that Section 5.12 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECTION 5.14. CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of
this Article V only, (1) the issuance and delivery of junior securities upon
conversion of Series 6-1/2% Notes in accordance with Article IV shall not be
deemed to constitute a payment or distribution on account of the principal of or
premium or interest on Series 6-1/2% Notes or on account of the purchase or
other acquisition of Series 6-1/2% Notes, and (2) the payment, issuance or
delivery of cash, property or securities (other than junior securities) upon
conversion of a Series 6-1/2% Note shall be deemed to constitute payment on
account of the principal of such Series 6-1/2% Note. For the purposes of this
Section 5.14, 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 Series 6-1/2%
Notes are so subordinated as provided in this Article V.
Nothing contained in this Article V or elsewhere in the Indenture or
this First Supplemental Indenture or in the Series 6-1/2% Notes is intended to
or shall impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Series 6-1/2% Notes, the right, which
is absolute and unconditional, of the Holder of any Series 6-1/2% Note to
convert such Series 6-1/2% Note in accordance with Article IV.
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ARTICLE V-A
Subsidiary Guarantee
SECTION 5A.01 GUARANTEE. Subject to this Article V-A, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Holder of a Series 6-1/2% Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture and this First Supplemental Indenture, the
Series 6-1/2% Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Series 6-1/2% Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of and interest on the
Series 6-1/2% Notes, if any, if lawful, and all other obligations of the Company
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Series 6-1/2%
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Series 6-1/2% Notes, the Indenture or this First Supplemental Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Series 6-1/2% Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenant
that this Subsidiary Guarantee shall not be discharged except by the complete
performance of the obligations contained in the Series 6-1/2% Notes and this
First Supplemental Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors,
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on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article VI hereof for the purposes of this Subsidiary Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article VI
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantors for the purpose of this Subsidiary Guarantee.
The Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
"Subsidiary Guarantee" means the guarantee given by the Guarantors
pursuant to the provisions of this Article V-A and substantially in the form
attached hereto as Exhibit A.
"Guarantor" means each Subsidiary of the Company on the date hereof and
their respective successors and assigns.
SECTION 5A.02. SUBORDINATION OF SUBSIDIARY GUARANTEE. Each Guarantor
agrees, and each Holder by accepting a Series 6-1/2% Note agrees, that the
obligations of each Guarantor under its Subsidiary Guarantee are subordinated
and junior in right of payment to the prior payment of all Senior Indebtedness
of each Guarantor on the same basis as the obligations on, or relating to, the
Series 6-1/2% Note are subordinated and junior in right of payment to the prior
payment of all Senior Indebtedness of the Company pursuant to Article V. In
furtherance of the foregoing, each Guarantor agrees, and the Trustee and each
Holder by accepting a Series 6-1/2% Note agrees, that the subordination and
related provisions applicable to the obligations of each Guarantor under its
Subsidiary Guarantee by virtue of the preceding sentence shall be as set forth
in Article V as if each reference to "Company" therein were instead a reference
to "a Guarantor," each reference to "Senior Indebtedness of the Company" therein
were instead a reference to "Senior Indebtedness of each Guarantor" and each
reference to "Series 6-1/2% Notes" therein were instead a reference to "this
Subsidiary Guarantee," with such appropriate modifications as the context may
require. For the purposes of the foregoing sentence, the Trustee and the Holders
shall have the right to receive and/or retain payments in respect of the Series
6-1/2% Notes pursuant to the Indenture and this First Supplemental Indenture,
including Article V hereof. The provisions of this Section 5A.02 may not be
amended or modified without the written consent of the parties holding a
majority of outstanding Senior Indebtedness.
SECTION 5A.03. LIMITATION ON GUARANTOR LIABILITY. Each Guarantor and,
by its acceptance of Series 6-1/2% Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Subsidiary Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor under its Subsidiary Guarantee and this Article V-A shall be limited
to the maximum amount as will, after giving
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effect to such maximum amount and all other contingent and fixed liabilities of
such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article V-A, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 5A.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE. To
evidence its Subsidiary Guarantee set forth in Section 5A.01, each Guarantor
hereby agrees that a notation of such Subsidiary Guarantee substantially in the
form included in Exhibit A shall be endorsed by a President or any Vice
President of such Guarantor on each Series 6-1/2% Note authenticated and
delivered by the Trustee and that this First Supplemental Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents.
Each Guarantor hereby agrees that this Subsidiary Guarantee set forth
in Section 5A.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Series 6-1/2% Note a notation of such Subsidiary
Guarantee.
If an officer whose signature is on this First Supplement Indenture or
on the Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Series 6-1/2% Note on which a Subsidiary Guarantee is
endorsed, the Subsidiary Guarantee shall be valid nevertheless.
The deliver of any Series 6-1/2% Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this First Supplemental Indenture on behalf of
the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this First Supplemental Indenture, the Company shall
cause such Subsidiaries to execute supplemental indentures to the Indenture and
this First Supplemental Indenture and Subsidiary Guarantees in accordance with
this Article V-A.
SECTION 5A.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. A
Guarantor may not sell or otherwise dispose of all or substantially all of its
assets, or consolidate with or merge with or into (whether or not such Guarantor
is the surviving Person) another Person unless:
(a) immediately after giving effect to such transaction, no
Event of Default exists; and
(b) the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such consolidation or
merger assumes all the obligations of such Guarantor, pursuant to a supplemental
indenture satisfactory to the Trustee.
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In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Series 6-1/2% Notes and the due and
punctual performance of all of the covenants and conditions of the Indenture and
this First Supplemental Indenture to be performed by the Guarantor, such
successor Person shall succeed to and be substituted for the Guarantor with the
same effect as if it had been named herein as a Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Series 6-1/2% Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respect have the
same legal rank and benefit under the Indenture and this First Supplemental
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture and this First Supplemental Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Article 8 and 10 of the Indenture and
notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or
this First Supplemental Indenture or in any of the Series 6-1/2% Notes shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor, or shall prevent any sale or conveyance of a Guarantor as an
entirety or substantially as an entirety to the Company or another Guarantor.
SECTION 5A.06. RELEASES FOLLOWING SALE OF ASSETS. The Subsidiary
Guarantee of a Guarantor will be released:
(a) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of merger or
consolidation), if the disposition is to the Company or another Guarantor; or
(b) in connection with any sale of all of the capital stock of
a Guarantor, if the purchaser of such capital stock complies with the provisions
of Section 5A.05 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate
and an Opinion of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the applicable provisions of this First
Supplemental Indenture the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from its obligations
under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Series 6-1/2% Notes and for the other obligation of any Guarantor under
this Indenture as provided in this Article V-A.
SECTION 5A.07 INCORPORATION OF COVENANTS SET FORTH IN THE INDENTURE.
The covenants set forth in Article 10 of the Indenture and the other provisions
of the Indenture
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relating thereto are hereby incorporated by reference herein, mutatis mutandis,
for all purposes to have the same effect as if set forth fully herein, except
that each reference to "the Company" therein shall instead be a reference to
"each Guarantor" and each reference to "Notes" shall instead a reference to
"Subsidiary Guarantees," with appropriate modifications as the context may
require. Each Guarantor agrees to comply with such covenants as incorporated by
reference herein.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. 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
V 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 upon any Series 6-1/2% Note
when it becomes due and payable, and continuance of such default for a period of
31 days (whether or not such payment is prohibited by the provisions of Article
V hereof); or (2) default in (i) the payment of the principal of any Series
6-1/2% Note when it becomes due and payable, or (ii) the payment of the
redemption price as set forth in Section 7.02 herein (the "Redemption Price")
with respect to any Series 6-1/2% Note when it becomes due and payable (whether
or not such payment is prohibited by the provisions of Article V hereof); or (3)
failure by the Company to provide the notice of a Change in Control in
accordance with Section 3.02 hereof or default in the payment of the Repurchase
Price in respect of any Series 6-1/2% Note on the Repurchase Date therefor
(whether or not such payment is prohibited by the provisions of Article V
hereof); or (4) failure by the Company to deliver shares of Common Stock
(together with cash in lieu of fractional shares) when such Common Stock (or
cash in lieu of fractional shares) is required to be delivered following
conversion of a Series 6-1/2% Note and continuation of such default for a period
of 10 days; or (5) default in the performance, or breach, of any covenant or
warranty of the Company or any Guarantor contained in the Series 6-1/2% Notes,
the Indenture or in this First Supplemental Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 90 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Series 6-1/2% Notes then
Outstanding, 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 (6) a default under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed of the Company or any Guarantor 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, 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 $10,000,000, which default shall
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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 20 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 aggregate
principal amount of the Series 6-1/2% Notes then Outstanding, 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 (unless such default has
been cured or waived); or (7) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company or a
Guarantor 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 Guarantor 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 Guarantor 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 Guarantor or of any substantial part of their respective
properties, or ordering the winding up or liquidation of the affairs of the
Company or a Guarantor, 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 (8) commencement by the Company or a Guarantor 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 Guarantor to the entry of a decree or order for relief in
respect of the Company or a Guarantor 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 Guarantor, or the filing by either
the Company or a Guarantor 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 Guarantor 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
Guarantor or of any substantial part of their respective properties, or the
making by either the Company or a Guarantor of an assignment for the benefit of
creditors, or the admission by either the Company or a Guarantor in writing of
an inability to pay the debts of either the Company or a Guarantor generally as
they become due, or the taking of corporate action by the Company or a Guarantor
in furtherance of any such action.
SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default (other than an Event of Default specified in Section 6.01(7) or
(8)) occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Series 6-1/2% Notes then
Outstanding may declare the principal of all the Series 6-1/2% Notes 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 thereon shall become immediately due and payable. If an
Event of Default specified in
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<PAGE> 35
Section 6.01(7) or (8) occurs, the principal of, and accrued interest on, all
the Series 6-1/2% Notes shall automatically, and without any declaration or
other action on the part of the Trustee or any Holder, become immediately due
and payable. Upon any such acceleration, no payment may be made to Holders of
Series 6-1/2% Notes until the earlier of (1) 120 days or more after the date of
such acceleration and (2) the payment in full of all Senior Indebtedness, but
only if such payment is then otherwise permitted under the terms of the
Indenture and this First Supplemental Indenture.
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 VI provided, the Holders of a
majority in principal amount of the Series 6-1/2% Notes then Outstanding, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if (1) the Company has paid or deposited with
the Trustee a sum sufficient to pay (A) all overdue interest on all Series
6-1/2% Notes, (B) the principal of (and premium, if any, on) any Series 6-1/2%
Notes which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate borne by the Series 6-1/2% Notes, (C) to the
extent that payment of such interest is lawful, interest upon overdue interest
at the rate borne by the Series 6-1/2% Notes, 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 Series 6-1/2%
Notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.13 of the Indenture.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 6.03. COMPANY NOTICE TO TRUSTEE. The Company shall file with
the Trustee written notice of the occurrence of any default or Event of Default
within five Business Days of the Company's becoming aware of such default or
Event of Default.
SECTION 6.04. LIQUIDATED DAMAGES. Nothing in the Indenture or this
First Supplemental Indenture shall impair or affect the right of any Holder or
the Trustee on behalf of one or more Holders to receive Liquidated Damages, as
that term is defined in Section 3 of the Registration Rights Agreement, to the
same extent as other payments referenced to in Section 5.8 of the Indenture. The
Trustee is authorized to take all such action with respect to collection and
enforcement of Liquidated Damages as it is authorized to take with respect to
all other payments referred to in Section 5.3 of the Indenture.
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<PAGE> 36
ARTICLE VII
Form of Series 6-1/2% Notes
SECTION 7.01. FORM OF FACE OF SERIES 6-1/2% NOte.
The Series 6-1/2% Notes and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the following forms:
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
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.
CheckFree Holdings Corporation
6-1/2% Convertible Subordinated Note due 2006
Registered $172,500,000
No. R-1 CUSIP US162816AAOO
CHECKFREE HOLDINGS CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
Cede & Co.
or registered assigns, the principal sum of $172,500,000 at the office or agency
of the Company in the Borough of Manhattan, The City of New York, on December 1,
2006 in such coin or
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<PAGE> 37
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest on
said principal sum semiannually on June 1 and December 1 of each year,
commencing June 1, 2000 (each an "Interest Payment Date"), at said office or
agency, in like coin or currency, at the rate of 6-1/2% 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 May 15 or
November 15 (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 Series 6-1/2% Notes 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 Series 6-1/2% Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of, premium, if any, and 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 either by (i) mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto
pursuant to Section 3.8 of the Indenture (as defined herein) or (ii) transfer to
an account maintained by the payee located inside the United States.
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.
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<PAGE> 38
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
CHECKFREE HOLDINGS CORPORATION
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
SECTION 7.02. FORM OF REVERSE OF SERIES 6-1/2% NOTE. This Security is
one of a duly authorized issue of Securities of the Company designated as its
6-1/2% Convertible Subordinated Notes due 2006 (herein called the "Securities"),
limited in aggregate principal amount to $172,500,000, issued and to be issued
under an Indenture, dated as of November 29, 1999 (the "Indenture"), as
supplemented by the First Supplemental Indenture thereto, dated as of November
29, 1999 ( the "First Supplemental Indenture"), between the Company and Fifth
Third Bank as Trustee for the Holders of Securities issued under said Indenture
and the First Supplemental 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 and
the First Supplemental Indenture, the Holder of this Security is entitled, at
his option, at any time on or before the close of business on November 30, 2006,
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 repurchase)
not after, the close of business on the Business Day immediately preceding the
Redemption Date or Repurchase 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 nonassessable shares of Common Stock of the Company at a
conversion price equal to $73.20 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 IV of the First Supplemental
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
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<PAGE> 39
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 funds acceptable to the Company 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 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 IV of the First
Supplemental Indenture. The conversion price is subject to adjustment as
provided in Article IV of the First Supplemental 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, 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 (assuming such holder of Common Stock failed to
exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares).
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 not be redeemed at the option of the Company prior
to December 1, 2002. The Securities (other than those Securities that have been
converted in accordance with the terms of the Indenture) are subject to
redemption at the option of the Company upon not less than 30 days' or more than
60 days' notice by mail (unless a shorter notice is deemed satisfactory by the
Trustee), as a whole or from time to time in part, at any time on or after
December 1, 2002. The Redemption Prices (expressed as percentages of the
principal amount) shall be as set forth below for Securities redeemed during the
following 12-month periods:
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<PAGE> 40
- --------------------------------------------------------------------------------
Period Redemption Price
- --------------------------------------------------------------------------------
December 1, 2002 through November 30, 2003 103.71%
- --------------------------------------------------------------------------------
December 1, 2003 through November 30, 2004 102.79%
- --------------------------------------------------------------------------------
December 1, 2004 through November 30, 2005 101.86%
- --------------------------------------------------------------------------------
and thereafter at a Redemption Price equal to 100.93% of the principal amount,
together, in the case of any such redemption, with accrued interest to (but not
including) the Redemption Date (subject to the right of holders of record on the
Regular Record Date to receive interest on the related Interest Payment Date).
Any redemption of Securities must be in integral multiples of $1,000.
If fewer than all of the Securities are to be redeemed, the Trustee will select
the Securities to be redeemed in principal amounts at maturity of $1,000 or
integral multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a Holder's Securities is
selected for partial redemption and that holder converts a portion of those
Securities prior to the redemption, the converted portion shall be deemed,
solely for purposes of determining the aggregate principal amount of the
Securities to be redeemed by the Company, to be of the portion selected for
redemption.
In certain circumstances involving a Change in Control, each Holder
shall have the right to require the Company to repurchase all or part of its
Securities at a repurchase price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest through the Repurchase Date (subject
to the right of holders of record on the Regular Record Date to receive interest
on the related Interest Payment Date).
The Securities do not have the benefit of any sinking fund.
The Securities are jointly and severally guaranteed by all of the
Subsidiaries of the Company pursuant to Article V-A of the First Supplemental
Indenture, and a notation of such Subsidiary Guarantee is attached to this
Security.
In the event of redemption, conversion or repurchase of this Security
in part only, a new Security or Securities for the unredeemed, unconverted or
unrepurchased portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
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 all Senior Indebtedness, and this Security is issued subject
to the provisions of the First Supplemental 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
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<PAGE> 41
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 and in Article VI of the First
Supplemental Indenture.
Subject to certain conditions set forth in the Indenture and the First
Supplemental Indenture, the Company at any time may terminate some or all of its
obligations under the Securities and the Indenture and the First Supplemental
Indenture if the Company deposits with the Trustee money or Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
The Indenture and the First Supplemental Indenture permit, 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 and the First Supplemental Indenture at any time
by the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture and the First Supplemental Indenture also contain 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 the First
Supplemental Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange therefor 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 the First Supplemental
Indenture and no provision of this Security or of the Indenture or the First
Supplemental 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 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 the First Supplemental 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.
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<PAGE> 42
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and the First Supplemental Indenture and subject to certain
limitations therein set forth, upon request of, and delivery of not less than
three Business Days notice to, the Company and the Trustee, a beneficial owner
of interests in a permanent global security may exchange such interests for a
definitive Note of like tenor and aggregate principal amount in certificated
form.
The depositary with respect to the Notes shall be The Depository Trust
Company.
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. In the event that any date on which interest is
payable on the Series 6-1/2% Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay).
All terms used in this Security which are defined in the Indenture and
the First Supplemental Indenture shall have the meanings assigned to them in the
Indenture and the First Supplemental Indenture.
THE INDENTURE AND THE FIRST SUPPLEMENTAL 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.
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<PAGE> 43
SECTION 7.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture and the First Supplemental Indenture.
Dated: ____________
FIFTH THIRD BANK
By
--------------------------------
Authorized Signatory
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<PAGE> 44
SECTION 7.04. FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
To: CheckFree Holdings Corporation.
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or the portion hereof (which is $1,000 or
an integral multiple thereof) below designated, at any time following the date
of original issuance thereof, into shares of Common Stock in accordance with the
terms of the Indenture and the First Supplemental Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon conversion,
together with any check in payment for a fractional share and any Security
representing any unconverted principal amount hereof, be issued and delivered to
the registered owner hereof unless a different name has been provided below. If
shares or any portion of this Security not converted are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith a
certificate in proper form certifying that the applicable restrictions on
transfer have been complied with.
Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
The undersigned hereby agrees that, promptly after request of the
Company, he or it will furnish such proof in support of this certification as
the Company or the Security Registrar for the Common Stock may, from time to
time, request.
Dated: __________________
Signature*
Signature Guaranty
If shares or Securities are to be registered Principal amount to
in the name of a Person other than the be converted (if less than all):
Holder, please print such Person's name ($______________,000
and address.*
- ---------------------------------- ----------------------------------
Name Social Security or
Taxpayer Identification Number
Street Address
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<PAGE> 45
City, State and Zip Code
* 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.
ARTICLE VIII
Original Issue of Series 6-1/2% Notes
SECTION 8.01. ORIGINAL ISSUE. Series 6-1/2% Notes in the aggregate
principal amount equal to $172,500,000 may, upon execution of this First
Supplemental Indenture, be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and make
available for delivery said Series 6-1/2% Notes to or upon a Company Order.
ARTICLE IX
Defeasance and Covenant Defeasance
SECTION 9.01. APPLICABILITY. The Company hereby elects, pursuant to
Section 14.1 of the Indenture, to make Sections 14.2 and 14.3 thereof applicable
to the Series 6-1/2% Notes.
SECTION 9.02. REFERENCES. (a) With respect to the Series 6-1/2% Notes,
references to Section 5.1 or 5.2 of the Indenture shall be deemed to be
references to Section 6.01 or 6.02 hereof. (b) With respect to the Series 6-1/2%
Notes, references in Section 14.4(a) of the Indenture to "Stated Maturity" shall
be deemed to mean "Stated Maturity, or any Redemption Date or Repurchase Date,
or upon conversion or otherwise". References in Section 14.4(a) of the Indenture
to "Trustee" shall be deemed to mean "Trustee, the Paying Agent or the
Conversion Agent".
ARTICLE X
Supplemental Indentures
SECTION 10.01. AMENDMENT TO SECTION 9.1 OF INDENTURE. Each of clauses
(4) and (5) of Section 9.1 of the Indenture is hereby deleted in its entirety
with respect to the Series 6-1/2% Notes and the remaining clauses in such
Section are deemed re-numbered accordingly to give effect to such deletion.
SECTION 10.02. AMENDMENT OF SECTION 9.2 OF INDENTURE. Clause (1) of
Section 9.2 of the Indenture is hereby deleted in its entirety with respect to
the Series 6-1/2% Notes and replaced in its entirety with the following:
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<PAGE> 46
"(1) reduce the principal amount, Repurchase Price or Redemption Price
with respect to any Series 6-1/2% Note, or extend the Stated Maturity of any
Series 6-1/2% Note or alter the manner of payment or rate of interest on any
Series 6-1/2% Note or make any Series 6 1/2% Note payable in money or securities
other than that stated in the Series 6 1/2% Note, or reopen the Series 6-1/2%
Notes for issuances of additional Series 6 1/2% Notes, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption or repayment at the option of
the Holder, on or after the Redemption Date or the Repurchase Date, as the case
may be); or".
ARTICLE XI
Miscellaneous Provisions
SECTION 11.01. DEFINED TERMS. Except as otherwise expressly provided in
this First Supplemental Indenture or in the form of Series 6-1/2% Note or
otherwise clearly required by the context hereof or thereof, all terms used
herein or in said form of Series 6-1/2% Note that are defined in the Indenture
shall have the several meanings respectively assigned to them thereby.
SECTION 11.02. INDENTURE. The Indenture, as supplemented by this First
Supplemental Indenture, is in all respects ratified and confirmed by the Company
and each Guarantor. This First Supplemental Indenture shall be deemed part of
the Indenture in the manner and to the extent herein and therein provided, each
Guarantor agrees by its execution and delivery of this First Supplemental
Indenture to be bound by the terms of the Indenture applicable to its
obligations under this First Supplemental Indenture and the Subsidiary
Guarantee.
SECTION 11.03. TRUSTEE. The recitals herein contained are made by the
Company and the Guarantors and not by the Trustee, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representation
as to the validity or sufficiency of this First Supplemental Indenture.
SECTION 11.04. EXECUTION IN COUNTERPARTS. This First Supplemental
Indenture may be executed in any number of counterparts each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
CHECKFREE HOLDINGS CORPORATION
by /s/ Allen L. Shulman
-----------------------------
Name: Allen L. Shulman
Title: Executive Vice President,
General Counsel and Chief Financial Officer
Attest: Robert J. Tannous
-------------------------
Title: Assistant Secretary
-------------------------
<PAGE> 48
FIFTH THIRD BANK, as Trustee,
by /s/ Kerry Byrne
Name: Kerry Byrne
--------------------------
Title: Authorized Officer
Attest: Gregory Hahn
------------------------
Title: Assistant Vice President
------------------------
<PAGE> 49
THE GUARANTORS:
CHECKFREE CORPORATION
By: /s/ Allen L. Shulman
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
Attest: /s/ Robert J. Tannous
-----------------------------
Title: Assistant Secretary
-----------------------------
CHECKFREE MANAGEMENT CORPORATION
By: /s/ Allen L. Shulman
---------------------------------
Title: Executive Vice President and
Treasurer
Attest: /s/ Robert J. Tannous
-----------------------------
Title: Assistant Secretary
-----------------------------
CHECKFREE INVESTMENT SERVICES, INC.
By: /s/ Allen L. Shulman
---------------------------------
Title: Vice President
Attest: /s/ Curtis A. Loveland
-----------------------------
Title: Secretary
-----------------------------
CHECKFREE INVESTMENT CORPORATION
By: /s/ Allen L. Shulman
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
Attest: /s/ Robert J. Tannous
-----------------------------
Title: Assistant Secretary
-----------------------------
<PAGE> 50
EXHIBIT A
SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture and the First Supplemental Indenture) has, jointly
and severally, unconditionally guaranteed, to the extent set forth in the Base
Indenture and the First Supplemental Indenture and subject to the provisions in
the Indenture and the First Supplemental Indenture, dated as of November __1999
(together the "Indenture"), among CheckFree Holdings Corporation, the Guarantors
party thereto and Fifth Third Bank as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the
Series 6-1/2% Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, and, to the extent permitted by law, interest,
as the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms of the Indenture and
(b) in case of any extension of time of payment or renewal of any Series 6-1/2%
Notes or any such obligations, that the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. The obligations of the
Guarantors to the Holders of Series 6-1/2% Notes and to the Trustee pursuant to
this Subsidiary Guarantee, the Indenture are expressly set forth in Article V-A
of the First Supplemental Indenture and reference is hereby made to the First
Supplemental Indenture for the precise terms of the Subsidiary Guarantee. The
obligations of the Guarantors will be released only in accordance with the
provisions of Article V-A of the First Supplemental Indenture. Each Holder of a
Series 6-1/2% Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
indebtedness evidenced by this Subsidiary Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture and the First Supplemental
Indenture.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 51
CHECKFREE CORPORATION
-----------------------------------------
By:
Title:
CHECKFREE MANAGEMENT CORPORATION
------------------------------------------
By:
Title:
CHECKFREE INVESTMENT CORPORATION
---------------------------------------
By:
Title:
CHECKFREE INVESTMENT SERVICES, INC.
---------------------------------------
By:
Title:
<PAGE> 1
EXHIBIT 4(g)
RULE 144A GLOBAL NOTE
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
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.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY (OR ANY SECURITY
INTO WHICH IT IS EXERCISABLE) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT OF 1933"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) (A "QIB") OR IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT (AN "ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS SECURITY (OR ANY SECURITY INTO WHICH IT IS
EXERCISABLE) EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER
<PAGE> 2
THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (OR ANY
SECURITY INTO WHICH IT IS EXERCISABLE) (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY (OR ANY SECURITY INTO WHICH IT IS EXERCISABLE) OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANING GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS SECURITY (OR ANY SECURITY INTO WHICH IT IS EXERCISABLE) IN
VIOLATION OF THE FOREGOING.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]
-2-
<PAGE> 3
CHECKFREE HOLDINGS CORPORATION
6-1/2% Convertible Subordinated Note due 2006
Registered $172,500,000
No. R-1 CUSIP 162816AAO
CHECKFREE HOLDINGS CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
Cede & Co.
or registered assigns, the principal sum of $172,500,000 at the office or agency
of the Company in the Borough of Manhattan, The City of New York, on December 1,
2006 in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest on said principal sum semiannually on June 1 and December 1 of
each year, commencing June 1, 2000 (each an "Interest Payment Date"), at said
office or agency, in like coin or currency, at the rate of 6-1/2% 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 May
15 or November 15 (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 Series 6-1/2% Notes 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 Series 6-1/2% Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of, premium, if any, and 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 either by (i) mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto
pursuant to Section 3.8 of the Indenture (as defined herein) or (ii) transfer to
an account maintained by the payee located inside the United States.
-3-
<PAGE> 4
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.
[SIGNATURE PAGE FOLLOWS.]
-4-
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
CHECKFREE HOLDINGS CORPORATION
By: /s/ Peter F. Sinisgalli
----------------------------------------
Name: Peter F. Sinisgalli
Title: President and Chief Operating
Officer
By: /s/ Allen L. Shulman
----------------------------------------
Name: Allen L. Shulman
Title: Executive Vice President, Chief
Financial Officer and General
Counsel
<PAGE> 6
REVERSE OF SERIES 6-1/2% NOTE
This Security is one of a duly authorized issue of Securities of the Company
designated as its 6-1/2% Convertible Subordinated Notes due 2006 (herein called
the "Securities"), limited in aggregate principal amount to $172,500,000, issued
and to be issued under an Indenture, dated as of November 29, 1999 (the
"Indenture"), as supplemented by the First Supplemental Indenture thereto, dated
as of November 29, 1999 ( the "First Supplemental Indenture"), between the
Company and Fifth Third Bank as Trustee for the Holders of Securities issued
under said Indenture and the First Supplemental Indenture (herein called the
"Trustee", which term includes any successor trustee under the Indenture and the
First Supplemental 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 and
the First Supplemental Indenture, the Holder of this Security is entitled, at
his option, at any time on or before the close of business on November 30, 2006,
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 repurchase)
not after, the close of business on the Business Day immediately preceding the
Redemption Date or Repurchase 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 nonassessable shares of Common Stock of the Company at a
conversion price equal to $73.20 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 IV of the First Supplemental
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 funds
acceptable to the Company 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 installment of interest (even if the Security has been
called for redemption on a Redemption
<PAGE> 7
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 IV of the First Supplemental Indenture. The conversion price
is subject to adjustment as provided in Article IV of the First Supplemental
Indenture. In addition, the Indenture and the First Supplemental Indenture
provide 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, 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 (assuming such holder of Common Stock failed to exercise any
rights of election and received per share the kind and amount received per share
by a plurality of non-electing shares).
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 not be redeemed at the option of the Company prior
to December 1, 2002. The Securities (other than those Securities that have been
converted in accordance with the terms of the Indenture) are subject to
redemption at the option of the Company upon not less than 30 days' or more than
60 days' notice by mail (unless a shorter notice is deemed satisfactory by the
Trustee), as a whole or from time to time in part, at any time on or after
December 1, 2002. The Redemption Prices (expressed as percentages of the
principal amount) shall be as set forth below for Securities redeemed during the
following 12-month periods:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Period Redemption Price
- -----------------------------------------------------------------------------
<S> <C>
December 1, 2002 through November 30, 2003 103.71%
- -----------------------------------------------------------------------------
December 1, 2003 through November 30, 2004 102.79%
- -----------------------------------------------------------------------------
December 1, 2004 through November 30, 2005 101.86%
- -----------------------------------------------------------------------------
</TABLE>
and thereafter at a Redemption Price equal to 100.93% of the principal amount,
together, in the case of any such redemption, with accrued interest to (but not
including) the Redemption Date (subject to the right of holders of record on the
Regular Record Date to receive interest on the related Interest Payment Date).
-2-
<PAGE> 8
Any redemption of Securities must be in integral multiples of $1,000.
If fewer than all of the Securities are to be redeemed, the Trustee will select
the Securities to be redeemed in principal amounts at maturity of $1,000 or
integral multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a Holder's Securities is
selected for partial redemption and that holder converts a portion of those
Securities prior to the redemption, the converted portion shall be deemed,
solely for purposes of determining the aggregate principal amount of the
Securities to be redeemed by the Company, to be of the portion selected for
redemption.
In certain circumstances involving a Change in Control, each Holder
shall have the right to require the Company to repurchase all or part of its
Securities at a repurchase price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest through the Repurchase Date (subject
to the right of holders of record on the Regular Record Date to receive interest
on the related Interest Payment Date).
The Securities do not have the benefit of any sinking fund.
The Securities are jointly and severally guaranteed by all of the
Subsidiaries of the Company pursuant to Article V-A of the First Supplemental
Indenture, and a notation of such Subsidiary Guarantee is attached to this
Security.
In the event of redemption, conversion or repurchase of this Security
in part only, a new Security or Securities for the unredeemed, unconverted or
unrepurchased portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
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 all Senior Indebtedness, and this Security is issued subject
to the provisions of the First Supplemental 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 and in Article VI of the First
Supplemental Indenture.
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Securities
and the Indenture if the Company deposits with the Trustee money or Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
-3-
<PAGE> 9
The Indenture and the First Supplemental Indenture permit, 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 and the First Supplemental Indenture at any time
by the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture and the First Supplemental Indenture also contain 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 the First Supplemental Indenture and certain past defaults under
the Indenture and the First Supplemental Indenture and their consequences. Any
such consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange therefor
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 the First Supplemental
Indenture and no provision of this Security or of the Indenture or the First
Supplemental 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 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 the First Supplemental 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.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and the First Supplemental Indenture and subject to certain
limitations therein set forth, upon request of, and delivery of not less than
three Business Days notice to, the Company and the Trustee, a beneficial owner
of interests in a permanent global security may exchange such interests for a
definitive Note of like tenor and aggregate principal amount in certificated
form.
The depositary with respect to the Notes shall be The Depository Trust
Company.
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.
-4-
<PAGE> 10
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. In the event that any date on which interest is
payable on the Series 6-1/2% Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay).
All terms used in this Security which are defined in the Indenture and
the First Supplemental Indenture shall have the meanings assigned to them in the
Indenture and the First Supplemental Indenture.
THE INDENTURE AND THE FIRST SUPPLEMENTAL 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.
-5-
<PAGE> 1
EXHIBIT 4(h)
EXECUTION COPY
--------------
6 1/2% CONVERTIBLE
SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
Dated as of November 22, 1999
by and among
CheckFree Holdings Corporation,
the Guarantors Signatories Hereto
and
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Deutsche Bank Securities Inc.
Hambrecht & Quist LLC
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
SECTION 1. DEFINITIONS......................................................1
SECTION 2. SHELF REGISTRATION...............................................4
(a) Shelf Registration......................................4
(b) Obligations of Holders..................................5
(c) Restrictions by Company of Offers and Sales.............7
SECTION 3. LIQUIDATED DAMAGES...............................................7
SECTION 4. REGISTRATION PROCEDURES..........................................9
(a) Shelf Registration......................................9
(b) Effectiveness and Amendments............................9
(c) Notifications, Information and Deliveries..............10
(d) Additional Procedures for Underwritten Offerings.......12
(e) Miscellaneous Procedures...............................13
SECTION 5. REGISTRATION EXPENSES...........................................14
(a) General................................................14
(b) Restrictions on Counsel Fees...........................14
SECTION 6. INDEMNIFICATION.................................................15
(a) By the Company.........................................15
(b) By the Holders.........................................16
(c) Notice and Defense of Claims...........................16
(d) Contribution...........................................17
(e) Certain Limitations on Contribution....................18
SECTION 7. INFORMATION REQUIREMENTS........................................18
SECTION 8. UNDERWRITTEN REGISTRATIONS......................................19
(a) Selection of Underwriter...............................19
(b) Participation by Holders...............................19
(c) Lock-Up................................................19
(d) Indemnification........................................19
(e) Expenses of an Underwritten Offering...................19
SECTION 9. MISCELLANEOUS...................................................19
(a) Remedies...............................................20
(b) No Conflicting Agreements..............................20
(c) No Piggybacks on Registration Statement................20
(d) Amendments and Waivers.................................20
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C> <C>
(e) Third Party Beneficiaries..............................20
(f) Notices................................................20
(g) Successors and Assigns.................................22
(h) Counterparts...........................................22
(i) Headings...............................................22
(j) Governing Law..........................................22
(k) Severability...........................................22
(l) Entire Agreement.......................................22
(m) Further Assurances.....................................22
(n) Termination............................................23
</TABLE>
-iii-
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 22, 1999 by and among CheckFree Holdings
Corporation, a Delaware corporation (the "Company"), the subsidiaries of the
Company listed on the signature pages hereto (the "Guarantors"), and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and
Hambrecht & Quist LLC. (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the Company's 6 1/2%
Convertible Subordinated Notes due 2006 (the "Notes") pursuant to the Purchase
Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
November 22, 1999 (the "Purchase Agreement"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Notes, the Company and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in the fifth paragraph of the Purchase Agreement. Capitalized terms used
herein and not otherwise defined shall have the meaning assigned to them in the
Indenture, dated as of the Closing Date, between the Company and Fifth Third
Bank, as Trustee, and the First Supplemental Indenture, dated as of the Closing
Date, among the Company, the Guarantors and Fifth Third Bank, as Trustee,
relating to the Notes (together the "Indenture").
The Company and the Guarantors agree with the Initial Purchasers, ((i)
for their benefit as Initial Purchasers and (ii) for the benefit of the Holders
(as defined below)),to perform their respective obligations set forth below:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms not
otherwise defined herein shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Business Day: Any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking
institutions in New York, New York are authorized or
required by law or executive order to close.
Closing Date: The date of the issuance and delivery of the Notes.
<PAGE> 5
Common Stock: Common Stock, $.01 par value per share, of the
Company, as issuable or issued upon conversion of
the Notes.
Commission: The Securities and Exchange Commission.
Default Period: As defined in Section 3.
Effectiveness Deadline: As defined in Section 2(a) hereof.
Effectiveness Period: The period commencing with the date on which the
Commission declares a Registration Statement
effective and ending on the date on which all
Registrable Securities have ceased to be Registrable
Securities.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission
promulgated thereunder.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Notes to certain "qualified
institutional buyers," as such term is defined in
Rule 144A under the Act.
Filing Deadline: As defined in Sections 2(a) hereof.
Guarantors: As defined in the preamble hereto.
Holder: Each of the holders from time to time of the Notes
(including the Initial Purchasers) and each of the
holders from time to time of the Common Stock issued
upon conversion of the Notes.
Liquidated Damages: As defined in Section 3.
Managing Underwriters: The investment banking firm or firms that shall
manage or co-manage an Underwritten Offering,
subject to the provisions of Section 8(a).
Notes: The 6 1/2% Convertible Subordinated Notes being
issued and sold pursuant to the Purchase Agreement
and the Indenture (including the Subsidiary
Guarantee, as defined in the Indenture).
Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust,
unincorporated organization or government or any
agency or political subdivision thereof.
-2-
<PAGE> 6
Prospectus: The prospectus included in a Registration Statement
at the time such Registration Statement is declared
effective, as amended or supplemented by any
prospectus supplement and by all other amendments
thereto, including post-effective amendments, all
material incorporated by reference into such
Prospectus and any information previously omitted in
reliance upon Rule 430A of the Act.
Registrable Securities: (A) The Common Stock of the Company into which the
Notes are convertible or converted, whether or not
such Notes have been converted, and at all times
subsequent thereto, and any Common Stock issued with
respect thereto upon any stock dividend, split or
similar event until, in the case of any such Common
Stock, (i) it is effectively registered under the
Act and disposed of in accordance with the
Registration Statement covering it, (ii) it is
saleable by the holder thereof pursuant to Rule
144(k) (or any successor provision) or (iii) it is
sold to the public pursuant to Rule 144, and, as a
result of the event or circumstance described in any
of the foregoing clauses (i) through (iii), the
legends with respect to transfer restrictions
required under the Indenture (other than any such
legends required solely as the consequence of the
fact that such Common Stock (or the Notes, upon the
conversion of which such Common Stock was issued or
is issuable) is owned by, or was previously owned
by, the Company or an Affiliate of the Company) are
removed or removable in accordance with the terms of
the Indenture; and (B) the Notes, until, in the case
of any such Note, (i) it is converted into shares of
Common Stock in accordance with the terms of the
Indenture, (ii) it is effectively registered under
the Act and disposed of in accordance with the
Registration Statement covering it, (iii) it is
saleable by the holder thereof pursuant to Rule
144(k) (or any successor provision) or (iv) it is
sold to the public pursuant to Rule 144, and, as a
result of the event or circumstance described in any
of the foregoing clauses (ii) through (iv), the
legends with respect to transfer restrictions
required under the Indenture (other than any such
legends required solely as the consequence of the
fact that such Note is owned by, or was previously
owned by, the Company or an Affiliate of the
Company) are removed or removable in accordance with
the terms of the Indenture.
Registration Default: As defined in Section 3 hereof.
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Registration Statement: Any registration statement of the Company and the
Guarantors which covers any of the Registrable
Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and
supplements to such registration statement,
including post-effective amendments, all exhibits,
and all material incorporated by reference or deemed
to be incorporated by reference therein.
Requisite Information: As defined in Section 2(b) hereof.
Rule 144: Rule 144 promulgated under the Act, as such Rule may
be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
Rule 144A: Rule 144A promulgated under the Act, as such Rule
may be amended from time to time, or any similar
rule or regulation hereafter adopted by the
Commission.
Selling Holder: As defined in Section 2(b) hereof.
Special Counsel: Ropes & Gray, or such successor counsel to the
Holders as shall be specified by the Holders of a
majority of the Registrable Securities, the
reasonable fees and expenses of which will be paid
by the Company and the Guarantors pursuant to
Section 5(b) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the
Indenture.
Underwritten Offering: A registration in which securities of the Company or
the Guarantors are sold to one or more underwriters
for reoffering to the public.
SECTION 2. SHELF REGISTRATION
(a) Shelf Registration.
(i) As soon as practicable after the Closing Date but in no
event later than 60 days after the Closing Date (such 60th day, the "Filing
Deadline"), the Company shall file with the Commission a Registration Statement
for an offering, to be made on a continuous basis pursuant to Rule 415 under the
Act, registering the resale from time to time of all the Registrable Securities
by Holders thereof.
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(ii) The Company shall use its reasonable best efforts to
cause such Registration Statement to become effective as soon as practicable but
in no event later than 120 days after the Closing Date (such 120th day, the
"Effectiveness Deadline"). The Company shall use its reasonable best efforts to
keep the Registration Statement continuously effective, supplemented and amended
as required by the provisions of Section 4 hereof, to the extent necessary to
ensure that the Registration Statement is available for sales of Registrable
Securities by the Holders thereof until the expiration of the Effectiveness
Period. The Company shall ensure that such Registration Statement conforms with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time during the
Effectiveness Period. The Company shall also supplement and amend the
Registration Statement if reasonably requested (A) by the Initial Purchasers or
by the Trustee on behalf of the Holders of a majority of the Registrable
Securities covered by such Registration Statement or (B) by any Managing
Underwriter, in the event of an Underwritten Offering.
(iii) The Company shall cause the Guarantors to take such
action as required, under the Act or otherwise, to effectuate the purposes of
this Section 2 and Section 4 hereof.
(b) Obligations of Holders. Each Holder agrees that if it wishes to
sell its Registrable Securities pursuant to a Registration Statement and related
Prospectus, it will do so only in accordance with this Section 2(b).
(i) Each Holder agrees to give written notice to the Company
at least five Business Days prior to any intended distribution of Registrable
Securities under a Registration Statement, which notice shall specify the date
on which such Holder intends to begin such distribution and any information with
respect to such Holder and the intended distribution of Registrable Securities
by such Holder as may be required to amend the Registration Statement or
supplement the related Prospectus with respect to such intended distribution of
Registrable Securities by such Holder (the "Requisite Information"). In the
event the Holder fails to provide the the Requisite Information in its initial
notice of its intention to distribute the Registrable Securities pursuant to the
Registration Statement, the Company will promptly request such Holder to provide
such Requisite Information.
(ii) As soon as practicable after the date such notice and
Requisite Information is provided by such Holder (after having provided
Requisite Information, a "Selling Holder"), and in any event within four
Business Days after such date, the Company shall, if necessary, prepare and file
with the Commission a post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the
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<PAGE> 9
statements therein not misleading, and so that, as thereafter delivered to
purchasers of the Registrable Securities being sold thereunder, such Prospectus
will comply in all material respects with the rules and requirements under the
Act and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company shall provide each Selling Holder with copies of any
documents filed pursuant to this clause (ii) as soon as practicable, and it
shall inform each Selling Holder that the Company has complied with its
obligations hereunder (or that, if the Company has filed a post-effective
amendment to the Registration Statement which has not yet been declared
effective, the Company will notify the Selling Holder to that effect, will use
its reasonable efforts to secure the effectiveness of such post-effective
amendment and will promptly notify the Selling Holder when the amendment has
become effective).
(iii) Each Selling Holder will sell all or any of its
Registrable Securities pursuant to the Registration Statement and related
Prospectus only during the 45-day period commencing with the date on which the
Company gives notice, pursuant to clause (ii) above, that the Registration
Statement and Prospectus may be used for such purpose. The Selling Holders will
not sell any Registrable Securities pursuant to such Registration Statement or
Prospectus after such 45-day period without giving the Company a new notice of
intention to sell pursuant to this Section 2(b) and receiving a further notice
from the Company pursuant to clause (ii) above.
(iv) Each Holder agrees, by acquisition of the Registrable
Securities, that no Holder of Registrable Securities shall be entitled to sell
any of such Registrable Securities pursuant to a Registration Statement or to
receive a Prospectus relating thereto, unless such Holder has furnished the
Company with the notice and Requisite Information required pursuant to clause
(i) hereof and such other information regarding such Holder and the distribution
of such Registrable Securities as the Company may from time to time reasonably
request. The Company may exclude from such registration the Registrable
Securities of any Holder who does not furnish such information provided above
for so long as such information is not so furnished. Each Selling Holder agrees
promptly to furnish to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such
Selling Holder not misleading. Any sale of any Registrable Securities by any
Selling Holder shall constitute a representation and warranty by such Selling
Holder that the information relating to such Selling Holder and its plan of
distribution is as set forth in the Prospectus delivered by such Selling Holder
in connection with such disposition, that such Prospectus does not as of the
time of such sale contain any untrue statement of a material fact relating to
such Selling Holder or its plan of distribution and that such Prospectus does
not as of the time of such sale omit to state any material fact relating to such
Selling Holder or its plan of distribution necessary to make the statements in
such Prospectus, in light of the circumstances under which they were made, not
misleading.
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<PAGE> 10
(c) Restrictions by Company of Offers and Sales. Notwithstanding
anything to the contrary in Section 4 of this Agreement, but subject to Section
3 of this Agreement, the Company may, by delivering written notice to the
Selling Holders, prohibit offers and sales of Registrable Securities pursuant to
a Registration Statement at any time if (A) (i) the Company or the Guarantors
are in possession of material non-public information relating to the Company or
the Guarantors, (ii) the Company determines (based on advice of counsel) that
such prohibition is necessary to avoid a requirement to disclose such material
non-public information to the public and (iii) the Company determines in good
faith that public disclosure of such material non-public information would not
be in the best interests of its stockholders or (B) (i) the Company or the
Guarantors have made a public announcement relating to an acquisition or
business combination transaction including the Company and/or one or more of the
Guarantors that is material to the Company and the Guarantors taken as a whole
and (ii) the Company determines in good faith that (x) offers and sales of
Registrable Securities pursuant to the Registration Statement prior to the
consummation of such transaction (or such earlier date as the Company shall
determine) is not in the best interests of the Company, the Guarantors and the
stockholders of the Company or (y) it would be impracticable at the time to
obtain any financial statements relating to such acquisition or business
combination transaction that would be required to be set forth in the
Registration Statement; provided, however, that upon (i) the public disclosure
by the Company or the Guarantors of the material non-public information
described in clause (A) of this paragraph or (ii) the consummation, abandonment
or termination of, or the availability of the required financial statements with
respect to a transaction described in clause (B) of this paragraph, the
suspension of the use of the Registration Statement pursuant to this Section
2(c) shall cease and the Company shall promptly notify the Selling Holders that
dispositions of the Registrable Securities may be resumed.
SECTION 3. LIQUIDATED DAMAGES
The parties hereto agree that the Holders will suffer damages if a
Registration Default (as defined in this Section 3) occurs and that it would not
be feasible to ascertain the extent of such damages with precision. Therefore,
if (i) the Registration Statement is not filed with the Commission on or prior
to the Filing Deadline, (ii) such Registration Statement has not been declared
effective by the Commission on or prior to the Effectiveness Deadline, or (iii)
such Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose (without being succeeded immediately by a post-effective
amendment to such Registration Statement that is itself declared effective
immediately and available for effecting resales of Registrable Securities) for a
period of time which shall exceed 30 days in the aggregate during any 3-month
period or 60 days in the aggregate during any 12-month period (each such event
referred to in clauses (i) through (iii), a "Registration Default"), then the
Company and the Guarantors agree, jointly and severally, to pay, as liquidated
damages, and not as a penalty, an additional amount to the Holders (the
"Liquidated Damages") for the period beginning on the date on which a
Registration Default occurred and ending on the date on which such
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<PAGE> 11
Registration Default is cured (the "Default Period"). The Company and the
Guarantors shall pay Liquidated Damages: (i) to each Holder of a Note, accruing
at a rate equal to one-half of one percent per annum (50 basis points) on the
aggregate principal amount of Notes held by such Holder and (ii) to each Holder
of Common Stock, accruing at a rate equal to one-half of one percent per annum
(50 basis points) calculated on an amount equal to the product of (x) the
then-applicable "conversion price" (as defined in the Indenture), or, in the
event that all Notes have been converted to Common Stock, the conversion price
applicable to the Note last converted, times (y) the number of shares of Common
Stock held by such Holder. If the Default Period continues for a period in
excess of ninety (90) days from the date on which the Registration Default
occurred, the Company and the Guarantors shall pay additional Liquidated Damages
after such 90th day (i) to each Holder of a Note, accruing at a rate equal to
one-quarter of one percent per annum (25 basis points) on the aggregate
principal amount of the Notes held by such Holder and (ii) to each Holder of
Common Stock, accruing at a rate equal to one-quarter of one percent per annum
(25 basis points) calculated on an amount equal to the product of (x) the then
applicable conversion price, times (y) the number of shares of Common Stock held
by such Holder. Liquidated Damages shall again increase in the manner described
in the previous sentence after each 90-day period in which the Registration
Default has not been cured; provided, however, that in no event shall the
Company and the Guarantors pay Liquidated Damages greater than one percent per
annum. Liquidated Damages shall cease to accrue when a Registration Default
shall have been cured. A Registration Default shall be deemed cured (1) upon
filing of the Registration Statement, in the case of clause (i) above, (2) upon
the effectiveness of this Registration Statement, in the case of clause (ii)
above, or (3) upon the filing of a post-effective amendment or supplement to the
Registration Statement that causes the Registration Statement to again be
declared effective or made usable, in the case of clause (iii) above.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
semiannual payment dates that correspond to interest payment dates for the
Notes. All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Registrable
Security at the expiration of the Effectiveness Period shall survive until such
time as all such obligations with respect to such Notes shall have been
satisfied in full. The Trustee shall be entitled, on behalf of the Holders, to
seek any available remedy for the enforcement of this Agreement, including the
payment of Liquidated Damages. Notwithstanding the foregoing, the parties agree
that the sole damages payable in connection with a Registration Default shall be
the Liquidated Damages provided for in this Section 3. Nothing in this Section 3
shall preclude a Holder from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement, in addition to the payment of
Liquidated Damages.
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SECTION 4. REGISTRATION PROCEDURES
(a) Shelf Registration. Subject to Section 2(a), the Company shall use
its reasonable best efforts to effect the registration of the Registrable
Securities with the Commission as to permit their being sold in accordance with
the Requisite Information furnished to the Company. The Registration Statement
shall be filed on Form S-3 or on another appropriate form under the Act, which
form shall be available for the resale of the Registrable Securities in the
intended method or methods of distribution thereof (including, without
limitation, in the form of one or more Underwritten Offerings) within the time
periods and otherwise in accordance with the provisions hereof. The Company and
the Guarantors shall not be permitted to include in the Registration Statement
any securities other than the Registrable Securities and those securities
disclosed in Schedule 9(c).
(b) Effectiveness and Amendments. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective for the Effectiveness Period. Upon the
occurrence of any event that would cause any Registration Statement (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Registrable Securities during the Effectiveness Period, the
Company shall file promptly an appropriate amendment to such Registration
Statement curing such defect, and, if Commission review is required, use its
reasonable best efforts to cause such amendment to be declared effective as soon
as practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the Effectiveness Period (subject
to Section 2(c) hereof), cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act (or any similar provisions then in force), and to comply fully
with Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement as
so amended or such Prospectus as so supplemented;
(iii) notify the Selling Holders, their Special Counsel, the
Initial Purchasers and the Managing Underwriters, if any, promptly and, if
requested by such persons, confirm such notice in writing (A) when the
Prospectus, any Prospectus supplement, a Registration Statement or
post-effective amendment relating to the Registrable Securities has been filed
with the Commission, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of any
request by the Commission or any other federal or state governmental authority
for amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension by any state
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<PAGE> 13
securities commission of the qualification of the Registrable Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceeding for any of the preceding purposes, (D) of the existence of any fact
or the happening of any event that makes any statement of a material fact made
in the Registration Statement or the Prospectus therein untrue, or that requires
the making of any additions to or changes in the Registration Statement in order
to make the statements therein not misleading, or that requires the making of
any additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and (E) of the determination of the Company that a post-effective
amendment to a Registration Statement would be appropriate. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Registrable Securities for offering or sale in any
jurisdiction, the Company shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible moment; and
(iv) subject to Section 4(b)(i), if any fact or event
contemplated by Section 4(b)(iii)(D) above shall exist or have occurred,
promptly prepare and file a supplement or post-effective amendment to the
Registration Statement or related Prospectus or file any other required document
(such as a Current Report on Form 8-K) so that, as thereafter delivered to the
purchasers of Registrable Securities, the Registration Statement shall not
contain any 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
not misleading, and so that the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. In the case of a post-effective amendment to a
Registration Statement, the Company shall use its reasonable efforts to cause it
to become effective as soon as applicable.
(c) Notifications, Information and Deliveries. In connection with any
Registration Statement required by this Agreement, the Company shall:
(i) furnish to the Initial Purchasers, the Special Counsel and
the Managing Underwriters, if any, in connection with such sale before filing
with the Commission, copies of any Registration Statement which will be subject
to the review and comment of the Initial Purchasers, the Special Counsel and the
Managing Underwriters. The Company shall not file any Registration Statement to
which the Initial Purchasers, the Special Counsel or the Managing Underwriters
shall reasonably object within two Business Days after the receipt thereof;
(ii) make available at reasonable times for inspection by a
representative of the Selling Holders, the Managing Underwriters, if any, the
Special Counsel or any accountant retained by the Selling Holders all relevant
financial and other records and pertinent corporate documents of the Company and
the Guarantors and cause the officers, directors and employees
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<PAGE> 14
of the Company and the Guarantors to supply all information reasonably requested
by any such Selling Holder, Managing Underwriters, if any, the Special Counsel
or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness, in each case as is customary for similar due diligence
investigations; provided, however, that any information that is designated in
writing by the Company, in good faith, as confidential at the time of delivery
of such information shall be kept confidential by such Selling Holders, Managing
Underwriter, Special Counsel or accountant, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; and provided further that the
foregoing inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of the Selling Holders and the other parties
entitled thereto by one counsel designated by and on behalf of such Selling
Holders and other parties reasonably acceptable to the Company;
(iii) if requested by the Selling Holders of a majority of the
Registrable Securities being sold, by the Initial Purchasers or by the Managing
Underwriters, if any, in connection with such sale, promptly include in any
Registration Statement or Prospectus, pursuant to a post-effective amendment or
supplement if necessary, such information as such Selling Holders, the Initial
Purchasers or Managing Underwriters, if any, may reasonably request to have
included therein, including, without limitation, information relating to the
"Plan of Distribution" of the Registrable Securities; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment, provided that the Company
shall not be required to take any actions under this clause (iii) that are not,
in the opinion of its counsel, in compliance with applicable law;
(iv) furnish to each Selling Holder, the Special Counsel, each
Initial Purchaser and each Managing Underwriter, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, except for documents incorporated by
reference therein and all exhibits, unless such documents and exhibits are
reasonably requested by such Persons; and
(v) deliver to each Selling Holder, the Special Counsel, each
Initial Purchaser and each Managing Underwriter, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request, which
copies the Company hereby consent to the use (in accordance with law) by such
Persons, in connection with the offering and the sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto; and
(vi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
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<PAGE> 15
(d) Additional Procedures for Underwritten Offerings. Subject to
Section 8 hereof, upon the request of the Selling Holders, Initial Purchasers or
Managing Underwriters, the Company and the Guarantors shall enter into such
agreements (including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith, in each case
in form, substance and scope as are customary in underwritten public offerings,
in order to expedite or facilitate the disposition of the Registrable Securities
pursuant to any Registration Statement as may be reasonably requested by such
Person in connection with any sale or resale pursuant to any applicable
Registration Statement and in such connection, the Company and the Guarantors
shall:
(i) upon request of the Selling Holders, the Special Counsel
or the Managing Underwriters, furnish to each such Person upon the effectiveness
of the Registration Statement:
(A) a certificate, dated such date, signed on behalf
of the Company and each Guarantor by (x) the President or any Senior Vice
President of the Company and each Guarantor and (y) a principal financial or
accounting officer of the Company and each Guarantor, confirming, as of the date
thereof, the applicable matters set forth in Section 1(a) of the Purchase
Agreement and such other similar matters as the Selling Holders, the Special
Counsel or the Managing Underwriters may reasonably request;
(B) an opinion, dated the date effectiveness of the
Registration Statement, of counsel for the Company and the Guarantors covering
matters similar to those set forth in Section 5(b) of the Purchase Agreement and
such other matters customarily covered in opinions requested in underwritten
offerings and such other matters as the Special Counsel and Managing
Underwriters may reasonably request, in form, scope and substance reasonably
satisfactory to the Special Counsel and the Managing Underwriters; and
(C) a customary comfort letter, dated as of the date
of effectiveness of the Registration Statement from the independent accountants
of the Company and the Guarantors, and updates thereof, in the customary form
and covering matters of the type customarily covered in comfort letters to
underwriters in connection with underwritten offerings, and affirming, at a
minimum, the matters set forth in the comfort letters delivered pursuant to
Section 5(d) of the Purchase Agreement; and
(ii) deliver such other documents and certificates as may be
reasonably requested by the Selling Holders, the Special Counsel and Managing
Underwriters to evidence compliance with clause (i) above and with any customary
conditions contained in any agreement entered into by the Company and the
Guarantors. The above shall be done at each closing under such underwriting or
similar agreement as and to the extent required thereunder.
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<PAGE> 16
(e) Miscellaneous Procedures. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
shall:
(i) prior to any public offering of the Registrable
Securities, cooperate with the Selling Holders, the Managing Underwriters, if
any, and the Special Counsel in connection with the registration and
qualification (or exemption therefrom) of the Registrable Securities under the
securities or Blue Sky laws of such jurisdictions as such Persons may request,
maintain such registration and qualification (or exemption therefrom) during the
Effectiveness Period, and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation in any jurisdiction
where it is not now so subject;
(ii) in connection with any sale of Registrable Securities
that will result in such securities no longer being Registrable Securities,
cooperate with the Selling Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and to register such Registrable Securities in
such denominations and such names as the Selling Holders may request at least
two Business Days prior to the sale of such Registrable Securities;
(iii) cause all shares of Common Stock covered by such
Registration Statement (A) to be listed on any securities exchange on which the
Common Stock is then listed or (B) to be authorized for quotation on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or the National Market System of NASDAQ, in each case no later than the date on
which the Registration Statement is declared effective, and to make such filings
under the Exchange Act as are required thereby and to have such filings declared
effective thereunder;
(iv) use its reasonable best efforts to cause the disposition
of the Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller to sellers thereof to consummate the
disposition of such Registrable Securities, subject to the proviso contained in
clause (i) above;
(v) provide a CUSIP number for all Registrable Securities not
later than the effective date of a Registration Statement covering such
Registrable Securities and provide the Trustee under the Indenture and the
transfer agent for the Common Stock with printed certificates for the
Registrable Securities which are in a form eligible for deposit with the
Depository Trust Company;
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<PAGE> 17
(vi) comply with all applicable rules and regulations of the
Commission, and make generally available to the Holders a consolidated earnings
statement (which need not be audited) meeting the requirements of Rule 158 under
the Act and covering a twelve-month period beginning after the effective date of
the Registration Statement (as such term is defined in paragraph (c) of Rule 158
under the Act) no later than 45 days after the end of such 12-month period;
(vii) cause the Indenture to be qualified under the TIA not
later than the effective date of the Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use their reasonable best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner; and
(viii) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc.
SECTION 5. REGISTRATION EXPENSES
(a) General. Except as set forth in Section 8(e), all expenses incident
to the performance of or compliance with this Agreement by the Company and the
Guarantors, will be borne by the Company and the Guarantors, jointly and
severally, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company and printing of Prospectuses), messenger and delivery
services and telephone expenses relating to the obligations of the Company and
the Guarantors hereunder; (iv) all fees and disbursements of counsel for the
Company and the Guarantors and for the Holders (subject to Section 5(b) below);
(v) all application and filing fees in connection with listing the Common Stock
on a national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance). The Company and the Guarantors will, in any event, bear their
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) Restrictions on Counsel Fees. In connection with any Registration
Statement required by this Agreement, the Company and the Guarantors will
reimburse the Initial
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<PAGE> 18
Purchasers and the Selling Holders for the reasonable fees and disbursements of
not more than one firm of attorneys, which firm shall be the Special Counsel or
any other firm chosen by the Holders of a majority of the Registrable Securities
for which the Registration Statement is being prepared.
SECTION 6. INDEMNIFICATION
(a) By the Company. The Company and the Guarantors agree, jointly and
severally, to indemnify and hold harmless each Initial Purchaser, each Holder,
their directors and officers and each Person, if any, who controls such Initial
Purchaser or Holder (within the meaning of Section 15 of the Act and Section
20(a) of the Exchange Act) (each such person being sometimes referred to herein
as an "Indemnified Holder"), from and against any and all losses, claims,
damages, liabilities, judgments (including without limitation, any reasonable
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary Prospectus or Prospectus or arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments arise out of or are based upon information relating to any of the
Initial Purchasers or Holders furnished in writing to the Company by any of such
Initial Purchasers or Holders, provided, however, that the Company and the
Guarantors shall not be liable to any Holder (or any person controlling such
Holder) to the extent that any such losses, claims, damages, liabilities or
judgments arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
either (A)(i) such Holder failed to send or deliver a copy of the Prospectus
with or prior to delivery of written confirmation of the sale by such Holder to
the person asserting the claims from which such losses, claims, damages,
liabilities or judgments arise and (ii) the Prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, or (B)(x) such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the Prospectus
and (y) having previously been furnished by or on behalf of the Company or the
Guarantors with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, with or prior to the delivery of written confirmation of the sale
of a Registrable Security to the person asserting the claim from which such
losses, claims, damages, liabilities or judgments arise. The Company and the
Guarantors shall also indemnify each underwriter and each person who controls
such person (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) to the same extent and with the same limitations as
provided above with respect to the indemnification of the Initial Purchasers or
the Holders.
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<PAGE> 19
(b) By the Holders. Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Initial Purchasers, the other Selling Holders,
the Company, the Guarantors and each of their directors and officers, and each
Person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Initial Purchasers, the other Selling
Holders, the Company and the Guarantors, to the same extent as the foregoing
indemnity from the Company and the Guarantors to each of the Indemnified
Holders, but only with reference to information relating to such Indemnified
Holder furnished in writing to the Company or the Guarantors by such Indemnified
Holder expressly for use in any Registration Statement or Prospectus. In no
event shall any Indemnified Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Indemnified
Holder with respect to its sale of Registrable Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Indemnified Holder
for such Registrable Securities and (ii) the amount of any damages that such
Indemnified Holder has otherwise been required to pay to the Company and the
Guarantors pursuant to this Section 6(b) by reason of such untrue or alleged
untrue statement or omission or alleged omission.
(c) Notice and Defense of Claims. In case any action shall be commenced
involving any person in respect of which indemnity may be sought pursuant to
Section 6(a) or 6(b) (the "indemnified party"), the indemnified party shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying person") in writing and the indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all reasonable fees and
expenses of such counsel, as incurred (except that in the case of any action in
respect of which indemnity may be sought pursuant to both Sections 6(a) and
6(b), an Indemnified Holder shall not be required to assume the defense of such
action pursuant to this Section 6(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of the Indemnified Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or with separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated
-16-
<PAGE> 20
in writing by a majority of the Indemnified Holders, in the case of the parties
indemnified pursuant to Section 7(a), and by the Company and the Guarantors, in
the case of parties indemnified pursuant to Section 7(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the reasonable fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) Contribution. To the extent that the indemnification provided for
in this Section 6 is unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and the Holders, on the other hand, from their
sale of Registrable Securities or (ii) if the allocation provided by the
foregoing clause is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in such
foregoing clause above but also the relative fault of the Company and the
Guarantors on the one hand, and of the Indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Indemnified Holder, on the other hand, 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 and the
Guarantors, on the one hand, or by the Indemnified Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
judgments referred to above shall be deemed to include, subject to the
limitations set forth in Section 6(e), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
-17-
<PAGE> 21
(e) Certain Limitations on Contribution. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in Section 6(d) shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding anything to the contrary in this
Section 6, no Holder or its related Indemnified Holders shall be require to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its Registrable
Securities pursuant to a Registration Statement exceeds the sum of (A) the
amount paid by such Holder for such Registrable Securities plus (B) the amount
of any damages which such Holder has otherwise been required to pay to the
Company and the Guarantors pursuant to this Section 6 by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
Sections 6(d) and (e) are several in proportion to the respective principal
amount of Registrable Securities held by each of the Holders hereunder and not
joint.
SECTION 7. INFORMATION REQUIREMENTS
The Company and the Guarantors agree with each Holder, for so long as
any Registrable Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to any Holder or beneficial owner of
Registrable Securities in connection with any sale thereof and any prospective
purchaser of Registrable Securities designated by such Holder or beneficial
owner, the information required by Rule 144(d)(4) under the Act in order to
permit resales of such Registrable Securities pursuant to Rule 144A, and (ii) is
subject to Section 13 or 15(d) of the Exchange Act, to make all filings required
thereby in a timely manner in order to permit resales of such Registrable
Securities pursuant to Rule 144. The Company and the Guarantors further covenant
that it will cooperate with any Holder and take such further reasonable action
as any Holder may reasonably request (including, without limitation, making such
reasonable representations as any such Holder may reasonably request), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act.
Upon the request of any Holder, the Company and the Guarantors shall deliver to
such Holder a written statement as to whether it has complied with such filing
requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities under any
section of the Exchange Act.
-18-
<PAGE> 22
SECTION 8. UNDERWRITTEN REGISTRATIONS
(a) Selection of Underwriter. If any of the Registrable Securities
covered by any Registration Statement are to be sold in an Underwritten
Offering, the Managing Underwriters that will administer the Underwritten
Offering will be selected by the Holders of a majority of such Registrable
Securities included in such Underwritten Offering, subject to the consent of the
Company (which will not be unreasonably withheld or delayed).
(b) Participation by Holders. No Holder may participate in any
Underwritten Offering hereunder unless such Holder (i) agrees to sell its
Registrable Securities on the basis reasonably provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements and (iii) at least 25% of the
outstanding Registrable Securities are included in such underwritten offering.
(c) Lock-Up. Each Holder agrees, if requested (pursuant to a timely
written notice) by the Managing Underwriters in an Underwritten Offering made
pursuant to a Registration Statement and to the extent permitted by applicable
law, not to effect any private sale or distribution (including a sale pursuant
to Rule 14(k) and Rule 144A, but excluding non-public sales to any of its
affiliates, officers, directors, employees and controlling persons) of any of
the Notes or Common Stock, during the period beginning 10 days prior to, and
ending 90 days after, the closing date of such underwritten offering.
(d) Indemnification. If any of the Registrable Securities covered by
any Registration are to be sold in an Underwritten Offering, the Managing
Underwriters, their controlling Persons and their respective officers,
directors, employees, representatives and agents shall be entitled to
indemnification (substantially similar to the indemnification set forth in
Section 7 of this Agreement) from the Company, the Guarantors and the Selling
Holders, which indemnification shall be set forth in an underwriting agreement.
(e) Expenses of an Underwritten Offering. Each Selling Holder
participating in any Underwritten Offering shall be responsible for any expenses
customarily borne by a selling security holder, including underwriting discounts
and commissions and fees and expenses of counsel to such selling security
holder, and shall reimburse the Company and the Guarantors for its pro rata
share of the fees and disbursements of its counsel, its independent public
accountants and any printing expenses incurred in connection with such
Underwritten Offerings.
SECTION 9. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
any failure by the Company and the Guarantors to comply with its obligations
under this Agreement may result in material irreparable injury to the Initial
Purchasers or the Holders for
-19-
<PAGE> 23
which there is not adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the obligations of the Company and the
Guarantors hereunder; provided, that the sole damages payable for a Registration
Default shall be Liquidated Damages. The Company and the Guarantors further
agree to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Conflicting Agreements. Neither the Company nor any of the
Guarantors have entered or will, on or after the date of this Agreement, enter
into any agreement with respect to any of their securities that is adverse to
the rights granted to the Holders in this Agreement or otherwise materially
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof.
(c) No Piggybacks on Registration Statement. Except as disclosed in
Schedule 9(c), the Company has not granted and shall not grant to holders of any
securities other than Registrable Securities the right to include any securities
in any Registration Statement provided for in this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 3
hereof and this Section 10(d)(i), the Company and the Guarantors have obtained
the written consent of Holders of all outstanding Registrable Securities and
(ii) in the case of all other provisions hereof, the Company and the Guarantors
have obtained the written consent of Holders of a majority of Registrable
Securities (excluding Registrable Securities held by the Company or its
Affiliates).
(e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, Telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Security Registrar under
the Indenture; and
(ii) if to the Company or any Guarantor:
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<PAGE> 24
CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
Telecopier No.: (678) 375-3633
Attention: General Counsel
With a copy to:
Porter, Wright, Morris & Arthur LLP
41 South High Street
Columbus, Ohio 43215-6194
Telecopier No.: (614) 227-2100
Attention: Robert J. Tannous, Esq.
(iii) if to the Initial Purchasers or Special Counsel to:
Merrill Lynch & Co.
5500 Sears Tower
Chicago, IL 60606
Attention: Steve Moss
with a copy to:
Merrill Lynch & Co.
North Tower
World Financial Center
New York, NY 10281-1201
Attention: IBK Counsel
and:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: David C. Chapin, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
-21-
<PAGE> 25
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities; provided, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(h) 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.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that 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.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(m) Further Assurances. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and the other
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<PAGE> 26
documents contemplated hereby and consummate and make effective the transactions
contemplated hereby.
(n) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 5 and 6 hereof and the obligations
to make payments of and provide for liquidated damages under Section 3 hereof to
the extent such damages accrue prior to the end of the Effectiveness Period,
each of which shall remain in effect in accordance with their terms.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CHECKFREE HOLDINGS CORPORATION
By: /s/ Allen L. Shulman
-----------------------------------
Name: Allen L. Shulman
Title: Executive Vice President and
Chief Financial Officer
CHECKFREE CORPORATION
By: /s/ Allen L. Shulman
-----------------------------------
Name: Allen L. Shulman
Title: Executive Vice President and
Chief Financial Officer
CHECKFREE INVESTMENT CORPORATION
By: /s/ Allen L. Shulman
-----------------------------------
Name: Allen L. Shulman
Title: Executive Vice President and
Chief Financial Officer
CHECKFREE MANAGEMENT CORPORATION
By: /s/ Allen L. Shulman
-----------------------------------
Name: Allen L. Shulman
Title: Executive Vice President and
Treasurer
CHECKFREE INVESTMENT SERVICES, INC.
By: /s/ Allen L. Shulman
-----------------------------------
Name: Allen L. Shulman
Title: Vice President
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
DEUTSCHE BANK SECURITIES INC.
HAMBRECHT & QUIST LLC
By: /s/ Stephen T. Moss
- ----------------------------------
Name: Stephen T. Moss
Title: Managing Director
<PAGE> 1
Exhibit 5
January 13, 2000
CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
Gentlemen:
With respect to the Registration Statement on Form S-3 (the
"Registration Statement") being filed by CheckFree Holdings Corporation (the
"Company") under the Securities Act of 1933, as amended, relating to the
registration of 2,356,557 shares of the Company's common stock, $.01 par value
(the "Shares"), we advise you as follows:
We are counsel for the Company and have participated in the preparation
of the Registration Statement. We have reviewed the Company's Restated
Certificate of Incorporation, as amended to date, the corporate action taken to
date in connection with the Registration Statement and the issuance and sale of
the Shares, and such other documents and authorities as we deem relevant for the
purpose of this opinion.
Based upon the foregoing, we are of the opinion that, upon compliance
with the Securities Act of 1933, as amended, and with the securities or "blue
sky" laws of the states in which the Shares are to be offered for sale, the
Shares will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the prospectus included in the Registration Statement.
Very truly yours,
/s/ Porter, Wright, Morris & Arthur LLP
PORTER, WRIGHT, MORRIS & ARTHUR LLP
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CheckFree Holdings Corporation on Form S-3 of our reports dated August 9, 1999,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
CheckFree Holdings Corporation for the year ended June 30, 1999 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Atlanta, Georgia
January 10, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this S-3
filing.
Detroit, Michigan, /s/ Arthur Andersen LLP
--------------------------
January 7, 2000 Arthur Andersen LLP
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
Each of the undersigned directors and/or officers of CheckFree Holdings
Corporation (the "Corporation") hereby appoints Peter J. Kight, Mark A. Johnson,
and Curtis A. Loveland as the undersigned's attorneys or any of them
individually as the undersigned's attorney, to sign, in the undersigned's name
and behalf and in any and all capacities stated below, and to cause to be filed
with the Securities and Exchange Commission (the "Commission"), the
Corporation's Registration Statement on Form S-3 (the "Registration Statement"),
and any and all amendments, including post-effective amendments, to the
Registration Statement, and any registration statement relating to the same
offering as this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, hereby granting unto
such attorney-in-fact, full power and authority to do and perform in the name
and on behalf of the undersigned, in any and all such capacities, every act and
thing whatsoever necessary to be done in and about the premises as fully as the
undersigned could or might do in person, hereby granting to such
attorney-in-fact full power of substitution and revocation, and hereby ratifying
all that any such attorney-in-fact or his substitute may do by virtue hereof.
IN WITNESS WHEREOF, we have here unto set our hands this 29th day of
December, 1999.
Signature Title
/s/ Peter J. Kight Chairman of the Board of Directors
- ------------------------------ and Chief Executive Officer
Peter J. Kight
/s/ Mark A. Johnson Vice Chairman and Director
- ------------------------------
Mark A. Johnson
/s/ Allen L. Shulman Executive Vice President, Chief
- ------------------------------ Financial Officer and General Counsel
Allen L. Shulman
/s/ Gary A. Luoma, Jr. Vice President, Chief Accounting
- ------------------------------ Officer and Assistant Secretary
Gary A. Luoma, Jr.
/s/ William P. Boardman Director
- ------------------------------
William P. Boardman
/s/ George R. Manser Director
- ------------------------------
George R. Manser
/s/ Eugene F. Quinn Director
- ------------------------------
Eugene F. Quinn
/s/ Jeffrey M. Wilkins Director
- ------------------------------
Jeffrey M. Wilkins
