-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AL6J14+kACObk1mhJAoZEQc1F7PcyDMYPCoVNm+nDNbXlzBtc6v01tp386lU3NoD m0hNv1nfpad0AVDNiI9zIQ== 0000895345-00-000022.txt : 20000202 0000895345-00-000022.hdr.sgml : 20000202 ACCESSION NUMBER: 0000895345-00-000022 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMSCOPE INC CENTRAL INDEX KEY: 0001035884 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 364135495 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-94691 FILM NUMBER: 507598 BUSINESS ADDRESS: STREET 1: 1375 LENOIR RHYNE BLVD CITY: HICKORY STATE: NC ZIP: 28601 BUSINESS PHONE: 8283242200 MAIL ADDRESS: STREET 1: 1375 LENOIR RHYNE BOULEVARD CITY: HICKORY STATE: NC ZIP: 28601 S-3 1 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 ----------------- COMMSCOPE, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ----------------- DELAWARE 13-4135495 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER) INCORPORATION OR ORGANIZATION) 1375 Lenoir-Rhyne Boulevard Hickory, North Carolina 28601 (828) 323-2200 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ----------------- Frank B. Wyatt, II, Esq. Vice President, General Counsel and Secretary COMMSCOPE, INC. 1375 Lenoir-Rhyne Boulevard Hickory, North Carolina 28601 (828) 323-2200 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ----------------- COPIES TO: Lois Herzeca, Esq. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON One New York Plaza New York, New York 10004 (212) 859-8000 --------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after the effective date of this Registration Statement. --------------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ================================================================================================================================= TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TO BE REGISTERED REGISTERED AGGREGATE PRICE PER NOTE AGGREGATE OFFERING PRICE REGISTRATION FEE ================================================================================================================================= 4% Convertible Subordinated Notes $172,500,000 (1) 100% (2)(3) $172,500,000 (2) $45,540 - --------------------------------------------------------------------------------------------------------------------------------- Common Stock, $.01 par value 3,579,581 (4) -- -- $--(5) ================================================================================================================================= (1) Represents the aggregate principal amount of the notes that were originally issued by the Registrant. (2) Estimated in accordance with Rule 457 of Regulation C under the Securities Act of 1933, as amended, solely for the purpose of determining the registration fee. (3) Exclusive of accrued interest and distributions, if any. (4) Represents the number of shares of common stock that are initially issuable upon conversion of the notes and shall be deemed to register an additional indeterminate number of shares of common stock issuable upon conversion in the future pursuant to Rule 416 of the Securities Act. (5) No additional consideration will be received for the common stock and therefore no registration fee is required pursuant to Rule 457(i).
----------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. =========================================================================== [RED HERRING] The information in this prospectus is not complete and may be changed. The selling securityholders may not sell their securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell the securities and it is not soliciting an offer to buy the securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 14, 2000 PROSPECTUS COMMSCOPE, INC. $172,500,000 of 4% Convertible Subordinated Notes due 2006 and 3,579,581 Shares of Common Stock Issuable upon Conversion of the Notes ----------------- This prospectus relates to 4% Convertible Subordinated Notes due December 15, 2006 of CommScope, Inc., a Delaware corporation, held by certain security holders who may offer for sale the notes and the shares of our common stock into which the notes are convertible at any time at market prices prevailing at the time of sale or at privately negotiated prices. The selling security holders may sell the notes or the common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. The holders of the notes may convert the notes into shares of our common stock at any time at a conversion rate of 20.7512 shares per $1,000 principal amount of notes. On or after December 15, 2002, we may redeem the notes, in whole or in part, at the redemption prices set forth in the section entitled "Description of Notes--Redemption at the Option of the Company." In the event of a Change of Control, as defined in the section entitled "Description of Notes--Change in Control Permits Purchase of Notes at the Option of the Holder," each holder of the notes may require us to repurchase the notes at 100% of the principal amount of the notes plus accrued interest. The notes are general, unsecured obligations that are subordinated in right of payment to all of our existing and future senior indebtedness and senior subordinated indebtedness. In addition, the notes will effectively rank junior to our subsidiaries' liabilities. See "Description of Notes--Subordination of Notes." On January 13, 2000 the last reported sale price of our common stock, listed under the symbol "CTV", on the New York Stock Exchange ("NYSE") was $40.875 per share. Our 4% Convertible Subordinated Notes are currently eligible for trading on the PORTAL Market of the Nasdaq Stock Market. ----------------- INVESTING IN OUR COMMON STOCK OR OUR CONVERTIBLE SUBORDINATED NOTES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS. ----------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------- THE DATE OF THIS PROSPECTUS IS JANUARY _____, 2000 TABLE OF CONTENTS PAGE ---- Summary............................................................... 1 Risk Factors.......................................................... 5 Use of Proceeds....................................................... 12 Price Range of Common Stock........................................... 12 Dividend Policy....................................................... 12 Ratio of Earnings to Fixed Charges.................................... 13 Business.............................................................. 14 Description of Notes.................................................. 24 Description of Capital Stock.......................................... 40 Description of Other Indebtedness..................................... 44 Certain United States Federal Tax Consequences........................ 47 Selling Securityholders............................................... 53 Plan of Distribution.................................................. 54 Experts............................................................... 55 Validity of Securities................................................ 55 Where You Can Find More Information................................... 55 Incorporation by Reference............................................ 56 Forward-Looking Statements............................................ 56 i SUMMARY The following is a summary of more detailed information appearing elsewhere in this prospectus. This summary is not complete, and does not contain all the information you should consider. You should read this entire document carefully, including the "Risk Factors". On July 28, 1997, General Instrument Corporation spun-off CommScope, Inc., its coaxial and other cable business, and NextLevel Systems, Inc., its broadband communication business, as two independent public companies. At the time of the spin-off, General Instrument Corporation changed its name to General Semiconductor, Inc. and effected a one for four reverse stock split. Thereafter, NextLevel Systems, Inc. changed its name to General Instrument Corporation. Except as otherwise provided in "Description of Notes," references in this prospectus to "CommScope, Inc.," or "we," "us," or "our" are to CommScope, Inc. and its direct and indirect subsidiaries on a consolidated basis since the spin-off and to the coaxial and other cable business conducted by General Instrument Corporation prior to the spin-off. This prospectus includes data regarding the cable industry and other industries which was obtained from industry publications. These industry organizations generally indicate that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. While we believe these industry publications to be reliable, we have not independently verified their data, and we do not guarantee the accuracy or completeness of the information, nor can we provide any assurance that our future performance will follow industry projections. COMMSCOPE We are a leading worldwide designer, manufacturer and marketer of a broad line of coaxial cables and other high-performance electronic and fiber-optic cable products for cable television, telephony, Internet access and wireless communications. We believe that we supplied over 50% of all coaxial cable purchased in the U.S. in 1998 for broadband cable networks using Hybrid Fiber Coaxial (HFC) architecture. We believe we are also the largest manufacturer and supplier of coaxial cable for HFC cable networks in Europe. We are a leading supplier of coaxial cable for telephone central office switching and transmission applications, as well as video distribution applications such as satellite television and security surveillance. In addition, we have developed an innovative line of coaxial cables for wireless communication infrastructure applications that have superior performance characteristics compared to traditional cables. This line of coaxial cables continues to gain market recognition, as evidenced by the nearly twofold increase in sales of these products in the third quarter of 1999 from the second quarter of 1999. We are a leading provider of high-performance premise wiring for local area networks and have developed a new patent-pending foaming process for unshielded twisted-pair cables that significantly reduces cost and improves electrical performance. We sell our products to approximately 2,400 customers in more than 85 countries. For the nine months ended September 30, 1999 our revenues were $537.3 million and our net income was $47.6 million. During this period, approximately 77% of our revenues were for HFC cable networks and other video applications, 12% were for wireless, central office and other telecommunications applications and 11% were for local area network premise wiring applications. International sales were 24.6% of our revenues during this period. We believe that we are the world's most technologically advanced, low-cost provider of coaxial cable. With our leading product offerings, cost-efficient manufacturing and economies of scale, we believe we will benefit from the convergence of video, voice and high-speed Internet access and the resulting demand for enhanced HFC broadband networks. We believe that the following industry trends will drive demand for our products: o endorsement of the HFC architecture by major cable, telephone and technology companies; o increasing use of the Internet; o increasing need for additional bandwidth to accommodate new applications; 1 o increasing maintenance requirements for HFC cable networks as operators improve reliability for telephony, data and other two-way services; o expansion of telephone central offices to accommodate digital subscriber line (DSL) growth and growing alternate access providers of telephony and data services; o the continuing rapid deployment of wireless communications systems worldwide; and o increasing demand for higher speed and bandwidth for local area networks. BUSINESS STRATEGY We have adopted a growth strategy to expand and strengthen our current market position as the leading worldwide supplier of coaxial cable for broadband communications. The principal elements of our growth strategy are: BENEFIT FROM HFC PARADIGM SHIFT. A vast majority of video networks worldwide, such as cable service provider networks, have adopted the HFC cable network architecture for video service delivery. Recent events involving major telecommunications and cable service providers create the potential to expand the role of HFC cable networks from a video-centric focus to a key platform for delivery of a variety of broadband services. These events include AT&T Corporation's acquisition of Tele-Communications, Inc. (TCI), AT&T Corporation's pending acquisition of MediaOne Group, Inc., the strategic relationship between AT&T Corporation and Time Warner, Inc. to offer cable telephony to residential and small business customers in 33 states and to develop the next-generation broadband services, Microsoft Corporation's $1 billion investment in Comcast Corporation and investments in cable television in Europe and the United Kingdom, Paul Allen's acquisitions of Marcus Cable Company, L.L.C., Charter Communications, Inc. and other cable companies, and the recent success of high-speed cable data services such as those offered by Excite@Home Corporation and others. We believe that the HFC cable network architecture provides the most cost-effective bandwidth for multi-channel video, voice and data into homes around the world. This architecture enables both cable and telecommunications service providers to offer new products and services such as high-speed Internet access, video on demand, Internet protocol telephony and high-definition television. As the leading provider of coaxial cable for HFC cable networks, we believe we are well positioned to benefit from the build out, upgrade and maintenance of these networks in both domestic and international markets. DEVELOP PROPRIETARY PRODUCTS AND EXPAND MARKET OPPORTUNITIES. We maintain an active program to identify new market opportunities and develop and commercialize products that use our core technology and manufacturing competencies. We have developed new products and entered new markets, including coaxial cable for wireless applications, satellite cables, local area network cables, specialized coaxial based telecommunication cables, broadcast audio and video cables and coaxial cables in conduit. We have developed specialized coaxial (Power Feeder [registered trademark]) and fiber optic (Fiber Feeder [trademark]) cables for distribution and telephony applications in HFC cable networks. We used our expertise in aluminum coaxial cable technology to develop Cell Reach [registered trademark], a patented copper coaxial cable solution for the wireless antenna market. We believe Cell Reach [registered trademark] is a technologically superior product with a lower total lifetime cost of ownership than the current industry standard. Cell Reach [registered trademark] has been installed in thousands of cellular and personal communications services antenna sites with leading service providers such as Nextel Communications, Inc., Sprint Corporation and certain Sprint affiliates, certain AT&T Corporation affiliates and Metricom, Inc. We have used our coaxial cable technology to enter the local area network cable market and developed UltraMedia, a high-end local area network cable product targeted for high-speed local area network applications. We have also recently developed a thin-wall foam design (Isolite [trademark]) for twisted-pair cables on which a patent is pending. 2 CONTINUOUSLY IMPROVE OPERATING EFFICIENCIES. We invested approximately $113 million in state-of-the-art manufacturing facilities and new technologies during the past four fiscal years. These investments have increased our capacity and operating efficiencies, improved management control and provided more consistent product quality. As a result, we believe we are one of the few manufacturers capable of satisfying volume production, time-to-market, and technology requirements of customers for coaxial cable in the communications industry. We believe that our breadth and scale permit us to cost-effectively invest in improving our operating efficiency through investments in engineering and cost-management programs. We intend to capture value in the supply chain through vertical integration projects. EXPAND OUR GLOBAL PLATFORM. We believe that the worldwide demand for video and data services, the large number of television households outside the U.S. and relatively low penetration rates for cable television in most countries provide significant long-term opportunities. We have become a major supplier of coaxial cable for the cable television and broadband services industries in international markets, principally Europe, Latin America and the Pacific Rim. In 1998 we had approximately 350 international customers in more than 85 countries, representing approximately $139.8 million or 24.4% of our 1998 revenue. We support our international sales efforts with sales representatives based in Europe, Latin America and the Pacific Rim. In addition, we are able to benefit from our domestic cable customer base because some of those customers are also equity investors in international cable service providers. Although there is current uncertainty in international markets, we believe that we are well positioned to benefit over the long term from future international growth opportunities. We believe we became the largest manufacturer and supplier of coaxial cable for HFC cable networks in Europe with our acquisition in January 1999 of Alcatel's coaxial cable business in Seneffe, Belgium. This acquisition also gave us access to established European distribution channels and complementary coaxial cable technologies. In addition, we recently purchased an existing 455,000 square-foot facility in North Carolina to expand our wireless business, support growth in other markets and house engineering, research and development functions. We are also in the process of adding 130,000 square feet at one of our existing facilities. We intend to establish or acquire international distribution and/or manufacturing facilities to further improve our ability to service international customers as well as reduce shipping and importation costs. LEVERAGE SUPERIOR CUSTOMER SERVICE. We believe that our coaxial cable manufacturing capacity is greater than that of any other manufacturer. This enables us to provide our customers with a unique high-volume service capability. As a result of our 24-hour, seven days per week continuous manufacturing operations, we are able to offer quick order turnaround services. In addition, we believe that our ability to offer rapid delivery services, materials management and logistics services to customers through our private truck fleet is an important competitive advantage. 3 THE OFFERING Issuer..................... CommScope, Inc. Offering................... $172,500,000 in principal amount of 4% convertible subordinated notes due 2006 (and 3,579,581 shares of common stock issuable upon conversion of the notes) by selling securityholders. Maturity.................. December 15, 2006 Interest payment dates.... June 15 and December 15, beginning June 15, 2000. Conversion rights......... The notes are convertible, at the option of the holder, at any time on or prior to maturity, into shares of our common stock at a conversion price of $48.19 per share, which is equal to a conversion rate of 20.7512 shares for each $1,000 principal amount of notes. This conversion price is subject to adjustment. Subject to certain exceptions, upon conversion, the holder will not receive any cash payment representing any further interest; this accrued interest will be deemed paid by the shares of common stock received by the holder on conversion. See "Description of Notes--Conversion Rights." Ranking.................... The notes are subordinated, unsecured general indebtedness. They will be subordinated to all of our existing and future senior indebtedness and senior subordinated indebtedness. The notes will effectively rank junior to all existing and future liabilities of our subsidiaries. At December 31, 1999, the notes were subordinated to $15.1 million of senior indebtedness and effectively subordinated to $10.8 million of other indebtedness of our subsidiaries. Optional redemption........ We may redeem some or all of the notes at any time on or after December 15, 2002, at the redemption prices described in this prospectus. Change of control.......... When a change of control event occurs, each holder of notes may require us to repurchase some or all of its notes at a purchase price equal to 100% of the principal amount of the notes, plus accrued interest. Use of proceeds............ We will not receive any proceeds from the sale of the notes or the shares of common stock offered in this prospectus. See "Selling Securityholders." 4 RISK FACTORS OUR SALES AND PROFITABILITY MAY BE ADVERSELY AFFECTED BY CHANGES IN CABLE TELEVISION CAPITAL SPENDING. Most of our revenues come from sales to the cable television industry. Demand for our products depends primarily on capital spending by cable television operators for maintaining, constructing, rebuilding or upgrading their systems. The amount of this capital spending, and, therefore, our sales and profitability, will be affected by a variety of factors, including: o general economic conditions; o acquisitions of cable television operators by non-cable television operators; o cable system consolidation within the industry; o the financial condition of domestic cable television operators and their access to financing; o competition from satellite and wireless television providers and telephone companies; o technological developments; and o new legislation and regulation of cable television operators. We cannot assure you that cable television capital spending will increase from historical levels or that existing levels of cable television capital spending will be maintained. In recent years, cable television capital spending has been affected by new legislation and regulation, on the federal, state and local level. Many aspects of government regulation are currently the subject of judicial proceedings and administrative or legislative proposals. The Federal Communications Commission is continuing its implementation of the Telecommunications Act of 1996 (the "Telecom Act") which, when fully implemented, may significantly impact the communications industry and alter federal, state and local laws and regulations regarding the provision of cable and telephony services. The Telecom Act eliminates substantially all restrictions on the entry of telephone companies and certain public utilities into the cable television business. Telephone companies may now enter the cable television business as traditional cable operators, as common carrier conduits for programming supplied by others, as operators of wireless distribution systems, or as hybrid common carrier/cable operator providers of programming on so-called "open video systems." The economic impact of the Telecom Act, other federal legislation, and the rules implementing these laws on the cable television industry and our business is still uncertain. THE LOSS OF SOME OF OUR PRINCIPAL CABLE TELEVISION CUSTOMERS COULD MATERIALLY ADVERSELY AFFECT US. Although the domestic cable television industry is comprised of thousands of cable systems, a small number of cable television operators own a majority of cable television systems and account for a majority of the capital expenditures made by cable television operators. The loss of some or all of our principal cable television customers could have a material adverse effect on our business and financial condition. OUR FAILURE TO INTRODUCE NEW PRODUCTS SUCCESSFULLY, AND CHANGES IN TECHNOLOGY, COULD ADVERSELY AFFECT US. Many of our markets are characterized by advances in information processing and communications capabilities which require increased transmission speeds and greater capacity, or "bandwidth," for carrying information. These advances require ongoing improvements in the capabilities of wire and cable products. We believe that our future success will depend in part upon our ability to enhance existing products and to develop and manufacture new products that meet or anticipate these changes. The failure to introduce successful new or 5 enhanced products on a timely and cost-competitive basis could adversely affect our business and financial condition. Fiber optic technology presents a potential substitute for the products that comprise most of our sales. Fiber optic cables have penetrated the cable television and local area network markets we serve in high-bandwidth point-to-point and trunking applications. Fiber optic cables have not yet significantly penetrated the local distribution and residential application markets we serve because of the high relative cost of electro-optic interfaces and the high cost of fiber termination and connection. At the same time, advances in data transmission equipment and copper cable technologies have increased the relative performance of copper-based cables which are our principal products. However, a significant decrease in the cost of fiber optic systems could make these systems superior on a price/performance basis to copper systems. While we are a fiber optic cable manufacturer and supplier to a small portion of the cable television market and certain specialty markets, a significant decrease in the cost of fiber optic systems would likely have an adverse effect on us. OUR INDUSTRY IS HIGHLY COMPETITIVE AND RAPID TECHNOLOGICAL CHANGE MAY LEAD TO FURTHER COMPETITION. Our coaxial, fiber optic and electronic cable products compete with those of a substantial number of foreign and domestic companies, some of which have greater resources, financial or otherwise, than we have. The rapid technological changes occurring in the telecommunications industry could lead to the entry of new competitors. Existing competitors' actions and new entrants may have an adverse impact on our sales and profitability. We believe that we enjoy a strong competitive position in the coaxial cable market because of our position as a low-cost, high-volume coaxial cable producer and our reputation as a high-quality provider of state-of-the-art cables, along with our strong orientation toward customer service. However, we cannot assure you that we will continue to compete successfully with our existing competitors or that we will be able to compete successfully with new competitors. OUR DEPENDENCE ON COMMODITIES SUBJECTS US TO PRICE FLUCTUATIONS WHICH COULD ADVERSELY AFFECT US. The principal raw materials we purchase are fabricated aluminum, plastics, bi-metals, copper and optical fiber. Our profitability may be affected by changes in the market price of these materials, which are linked to the commodity markets. Although we have generally been able to pass on increases in the price of these materials to our customers, we cannot assure you that we will be able to do so in the future. Additionally, significant increases in the price of our products due to increases in the cost of raw materials could have a negative effect on demand for our products. DIFFICULTIES WITH OUR KEY SUPPLIERS COULD ADVERSELY AFFECT US. A significant portion of our raw material purchases are bi-metallic center conductors for coaxial cables. Almost all of these supplies are purchased from Copperweld Corporation under a long-term supply arrangement expiring in March 2000. Copperweld has agreed to continue to supply us with bi-metallic center conductors after expiration of this agreement, but this continued supply arrangement is indefinite in duration. If we are unable to continue to purchase bi-metallic center conductors from this supplier, either before or after expiration of this arrangement, we may be unable to obtain these raw materials on commercially acceptable terms from another source. There are few, and limited, alternative sources of supply for these raw materials. In February 1999, we purchased the clad wire fabrication equipment and technology of Texas Instruments Incorporated for manufacturing copper-clad aluminum wire and copper-clad steel wire. We anticipate that in 2000 we will begin to produce a significant portion of the bi-metallic center conductors we use. However, the loss of Copperweld as a supplier of bi-metallic center conductors, either during the term of the current supply contract, or after the expiration of that agreement, and/or our failure to vertically integrate these products, could have a material adverse effect on our business and financial condition. In addition, we purchase fine aluminum wire primarily from a single source. Fine aluminum wire is a smaller raw material purchase than bi-metallic wire. Neither of these major raw materials could be readily replaced in sufficient quantities if all supplies from the respective primary sources 6 were disrupted for an extended period and we were unable to vertically integrate the production of these products. In such event, there could be a materially adverse impact on our financial results. Additionally, fluorinated-ethylene-propylene (FEP) is the primary raw material used throughout the industry for producing flame-retarding cables for local area network applications. There are few worldwide producers of FEP and market supplies have been periodically limited over the past several years. Availability of adequate supplies of FEP will be critical to future local area network cable sales growth. OUR BUSINESS IS SUBJECT TO THE ECONOMIC UNCERTAINTIES AND POLITICAL RISKS OF SELLING OUR PRODUCTS IN FOREIGN COUNTRIES. We believe that growth in international markets, including the developing markets in Asia, the Middle East and Latin America, and the expected privatization of the telecommunications structure in many European countries, represents significant future opportunities for us. However, we cannot predict with certainty the outlook for international sales in 2000 and beyond due to political and economic uncertainties. Our international operations are subject to the usual risks inherent in sales abroad, including risks with respect to currency exchange rates, economic and political destabilization, restrictive actions by foreign governments, nationalizations, the laws and policies of the U.S. affecting trade, foreign investment and loans, and foreign tax laws. POTENTIAL ENVIRONMENTAL LIABILITIES MAY ARISE IN THE FUTURE AND ADVERSELY IMPACT OUR FINANCIAL POSITION. We are subject to various federal, state, local and foreign laws and regulations governing the use, discharge and disposal of hazardous materials. We believe that our manufacturing facilities are in substantial compliance with current laws and regulations. Compliance with current laws and regulations has not had and is not expected to have a material adverse effect on our financial condition. Our present and past facilities have been in operation for many years, and over that time in the course of those operations, these facilities have used substances which are or might be considered hazardous, and we have generated and disposed of wastes which are or might be considered hazardous. Therefore, it is possible that environmental issues may arise in the future which we cannot now predict. OUR INDEBTEDNESS COULD RESTRICT OUR OPERATIONS, MAKE US MORE VULNERABLE TO ADVERSE ECONOMIC CONDITIONS AND MAKE IT MORE DIFFICULT FOR US TO MAKE PAYMENTS ON THE NOTES. As of December 31, 1999, our total long-term debt was approximately $198.4 million or [ ]% of our combined long-term debt and total stockholders' equity. Our current and future indebtedness could have important consequences to you. For example, it could: o impair our ability to obtain additional financing in the future; o reduce funds available to us for other purposes, including working capital, capital expenditures, research and development, strategic acquisitions and other general corporate purposes; o restrict our ability to introduce new products or exploit business opportunities; o increase our vulnerability to economic downturns and competitive pressures in the industry we operate in; o increase our vulnerability to interest rate increases to the extent variable-rate debt is not effectively hedged; 7 o limit, along with the financial and other restrictive covenants in our indebtedness, our ability to dispose of assets or borrow additional funds; o make it more difficult for us to satisfy our obligations with respect to the notes; and o place us at a competitive disadvantage. WE MAY BE ABLE TO INCUR SIGNIFICANTLY MORE DEBT IN THE FUTURE, WHICH WILL INCREASE THE RISKS RELATED TO OUR INDEBTEDNESS. We may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not prohibit us or our subsidiaries from incurring indebtedness. Our revolving credit facility permitted additional borrowings of up to $350 million as of December 31, 1999, subject to customary borrowing conditions. Based on our current level of operations, we believe that our cash flow from operations and our available financing will be adequate to meet our anticipated requirements for operating our business and servicing our debt. Our ability to generate cash flow depends upon, among other things, our future operating performance. To a large extent, this depends upon economic, financial, competitive and other factors beyond our control. If we cannot generate enough cash from operations to make payments on our indebtedness, we will need to refinance our indebtedness, obtain additional financing or sell assets. We cannot assure you that we would be able to do so or do so without additional expense. HOLDERS OF SENIOR INDEBTEDNESS WILL BE PAID BEFORE HOLDERS OF THE NOTES ARE PAID. The notes will be subordinated to our existing and future senior indebtedness and will be structurally subordinate to all liabilities of our subsidiaries. As of December 31, 1999, the notes were subordinated to $15.1 million of senior indebtedness and effectively subordinated to $10.8 million of other indebtedness of our subsidiaries. If we become bankrupt, liquidate, or dissolve, our assets would be available to pay obligations on the notes only after our senior indebtedness has been paid. We cannot assure you that there will be sufficient assets to pay amounts due on the notes. See "Description of Notes--Subordination of Notes." If we fail to pay any of our senior indebtedness, we may make payments on the notes only if we cure the default or the holders of the senior indebtedness waive the default. Moreover, if any non-payment default exists under our designated senior indebtedness, we may not make any cash payments on the notes for a period of up to 179 days in any 365 day period, unless we cure the default, the holders of the senior indebtedness waive the default or rescind acceleration of the indebtedness, or we repay the indebtedness in full. See "Description of Notes--Subordination of Notes." THE RESTRICTIONS IMPOSED BY OUR EXISTING DEBT COULD NEGATIVELY AFFECT OUR BUSINESS AND OUR FAILURE TO COMPLY WITH THESE RESTRICTIONS COULD RESULT IN A DEFAULT UNDER OUR DEBT INSTRUMENTS. Our existing debt agreements contain covenants that restrict our ability and our subsidiaries' ability to: o dispose of assets; o incur additional indebtedness; o incur liens on property or assets; o repay other indebtedness; o pay dividends; 8 o enter into certain investments or transactions; o repurchase or redeem capital stock; o engage in mergers or consolidations; or o engage in certain transactions with subsidiaries and affiliates and otherwise restrict corporate activities. In addition, our existing debt agreements contain financial covenants, including: o a total debt to EBITDA ratio; o a net worth maintenance; and o an interest expense coverage ratio. Our compliance with our covenants in the future may be affected by events beyond our control. Our breach of or failure to comply with any of the covenants could result in a default under the debt agreements or the indenture. If we default under the debt agreements, our senior lenders could cause all of our outstanding debt obligations to become due and payable, require us to apply all of our available cash to repay the indebtedness or prevent us from making debt service payments on any other indebtedness we owe. If a default under the indenture occurs, the holders of the notes could elect to declare the notes due and payable. A significant payment default under our debt agreements or any event of default under the indenture would be a cross default under the other instrument and could result in the acceleration of the indebtedness under both instruments. If the indebtedness under our existing debt agreements or these notes is accelerated, we may not have sufficient assets to repay amounts due under our existing debt agreements, these notes or on other debt securities then outstanding. WE MAY NOT BE ABLE TO REPURCHASE NOTES UPON A CHANGE OF CONTROL WHICH WOULD BE AN EVENT OF DEFAULT UNDER THE INDENTURE. Upon the occurrence of certain specified change of control events, each holder of notes will have the right at the holder's option to require us to purchase all or any part of the holder's notes at a cash price equal to 100% of the principal amount of such holder's notes, plus accrued interest to the repurchase date. Under our debt agreements, a change of control is an event of default, and therefore, it restricts us from repurchasing the notes without the approval of our senior lenders. We cannot assure you that we will have sufficient funds available or will be permitted by our senior lenders to repurchase the notes upon a change of control. Our failure to repurchase the notes would constitute an event of default under the indenture. See "Description of Notes--Change in Control Permits Purchase of Notes at Option of the Holder." WE DEPEND ON THE CASH FLOW OF OUR SUBSIDIARIES TO SATISFY OUR OBLIGATIONS INCLUDING OUR OBLIGATIONS UNDER THE NOTES. Our subsidiaries conduct all of our operations and own all of our consolidated assets. Consequently, our operating cash flow and our ability to service our debt, including the notes, depends upon the operating cash flow of our subsidiaries and the payment of funds by them to us in the form of loans, dividends or otherwise. These payments may not be adequate to pay interest and principal on the notes when due. In addition, the ability of our subsidiaries to make payments to us depends on applicable law and restrictions under our current and future debt agreements and on the terms of other present and future debt instruments to which our subsidiaries are or may be a party. These debt agreements and instruments may include requirements to maintain minimum levels of working capital and other assets. Our current debt agreements restrict the ability of our subsidiaries to make loans, pay dividends or make other distributions to us in the event that there is a payment default under our debt agreements. 9 YOU MAY BE UNABLE TO SELL YOUR NOTES IF A TRADING MARKET FOR THE NOTES DOES NOT DEVELOP. The liquidity of any market for the notes will depend on the number of holders of the notes, the interest of securities dealers in making a market in the notes and other factors. Accordingly, we cannot assure you as to the development or liquidity of any market for the notes. If an active trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected. If the notes are traded, they may trade at a discount from their initial offering price depending upon prevailing interest rates, the market for similar securities, our performance and certain other factors. THERE MAY BE VOLATILITY OF THE MARKET PRICE OF THE NOTES AND OUR COMMON STOCK. The market price of our common stock has fluctuated in the past and may continue to fluctuate. In addition, the securities markets have experienced significant price and volume fluctuations. Factors such as political and economic conditions in foreign countries, quarterly fluctuations in our operating results and the operating results of our competitors and changes in our industry may have a significant impact on the market price of the notes and common stock into which the notes are convertible. In particular, if we were to report operating results which did not meet the expectations of research analysts, the market price of the notes and our common stock could be materially adversely affected. WE DO NOT ANTICIPATE THAT WE WILL PAY CASH DIVIDENDS. We have never declared or paid any cash dividends on our capital stock. We do not currently intend to pay cash dividends in the foreseeable future but intend to reinvest earnings in our business. Our debt agreements contain limits on our ability to declare and pay cash dividends on our common stock. WE CANNOT PREDICT THE EFFECT FUTURE SALES OF NOTES OR SHARES OF COMMON STOCK WILL HAVE ON THE MARKET PRICE OF COMMON STOCK. We cannot predict the effect, if any, that future sales of notes or shares of common stock will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of common stock, including shares issued upon the conversion of the notes, or the perception that such sales could occur, may adversely affect prevailing market prices for common stock. YEAR 2000 AND SYSTEMS FAILURES MAY ADVERSELY IMPACT OUR OPERATIONS. Our businesses could be adversely affected by information technology issues related to the Year 2000 issue. The Year 2000 issue is a broad business issue, whose impact extends to possible failure of our financial, distribution and manufacturing systems, as well as to those of third parties. None of our products contain date sensitive or date processing logic. The ability of third parties with whom we do business to address adequately their Year 2000 issues is outside our control. However, if any of our systems are not Year 2000 compliant or if our customers, our suppliers or government agencies fail to achieve Year 2000 compliance, and our contingency plans fail to mitigate any Year 2000 compliance failures, we may experience adverse consequences, including: o our customers may be unable to place orders with us due either to our or their system failures; o we may be unable to maintain adequate production scheduling, inventory cost accounting and other elements of our business that are dependent upon computer systems; and o we may be unable to deliver our products on a timely basis. In addition, if our information systems were to fail, the areas of customer service, warehousing, order fulfillment and other areas could be adversely affected. The failure of our information systems could result in lost 10 sales, longer turnaround times, significantly increased freight and warehousing costs, higher levels of inventories and accounts receivable, extended order lead times and customer service difficulties. ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE IN CONTROL OR ADVERSELY IMPACT THE PRICE OF OUR COMMON STOCK. Provisions in our certificate of incorporation and provisions of the Delaware General Corporation Law could have the effect of deterring hostile takeovers or delaying, deterring, or preventing a change of control of our company, including transactions in which stockholders might otherwise receive a premium for their shares over current market prices. See "Description of Capital Stock." 11 USE OF PROCEEDS We will not receive any proceeds from the sale of the notes or the shares of common stock offered hereby. See "Selling Securityholders." PRICE RANGE OF COMMON STOCK Since the spin-off in July 1997, our common stock has been traded on the New York Stock Exchange under the symbol "CTV." The following table sets forth the high and low sale prices as reported by the New York Stock Exchange for the periods indicated. The stock price information shown below does not include "when-issued" trading prior to the spin-off. High Low ---- --- Common Stock Price Range ------------------------ 1997 Third Quarter (beginning July 28)...... $19 $12 3/4 Fourth Quarter......................... $14 7/16 $10 3/8 1998 First Quarter.......................... $15 3/16 $11 5/8 Second Quarter......................... $17 7/16 $13 5/16 Third Quarter.......................... $20 11/16 $9 3/8 Fourth Quarter......................... $17 1/4 $8 3/4 1999 First Quarter.......................... $21 9/16 $15 7/8 Second Quarter......................... $31 3/16 $19 1/4 Third Quarter.......................... $40 $29 1/4 Fourth Quarter......................... $46 3/8 $31 11/16 2000 First Quarter (through January 13) $42 $35 1/8 As of December 31, 1999, the approximate number of registered stockholders of record of our common stock was 755. DIVIDEND POLICY We have never declared or paid any cash dividends on our capital stock. We do not currently intend to pay cash dividends in the foreseeable future, but intend to reinvest earnings in our business. Our debt agreements contain limits on our ability to declare and pay cash dividends on our common stock. 12 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the actual and pro forma ratio of earnings to fixed charges for each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998 and for the nine months ended September 30, 1998 and 1999.
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, --------------------------------------------- --------------------- 1994 1995 1996 1997 1998 1998 1999 Actual ratio of earnings to fixed charges (1).............. 7.15 9.63 10.13 5.49 4.90 4.39 10.70 Pro forma ratio of earnings to fixed charges (2).............. - - - - 5.94 - 11.62
(1) For purposes of computing the actual ratio of earnings to fixed charges, earnings are divided by fixed charges. Earnings represent the aggregate of income beflre income taxes plus fixed charges. Fixed charges represent interest plus amortization of deferred financing fees. (2) For purposes of computing the pro forma ratio of earnings to fixed charges, earnings and fixed charges (as defined in (1) above) have been adjusted for the assumed issuance of the convertible notes and use of proceeds to extinguish outstanding debt on the revolving credit agreement as of the beginning of each period. For both periods shown, earnings were increased and fixed charges were decreased based on the pro forma net decrease in interest expense and amortization of deferred financing fees. Nine Months Year Ended Ended December 31, September 30, 1998 1999 ---------- ---------- Pro forma decrease in interest expense $3,427,265 $1,161,102 Pro forma increase in deferred financing fees 720,357 540,268 ---------- ---------- Pro forma net increase in earnings and decrease in fixed charges $2,706,908 $ 620,834 ========== ========== 13 BUSINESS GENERAL We are a leading worldwide designer, manufacturer and marketer of a broad line of coaxial cables and other high-performance electronic and fiber-optic cable products for cable television, telephony, Internet access and wireless communications. We believe that we supplied over 50% of all coaxial cable purchased in the U.S. in 1998 for broadband cable networks using Hybrid Fiber Coaxial (HFC) architecture. We believe we are also the largest manufacturer and supplier of coaxial cable for HFC cable networks in Europe. We are a leading supplier of coaxial cable for telephone central office switching and transmission applications, as well as video distribution applications such as satellite television and security surveillance. In addition, we have developed an innovative line of coaxial cables for wireless communication infrastructure applications that have superior performance characteristics compared to traditional cables. This line of coaxial cables continues to gain market recognition, as evidenced by the nearly twofold increase in sales of these products in the third quarter of 1999 from the second quarter of 1999. We are a leading provider of high-performance premise wiring for local area networks and have developed a new patent-pending foaming process for unshielded twisted-pair cables that significantly reduces cost and improves electrical performance. We sell our products to approximately 2,400 customers in more than 85 countries. For the nine months ended September 30, 1999 our revenues were $537.3 million and our net income was $47.6 million. During this period, approximately 77% of our revenues were for HFC cable networks and other video applications, 12% were for wireless, central office and other telecommunications applications and 11% were for local area network premise wiring applications. International sales were 24.6% of our revenues during this period. We believe that we are the world's most technologically advanced, low-cost provider of coaxial cable. With our leading product offerings, cost-efficient manufacturing and economies of scale, we believe we will benefit from the convergence of video, voice and high-speed Internet access and the resulting demand for enhanced HFC broadband networks. We believe that the following industry trends will drive demand for our products: o endorsement of the HFC architecture by major cable, telephone and technology companies; o increasing use of the Internet; o increasing need for additional bandwidth to accommodate new applications; o increasing maintenance requirements for HFC cable networks as operators improve reliability for telephony, data and other two-way services; o expansion of telephone central offices to accommodate digital subscriber line (DSL) growth and growing alternate access providers of telephony and data services; o the continuing rapid deployment of wireless communications systems worldwide; and o increasing demand for higher speed and bandwidth for local area networks. BUSINESS STRATEGY We have adopted a growth strategy to expand and strengthen our current market position as the leading worldwide supplier of coaxial cable for broadband communications. The principal elements of our growth strategy are: 14 BENEFIT FROM HFC PARADIGM SHIFT. A vast majority of video networks worldwide, such as cable service provider networks, have adopted the HFC cable network architecture for video service delivery. Recent events involving major telecommunications and cable service providers create the potential to expand the role of HFC cable networks from a video-centric focus to a key platform for delivery of a variety of broadband services. These events include AT&T Corporation's acquisition of Tele-Communications, Inc. (TCI), AT&T Corporation's pending acquisition of MediaOne Group, Inc., the strategic relationship between AT&T Corporation and Time Warner, Inc. to offer cable telephony to residential and small business customers in 33 states and to develop the next-generation broadband services, Microsoft Corporation's $1 billion investment in Comcast Corporation and investments in cable television in Europe and the United Kingdom, Paul Allen's acquisitions of Marcus Cable Company, L.L.C., Charter Communications, Inc. and other cable companies, and the recent success of high-speed cable data services such as those offered by Excite@Home Corporation and others. We believe that the HFC cable network architecture provides the most cost-effective bandwidth for multi-channel video, voice and data into homes around the world. This architecture enables both cable and telecommunications service providers to offer new products and services such as high-speed Internet access, video on demand, Internet protocol telephony and high-definition television. As the leading provider of coaxial cable for HFC cable networks, we believe we are well positioned to benefit from the build out, upgrade and maintenance of these networks in both domestic and international markets. DEVELOP PROPRIETARY PRODUCTS AND EXPAND MARKET OPPORTUNITIES. We maintain an active program to identify new market opportunities and develop and commercialize products that use our core technology and manufacturing competencies. We have developed new products and entered new markets, including coaxial cable for wireless applications, satellite cables, local area network cables, specialized coaxial based telecommunication cables, broadcast audio and video cables and coaxial cables in conduit. We have developed specialized coaxial (Power Feeder [registered trademark]) and fiber optic (Fiber Feeder [trademark]) cables for distribution and telephony applications in HFC cable networks. We used our expertise in aluminum coaxial cable technology to develop Cell Reach [registered trademark], a patented copper coaxial cable solution for the wireless antenna market. We believe Cell Reach [registered trademark] is a technologically superior product with a lower total lifetime cost of ownership than the current industry standard. Cell Reach [registered trademark] has been installed in thousands of cellular and personal communications services antenna sites with leading service providers such as Nextel Communications, Inc., Sprint Corporation and certain Sprint affiliates, certain AT&T Corporation affiliates and Metricom, Inc. We have used our coaxial cable technology to enter the local area network cable market and developed UltraMedia, a high-end local area network cable product targeted for high-speed local area network applications. We have also recently developed a thin-wall foam design (Isolite [trademark]) for twisted-pair cables on which a patent is pending. CONTINUOUSLY IMPROVE OPERATING EFFICIENCIES. We invested approximately $113 million in state-of-the-art manufacturing facilities and new technologies during the past four fiscal years. These investments have increased our capacity and operating efficiencies, improved management control and provided more consistent product quality. As a result, we believe we are one of the few manufacturers capable of satisfying volume production, time-to-market, and technology requirements of customers for coaxial cable in the communications industry. We believe that our breadth and scale permit us to cost-effectively invest in improving our operating efficiency through investments in engineering and cost-management programs. We intend to capture value in the supply chain through vertical integration projects. EXPAND OUR GLOBAL PLATFORM. We believe that the worldwide demand for video and data services, the large number of television households outside the U.S. and relatively low penetration rates for cable television in most countries provide significant long-term opportunities. We have become a major supplier of coaxial cable for the cable television and broadband services industries in international markets, principally Europe, Latin America and the Pacific Rim. In 1998 we had approximately 350 international customers in more than 85 countries, representing approximately $139.8 million or 24.4% of our 1998 revenue. We support our international sales 15 efforts with sales representatives based in Europe, Latin America and the Pacific Rim. In addition, we are able to benefit from our domestic cable customer base because some of those customers are also equity investors in international cable service providers. Although there is current uncertainty in international markets, we believe that we are well positioned to benefit over the long term from future international growth opportunities. We believe we became the largest manufacturer and supplier of coaxial cable for HFC cable networks in Europe with our acquisition in January 1999 of Alcatel's coaxial cable business in Seneffe, Belgium. This acquisition also gave us access to established European distribution channels and complementary coaxial cable technologies. In addition, we recently purchased an existing 455,000 square-foot facility in North Carolina to expand our wireless business, support growth in other markets and house engineering, research and development functions. We are also in the process of adding 130,000 square feet at one of our existing facilities. We intend to establish or acquire international distribution and/or manufacturing facilities to further improve our ability to service international customers as well as reduce shipping and importation costs. LEVERAGE SUPERIOR CUSTOMER SERVICE. We believe that our coaxial cable manufacturing capacity is greater than that of any other manufacturer. This enables us to provide our customers with a unique high-volume service capability. As a result of our 24-hour, seven days per week continuous manufacturing operations, we are able to offer quick order turnaround services. In addition, we believe that our ability to offer rapid delivery services, materials management and logistics services to customers through our private truck fleet is an important competitive advantage. BUSINESS UNITS We manufacture and sell cable for three broad product categories: o cable television and other video applications; o local area network applications; and o wireless and other telecommunications applications. DOMESTIC HFC CABLE TV MARKET. We design, manufacture and market primarily coaxial cable, most of which is used in the cable television industry. We manufacture two primary types of coaxial cable: o semi-flexible, which has an aluminum or copper outer tubular shield or outer conductor; and o flexible, which is typically smaller in diameter than semi-flexible coaxial cable and has a more flexible outer conductor typically made of metallic tapes and braided fine wires. Semi-flexible coaxial cables are used in the trunk and feeder distribution portion of cable television systems, and flexible coaxial cables, also known as drop cables, are used for connecting the feeder cable to a residence or business or for some other communications applications. We also manufacture fiber optic cable primarily for the cable television industry. Cable television service traditionally has been provided primarily by cable television system operators that have been awarded franchises from the municipalities they serve. In response to increasing competitive pressures, cable television systems operators have been expanding the variety of their service offerings not only for video, but for Internet access and telephony, which generally requires increasing amounts of cable and system bandwidth. Cable television systems operators have generally adopted, and we believe that for the foreseeable future will continue to adopt, HFC cable system designs when seeking to increase system bandwidth. These systems combine the advantages of fiber optic cable in transmitting clear signals over a long distance without amplification, and the 16 advantages of high-bandwidth coaxial cable in ease of installation, low cost and compatibility with the receiving components of the customer's communications devices. We believe that: o cable television systems operators are likely to increase their use of fiber optic cable for the trunk and feeder portions of their cable systems; o there will be an ongoing need for high-capacity coaxial cable for the local distribution and street-to-the-home portions of the cable system; and o coaxial cable will remain the most cost effective means for the transmission of broadband signals to the home or business over shorter distances in cable networks. For local distribution purposes, coaxial cable has the necessary signal carrying capacity or bandwidth to handle upstream and downstream signal transmission. The construction, expansion and upgrade of cable systems require significant capital investment by cable operators. Cable television systems operators have been significant borrowers from the credit and capital markets. Therefore, capital spending within the domestic cable television industry has historically been cyclical, depending to a significant degree on the availability of credit and capital. The cable television industry has also been subject to varying degrees of both national and local government regulation, most recently the Telecom Act and the 1992 Cable Act, and their implementing regulations adopted in 1993 and 1994. The regional Bell operating companies and other telephone service providers have generally been subject to regulatory restrictions which prevented them from offering cable television service within their franchise telephone areas. However, the Telecom Act removes or phases out many of the regulatory and sale restrictions affecting cable television systems operators and telephone operating companies in the offering of video and telephone services. We believe that the Telecom Act will encourage competition among cable television systems operators, telephone operating companies and other communications companies in offering video, telephone and data services such as Internet access to consumers, and that providers of such services will upgrade their present communications delivery systems. We have provided coaxial cables to most major U.S. telephone operating companies. Several of these companies are installing broadband networks for the delivery of video, telephone and other services to some portion of their telephone service areas. The broadband networks proposed by some of the telephone companies use HFC technologies similar to those employed by many cable television operators. INTERNATIONAL MARKETS. Cable system designs using HFC technology are increasingly being used in international markets with low cable television penetration. Based upon industry trade publications and reports from telecommunications industry analysts, we estimate that approximately 32% of the television households in Europe subscribe to some form of multichannel television service as compared to a subscription rate of approximately 75% in the U.S. Based upon such sources, we estimate that subscription rates in the Asia/Pacific Rim and Latin American/Caribbean markets are even lower at approximately 28% and 19%, respectively. In terms of television households, it is estimated that there are approximately 263 million television households in Europe, approximately 440 million in Asia/Pacific Rim and approximately 96 million in Latin America and the Caribbean. This compares to approximately 100 million television households in the U.S. As of September 30, 1999, we had sales in more than 85 countries. We have penetrated the international marketplace through a network of distributors and agents located in major countries where we do business. In addition to new customers developed by our network of distributors and sales representatives, many large U.S. cable television operators, with whom we have had long established business relationships, are active investors in cable television systems outside the U.S. VIDEO AND BROADCAST APPLICATIONS (NON-CABLE TELEVISION). Many specialized markets or applications are served by multiple cable media such as coaxial, twisted pair, fiber optic or combinations of each. We are a leading producer of composite cables made of flexible coaxial and twisted copper pairs for full service communications providers worldwide. In the satellite direct-to-home cable market, where specialized composite coaxial and copper 17 cables transmit satellite-delivered video signals and antenna positioning/control signals, we have developed a leading market position. We market an array of premium metallic and optical cable products directed at the broadcasting and video production studio market. Because of our position in other video transport markets and access to distribution channels within the market, we view these products as a growth opportunity, although we cannot assure you that we will be able to penetrate this market successfully. LOCAL AREA NETWORK MARKET. The proliferation of personal computers, and more broadly the practice of distributed computing, has created a need for products which enable users to share files, applications and peripheral equipment such as printers and data storage devices. Local area networks, typically consisting of at least one dedicated computer (a "server"), peripheral devices, network software and interconnecting cables, were developed in response to this demand. We manufacture a variety of twisted pair, coaxial and fiber optic cables to transmit data for local area network applications. The most widely used cable design for this application consists of four high-performance twisted pairs that are capable of transmitting data at rates in excess of 100 mbps. We focus our products and marketing on cables with enhanced electrical and physical performance such as our UltraMedia unshielded twisted pair. We believe that UltraMedia cable is among the highest performing unshielded twisted pair cables in the industry. Copper and fiber optic composite cables are frequently combined in a single cable to reduce installation costs and support multimedia applications. WIRELESS COMMUNICATION APPLICATIONS. We believe that the rapid deployment of cellular or "wireless" communication systems throughout the U.S. and the rest of the world presents a growth opportunity for us. Semi-flexible coaxial cables are used to connect the antennae located at the top of cellular antenna towers to the radios and power sources located adjacent to or near the antenna site. In 1996 and 1997, we developed Cell Reach [registered trademark] products, a line of copper shielded semi-flexible coaxial cables and related connectors and accessories to address this market. We are expanding manufacturing capacity for this product line and we are developing additional products and marketing programs for Cell Reach [registered trademark] for both the U.S. and certain international markets. Cell Reach [registered trademark] has been installed in thousands of cellular and personal communications services sites with leading service providers such as Nextel Communications, Inc., Sprint Corporation and certain Sprint affiliates, certain AT&T Corporation affiliates and Metricom, Inc. There are, however, larger, well established companies with significant financial resources and brand recognition in the cellular market which have established marketing channels for coaxial cables and accessories. OTHER MARKETS. We have developed a strategy for addressing additional cable consuming markets. By combining narrowly focused product and market management with our cable manufacturing and operational skills, we are entering new markets for broadcast, home automation, telephone central office switching and transmission, and other high-performance communications applications. MANUFACTURING We employ advanced cable manufacturing processes, the most important of which are: o thermoplastic extrusion for insulating wires and cables; o high-speed welding and swaging of metallic shields or outer conductors; o braiding; o cabling; and o automated testing. Many of these processes, some of which are proprietary and/or trade secret information, are performed on equipment that has been modified for our purposes or specifically built to our specifications, often internally in our own machine shop facilities. We fabricate very few of the raw material components used in making most of our 18 cables, such as wires, tapes, tubes and similar materials. We believe, however, that fabrication, to the extent economically feasible, could be done by us instead of being outsourced. For example, we acquired the clad wire fabrication equipment and technology of Texas Instruments Incorporated for manufacturing copper-clad aluminum wire and copper-clad steel wire that we use as center conductors for our cable. This acquisition allows us to further vertically integrate our processes, providing an opportunity to significantly reduce cost. We are also pursuing fine wire drawing to produce wires to be braided for flexible coaxial cables. The manufacturing processes of the three principal types of cable we manufacture are further described below. COAXIAL CABLES. We employ a number of advanced plastic and metal forming processes in the manufacture of coaxial cable. Three fundamental process sequences are common to almost all coaxial cables: o First, a plastic insulation material, called the dielectric, is melt extruded around a metallic wire or center conductor. Current state-of-the-art dielectrics consist of foamed plastics to enhance the electrical properties of the cable. Precise control of the foaming process is critical to achieve the mechanical and electrical performance required for broadband services and cellular communications applications. We believe that plastic foam extrusion, using proprietary materials, equipment and control systems, is one of our core competencies. o The second step involves sheathing the dielectric material with a metallic shield or outer conductor. Three basic shield designs and processes are used. For semi-flexible coaxial cables, we apply solid aluminum or copper shields over the dielectric by either pulling the dielectric insulated wire into a long, hollow metallic tube or welding the metallic tube directly over the dielectric. Welding allows the use of thinner metal, resulting in more flexible products. We use a proprietary welding process that achieves significantly higher process speeds than those achievable using other cable welding methods. The same welding process has led to extremely efficient manufacturing processes of copper shielded products for cellular communications. For both hollow and welded tubes, the cable is passed through tools that form the metallic shield tightly around the dielectric. o Flexible coaxial cables, which are usually smaller in diameter than semi-flexible coaxial cables, generally are made with the third shield design. Flexible outer shield designs typically involve laminated metallic foils and braided fine wires which are used to enhance flexibility which is more desirable for indoor wiring or for connecting subscribers in drop cable applications. o The third and usually final process sequence is the melt extrusion of thermoplastic jackets to protect the coaxial cable. A large number of variations are produced during this sequence including: incorporating an integral strength member; customer specified extruded stripes and printing for identification; abrasion and crush resistant jackets; and adding moisture blocking fillers. TWISTED COPPER PAIRS. We insulate single copper wires using high-speed thermoplastic extrusion techniques. Two insulated copper singles are then twinned by twisting them into an electrically balanced pair unit in a separate process. They are then bunched or cabled by grouping two or more pair units into larger units for further processing in one or more further processes depending on the number of pairs desired within the completed cable. The cabled units are then shielded and jacketed or simply jacketed without applying a metallic shield in the jacketing process. The jacketing process involves extrusion of a plastic jacket over a shielded or unshielded cable core. The majority of sales of our twisted copper pairs come from plenum rated unshielded twisted pair cables for local area network applications. Plenum cables are cables rated under the National Electrical Code as safe for installation within the air plenum areas of office buildings due to their flame retarding and low smoke generating characteristics when heated. Plenum cables are made from more costly thermoplastic insulating materials, such as FEP. These materials have significantly higher extrusion temperature profiles that require more costly extrusion equipment than non-plenum rated cables. We believe that the processing of plenum rated materials is one of our core competencies. In addition, we recently announced an engineering breakthrough for the extrusion of FEP. The 19 patent pending thin-wall foam FEP process improves signal velocity and uses significantly less raw material in a smaller diameter cable in typical applications. We believe that this process enhances our ability to grow and serve customers in all local area network segments. FIBER OPTIC CABLES. We manufacture fiber optic cables by purchasing bulk uncabled optical fiber singles and colors and buffering them before cabling them into unjacketed core units. We then apply protective outer jackets and, sometimes, shields and jackets in a final process before testing. The manufacturing and test equipment for fiber optic cables are different from those used to manufacture coaxial and copper twisted pair cables. Most of the fiber optic cables we produce are sold to the cable television and local area network industry. Some of these fiber optic cables are produced under licenses acquired from other fiber and fiber optic cable manufacturers. COMPOSITE CABLES. We also produce cables that are combinations of some or all of coaxial cables, copper singles or twisted copper pairs and fiber optic cables within a single cable for a variety of applications. The most significant of the composite cables we manufacture are combination coaxial and copper twisted pairs within a common outer jacket which are being used by some telephone companies and cable operators to provide both cable television services and telephone services to the same households over HFC cable networks. Nearly all of our current markets have applications for composite cables which we can manufacture. RESEARCH AND DEVELOPMENT Our research, development and engineering expenditures for the creation and application of new and improved products and processes were $6 million, $6 million and $5 million for the years ended December 31, 1998, 1997 and 1996, respectively, and $6 million for the nine months ended September 30, 1999. We focus our research and development efforts primarily on those product areas that we believe have the potential for broad market applications and significant sales within a one-to-three year period. We anticipate that the level of spending on product development activities will accelerate in future years. The widespread deployment of broadband services and HFC cable systems is expected to provide opportunities for us to enhance our coaxial cable product lines and to improve our manufacturing processes. Additionally, we expect that our participation in the local area network, wireless communications and other new markets now identified will require higher rates of product development spending in relation to sales generated than has been the case in recent years. SALES AND DISTRIBUTION We market our products worldwide through a combination of more than 100 direct sales, territory managers and manufacturers' representative personnel. We support our sales organization with regional service centers in: North Carolina; California; Alabama; Seneffe, Belgium; Birmingham, England; and Melbourne, Australia. In addition, we utilize local inventories, sales literature, internal sales service support, design engineering services and a group of product engineers who travel with sales personnel and territory managers and assist in product application issues, and conduct technical seminars at customer locations to support our sales organization. We have expanded our global presence through our acquisition of Europe's largest manufacturer of cable television coaxial cable. A key aspect of our customer support and distribution chain is the use of our private truck fleet. We believe that the ability to offer rapid delivery services, materials management and logistics services to customers through our private truck fleet is an important competitive advantage. Our products are sold and used in a wide variety of applications. Our products primarily are sold directly to cable system operators, telecommunications companies, original equipment manufacturers and indirectly through distributors. There has been a trend on the part of original equipment manufacturer customers to consolidate their lists of qualified suppliers to companies that have a global presence, can meet quality and delivery standards, have a broad product portfolio and design capability, and have competitive prices. We have concentrated our efforts on service and productivity improvements including advanced computer aided design and manufacturing systems, statistical process controls and just-in-time inventory programs to increase product quality and shorten product delivery schedules. Our strategy is to provide a broad selection of products in the areas in 20 which we compete. We have achieved a preferred supplier designation from many of our cable television, telephone and original equipment manufacturer customers. Cable television services in the U.S. are provided primarily by cable television systems operators. It is estimated that the five largest cable television systems operators account for more than 50% of the cable television subscribers in the U.S. The major cable television systems operators include such companies as AT&T, Time Warner Cable, MediaOne, Comcast and Cablevision Systems Corporation. Many of the major cable television systems operators are our customers, including those listed above. During the nine months ended September 30, 1999, AT&T accounted for approximately 11% of our net sales. During 1998 and 1997, sales to no single customer accounted for 10% or more of our net sales and TCI (now part of AT&T) was the only customer which accounted for 10% or more of our net sales during 1996. PATENTS We pursue an active policy of seeking intellectual property protection, namely patents, for new products and designs. We hold 45 patents worldwide and have 80 pending applications. We consider our patents to be valuable assets, but no single patent is material to our operations as a whole. We intend to rely on our proprietary knowledge, trade secrets and continuing technological innovation to develop and maintain our competitive position. BACKLOG At December 31, 1998, 1997 and 1996, we had an order backlog of approximately $43 million, $55 million and $36 million, respectively. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions. Backlog includes only orders for products scheduled to be shipped within six months. Unfilled orders may be canceled prior to shipment of goods; however, cancellations historically have not been material. However, significant elements of our business, such as sales to the cable television industry, distributors, the computer industry and other commercial customers, generally have short lead times. Therefore, our current order backlog may not be indicative of future demand. COMPETITION We encounter competition in substantially all areas of our business. We compete primarily on the basis of product specifications, quality, price, engineering, customer service and delivery time. Competitors include large, diversified companies, some of which have substantially greater assets and financial resources than we do, as well as medium to small companies. We also face competition from certain smaller companies that have concentrated their efforts in one or more areas of the coaxial cable market. We believe that we enjoy a strong competitive position in the coaxial cable market due to our position as a low-cost, high-volume coaxial cable producer and reputation as a high-quality provider of state-of-the-art cables with a strong orientation toward customer service. We also believe that we enjoy a strong competitive position in the electronic cable market due to our large direct field sales organization within the local area network segment, the comprehensive nature of our product line and our long established reputation for quality. RAW MATERIALS In the manufacture of coaxial and twisted-pair cables, we process metal tubes, tapes and wires including bi-metallic wires (wires made of aluminum or steel with thin outer skins of copper) that are fabricated from high-grade aluminum, copper and steel. Most of these fabricated metal components are purchased under supply arrangements with some portion of the unit pricing indexed to commodity market prices for these metals. We have adopted a hedging policy pursuant to which we may, from time to time, attempt to match futures contracts or option contracts for a specific metal with some portion of the anticipated metal purchases for the same periods. Other major raw materials we use include polyethelenes, polyvinylchlorides, FEP and other plastic insulating materials, optical fibers, and wood and cardboard shipping and packaging materials. In 1998, approximately 13% of our raw material purchases were for bi-metallic center conductors for coaxial cables, nearly all of which were 21 purchased from Copperweld Corporation under a long-term supply arrangement expiring in March 2000. Copperweld has agreed to continue to supply us with bi-metallic center conducts after expiration of this agreement, but this continued supply arrangement is indefinite in duration. If we are unable to continue to purchase bi-metallic center conductors from this supplier, either before or after expiration of this arrangement, we may be unable to obtain these raw materials on commercially acceptable terms from another source. There are few, and limited, alternative sources of supply for these raw materials. In February 1999, we purchased the clad wire fabrication equipment and technology of Texas Instruments Incorporated for manufacturing copper-clad aluminum wire and copper-clad steel wire. We anticipate that in 2000 we will begin to produce a significant portion of the bi-metallic center conductors we use. However, the loss of Copperweld as a supplier of bi-metal center conductors, either during the term of the current supply contract, or after the expiration of that agreement, and/or our failure to vertically integrate these products, could have a material adverse effect on our business and financial condition. In addition, we purchase fine aluminum wire primarily from a single source. Fine Aluminum wire is a smaller raw material purchase than bi-metallic wire. Neither of these major raw materials could be readily replaced in sufficient quantities if all supplies from the respective primary sources were disrupted for an extended period and we were unable to vertically integrate the production of these products. In such event, there could be a materially adverse impact on our financial results. Additionally, FEP is the primary raw material used throughout the industry for producing flame-retarding cables for local area network applications. There are few worldwide producers of FEP and market supplies have been periodically limited over the past several years. Availability of adequate supplies of FEP will be critical to future local area network cable sales growth. We have demonstrated an ability to successfully foam FEP. Our ability to expand foaming of FEP on a larger scale would help moderate the impact of any limitation of the FEP supply. Alternative sources of supply or access to alternative materials are generally available for all other major raw materials we use. Supplies of all other material raw materials we use are generally adequate and expected to remain so for the foreseeable future. ENVIRONMENT We use some hazardous substances and generate some solid and hazardous waste in the ordinary course of our business. As a result, we are subject to various federal, state, local and foreign laws and regulations governing the use, discharge and disposal of hazardous materials. Because of the nature of our business, we have incurred, and will continue to incur, costs relating to compliance with these environmental laws. Although we believe that we are in substantial compliance with such environmental requirements, and we have not in the past been required to incur material costs in connection with this compliance, there can be no assurance that our cost to comply with these requirements will not increase in the future. Although we are unable to predict what legislation or regulations may be adopted in the future with respect to environmental protection and waste disposal, compliance with existing legislation and regulations has not had and is not expected to have a material adverse effect on our operations or financial condition. EMPLOYEES At November 30, 1999, we employed approximately 3,200 people. Substantially all employees are located in the U.S. We also have employees in foreign countries, including those in our Seneffe, Belgium operations. We believe that our relations with our employees are satisfactory. PROPERTIES Our principal administrative, production and research and development facilities are located in the following locations: The Hickory, North Carolina facility occupies approximately 40,000 square feet under a lease expiring in December 2001. Our executive offices, sales office and customer service department are located at this facility. 22 The Catawba, North Carolina facility occupies approximately 1,000,000 square feet and is owned by us. The Catawba facility manufactures coaxial cables, is the major distribution facility for our products and houses certain administrative and engineering activities. The Claremont, North Carolina facility occupies approximately 450,000 square feet and is owned by us. We are in the process of adding 130,000 square feet of capacity at this facility. The Claremont facility manufactures coaxial, copper twisted pair and fiber optic cables and houses certain of our administrative, sales and engineering activities. The Scottsboro, Alabama facility occupies 150,000 square feet and is owned by us. The Scottsboro facility manufactures coaxial cables. The Statesville, North Carolina facility occupies approximately 315,000 square feet and is owned by us. The Statesville facility houses certain local area network cable manufacturing, cable-in-conduit manufacturing, wire fabrication, recycling activities, research and development, and engineering activities. During 1999, we purchased an approximately 120,000 square-foot facility in Seneffe, Belgium, which houses certain coaxial cable manufacturing and sales activities. We recently purchased a facility in Newton, North Carolina with 455,000 square feet of manufacturing, office and warehouse space. We intend to renovate the facility and establish the new CommScope Cable Technology Center at the location. Once renovated, we expect the facility to house the majority of our engineering, research and development functions as well as manufacturing of wireless products. We do not believe there is any material long-term excess capacity in our facilities, although utilization is subject to change based on customer demand. We believe that our facilities and equipment generally are well maintained, in good operating condition and suitable for our purposes and adequate for our present operations. LEGAL PROCEEDINGS We are not involved in any pending legal proceedings other than various claims and lawsuits arising in the normal course of business. We do not believe that any such claims or lawsuits will have a material adverse effect on our financial statements. 23 DESCRIPTION OF NOTES The Notes were issued under an indenture dated as of December 15, 1999 (the "Indenture"), between us and First Union National Bank, as trustee (the "Trustee"). A copy of the Indenture and Registration Rights Agreement are filed as exhibits to the Registration Statement of which this prospectus is a part. The following summaries of certain provisions of the Notes, the Indenture and the Registration Rights Agreement 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, the Indenture and the Registration Rights Agreement 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 which is a part thereof) or the Registration Rights Agreement are referred to, such provisions or defined terms are incorporated herein by reference. Unless the context suggests otherwise, references in this "Description of Notes" to the "Company" refer to CommScope and not to its subsidiaries. GENERAL The Notes are unsecured, subordinated obligations of the Company limited to $172,500,000 aggregate principal amount and mature on December 15, 2006. The principal amount of each Note is $1,000 and is payable at the office of the Paying Agent, which initially is the Trustee, or an office or agency maintained by the Company for such purpose in the Borough of Manhattan, City of New York. The Notes are subordinated in right of payment to all existing and future Senior Indebtedness as described under "--Subordination of Notes" below. The Notes bear interest at the rate of 4% per annum on the principal amount from December 15, 1999, 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 15 and December 15 of each year (each an "Interest Payment Date"), commencing on June 15, 2000, to holders of record at the close of business on June 1 or December 1 (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 interest required to be made on any day that is not a business day will be made on the next succeeding business day. 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 such 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 canceled (except for registration of transfer, exchange or replacement thereof). You may present Notes for conversion at the office of the Conversion Agent and for exchange or registration of transfer at the office of the Registrar. Each such agent shall initially be the Trustee. FORM, DENOMINATION AND REGISTRATION The Notes were issued in registered book-entry form, without coupons, in denominations of $1,000 principal amount at maturity and integral multiples thereof. The Notes are represented by one or more global Notes without coupons (each, a "Global Note") which were 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 such Global Note will be 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 Notes in certificated form except in the limited circumstances described herein. No service charge will be made for any registration of transfer or exchange of Notes, but we may require payment by a holder of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection therewith. 24 Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC ("participants") or persons who hold interests directly or indirectly through DTC participants. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of that ownership will be effected through DTC participants and will be shown on, records maintained by DTC (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). So long as DTC, or its nominee, is the registered owner or holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. No beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures (in addition to those under the Indenture referred to herein). If DTC or any successor depository notifies us that it is unwilling or unable to continue as depository for a Global Note or ceases to be a "Clearing Agency" registered or in good standing under the Exchange Act or other applicable statute or regulation and a successor depository is not appointed by us within 90 days, or an Event of Default has occurred and is continuing, DTC participants in such Global Note will receive physical delivery of Notes in certificated form and will be considered to be the owners or Holders of such Notes under the Indenture or the Notes. Payments on Global Notes will be made to DTC or its nominee, as the registered owner thereof. None of the Company, the Trustee or any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment in respect of a Global Note held by it or its nominee, will credit participants' accounts with payment in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments, however, will be the responsibility of such participants. Transfers between participants in DTC will be effected in accordance with DTC rules and will be settled in same-day funds. The laws of some states, however, require that certain persons take physical delivery of securities in definitive form. Notes will only be delivered in certificated form in the limited circumstances described therein. Consequently, the ability to transfer Notes evidenced by the Global Note will be limited to such extent. DTC will take any action permitted to be taken by a holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC will exchange the Global Notes for Notes in certificated form, which it will distribute to its participants. In case any Note shall become mutilated, defaced, destroyed, lost or stolen, we will execute and upon the Company's request the Trustee will authenticate and deliver a new Note, of like tenor (including the same date of issuance) and equal principal amount at maturity, registered in the same manner, dated the date of its authentication in exchange and substitution for such Note (upon surrender and cancellation thereof) or in lieu of and substitution for such Note. In case such Note is destroyed, lost or stolen, the applicant for a substituted Note shall furnish to us and the Trustee such security or indemnity as may be required by them to hold each of them harmless, and, in every case of destruction, loss or theft of such Note, the applicant shall also furnish to us satisfactory evidence of the destruction, loss or theft of such Note and of the ownership thereof. Upon the issuance of any substituted Note, we may require the payment by the registered holder thereof of a sum sufficient to cover fees and expenses connected therewith. 25 Holders who desire to convert their Notes into common stock pursuant to the terms of the Notes should contact their brokers or other participants to obtain information on procedures, including proper forms and cut-off times, for submitting such requests. SUBORDINATION OF NOTES The Notes are unsecured obligations of the Company and are subordinated in right of payment 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. At December 31, 1999 the notes were subordinated to $15.1 million of Senior Indebtedness and effectively subordinated to $10.8 million of other indebtedness of our subsidiaries. The Indenture does not restrict the incurrence by us or our subsidiaries of indebtedness or other obligations. The term "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 obligations of the Company (including all interest accruing after the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowed as a claim in any such proceeding) payable under the Credit Agreement, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company; (3) all of the Company's capital lease obligations; (4) 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); (5) all of the Company's obligations for the reimbursement of any letter of credit, banker's acceptance, security purchase facility or similar credit transaction; (6) all obligations of the type referred to in clauses (1) through (5) above of other persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise; and (7) all obligations of the type referred to in clauses (1) through (6) 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 Notes 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 Notes. "Credit Agreement" means that certain Credit Agreement dated as of July 23, 1997 by and among the Company and the lenders party thereto from time to time and The Chase Manhattan Bank, as Administrative Agent, and the other financial institutions named therein as Co-Agents, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, 26 restated, modified, increased, renewed, refunded, replaced or refinanced from time to time, whether or not with the same parties. Such 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 such Senior Indebtedness. By reason of such subordination, in the event of dissolution, insolvency, bankruptcy or other similar proceedings, or upon any winding up, liquidation or dissolution, in each case whether voluntary or involuntary, upon any payment or distribution of our assets or securities, (1) the holders of the Notes are required to pay over their share of such payment or distribution to the holders of Senior Indebtedness or their representative 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 (2) unsecured creditors of ours who are not holders of Notes or Senior Indebtedness may recover less, ratably, than holders of Senior Indebtedness of ours and may recover more, ratably, than the holders of Notes. In addition, no payment of the principal amount, Redemption Price, Change in Control Purchase Price, conversion consideration or interest or other obligations with respect to any Notes may be made by us, nor may we redeem, acquire or defease any Notes, if: (1) any payment default on any Senior Indebtedness has occurred and is continuing; or (2) 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 either such default is the subject of judicial proceedings or we receive a written notice of such default (a "Senior Indebtedness Default Notice"); provided, however, that only a holder of more than $10 million of Senior Indebtedness can provide a Senior Indebtedness Default Notice. Notwithstanding the foregoing, payments with respect to the Notes may resume and we may acquire Notes for cash when: (a) the default with respect to the Senior Indebtedness is cured or waived or ceases to exist; or (b) in the case of a default described in (2) above, 179 or more days pass after the Senior Indebtedness Default Notice 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 or distribution 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: (1) 120 days after the date of such acceleration; or (2) the payment in full in cash of all Senior Indebtedness, but only if such payment or distribution is then otherwise permitted under the terms of the Indenture. 27 Upon any payment or distribution of our assets or securities 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 before the holders of the Notes shall be entitled to receive any payment or distribution with respect to any Notes. The Notes are effectively subordinated to all existing and future liabilities of our subsidiaries. Any right of ours to receive assets of any of our subsidiaries upon their liquidation or reorganization (and the consequent right of the holders of the Notes to participate in those assets) will be subject to the claims of that subsidiary's creditors (including trade creditors), except to the extent that we ourselves are recognized as a creditor of that subsidiary, in which case our claims would still be subordinate to any security interests in the assets of that subsidiary and any indebtedness of that subsidiary senior to that held by us. CONVERSION RIGHTS A holder of a Note is entitled to convert it into shares of common stock at any time before the close of business on December 15, 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 option of such holder to require the Company to purchase such 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 20.7512 shares of common stock per $1,000 principal amount (equivalent to a conversion price of $48.19 per share of common stock), subject to adjustment upon the occurrence of certain events described below. See "Price Range of Common Stock." A holder otherwise entitled to a fractional share of common stock will receive cash in an amount equal to the market value of such fractional share based on the closing sale price on the trading day immediately preceding the Conversion Date, subject to the subordination provisions. A holder may convert a portion of such holder's Notes so long as such 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 such notice to the Conversion Agent (initially the Trustee) at the office maintained by the Conversion Agent for such 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. Upon conversion of a Note, a holder will not receive (except as provided below) any cash payment representing accrued interest thereon. The Company's delivery to the holder of the fixed number of shares of common stock into which the Note is convertible (together with the cash payment, if any, in lieu of any fractional shares) will satisfy the Company's obligation to pay the principal amount of the Note, and the accrued and unpaid interest to the Conversion Date. Thus, such 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 Notes at the option of the holder made concurrently with or after acceleration of the Notes following 28 an Event of Default described under "--Events of Default; Notice and Waiver" below, subject to the subordination provisions. 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 such Interest Payment Date (except Notes to be redeemed on a date within such period) must be accompanied by payment of an amount equal to the interest thereon that the registered holder is to receive. Except where Notes surrendered for conversion must be accompanied by payment as described above, no interest on 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 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 common stock upon conversion, see "Certain United States Federal Tax Consequences--Certain Federal Income Tax Consequences to U.S. Holders--Conversion of the Notes." The Conversion Rate is subject to adjustment in certain events, including (a) the issuance of shares of common stock as a dividend or a distribution with respect to common stock; (b) subdivisions, combinations and reclassification of common stock; (c) the issuance to all holders of common stock of rights or warrants entitling them (for a period not exceeding 45 days) to subscribe for shares of common stock at less than the then Market Price (as defined below) of the common stock; (d) the distribution to holders of 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); (e) the payment of dividends (and other distributions) on 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 the common stock concluded within the preceding 12 months not triggering a Conversion Rate adjustment, does not exceed 10% of our aggregate market capitalization (such aggregate market capitalization being the product of the current market price of common stock as of the trading day immediately preceding the date of declaration of such dividend multiplied by the number of shares of common stock then outstanding) on the date of such distribution; and (f) payment to holders of common stock in respect of a tender or exchange offer (other than an odd-lot offer) by us or one of our subsidiaries for common stock as of the trading day next succeeding the last date tenders or exchanges may be made pursuant to such 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 the 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. However, no adjustment 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. Any adjustment that would otherwise be required to be made shall be 29 carried forward and taken into account in a subsequent adjustment. No adjustment of the conversion price will result in zero or in a negative number or will reduce the conversion price below the then par value of the common stock (in which case the conversion price would be reduced to such par value), unless the common stock has no par value at such time (in which case the conversion price would be reduced to $.01 per share). 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 common stock distributed to stockholders exceeds the Average Sale Price per share of common stock, or such Average Sale Price exceeds such fair market value of such 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 common stock into which such Note is convertible, the kind and amounts of assets, debt securities or rights, options or warrants comprising the distribution that such holder would have received if such holder had converted such Note immediately prior to the record date for determining the stockholders entitled to receive the distribution, subject to the subordination provisions. The Indenture permits us to increase the Conversion Rate from time to time. "Market Price" means, on any date in question, subject to certain adjustments, the average of the daily closing prices for the 10 consecutive trading days immediately preceding the date in question. In the event that we become a party to any transaction (including, and with certain exceptions, (a) any recapitalization or reclassification of the common stock; (b) any consolidation of us with, or merger of us into, any other Person, or any merger of another Person into us; (c) any sale, transfer or lease of all or substantially all of our assets; or (d) any compulsory share exchange), in which the 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 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 such Transaction by a holder of the number of shares of common stock issuable upon conversion of such Notes immediately prior to such Transaction, subject to the subordination provisions. 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 the common stock into which such Note was convertible immediately prior to such Transaction, subject to the subordination provisions. 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 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 such an adjustment to the Conversion Rate may result in a taxable dividend to holders of common stock. See "Certain United States Federal Tax Consequences--Certain Federal Income Tax Consequences to U.S. Holders--Adjustment of Conversion Price." REDEMPTION OF NOTES AT THE OPTION OF THE COMPANY No sinking fund is provided for the Notes. Prior to December 15, 2002, we are not 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 Notes (unless a shorter notice shall be satisfactory to the Trustee) at the Redemption Prices set forth 30 below plus accrued cash interest to the Redemption Date. Any such 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. PERIOD REDEMPTION ------ ---------- PRICE ----- December 15, 2002 through December 14, 2003............ 102.2857% December 15, 2003 through December 14, 2004............ 101.7143% December 15, 2004 through December 14, 2005............ 101.1429% December 15, 2005 and thereafter....................... 100.5714% 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 the Company, to be of the portion selected for redemption. CHANGE IN CONTROL PERMITS PURCHASE OF NOTES AT THE OPTION OF THE HOLDER In the event of any Change in Control (as defined below) of the Company, each holder of 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 45 business days after the occurrence of such Change in Control (the "Change in Control Purchase Date") at a cash price equal to 100% of the principal amount of such holder's Notes plus accrued cash interest to the Change in Control Purchase Date (the "Change in Control Purchase Price"). Within 25 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: (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 given; (3) the Change in Control Purchase Date; (4) the Change in Control Purchase Price; (5) the name and address of the Paying Agent and the Conversion Agent; (6) the Conversion Rate and any adjustments thereto; (7) the procedures that holders must follow to exercise these rights; (8) the procedures for withdrawing a Change in Control Purchase Notice; (9) that holders who want to convert Notes must satisfy the requirements set forth in the Notes; and 31 (10) briefly, the conversion rights of holders of Notes. To exercise the purchase right, the holder must deliver written notice of the exercise of such right (a "Change in Control Purchase Notice") to the Paying Agent or an office or agency maintained by us for such purpose in the Borough of Manhattan, The City of New York, prior to the close of business, on the Change in Control Purchase Date. Any Change in Control Purchase Notice must state (1) the certificate numbers of the Notes to be delivered by the holder thereof for purchase by us; (2) the portion of the principal amount of Notes to be purchased, which portion must be $1,000 or an integral multiple thereof; and (3) that such 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 such purpose in the Borough of Manhattan, The City of New York, at any time (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 such Note on the business day following the Change in Control Purchase Date, then, immediately after the Change in Control Purchase Date, such Note will cease to be outstanding and interest on such Note will cease to accrue and will be deemed paid, whether or not such 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 such Note). Under the Indenture, a "Change in Control" of the Company is deemed to have occurred upon the occurrence of any of the following events: (1) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under 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), directly or indirectly, of more than 50% of the total outstanding voting stock of the Company; (2) the Company consolidates with, or merges with or into another Person or conveys, transfers, leases or otherwise disposes of all or substantially all of the Company's assets to any Person, or any Person consolidates with or merges with or into the Company, in any such event pursuant to a transaction in which the outstanding voting stock of the Company is converted into or exchanged for cash, securities or other property, other than any such transaction where: (a) the voting stock of the Company 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 32 Stock) of the surviving or transferee corporation or (ii) voting stock (other than Redeemable Capital Stock) of the surviving or transferee corporation and cash, securities and other property (other than capital stock of the surviving entity); and (b) immediately after such transaction, no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under 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), directly or indirectly, of more than 50% of the total outstanding voting stock of the surviving or transferee corporation; (3) during any consecutive two-year period, individuals who at the beginning of such period constituted the Company's 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 or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Company's Board of Directors then in office; or (4) 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 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 hereof 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 a right to be put to us upon certain terminations of employment; and provided further, however, that any class or series of capital stock that would not constitute Redeemable Capital Stock but for provisions thereof giving holder thereof the right to require the issuer of such capital stock to repurchase or redeem such capital stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the final stated maturity of the Notes shall not constitute Redeemable Capital Stock if the "asset sale" or "change of control" provisions applicable to such class or series of capital stock are no more favorable to the holders of such capital stock in any material respect than the provisions contained herein under this caption and such class or series of capital stock specifically provides that the issuer of such capital stock will not repurchase or redeem any such stock pursuant to such provision prior to our repurchase of such notes as required pursuant to the provisions contained herein under this caption. The Indenture does not permit the Board of Directors to waive our obligation to purchase Notes at the option of a holder in the event of a Change in Control of our Company. We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act 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 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 our company 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 common stock or to obtain control of our company by means of a merger, tender offer, solicitation or otherwise, or part of a plan by us 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. 33 The Company's debt agreements contain "change in control" provisions that in relevant part are similar to the provision in the Indenture relating to a Change in Control, and the occurrence of such a "change of control" would constitute a default under the debt agreements. The Company's obligations under the debt agreements are senior in right of payment to the notes and the debt agreements will not permit the purchase of the notes absent consent of the lenders under the debt agreements in the event of a Change in Control, even though the failure by the Company to comply with its obligations in the event of a Change in Control would constitute an Event of Default under the Indenture. In addition, the exercise by the Holders of their right to require the Company to repurchase the notes could cause a default under the debt agreements, even if the Change in Control itself does not, due to the financial effect of such repurchase on the Company. If the Company is unable to obtain the requisite consents and/or repay all Indebtedness which prohibits the repurchase of the notes upon the occurrence of a Change in Control, the Company would remain prohibited by such Indebtedness from purchasing any notes and, as a result, the Company could not purchase the Notes, which would constitute an Event of Default under the Indenture. Such an Event of Default under the Indenture would also constitute an Event of Default under the debt agreements which would permit the lenders thereunder to accelerate all of the Company's Indebtedness under the debt agreements. If a Change in Control were to occur, there can be no assurance that the Company would have sufficient assets to first satisfy its obligations under the debt agreements or other agreements relating to any Indebtedness, if accelerated, and then to purchase all of the notes that might be delivered by Holders seeking to exercise the purchase right. REGISTRATION RIGHTS; LIQUIDATED DAMAGES We entered into a registration rights agreement with the Initial Purchasers (the "Registration Rights Agreement") pursuant to which, for the benefit of the holders, we agreed to file with the SEC the Shelf Registration Statement at our expense covering resale of the Registrable Securities as soon as practicable, but in any event within 90 days after the first date of original issuance of the Notes. We will use all reasonable efforts to cause the Shelf Registration Statement to become effective as promptly as is practicable, but in any event within 180 days of such first date of original issuance and to keep the Shelf Registration Statement effective until the earlier of: o the sale pursuant to the Shelf Registration Statement of all the securities registered thereunder and o the expiration of the holding period applicable to such securities held by persons that are not affiliates of the Company under Rule 144(k) under the Securities Act or any successor provision, subject to certain permitted exceptions. We are permitted to suspend the use of the prospectus that is part of the Shelf Registration Statement under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events for a period not to exceed an aggregate of 90 days in any 12-month period. We agreed to pay predetermined liquidated damages as described herein ("Liquidated Damages") to holders of Notes and holders of common stock issued upon conversion of the Notes if the Shelf Registration Statement is not timely filed or made effective or if the prospectus is unavailable for the periods in excess of those permitted above. Such Liquidated Damages shall accrue until such failure to file or become effective or unavailability is cured: o in respect of any Note, at a rate per annum equal to 0.25% of the principal amount of the Notes for the first 90 day period after the occurrence of such event and 0.25% for each 90 day period thereafter, provided that the maximum amount of Liquidated Damages will in no event exceed 1.0% per annum of the principal amount of the Notes, o in respect of any shares of common stock into which the Notes have been converted, at a rate per annum equal to $2.50 per 20.7512 shares of common stock (subject to adjustment in certain circumstances) for the first 90 day period after the occurrence of such event and $2.50 per 20.7512 shares of common stock (subject to adjustment) for each 90 day period thereafter, 34 provided that the maximum amount of Liquidated Damages will in no event exceed $10.00 per 20.7512 shares of common stock (subject to adjustment). A holder who elects to sell any Notes and common stock issued upon conversion of the Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling stockholder in the related prospectus, may be required to deliver a prospectus to purchasers, may be subject to certain civil liability provisions under the Securities Act in connection with those sales and will be bound by certain provisions of the Registration Rights Agreement that are applicable to such holder (including certain indemnification provisions). We will pay all expenses of the Shelf Registration Statement, provide to each registered holder copies of such prospectus, notify each registered holder when the Shelf Registration Statement has become effective and take certain other actions as are required to permit, subject to the foregoing, unrestricted resales of the Notes and the common stock issued upon conversion of the Notes. We have agreed to pay Liquidated Damages in the amount set forth above to such holder if the Company fails to make such filing in the time required or, if such filing is a post-effective amendment to the Shelf Registration Statement required to be declared effective under the Securities Act, if such amendment is not declared effective within 45 days of the filing thereof, subject to certain exceptions. By acquiring Registrable Securities, a Holder will be deemed to have agreed to indemnify the Company against certain losses arising out of information furnished by such holder in writing for inclusion in any Shelf Registration Statement. Holders of Notes will also be required to suspend their use of the prospectus included in the Shelf Registration Statement under certain circumstances upon receipt of written notice to that effect from the Company. The summary herein of certain provisions of the Registration Rights Agreement is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit to the Registration Statement of which this prospectus is a part. CONSOLIDATION, MERGER AND SALE OR LEASE OF ASSETS We, without the consent of any holders of 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: (1) 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; (2) 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 (3) 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 on 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 such event shall automatically become and be 35 immediately due and payable. Upon any such acceleration, the subordination provisions of the Indenture preclude any payment being made to holders of Notes until the earlier of: (1) 120 days or more after the date of such acceleration; and (2) the payment in full in cash of all Senior Indebtedness, but only if such payment is then otherwise permitted under the terms of the Indenture. See "--Subordination of Notes" above. Under certain circumstances, the holders of a majority in aggregate principal amount of the outstanding Notes may rescind any such 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 common stock (or cash in lieu of fractional shares) to be delivered on conversion of Notes, in each case to the extent that the payment of such interest shall be legally enforceable. Under the Indenture, Events of Default include: (1) 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 such payment is prohibited by the provisions of the Indenture); (2) 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 Note and continuation of such default for 10 days; (3) failure by the Company to comply with any of its other agreements in the Notes or the Indenture upon the receipt by the Company of notice of such default from the Trustee or from holders of not less than 25% in aggregate principal amount of the Notes then outstanding and the Company's failure to cure such default within 90 days after receipt by the Company of such notice; (4) default under any bond, note or other evidence of indebtedness for money borrowed of the Company having an aggregate outstanding principal amount of in excess of $12.5 million, which default shall have resulted in such indebtedness being accelerated, without such indebtedness being discharged or such acceleration having been rescinded or annulled within 60 days after receipt of notice thereof by the Company from the Trustee or the Company 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 (5) 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 shall be aware, unless such defaults shall have been cured or waived before the giving of such notice; provided that the Trustee may withhold such notice as to any default other than a 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 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 or 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: 36 (1) such holder shall have previously given the Trustee written notice of a continuing Event of Default; (2) the holders of at least 25% in aggregate principal amount of the outstanding Notes shall have made a written request to the Trustee to pursue such remedy; (3) such holder or holders shall have offered to the Trustee reasonable security or indemnity against any loss, liability or expense satisfactory to it; (4) the Trustee shall have failed to comply with the request within 60 days after receipt of such notice, request and offer of security or indemnity; and (5) the holders of a majority in aggregate principal amount of the outstanding Notes shall not have given the Trustee a direction inconsistent with such request within 60 days after receipt of such 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 such holder on or after the respective due dates expressed in the Notes, (b) to convert such Notes, or (c) to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or adversely affected without such holder's consent. The holders of a majority in aggregate principal amount of Notes at the time outstanding may waive any existing default and its consequences except: (1) any default in any payment on the Notes, (2) any default with respect to the conversion rights of the Notes, or (3) 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 such waiver shall extend to any subsequent or other default or impair any consequent right. We are required to furnish to the Trustee annually a statement as to any default by the Company in the performance and observance of our obligations under the Indenture. In addition, we are 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 such default or Event of Default. MODIFICATION The Indenture or the Notes may be modified or amended by the Company and the Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each holder affected thereby, no amendment may, among other things: (1) 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 on any Note or make any Note payable in money or securities other than that stated in the Note; 37 (2) 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 such amendments or waivers; (3) make any change that adversely affects the right of a holder to convert any Note; (4) modify the provisions of the Indenture relating to the ranking of the Notes in a manner adverse to the holders of the Notes; or (5) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the Notes. Without the consent of any holder of Notes, the Company and the Trustee may amend the Indenture to: (1) cure any ambiguity, defect or inconsistency, provided, however, that such amendment does not materially adversely affect the rights of any holder of Notes; (2) provide for the assumption by a successor to the Company of the obligations of the Company under the Indenture; (3) 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; (4) make any change that does not adversely affect the rights of any holder of Notes; (5) 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, as amended; or (6) add to the covenants or obligations of the Company under the Indenture for the protection of holders of the Notes or surrender any right, power or option conferred by the Indenture on the Company. NO RECOURSE AGAINST OTHERS The Indenture provides that a director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. THE TRUSTEE First Union National Bank is the Trustee, Registrar, Paying Agent and Conversion Agent under the Indenture. First Union National Bank is also the lender under our Euro credit agreement. The Indenture contains certain limitations on the rights of the Trustee, as a creditor of the Company, to obtain payment of claims in certain cases (including in the event of an Event of Default), or to realize on certain property received in respect of any such claims as security or otherwise. The Trustee will be permitted to engage in other transactions with the Company and its subsidiaries; provided, however, that if it acquires any conflicting interest (as defined), it must eliminate such conflict or resign. In case an Event of Default shall occur and shall not be cured or waived, the Trustee will be required to use the degree of care of a prudent person in the conduct of its own affairs in the exercise of its powers. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the Holders of notes, unless they shall have offered to the Trustee reasonable security or indemnity. 38 GOVERNING LAW The Indenture, the Notes and the Registration Rights Agreement provide that they are to be governed in accordance with the laws of the State of New York, without regard to choice of law provisions. 39 DESCRIPTION OF CAPITAL STOCK GENERAL This summary highlights certain provisions of our certificate of incorporation and our by-laws. The following description of our capital stock is not complete and is qualified in its entirety by the provisions of our certificate of incorporation, our by-laws, our stockholder rights plan and applicable law. See "Where You Can Find More Information." Our certificate of incorporation provides that our authorized capital stock consists of 300,000,000 shares of common stock, of which 50,889,208 shares were issued and outstanding as of December 31, 1999, and 20,000,000 shares of preferred stock, $.01 par value per share, none of which were issued and outstanding as of that date. All our outstanding shares of common stock are validly issued, fully paid and nonassessable. The common stock issuable upon conversion of the notes will be, when issued and paid for, fully paid and nonassessable. COMMON STOCK Each holder of our common stock is entitled to one vote for each share owned of record on all matters submitted to a vote of stockholders. There are no cumulative voting rights. Accordingly, the holders of a majority of the shares voting for the election of directors can elect all the directors if they choose to do so, subject to any voting rights of holders of preferred stock to elect directors. Subject to the preferential rights of any outstanding series of preferred stock, and to any restrictions on payment of dividends imposed by our debt agreements, the holders of common stock will be entitled to those dividends as may be declared from time to time by our board of directors from funds legally available therefor, and will be entitled, after payment of all prior claims, to receive pro rata all of our assets upon our liquidation, dissolution or winding up. Holders of common stock have no redemption or conversion rights or preemptive rights to purchase or subscribe for our securities. Certain provisions of our certificate of incorporation and by-laws have the effect of making more difficult an acquisition of control of us in a transaction not approved by our board of directors. PREFERRED STOCK Our authorized capital stock includes 20,000,000 shares of preferred stock, none of which are currently issued or outstanding. Our board of directors is authorized to divide the preferred stock into series and, with respect to each series, to determine the preferences and rights and the qualifications, limitations or restrictions thereof, including the dividend rights, conversion rights, voting rights, redemption rights and terms, liquidation preferences, sinking fund provisions, the number of shares constituting the series and the designation of such series. Our board of directors could, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of common stock and which could have certain anti-takeover effects. In connection with the Rights Plan (as defined below), our board of directors has authorized 400,000 shares of Series A Participating Preferred Stock (the "Series A Preferred"). No shares of Series A Preferred are outstanding. For a description of the rights, powers and preferences of the Series A Preferred, see "--Rights Plan." RIGHTS PLAN On June 10, 1997, our board of directors adopted a stockholder rights plan (the "Rights Plan") pursuant to which one right (collectively, the "Rights") to purchase one one-thousandth of a share of Series A Preferred would be distributed as a dividend for each outstanding share of common stock at a purchase price of $60.00 per one one-thousandth of a share of Series A Preferred, subject to adjustment. The Rights are issuable on the terms and subject to the conditions set forth in the Rights Plan. The Rights will expire no later than June 10, 2007. The Rights will be exercisable on the earlier to occur of 40 o the first date of public announcement that a person or "group" has acquired beneficial ownership of 15% or more of the outstanding common stock (except pursuant to a Permitted Offer, as defined in the Rights Plan) (an "Acquiring Person"); and o ten business days (or such later date as the board may determine) following the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in a person or group becoming an Acquiring Person. If any person or group becomes an Acquiring Person or commences a tender offer upon consummation of which such person or group would become an Acquiring Person, each Right not owned by such Acquiring Person or certain related parties would entitle its holder to purchase, at the Right's then current exercise price, shares of common stock, or, in the discretion of the board, the number of one one-thousandths of a share of Series A Preferred having a value of twice the Right's exercise price. In addition, if, after a person or group becomes an Acquiring Person, we are involved in a merger or other business combination transaction in which the holders of all of the outstanding common stock immediately prior to the consummation of the transaction are not the holders of the surviving corporation's voting power or more than 50% of our assets or earning power is sold or transferred, each Right will entitle its holder to purchase common shares of the acquiring company having a value equal to two times the Right's then current exercise price. The purchase price payable, and the shares issuable, upon exercise of the Rights will be subject to adjustment from time to time as specified in the Rights Plan. We will generally be entitled to redeem the Rights in whole, but not in part, at $.01 per Right at any time prior to the earlier to occur of a person becoming an Acquiring Person or expiration of the Rights. Shares of Series A Preferred purchasable upon exercise of the Rights will not be redeemable. Each Share of Series A Preferred will be entitled to a minimum preferential quarterly dividend payment of $10.00 per share but, if greater, will be entitled to an aggregate dividend per share of 1,000 times the dividend declared per share of common stock. In the event of our liquidation, the holders of Series A Preferred will be entitled to a minimum preferential liquidation payment of $100.00, provided that they will be entitled to an aggregate payment per share of at least 1,000 times the aggregate payment made per share of common stock. Each share of Series A Preferred will have one thousand votes, voting together with the common stock. These rights are protected by customary antidilution provisions. In the event that the amount of accrued and unpaid dividends on the Series A Preferred is equivalent to at least six full quarterly dividends, the holders of the Series A Preferred will have the right, voting as a class, to elect two directors in addition to the directors elected by the holders of common stock until all dividends in default on the Series A Preferred have been paid in full and dividends for the current dividend period declared and funds therefor set apart. CLASSIFIED BOARD OF DIRECTORS Our board of directors is divided into three classes with each class elected in staggered elections and serving a three year term. Classification of directors makes it more difficult for stockholders to change the composition of the board of directors. At least two annual meetings of stockholders, instead of one, will generally be required to change who represents the majority of the board of directors. If we are confronted by a holder attempting to force a proxy contest, a tender or exchange offer or other extraordinary corporate transaction, this classification and time period would allow the board sufficient time to review the proposal. The board would also have the opportunity to review any available alternatives to the proposal and to act in what it believes to be the best interests of the stockholders. LIMITATION OF DIRECTOR LIABILITY Our certificate of incorporation limits the liability of our directors to us and our stockholders to the fullest extent permitted by Delaware law. Specifically, our directors will not be personally liable for money damages for breach of fiduciary duty as a director, except for liability 41 o for any breach of the director's duty of loyalty to us or our stockholders; o for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; o under Section 174 of the Delaware General Corporation Law, which concerns unlawful payments of dividends, stock purchases or redemptions; and o for any transaction from which the director derived an improper personal benefit. DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BY-LAWS PROVISIONS DELAWARE LAW. We must comply with the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns, or, in some cases, within three years prior, did own, 15% or more of the corporation's voting stock. Under Section 203, a business combination between us and an interested stockholder is prohibited unless it satisfies one of the following three conditions: o our board of directors must have previously approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; o upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, shares owned by persons who are directors and also officers and employee stock plans, in some instances; and o the business combination is approved by our board of directors and authorized at an annual or special meeting of the stockholders by the affirmative vote of the holders of at least 66 2'3% of the outstanding voting stock that is not owned by the interested stockholder. SPECIAL MEETINGS. Our by-laws provide that special meetings of stockholders for any purpose or purposes can be called only upon the request of our chairman of the board, our president, our board of directors, or the holders of shares entitled to at least a majority of the votes at the meeting. AMENDMENT OF OUR BY-LAWS. To adopt, repeal, alter or amend the provisions of our by-laws, our by-laws require the affirmative vote of either the holders of at least a majority of the voting power of all of the issued and outstanding shares of our capital stock entitled to vote on the matter or our board of directors. ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND PROPOSALS. Our by-laws establish advance notice procedures for stockholders to make nominations of candidates for election as directors, or bring other business before an annual meeting of our stockholders. These procedures provide that only persons who are nominated by or at the direction of our board of directors, or by a stockholder who has given timely written notice to our secretary before the meeting at which directors are to be elected, will be eligible for election as one of our directors. Further, these procedures provide that at an annual meeting, the only business that may be conducted is the business that has been specified in the 42 notice of the meeting given by, or at the direction of, our board or by a stockholder who has given timely written notice to our secretary of such stockholder's intention to bring that business before the meeting. Under these procedures, notice of stockholder nominations to be made or business to be conducted at an annual meeting must be received by us not less than 60 days nor more than 90 days before the date of the meeting, or, if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to the stockholders, the 10th day following the earlier of the day notice was mailed or the day public disclosure was made. Under these procedures, notice of a stockholder nomination to be made at a special meeting at which directors are to be elected must be received by us not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first. Under our by-laws, a stockholder's notice nominating a person for election as a director must contain specific information about the proposed nominee and the nominating stockholder. If our chairman of the board determines that a nomination was not made in the manner described in our by-laws, the nomination will be disregarded. Similarly, a stockholder's notice proposing the conduct of business must contain specific information about the business and about the proposing stockholder. If our chairman of the board determines that business was not properly brought before the meeting in the manner described in our by-laws, the business will not be conducted. By requiring advance notice of nominations by stockholders, our by-laws afford our board of directors an opportunity to consider the qualifications of the proposed nominee and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders about these qualifications. By requiring advance notice of other proposed business, our by-laws also provide an orderly procedure for conducting annual meetings of stockholders and, to the extent deemed necessary or desirable by our board of directors, provides our board of directors with an opportunity to inform stockholders, before meetings, of any business proposed to be conducted at the meetings, together with any recommendations as to our board of directors' position regarding action to be taken with respect to the business, so that stockholders can better decide whether to attend a meeting or to grant a proxy regarding the disposition of any business. The foregoing provisions may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if the proper procedures are not followed, and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal, without regard to whether consideration of these nominees or proposals might be harmful or beneficial to us and our stockholders. Written Consent Provisions. Our by-laws provide that any action required or permitted to be taken by the holders of capital stock at any meeting of our stockholders may be taken without a meeting only by the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote were present and voted. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for our common stock is ChaseMellon Shareholder Services, L.L.C. 43 DESCRIPTION OF OTHER INDEBTEDNESS The following summary of our debt agreements does not purport to be complete and is qualified in its entirety by reference to the debt agreements described below, including the definitions of certain capitalized terms used herein. Any terms not defined in this section are defined in the debt agreements. See "Where You Can Find More Information." REVOLVING CREDIT AGREEMENT On July 23, 1997, CommScope NC, our wholly owned subsidiary, entered into a credit agreement (as amended, the "revolving credit agreement") which provides for a $350 million revolving credit facility that matures on December 31, 2002. The borrowings under the revolving credit agreement will be structurally senior to, and will be repaid prior to, any subordinated indebtedness, including the notes. INTEREST RATE CALCULATIONS. Interest is payable quarterly, or at the end of the relevant interest period, if earlier, at a per annum rate equal to the Adjusted Base Rate for Adjusted Base Rate Loans, or a Eurodollar Rate for Eurodollar ("LIBOR") Loans, plus in each case, the relevant applicable margin. We are also able to set interest rates through a competitive bid procedure. The Adjusted Base Rate is a fluctuating rate calculated on a daily basis as the highest of: o the rate of interest publicly announced by The Chase Manhattan Bank for the date of determination; o 1% over the sum of (a) the product of the secondary market rate for the three month certificates of deposit and a fraction of the percentage for determining the reserve requirement for a depositary institution, and (b) the net annual assessment rate payable on that date to the FDIC for insuring deposits; and o 0.5% over the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System as arranged by Federal Funds brokers on the date of determination. The Eurodollar Base Rate is the per annum rate determined by the administrative agent to the arithmetic mean of the offered rates for deposits in dollars with a term comparable to the interest period that appears on the Telerate British Bankers Association Interest Settlement Rates Page. The Eurodollar rate is the Eurodollar Base Rate adjusted for reserve requirements. On September 30, 1999, the borrowings under the revolving credit agreement had a weighted average interest rate of 5.7%. FEES. The revolving credit agreement requires us to pay the following fees: o a quarterly facility fee based on our leverage ratio; o a fee to each lender based on our leverage ratio in proportion to the lender's standby letter of credit availability; o an issuing fee of 0.125% per annum on the face amount of each letter of credit; and o an administrative fee to The Chase Manhattan Bank for its services as administrative agent under the revolving credit agreement. COVENANTS AND CONDITIONS. In addition to specific customary covenants, the revolving credit agreement includes covenants that restrict our ability to: 44 o dispose of assets; o incur additional indebtedness; o incur liens on property or assets; o pay dividends; o guarantee any obligations; o enter into certain investments or transactions; o repurchase or redeem capital stock; o engage in mergers or consolidation; o make acquisitions; and o engage in certain transactions with subsidiaries and affiliates and otherwise restrict corporate activities. The revolving credit agreement contains financial covenants which require CommScope NC to maintain: o a Leverage Ratio equal to or below 3.25 to 1.0; o an Interest Coverage Ratio equal to or above 4.25 to 1.0; and o Consolidated Net Worth of at least the sum of (a) $100,000,000 and (b) 50% of the Consolidated Net Income of CommScope, Inc., if positive, for each fiscal quarter beginning July 1, 1997. We were in compliance with these covenants at September 30, 1999. GUARANTEES. Both CommScope, Inc. and our subsidiaries (other than CommScope NC) with greater than $50 million book value, if any, have unconditionally guaranteed the obligations under the revolving credit agreement. EVENTS OF DEFAULT. The revolving credit agreement contains customary events of default, which include a default in the payment of principal or interest on debt or guarantees aggregating $12.5 million or more. If any event of default occurs, our obligations could be accelerated with material adverse results to the holders of the notes. AMENDMENTS. The revolving credit agreement was amended on December 7, 1999 to permit the issuance of the notes. EURO CREDIT AGREEMENT On February 26, 1999, CommScope NC, our wholly owned subsidiary, entered into a credit agreement (as amended, the "Euro credit agreement"), which provides for a 15 million Euro ($16.4 million on the date of borrowing) term credit facility that matures on March 1, 2006. The borrowings under the Euro credit agreement will rank senior to, and will be repaid prior to, any subordinated indebtedness, including the notes. 45 INTEREST RATE CALCULATIONS. Interest is payable quarterly at a per annum rate equal to the Euro LIBOR Market Rate plus an applicable margin. The Euro LIBOR Market Rate is the per annum rate determined by the administrative agent to the arithmetic mean of the offered rates for deposits in dollars with a term comparable to the interest period that appears on the Telerate British Bankers Association Interest Settlement Rates Page adjusted for reserve requirements. On September 30, 1999 the borrowings under the Euro credit agreement had a weighted average interest rate of 4.53%. FEES. The Euro credit agreement required us to pay a one time fee of 0.125% of the amount of the loan. COVENANTS AND CONDITIONS. The Euro credit agreement includes the same covenants and conditions as the revolving credit agreement described above. We were in compliance with these covenants at September 30, 1999. GUARANTEES. Both CommScope, Inc. and our subsidiaries (other than CommScope NC) with greater than $50 million book value, if any, have unconditionally guaranteed the obligations under the Euro credit agreement. EVENTS OF DEFAULT. The revolving credit agreement contains customary events of default, which include a default in the payment of principal or interest on debt or guarantees aggregating $12.5 million or more. If any event of default occurs, our obligations could be accelerated with material adverse results to the holders of the notes. AMENDMENTS. The Euro credit agreement was amended on December 7, 1999 to permit the issuance of the notes. 46 CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES The following is a summary of certain U.S. federal income tax consequences and, in the case of Non-U.S. holders, as described below, certain U.S. federal estate tax consequences, of the acquisition, ownership and disposition of the notes and of the common stock into which the notes may be converted by beneficial owners of the notes, but is not intended and does not purport to be a complete analysis of all potential U.S. federal income, estate tax, or other tax considerations which may be relevant to certain investors in light of their particular investment or other circumstances. In addition, we do not discuss any U.S. state or local income or foreign income or other tax consequences. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, Treasury Regulations and administrative and judicial interpretations thereof, all as in effect as of the date of this prospectus and all of which are subject to change or differing interpretation, possibly with retroactive effect. The discussion below deals only with notes and common stock held as capital assets which are, generally, property held for investment, and does not address holders of notes or common stock that may be subject to special rules, including, without limitation, certain U.S. expatriates, financial institutions, insurance companies, tax-exempt entities, dealers in securities or currencies, traders in securities that elect mark-to-market accounting treatment, and persons who hold the notes or common stock as part of a straddle, hedge, conversion or other integrated transaction. You should consult your own tax advisor regarding the particular U.S. federal, state and local and foreign income and other tax consequences of acquiring, owning and disposing of the notes and common stock that may be applicable to you. Certain Federal Income Tax Consequences to U.S. Holders For purposes of the following discussion, a "U.S. holder" means a beneficial owner of a note or common stock that is, for U.S. federal income tax purposes, (1) a citizen or individual resident of the United States, (2) a corporation or partnership (unless the Internal Revenue Service provides otherwise) created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if, in general, the trust is subject to the supervision of a court within the United States and the control of one or more United States persons as described in section 7701(a)(30) of the Internal Revenue Code. TAXATION OF STATED INTEREST. In general, stated interest paid on a note will be taxable to a U.S. holder as ordinary income at the time it is received or accrued in accordance with the U.S. holder's regular method of accounting for federal income tax purposes. LIQUIDATED DAMAGES. As more fully described above under "Descriptions of Notes -- Registration Rights; Liquidated Damages," in the event a registration statement is not filed or does not become effective as provided in the Registration Rights Agreement, we will be required to pay liquidated damages to U.S. holders of the notes. Under the Treasury Regulations regarding contingent payment debt instruments, any payment subject to a remote or incidental contingency (i.e., there is a remote likelihood that the payment will be required or the potential amount of the payment is insignificant relative to the remaining payments on the debt instrument) is not considered a contingent payment and is ignored for purposes of computing original issue discount accruals. We believe that the liquidated damage payments with respect to the notes are subject to either a remote or incidental contingency. Accordingly, a U.S. holder of a note should be required to report any liquidated damage payment as interest for U.S. federal income tax purposes only at the time the payment is made or properly accrued under the U.S. holder's method of accounting. MARKET DISCOUNT. The resale of notes may be adversely affected by the impact on a purchaser of the "market discount" provisions of the Code. For this purpose, the market discount on a note generally will be equal 47 to the amount, if any, by which the stated redemption price at maturity of the note immediately after its acquisition (other than at original issue) exceeds the U.S. holder's adjusted tax basis in the note. Subject to a de minimis exception, these provisions generally require a U.S. holder who acquires a note at a market discount to treat as ordinary income any gain recognized on the disposition of that note to the extent of the "accrued market discount" on such note at the time of disposition, unless the U.S. holder elects to include accrued market discount in income currently. This election to include market discount in income currently, once made, applies to all market discount obligations acquired on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. In general, market discount will be treated as accruing on a straight-line basis over the remaining term of the note at the time of acquisition, or, at the election of the U.S. holder, under a constant yield method. A U.S. holder who acquires a note at a market discount and who does not elect to include accrued market discount in income currently may be required to defer the deduction of a portion of the interest on any indebtedness incurred or maintained to purchase or carry the note until the note is disposed of in a taxable transaction. If a U.S. holder acquires a note with market discount and receives common stock upon conversion of the note, the amount of accrued market discount not previously included in income with respect to the converted note through the date of conversion will be treated as ordinary income upon the disposition of the common stock. AMORTIZABLE BOND PREMIUM. If a U.S. holder of a note acquires the note at a cost that is in excess of the amount payable at maturity (after reducing that cost by an amount equal to the value of the conversion option), the U.S. holder may elect under Section 171 of the Code to amortize the excess cost (as an offset to interest income) on a constant interest rate basis over the term of the note. However, because the notes may be redeemed at our option at a price in excess of their principal amount, a U.S. holder may be required to amortize any bond premium based on the earlier call date and the call price payable at that time. If the U.S. holder makes an election to amortize bond premium, the tax basis of all the U.S. holder's notes will be reduced by the allowable bond premium amortization. The amortization election would apply to all debt instruments held or subsequently acquired by the electing purchaser and cannot be revoked without permission from the IRS. On conversion of a note into conversion shares, no additional amortization of any bond premium would be allowed, and any remaining premium would be added to the U.S. holder's tax basis in the common stock received. DISPOSITIONS. Upon the sale, exchange or retirement of a note or upon the sale of a share of common stock, a U.S. holder generally will recognize taxable gain or loss in an amount equal to the difference, if any, between the amount realized on the disposition (excluding any amount received that is attributable to accrued but unpaid interest) and the U.S. holder's adjusted tax basis in the note or common stock. A U.S. holder's adjusted tax basis in a note will generally equal the cost of such note to that holder, less principal payments received by that holder and increased by any market discount previously included in income by that holder. A holder's tax basis in the 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 the conversion, reduced by any basis allocable to a fractional share paid in cash. Gain or loss recognized by a U.S. holder on the sale, exchange or retirement of a note or upon the sale of a share of common stock generally will be capital gain or loss and will be long-term capital gain or loss if the note or common stock was held for more than one year. Long-term capital gain recognized by a non-corporate U.S. holder generally will be subject to a maximum tax rate of 20%. Subject to certain limited exceptions, capital losses cannot be used to offset ordinary income. CONVERSION OF THE NOTES. A U.S. holder generally will not recognize any income, gain or loss upon conversion of a note into common stock, except with respect to cash received in lieu of a fractional share of common stock. The holder's tax basis in the 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), and the holding period for the common stock received on conversion will generally include the holding period of the note converted. Cash received in lieu of a fractional share of common stock upon conversion should be treated as a payment in exchange for the fractional share of common stock. Accordingly, the receipt of cash in lieu of a fractional share of common stock generally should result in capital gain or loss (measured by the difference between the cash received for the fractional share and the U.S. holder's adjusted tax basis in the fractional share). 48 DISTRIBUTIONS ON THE COMMON STOCK. The amount of any distribution by us in respect of the common stock (including any liquidated damages in respect of common stock as described above under "Description of Notes--Registration Rights; Liquidated Damages") will be equal to the amount of cash and the fair market value, on the date of distribution, of any property distributed. Generally, distributions will be treated as a dividend, subject to a tax as ordinary income, to the extent of our current or accumulated earnings and profits, then as a tax-free return of capital to the extent of the holder's tax basis in the common stock and thereafter as gain from the sale or exchange of the stock. ADJUSTMENT OF CONVERSION PRICE. If at any time we make a distribution of property to stockholders that would be taxable to those stockholders as a dividend (e.g., distributions of evidences of indebtedness or assets of our company, but generally not stock dividends or rights to subscribe for common stock) for U.S. federal income tax purposes and, in accordance with the antidilution provisions of the notes, the conversion price of the notes is decreased, the amount of that decrease may be deemed to be the payment of a taxable dividend to holders of the notes. As a result, U.S. holders of notes could recognize taxable income as a result of an event pursuant to which they receive no cash or property. BACKUP WITHHOLDING AND INFORMATION REPORTING. We are required to furnish to record holders of the notes, other than corporations and other exempt holders, and to the IRS, information with respect to interest paid on the notes and dividends paid on the common stock. In general, "backup withholding" at a rate of 31% may apply to payments of principal and interest made on a note, payments of dividends on common stock, and to the payment of the proceeds of a sale or exchange of common stock or of a note before maturity, that are made to a non-corporate U.S. holder if such holder fails to provide a correct taxpayer identification number or otherwise comply with applicable requirements of the backup withholding rules. The backup withholding tax is not an additional tax and may be credited against a U.S. holder's U.S. federal income tax liability, provided that correct information is provided to the Internal Revenue Service. Certain U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders For purposes of the following discussion, a "Non-U.S. holder" is a beneficial owner of a note or common stock that is not, for U.S. federal income tax purposes, a U.S. holder. An individual may, subject to certain exceptions, be deemed to be a resident alien, as opposed to a non-resident alien, by virtue of being present in the United States on at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year, counting for these purposes all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year. Resident aliens are subject to U.S. federal tax as if they were U.S. citizens. Under present U.S. federal income and estate tax law and subject to the discussions below concerning income effectively connected with a trade or business in the United States and backup withholding: o payments of principal, premium, if any, and interest on a note by us or any of our agents to any Non-U.S. holder will not be subject to withholding of U.S. federal income tax, provided that in the case of interest 49 (1) the Non-U.S. holder does not directly or indirectly, actually or constructively, own 10 percent or more of the total combined voting power of all classes of our stock entitled to vote, (2) the Non-U.S. holder is not (A) a controlled foreign corporation that is related to us through sufficient stock ownership, or (B) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code, and (3) either (A) the beneficial owner of the note certifies to us or our paying agent, under penalties of perjury, that it is not a "United States person", as defined in the Internal Revenue Code and provides its name, address, and U.S. Taxpayer identification number, if any or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the note on behalf of the beneficial owner certifies to us or our paying agent under penalties of perjury that it, or the financial institution between it and the beneficial owner, has received from the beneficial owner the certificate described in (A) above and provides us or our paying agent with a copy of this certificate; o payments of dividends on the common stock to a Non-U.S. holder will be subject to withholding of U.S. federal income tax at a 30% rate unless that rate is reduced by an applicable income tax treaty. Dividends that are effectively connected with the holder's conduct of a trade or business in the U.S. are generally subject to U.S. federal income tax at regular rates, but are not generally subject to the 30% withholding tax if the Non-U.S. holder files a properly executed Form W-8ECI or currently a Form 4224 or successor form with the payor; o a Non-U.S. holder will not be subject to U.S. federal income tax on any gain or income realized on the sale or other disposition of common stock, or the sale, exchange, redemption, retirement at maturity or other disposition of a note; provided that, in the case of proceeds representing accrued interest, the conditions described in the first bullet paragraph above are met, unless (1) the Non-U.S. holder is an individual who is present in the United States for 183 days or more during the taxable year of gain and certain other conditions are met, or (2) the gain is effectively connected with the conduct of a U.S. trade or business by such Non-U.S. holder, or if an income tax treaty applies, is generally attributable to a U.S. "permanent establishment" maintained by the Non-U.S. holder; o interest on notes not excluded from U.S. withholding tax as described in the first bullet paragraph above will be subject to U.S. withholding at a 30% rate, except where an applicable tax treaty provides for the reduction or elimination of such withholding tax; o a note held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of such individual's death if, at the time of the individual's death, 50 (1) the individual did not directly or indirectly, actually or constructively, own 10 percent or more of the total combined voting power of all classes of our stock entitled to vote, and (2) the income on the note would not have been effectively connected with the conduct of a trade or business by the individual in the United States; and o common stock owned or treated as owned by an individual who at the time of death is not a citizen or resident of the United States will be subject to U.S. federal estate tax unless otherwise provided by an applicable estate tax treaty. If a Non-U.S. holder of a note is engaged in a trade or business in the United States and interest on or gain realized on the sale of the note is effectively connected with the conduct of such trade or business or, if an income tax treaty applies, and the Non-U.S. holder maintains a U.S. "permanent establishment" to which the interest or gain is generally attributable, the Non-U.S. holder, although exempt from the withholding tax discussed in the first bullet paragraph above, provided that such holder furnishes a properly executed United States Internal Revenue Service Form W-8ECI or currently a Form 4224 or successor form on or before any payment date to claim such exemption, may be subject to U.S. federal income tax on such interest, as well as on gain or income discussed in the third bullet paragraph above, on a net basis in the same manner as if it were a U.S. holder. In addition, a foreign corporation that is a holder of a note or common stock may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to some adjustments, unless it qualifies for a lower rate under an applicable income tax treaty. For this purpose, interest on a note, dividends on common stock or gain recognized on the disposition of a note or common stock will be treated as effectively connected earnings and profits if that interest, dividend or gain is effectively connected with the conduct by the foreign corporation of a trade or business in the United States. Treasury Regulations generally effective for payments made after December 31, 2000 will provide alternative methods for satisfying the certification requirement described in clause (3) of the first bullet paragraph above and may also require a Non-U.S. holder claiming the benefit of an income tax treaty to provide its U.S. taxpayer identification number. These regulations generally also will require, in the case of a note or common stock held by a foreign partnership, that (1) in the case of interest, the certification described in clause (3) of the first bullet paragraph above be provided by the partners and in the case of dividends, the partners certify entitlement to a reduced rate of withholding under an applicable treaty and (2) the partnership provide certain information, including a U.S. taxpayer identification number. A look-through rule will apply in the case of tiered partnerships. Under current Treasury Regulations, backup withholding at a rate of 31% and information reporting will not apply to payments of interest or dividends made by us or our paying agent, in its capacity as such, to a Non-U.S. holder of a note or common stock if such holder has provided the required certification as set forth above or has otherwise established an exemption, provided that neither we nor our paying agent has actual knowledge that the holder is a United States person or that the conditions of any other exemption are not in fact satisfied. We or our paying agent may, however, report payments of interest or dividends on the notes or common stock. Payments of the proceeds from a disposition by a Non-U.S. holder of a note or common stock made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that information reporting may apply to such payments if the broker is 51 (1) a United States person, (2) a controlled foreign corporation for U.S. federal income tax purposes, (3) a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period, unless the Non-U.S. holder is an exempt recipient or such broker has evidence that the payee is a Non-U.S. holder and no actual knowledge that such evidence is false and certain other conditions are met, or (4) with respect to payments made after December 31, 2000, a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons, as defined in Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership or if, at any time during its tax year, such foreign partnership is engaged in a U.S. trade or business. Payments of the proceeds from a disposition by a Non-U.S. holder of a note or common stock made to or through the U.S. office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies under penalties of perjury that he or she is not a United States person and satisfies certain other conditions or otherwise establishes an exemption from information reporting and backup withholding. Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. holder would be allowed as a refund or a credit against such holder's U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service. Non-U.S. holders should consult their tax advisors regarding U.S. federal, state, local and foreign tax consequences to non-U.S. holders of purchasing, holding and disposing of the notes or common stock. 52 SELLING SECURITYHOLDERS The notes were originally issued by us and sold by the initial purchasers in a transaction exempt from the registration requirements of the Securities Act to persons reasonably believed by the initial purchasers to be qualified institutional buyers. Selling holders, including their transferees, pledgees or 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 into which the notes are convertible. The following table sets forth information with respect to the selling holders and the principal amounts of notes beneficially owned by each selling holder that may be offered under this prospectus. The information is based on information provided by or on behalf of the selling holders. The selling holders may offer all, some or none of the notes or common stock into which the notes are convertible. Because the selling holders may offer all or some portion of the notes or the common stock, no estimate can be given as to the amount of the notes or the common stock that will be held by the selling holders upon termination of any sales. In addition, the selling holders identified below may have sold, transferred or otherwise disposed of all or a portion of their notes since the date on which they provided the information regarding their notes in transactions exempt from the registration requirements of the Securities Act. COMMON COMMON PRINCIPAL STOCK STOCK AMOUNT OF ISSUABLE OWNED NOTES UPON AFTER BENEFICIALLY CONVERSION COMMON COMPLETION OWNED AND OF THE STOCK OF THE NAME OFFERED NOTES OFFERED OFFERING ------ ------------- -------------- ------------- ------------- None of the selling holders nor any of their affiliates, officers, directors or principal equity holders has held any position or office or has had any material relationship with us within the past three years. The selling holders purchased all of the notes in private transactions on or after December 15, 1999. All of the notes were "restricted securities" under the Securities Act prior to this registration. Information concerning the selling holders may change from time to time and any changed information will be set forth in supplements to this prospectus if and when necessary. In addition, the conversion rate and therefore, the number of shares of common stock issuable upon conversion of the notes, is subject to adjustment under certain circumstances. Accordingly, the aggregate principal amount of notes and the number of shares of common stock into which the notes are convertible may increase or decrease. 53 PLAN OF DISTRIBUTION The selling holders and their successors, including their transferees, pledgees or donees or their successors, may sell the notes and the common stock into which the notes are convertible directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling holders or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved. The notes and the common stock into which the notes are convertible may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market prices, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions: o on any national securities exchange or U.S. inter-dealer system of a registered national securities association on which the notes or the common stock may be listed or quoted at the time of sale; o in the over-the-counter market; o in transactions otherwise than on these exchanges or systems or in the over-the-counter market; o through the writing of options, whether the options are listed on an options exchange or otherwise; or o through the settlement of short sales. In connection with the sale of the notes and the common stock into which the notes are convertible or otherwise, the selling holders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the notes or the common stock into which the notes are convertible in the course of hedging the positions they assume. The selling holders may also sell the notes or the common stock into which the notes are convertible short and deliver these securities to close out their short positions, or loan or pledge the notes or the common stock into which the notes are convertible to broker-dealers that in turn may sell these securities. The aggregate proceeds to the selling holders from the sale of the notes or common stock into which the notes are convertible offered by them will be the purchase price of the notes or common stock less discounts and commissions, if any. Each of the selling holders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of notes or common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Our outstanding common stock is listed for trading on the New York Stock Exchange. We do not intend to list the notes for trading on any national securities exchange or on the New York Stock Exchange and can give no assurance about the development of any trading market for the notes. In order to comply with the securities laws of some states, if applicable, the notes and common stock into which the notes are convertible may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the notes and common stock into which the notes are convertible may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. The selling holders and any underwriters, broker-dealers or agents that participate in the sale of the notes and common stock into which the notes are convertible may be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling holders who are "underwriters" 54 within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. The selling holders have acknowledged that they understand their obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder may not sell any notes or common stock described in this prospectus and may not transfer, devise or gift these securities by other means not described in this prospectus. To the extent required, the specific notes or common stock to be sold, the names of the selling holders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part. We entered into a registration rights agreement for the benefit of holders of the notes to register their notes and common stock under applicable federal and state securities laws under specific circumstances and at specific times. The registration rights agreement provides for cross-indemnification of the selling holders and us and their and our respective directors, officers and controlling persons against specific liabilities in connection with the offer and sale of the notes and the common stock, including liabilities under the Securities Act. We will pay substantially all of the expenses incurred by the selling holders incident to the offering and sale of the notes and the common stock. EXPERTS The financial statements and schedules incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. VALIDITY OF SECURITIES The validity of the notes and the common stock which may be offered by this prospectus is being passed upon for us by Fried, Frank, Harris, Shriver & Jacobson, (a partnership including professional corporations), New York, New York. WHERE YOU CAN FIND MORE INFORMATION Our principal executive offices are located at 1375 Lenoir-Rhyne Boulevard, Hickory, North Carolina 28601 (telephone (828) 324-2200). We also maintain an Internet home page at www.Commscope.com. We have filed with the Securities and Exchange Commission a registration statement on Form S-3 to register the securities offered by this prospectus. However, this prospectus does not contain all of the information contained in the registration statement and the exhibits and schedules to the registration statement. We strongly encourage you to carefully read the registration statement and the exhibits and schedules to the registration statement. We also file annual, quarterly and special reports, proxy statements and other information with the SEC. You may inspect and copy such material at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the SEC's regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048. You may also obtain copies of such material from the SEC at prescribed rates by writing to the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. 55 Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC's web site at www.sec.gov. INCORPORATION BY REFERENCE The SEC allows us to "incorporate by reference" the information contained in documents that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Information in this prospectus supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus, while information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (other than information filed in response to Items 402(k) and (l) of Regulation S-K): 1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998, including all material incorporated by reference in that report; 2. Our Current Reports on Form 8-K dated January 4, 1999, December 7, 1999 and December 15, 1999; 3. Our Definitive Proxy Statement on Schedule 14A, filed on March 31, 1999, excluding the Sections captioned "Report of the Compensation Committee" and "Performance Graph"; 4. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1999, June 30, 1999 and September 30, 1999, including all material incorporated by reference in each of those reports; 5. All other reports filed by us pursuant to Section 13(a) or 15(d) of the Exchange Act since December 31, 1998, including all material incorporated by reference in such reports; and 6. The description of the common stock contained in our Registration Statement on Form 8-A, dated June 30, 1997, as amended. You may request a copy of these filings, at no cost to you, by writing or telephoning us at: CommScope, Inc.: Attention: Investor Relations: 1375 Lenoir-Rhyne Boulevard, Hickory, North Carolina 28601 (telephone (828) 324-2200). Our common stock is quoted on the NYSE under the symbol "CTV." The last reported sales price of the common stock on the NYSE on January 13, 2000 was $40.875 per share. You may inspect reports and other information concerning us at the offices of the NYSE, 20 Broad Street, New York, New York 10004. You should rely only on the information incorporated by reference or provided in this prospectus. We have authorized no one to provide you with different information. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of the document. FORWARD-LOOKING STATEMENTS Statements in this prospectus which are other than historical facts are intended to be "forward-looking statements" within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. These forward-looking statements are identified by their use of such terms and phrases as "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projects," "projected," "projections," "plans," "anticipates," "anticipated," "should," "designed to," "foreseeable future," "believe," "believes" and "scheduled" and similar expressions. These statements are subject to various risks and uncertainties, many of which are outside of our control, such as the level of market demand for our products, competitive pressures, the ability to achieve reductions in costs and to continue to integrate acquisitions, price fluctuations of materials and the potential unavailability thereof, foreign currency fluctuations, 56 technological obsolescence, international economic and political uncertainties as well as the specific factors described above. The information contained in this prospectus represents our best judgment at the date of this prospectus based on information currently available. However, we do not intend to update this information to reflect any developments or information obtained after the date of this prospectus and we disclaim any legal obligation to do so. 57 ================================ ================================== We have not authorized any dealer, salesperson or other person to give you written information other than this prospectus or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus is not an offer to sell these securities or our solicitation of your offer to buy these securities in any jurisdiction where that would not be permitted or legal. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus shall create an implication that the information contained herein or our affairs have not changed since the date hereof. COMMSCOPE, INC. $172,500,000 of 4% Convertible Subordinated Notes and 3,579,581 shares of Common Stock Issuable upon Conversion of the Notes ---------------------------------- PROSPECTUS ---------------------------------- January , 2000 ================================ ================================== PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemized statement of expenses of the Registrant in connection with the securities being registered. All of the expenses are estimated, except for the registration fee. Securities and Exchange Commission registration fee..... $ 45,540 Legal fees and expenses................................. $ 25,000 Accounting fees and expenses............................ $ 5,000 New York Stock Exchange Supplemental Listing fee........ $ 1,500 Miscellaneous........................................... $ 2,960 -------- Total............................................... $ 80,000 ======== ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law (the "DGCL") provides that a corporation may indemnify its directors and officers, as well as other employees and individuals (each an "Indemnified Party," and collectively, "Indemnified Parties"), against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement in connection with specified actions, suits, or proceedings, whether civil, criminal, administrative, or investigative, other than in connection with actions by or in the right of the corporation (a "derivative action"), if an Indemnified Party acted in good faith and in a manner such Indemnified Party reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that a corporation may only indemnify an Indemnified Party for expenses (including attorneys' fees) incurred in connection with the defense or settlement of such derivative action. Additionally, in the context of a derivative action, DGCL Section 145 requires court approval before there can be any indemnification where an Indemnified Party has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification arrangements that may be granted pursuant to a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement, or otherwise. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for (i) any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) any willful or negligent declaration of an unlawful dividend, stock purchase or redemption, or (iv) any transaction from which the director derived an improper personal benefit. The Certificate of Incorporation and By-Laws of the Registrant provide that directors and officers of the Registrant shall not, to the fullest extent permitted by the DGCL, be liable to the Registrant or any of its stockholders for monetary damages for any breach of fiduciary duty as a director or officer, as the case may be. The Certificate of Incorporation and By-Laws of the Registrant also provide that if the DGCL is amended to permit further elimination or limitation of the personal liability of directors and officers, then the liability of the directors and officers of the Registrant shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. The Registrant has entered into agreements to indemnify its directors and officers in addition to the indemnification provided for in its Certificate of Incorporation and By-Laws. These agreements, among other things, indemnify the Registrant's directors and officers to the fullest extent permitted by Delaware law for certain expenses (including attorney's fees), liabilities, judgments, fines and settlement amounts incurred by such person arising out of or in connection with such person's service as a director or officer of the Registrant or an affiliate of the Registrant. II - 1 The Registrant maintains directors' and officers' liability insurance, under which its directors and officers are insured, within the limits and subject to the limitations of the policies, against certain expenses in connection with the defense of, and certain liabilities which might be imposed as a result of, actions, suits or proceedings to which directors and officers are parties by reason of being or have been directors or officers of the Registrant, as the case may be. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES EXHIBITS -------- 3.1* Amended and Restated Certificate of Incorporation of CommScope, Inc. 3.2* Amended and Restated By-Laws of CommScope, Inc. 4.1** Rights Agreement, dated June 12, 1997, between CommScope, Inc. and ChaseMellon Shareholder Services, L.L.C. 4.2*** Amendment No. 1 to the Rights Agreement, dated as of June 14, 1999 between CommScope, Inc. and ChaseMellon Shareholder Services, LLC. 4.4 Purchase Agreement dated December 9, 1999 between CommScope, Inc. and the Initial Purchasers 4.5 Indenture, dated as of December 15, 1999 between CommScope and First Union National Bank New York, as Trustee 4.6 Registration Rights Agreement, dated December 15, 1999 between CommScope and the Initial Purchasers. 4.7**** Specimen Stock Certificate. 5 Opinion of Fried, Frank, Harris, Shriver & Jacobson 12 Statements re: Computations of Ratios 23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1) 23.2 Independent Auditors' Consent 24 Powers of Attorney (included on the signature page hereof) 25 Statement of Eligibility of the Trustee on Form T-1. * Incorporated herein by reference from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997 (File No. 1-12929). ** Incorporated herein by reference from the Registration Statement on Form 8-A filed June 30, 1997 (File No. 1-12929). *** Incorporated herein by reference from the Amendment to the Registration Statement on Form 8-A/A filed June 14, 1999 (File No. 1-12929). **** Incorporated herein by reference from the Company's Registration Statement on Form S-4 filed June 13, 1997 (Reg. No. 333-23935). II - 2 ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) 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 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 II - 3 director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II - 4 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 Hickory, State of North Carolina, on January 14, 2000. COMMSCOPE, INC. By: /s/Frank M. Drendel ----------------------------- Frank M. Drendel Chairman and Chief Executive Officer Each of the undersigned hereby appoints Frank B. Wyatt, II and Jearld L. Leonhardt. and each of them (with full power to act alone), as attorney and agents for the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to sign and file with the Commission under the Securities Act any and all amendments and exhibits to this Registration Statement and any and all applications, instruments and other documents to be filed with the Commission pertaining to the registration of the securities covered hereby, with full power and authority to do and perform any and all acts and things whatsoever requisite or desirable. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY IN WHICH SIGNED DATE --------- ------------------------ ---- /s/Frank M. Drendel Chairman and January 14, 2000 ------------------------- Chief Executive Officer Frank M. Drendel (Principal Executive Officer) /s/Jearld L. Leonhardt Executive Vice President January 14, 2000 ------------------------- and Chief Financial Officer Jearld L. Leonhardt (Principal Financial Officer) /s/William R. Gooden Senior Vice President and Controller January 14, 2000 ------------------------- (Principal Accounting Officer) William R. Gooden /s/Edward D. Breen Director January 14, 2000 ------------------------- Edward D. Breen /s/Duncan M. Faircloth Director January 14, 2000 ------------------------- Duncan M. Faircloth /s/Boyd L. George Director January 14, 2000 ------------------------- Boyd L. George /s/George N. Hutton Director January 14, 2000 ------------------------- George N. Hutton, Jr. /s/James N. Whitson Director January 14, 20000 ------------------------- James N. Whitson
II - 5 EXHIBIT INDEX 3.1* Amended and Restated Certificate of Incorporation of CommScope, Inc. 3.2* Amended and Restated By-Laws of CommScope, Inc. 4.1** Rights Agreement, dated June 12, 1997, between CommScope, Inc. and ChaseMellon Shareholder Services, L.L.C. 4.2*** Amendment No. 1 to the Rights Agreement, dated as of June 14, 1999 between CommScope, Inc. and ChaseMellon Shareholder Services, LLC. 4.4 Purchase Agreement dated December 9, 1999 between CommScope, Inc. and the Initial Purchasers 4.5 Indenture, dated as of December 15, 1999 between CommScope and First Union National Bank New York, as Trustee 4.6 Registration Rights Agreement, dated December 15, 1999 between CommScope and the Initial Purchasers. 4.7**** Specimen Stock Certificate. 5 Opinion of Fried, Frank, Harris, Shriver & Jacobson 12 Statements re: Computations of Ratios 23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1) 23.2 Independent Auditors' Consent 24 Powers of Attorney (included on the signature page hereof) 25 Statement of Eligibility of the Trustee on Form T-1. * Incorporated herein by reference from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1997 (File No. 1-12929). ** Incorporated herein by reference from the Registration Statement on Form 8-A filed June 30, 1997 (File No. 1-12929). *** Incorporated herein by reference from the Amendment to the Registration Statement on Form 8-A/A filed June 14, 1999 (File No. 1-12929). **** Incorporated herein by reference from the Company's Registration Statement on Form S-4 filed June 13, 1997 (Reg. No. 333-23935). EX-4.4 2 Exhibit 4.4 =========================================================================== COMMSCOPE, INC. $150,000,000 Convertible Subordinated Notes due 2006 PURCHASE AGREEMENT ------------------ Dated: December 9, 1999 =========================================================================== COMMSCOPE, INC. $150,000,000 CONVERTIBLE SUBORDINATED NOTES DUE 2006 PURCHASE AGREEMENT ------------------ December 9,1999 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated CIBC WORLD MARKETS CORP. as Representatives of the several Initial Purchasers c/o MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1305 Ladies and Gentlemen: CommScope, Inc. (the "Company"), a Delaware corporation, confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Initial Purchasers named in Schedule A hereto (collectively, the "Initial Purchasers", which term shall also include any initial purchaser substituted as hereinafter provided in Section 11 hereof), for whom Merrill Lynch and CIBC World Markets Corp. are acting as representatives (in such capacity, the "Representatives"), with respect to the issue and sale by the Company and the purchase by the Initial Purchasers, acting severally and not jointly, of the respective principal amounts set forth in said Schedule A of $150,000,000 aggregate principal amount of the Company's Convertible Subordinated Notes due 2006 (the "Firm Notes"), and, at the election of the Initial Purchasers, solely to cover over-allotments, if any, in connection with the offering of the Firm Notes, up to $22,500,000 aggregate principal amount of additional Convertible Subordinated Notes due 2006 (the "Additional Notes"). The Firm Notes and any Additional Notes that the Initial Purchasers elect to purchase are collectively referred to as the "Notes." The Notes will be convertible at the option of the holder thereof into 2 shares (the "Conversion Shares") of common stock, par value $.01 per share, of the Company (the "Common Stock"). The Notes are to be issued pursuant to an indenture to be dated as of the Closing Time (as defined in Section 2(b)) (the "Indenture") between the Company and First Union National Bank, as trustee (the "Trustee"). Notes issued in book-entry form will be issued to Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as of the Closing Time (the "DTC Agreement"), among the Company, the Trustee and DTC. The Notes and the Conversion Shares are collectively referred to herein as the "Securities." Capitalized terms used herein without definition have the respective meanings specified in the Offering Memorandum. The Company understands that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set forth herein and agrees that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities to purchasers ("Subsequent Purchasers") at any time after this Agreement has been executed and delivered. The Securities are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and the Indenture, investors that acquire Securities may only resell or otherwise transfer such Securities if such Securities are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available (including the exemption afforded by Rule 144A ("Rule 144A") of the rules and regulations promulgated under the 1933 Act by the Securities and Exchange Commission (the "Commission")). The Company has prepared and delivered to each Initial Purchaser copies of a preliminary offering memorandum dated December 6, 1999 (the "Preliminary Offering Memorandum") and has prepared and will deliver to each Initial Purchaser, on the date hereof or the next succeeding day, copies of a final offering memorandum dated December 9, 1999 (the "Final Offering Memorandum"), each for use by such Initial Purchaser in connection with its solicitation of purchases of, or offering of, the Securities. "Offering Memorandum" means, with respect to any date or time referred to in this Agreement, the most recent offering memorandum (whether the Preliminary Offering Memorandum or the Final Offering Memorandum, or any amendment or supplement to either such document), including exhibits thereto and any documents incorporated therein by reference, which has been prepared and delivered by the Company to the Initial Purchasers in connection with their solicitation of purchases of, or offering of, the Securities. The Initial Purchasers and other holders of Securities (including subsequent transferees) will be entitled to the benefits of the registration rights agreement, to be dated as of the Closing Time (the "Registration Rights Agreement"), among the Company and the Initial Purchasers, in the form attached as Exhibit B. Pursuant to the Registration Rights Agreement, the Company will agree to file with the Commission a shelf registration statement pursuant to 3 Rule 415 under the 1933 Act relating to resales of the Securities by holders thereof, and to use its best efforts to cause such shelf registration statement to be declared effective. SECTION 1. Representations and Warranties by the Company. ---------------------------------------------- (a) Representations and Warranties. The Company represents and warrants to each Initial Purchaser as of the date hereof and as of the Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in Section 2(b), and agrees with each Initial Purchaser, as follows: (i) Offering Memorandum. The Offering Memorandum does not, and at the Closing Time (and, if any Additional Notes are purchased, at the Date of Delivery), will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions from the Offering Memorandum made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser through Merrill Lynch expressly for use in the Offering Memorandum. (ii) Independent Accountants. The accountants who certified the financial statements and supporting schedules included in the Offering Memorandum are independent public accountants with respect to the Company and its subsidiaries within the meaning of Regulation S-X under the 1933 Act. (iii) Financial Statements. The financial statements, together with the related schedules and notes, included in the Offering Memorandum present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders= equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The supporting schedules, if any, included in the Offering Memorandum present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Offering Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Offering Memorandum. (iv) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Offering Memorandum, neither the Company nor any of its subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, except as 4 otherwise set forth or contemplated in the Offering Memorandum; and since the respective dates as of which information is given in the Offering Memorandum, there has not been any change in the capital stock or any increase in the long-term debt of the Company or any of its subsidiaries, other than the issuance of shares of common stock as a result of exercises of stock options under existing Company stock option plans, or any material adverse change, or any development that may be reasonably expected to involve a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, except as otherwise set forth or contemplated in the Offering Memorandum. (v) Good Standing of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Memorandum; and the Company is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases properties or conducts business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (vi) Good Standing of Subsidiaries. Each "significant subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole; except as otherwise disclosed in the Offering Memorandum, all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary. The only Subsidiaries of the Company are the subsidiaries listed on Schedule C hereto. (vii) Capitalization. The Company has an authorized capitalization as set forth in the Offering Memorandum in the column entitled "Actual" under the caption "Capitalization", and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable; and none of the 5 outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company. (viii) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company. (ix) Authorization of the Indenture. The Indenture has been duly authorized by the Company and, when executed and delivered by the Company and the Trustee, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors= rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (x) Authorization of the Notes. The Notes have been duly authorized and, at the Closing Time, will have been duly executed by the Company and, when authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers) reorganization, moratorium or similar laws affecting enforcement of creditors= rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture. (xi) Authorization of Registration Rights Agreement. As of the Closing Time, the Registration Rights Agreement will have been duly authorized, executed and delivered by the Company and upon such execution by the Company (assuming the due authorization, execution and delivery thereof by the other parties thereto) the Registration Rights Agreement will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with the terms thereof, except as enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and except as any rights to indemnity and contribution may be limited by federal and state securities laws and public policy considerations. 6 (xii) Conversion Shares. The Conversion Shares have been duly authorized and validly reserved for issuance upon conversion of the Notes by all necessary corporate action of the Company and, when duly issued by the Company upon such conversion, will be validly issued, fully paid and nonassessable; no holder thereof will be subject to personal liability for obligations of the Company solely by reason of being such a holder; and the issuance of the Conversion Shares will not be subject to preemptive or similar rights. (xiii) Description of the Securities and the Indenture. The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Offering Memorandum and will be in substantially the respective forms last delivered to the Initial Purchasers prior to the date of this Agreement. (xiv) Absence of Defaults and Conflicts. Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject (collectively, "Agreements and Instruments") except for such defaults that would not result in a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"); and the execution, delivery and performance of this Agreement, the Indenture, the Registration Rights Agreement and the Notes and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Offering Memorandum and the consummation of the transactions contemplated herein and in the Offering Memorandum (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds") and compliance by the Company with its obligations hereunder have been duly authorized by all necessary corporate action and do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any Agreements and Instruments which conflict, breach, violation or default would have, or may reasonably be expected to have, a Material Adverse Effect, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties. (xv) Absence of Proceedings. Other than as set forth or contemplated in the Offering Memorandum, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Com- 7 pany or any of its subsidiaries is the subject which would individually or in the aggregate have, or may reasonably be expected to have, a Material Adverse Effect; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (xvi) Possession of Intellectual Property. The Company and its subsidiaries own or possess, or own or possess adequate licenses or other rights to use, all patents and trademarks used in connection with the businesses conducted by them as described in the Offering Memorandum, other than such patents, trademarks or licenses with respect to which the failure to own or possess, or to own or possess adequate licenses or other rights to use in connection with the businesses conducted by the Company and its subsidiaries as described in the Offering Memorandum, individually or considered together with all other such failures, may not reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with (and knows of no such infringement of or conflict with) asserted rights of others with respect to any such patents, trademarks or licenses of the Company, which infringement or conflict, individually or considered together with all other such infringements and conflicts, would have, or may reasonably be expected to have, a Material Adverse Effect. (xvii) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement or for the due execution, delivery or performance of the Indenture and the Registration Rights Agreement by the Company, except such as have been already obtained and such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Notes or by the federal and state securities laws in connection with the registration obligations under the Registration Rights Agreement. (xviii) Title to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Memorandum or such as do not materially affect the value of such property and do not interfere in any material respect with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere in any material respect with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries. 8 (xix) Environmental Laws. Except as described in the Offering Memorandum and except such matters as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or Environmental Laws. (xx) Year 2000. The Company has reviewed its operations to evaluate the extent to which the business or operations of the Company will be affected by the Year 2000 Problem (that is, any significant risk that computer hardware or software applications used by the Company will not, in the case of dates or time periods occurring after December 31, 1999, function at least as effectively as in the case of dates or time periods occurring prior to January 1, 2000); as a result of such review, the Company has no reasonable belief that there are any issues related to the Company's preparedness to address the Year 2000 Problem that are of a character required to be described or referred to in the Offering Memorandum which have not been accurately described in the Offering Memorandum and which could reasonably be expected to have a Material Adverse Effect. (xxi) Investment Company Act. The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Offering Memorandum will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). 9 (xxii) Similar Offerings. Neither the Company nor any of its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each, an "Affiliate"), has, directly or indirectly, solicited any offer to buy, sold or offered to sell or otherwise negotiated in respect of, or will solicit any offer to buy, sell or offer to sell or otherwise negotiate in respect of, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the Securities to be registered under the 1933 Act. (xxiii) Rule 144A Eligibility. The Notes are eligible for resale pursuant to Rule 144A and will not be, at the Closing Time, of the same class as securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 (the "1934 Act"), or quoted in a U.S. automated interdealer quotation system. (xxiv) No General Solicitation. None of the Company, its Affiliates or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act. (xxv) No Registration Required. Subject to the accuracy of the representations and warranties of the Initial Purchasers set forth in Section 6(c) and compliance by the Initial Purchasers with the procedures set forth in Section 6(a) hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement and the Offering Memorandum to register the Securities under the 1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "1939 Act"). (xxvi) Reporting Company. The Company is subject to the reporting requirements of Section 13 or Section 15(d) of the 1934 Act. (b) Any certificate signed by any officer of the Company and delivered to the Initial Purchasers or to counsel for the Initial Purchasers shall be deemed a representation and warranty by the Company to the Initial Purchasers as to the matters covered thereby. SECTION 2. Sale and Delivery to the Initial Purchasers; Closing. ----------------------------------------------------- (a) Securities. On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Company agrees to sell to each Initial Purchaser, severally and not jointly, and each Initial Purchaser, severally and not jointly, agrees to purchase from the Company, at the price set forth in Schedule B, the aggregate principal amount of Firm Notes set forth in Schedule A opposite the name of such Initial Purchaser, plus any additional principal amount of Firm Notes which such Initial Purchaser may become obligated to purchase pursuant to the provisions of Section 11 hereof. 10 (b) Additional Notes. In addition, on the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Initial Purchasers, severally and not jointly, to purchase up to aggregate principal amount of $22,500,000 of Additional Notes, at the price set forth in Schedule B. The option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Firm Notes upon notice by the Representatives to the Company setting forth the number of Additional Notes as to which the several Initial Purchasers are then exercising the option and the time and date of payment and delivery for such Additional Notes. Any such time and date of delivery (a "Date of Delivery") shall be determined by the Representatives but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time (as defined below). If the option is exercised as to all or any portion of the Additional Notes, each of the Initial Purchasers, acting severally and not jointly, will purchase that proportion of the total number of Additional Notes then being purchased which the number of Firm Notes set forth in Schedule A opposite the name of such Initial Purchaser bears to the total number of Firm Notes, subject in each case to such adjustments as the Representatives in their discretion shall make to eliminate any sales or purchases of Notes in denominations in an aggregate principal amount of less than $1,000. (c) Payment. Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the office of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, or at such other place as shall be agreed upon by the Representatives and the Company, at 9:00 A.M. (eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (eastern time)) business day after the date hereof (unless postponed in accordance with the provisions of Section 11), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery being herein called the "Closing Time"). In addition, in the event that any or all of the Additional Notes are purchased by the Initial Purchasers, payment of the purchase price for, and delivery of certificates for, such Additional Notes shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Company and the Representatives, on each Date of Delivery as specified in the notice from the Representatives to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representatives for the respective accounts of the Initial Purchasers of certificates for the Notes to be purchased by them. It is understood that each Initial Purchaser has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Notes which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Initial Purchasers, may (but shall not be obligated to) make payment of the purchase price for the 11 Notes to be purchased by any Initial Purchaser whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Initial Purchaser from its obligations hereunder. (d) Denominations; Registration. Certificates for the Notes shall be in such denominations and registered in such names as the Representatives may request in writing at least one full business day before the Closing Time or the relevant Date of Delivery, as the case may be. The certificates representing the Notes shall be made available for examination and packaging by the Initial Purchasers in The City of New York not later than 10:00 A.M. on the last business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. SECTION 3. Covenants of the Company. The Company covenants with each Initial Purchaser as follows: (a) Offering Memorandum. The Company, as promptly as possible, will furnish to each Initial Purchaser, without charge, such number of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and any amendments and supplements thereto and documents incorporated by reference therein as such Initial Purchaser may reasonably request. (b) Notice and Effect of Material Events. The Company will immediately notify each Initial Purchaser, and confirm such notice in writing, of (x) any filing made by the Company of information relating to the offering of the Securities with any securities exchange or any other regulatory body in the United States or any other jurisdiction, and (y) prior to the completion of the placement of the Securities by the Initial Purchasers as evidenced by a notice in writing from the Initial Purchasers to the Company, any material changes in or affecting the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise which (i) make any statement in the Offering Memorandum false or misleading or (ii) are not disclosed in the Offering Memorandum. In such event or if during such time any event shall occur as a result of which it is necessary, in the reasonable opinion of any of the Company, its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement the Final Offering Memorandum in order that the Final Offering Memorandum not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances then existing, the Company will forthwith amend or supplement the Final Offering Memorandum by preparing and furnishing to each Initial Purchaser an amendment or amendments of, or a supplement or supplements to, the Final Offering Memorandum (in form and substance satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so that, as so amended or supplemented, the Final Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, not misleading. 12 (c) Amendment to Offering Memorandum and Supplements. The Company will advise each Initial Purchaser promptly of any proposal to amend or supplement the Offering Memorandum and will not effect such amendment or supplement without the consent of the Initial Purchasers. Neither the consent of the Initial Purchasers, nor the Initial Purchaser=s delivery of any such amendment or supplement, shall constitute a waiver of any of the conditions set forth in Section 5 hereof. (d) Rating of Securities. The Company shall take all reasonable action necessary to enable Standard & Poor's Ratings Services, a division of McGraw Hill, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's") to provide their respective credit ratings of the Securities. (e) DTC. The Company will cooperate with the Representatives and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of DTC. (f) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Offering Memorandum under "Use of Proceeds". (g) Restriction on Sale of Securities. During a period of 90 days from the date of the Offering Memorandum, the Company will not, without the prior written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. Notwithstanding the foregoing, during such period (i) the Company may grant stock options pursuant to the Company's existing stock option plan and (ii) the Company may issue shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof. (h) PORTAL Designation. The Company will use its best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market. SECTION 4. Payment of Expenses. -------------------- 13 (a) Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing, delivery to the Initial Purchasers and any filing of the Offering Memorandum (including financial statements and any schedules or exhibits and any document incorporated therein by reference) and of each amendment or supplement thereto, (ii) the preparation, printing and delivery to the Initial Purchasers of this Agreement, any Agreement among Initial Purchasers, the Indenture and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Initial Purchasers, including any transfer taxes, any stamp or other duties payable upon the sale, issuance and delivery of the Securities to the Initial Purchasers and any charges of DTC in connection therewith, (iv) the fees and disbursements of the Company=s counsel, accountants and other advisors, (v) the reasonable fees and disbursements of counsel for the Initial Purchasers in connection with the preparation of the Blue Sky Survey, any supplement thereto, (vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (vii) any fees payable in connection with the rating of the Securities, and (viii) any fees and expenses payable in connection with the initial and continued designation of the Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322. (b) Termination of Agreement. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Initial Purchasers. SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations of the several Initial Purchasers hereunder are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or any of its subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) Opinion of Counsel for Company. At the Closing Time, the Representatives shall have received the favorable opinion, dated as of the Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company, in form and substance satisfactory to counsel for the Initial Purchasers, together with signed or reproduced copies of such letter for each of the other Initial Purchasers to the effect set forth in Exhibit A-1 hereto and to such further effect as counsel to the Initial Purchasers may reasonably request. (b) Opinion of General Counsel of Company. At the Closing Time, the Representatives shall have received the favorable opinion, dated as of the Closing Time, of Frank B. Wyatt, II, Vice President and General Counsel of the Company, in form and substance satisfactory to counsel for the Initial Purchasers, together with signed or reproduced copies of 14 such letter for each of the other Initial Purchasers to the effect set forth in Exhibit A-2 hereto and to such further effect as counsel to the Initial Purchasers may reasonably request. (c) Opinion of Counsel for Initial Purchasers. At the Closing Time, the Representatives shall have received the favorable opinion, dated as of the Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, together with signed or reproduced copies of such letter for each of the other Initial Purchasers in form and substance satisfactory to the Representatives. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (d) Officers' Certificate. At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Offering Memorandum, any Material Adverse Effect, and the Representatives shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of the Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties in Section 1 hereof are true and correct with the same force and effect as though expressly made at and as of the Closing Time, and (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. (e) Accountants' Comfort Letter. At the time of the execution of this Agreement, the Representatives shall have received from Deloitte & Touche LLP a letter dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Initial Purchasers containing statements and information of the type ordinarily included in accountants' "comfort letters" to Initial Purchasers with respect to the financial statements and certain financial information contained in the Offering Memorandum. (f) Bring-down Comfort Letter. At the Closing Time, the Representatives shall have received from Deloitte & Touche LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (e) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (g) Maintenance of Rating. At the Closing Time and on any Date of Delivery, the Notes shall be rated at least Baa3 by Moody=s and BB+ by S&P, and the Company shall have delivered to the Representatives a letter dated the Closing Time or such Date of Delivery, as applicable, from each such rating agency, or other evidence satisfactory to the Representatives, confirming that the Notes have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Notes or any of the Company's other debt securities by any "nationally recognized statistical rating agency", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and 15 no such securities rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Notes or any of the Company=s other debt securities. (h) PORTAL. At the Closing Time, the Securities shall have been designated for trading on PORTAL. (i) Conditions to Purchase of Additional Notes. In the event that the Initial Purchasers exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Additional Notes, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company or any subsidiary of the Company hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received: (i) Officers' Certificate. A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery. (ii) Opinion of Counsel for Company. The favorable opinion of each of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company, and Frank B. Wyatt, II, Vice President and General Counsel of the Company, in form and substance satisfactory to counsel for the Initial Purchasers, dated such Date of Delivery, relating to the Additional Notes to be purchased on such Date of Delivery and otherwise to the same effect as the opinions required by Section 5(a) and 5 (b) hereof, respectively. (iii) Opinion of Counsel for Initial Purchasers. The favorable opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, dated such Date of Delivery, relating to the Additional Notes to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(c) hereof. (iv) Bring-down Comfort Letter. A letter from Deloitte & Touche LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(f) hereof, except that the "specified date" in the letter furnished pursuant to this paragraph shall be a date not more than five days prior to such Date of Delivery. (j) Additional Documents. At the Closing Time and at each Date of Delivery, counsel for the Initial Purchasers shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein 16 contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representatives and counsel for the Initial Purchasers. (k) Registration Rights Agreement. At the Closing Time, the Company and the Initial Purchasers shall have entered into the Registration Rights Agreement, and the Registration Rights Agreement shall be in full force and effect. (l) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Additional Notes on a Date of Delivery which is after the Closing Time, the obligations of the several Initial Purchasers to purchase the relevant Additional Notes, may be terminated by the Representatives by notice to the Company at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 7, 8 and 9 shall survive any such termination and remain in full force and effect. SECTION 6. Subsequent Offers and Resales of the Securities. ------------------------------------------------ (a) Offer and Sale Procedures. Each of the Initial Purchasers and the Company hereby establish and agree to observe the following procedures in connection with the offer and sale of the Securities: (i) Offers and Sales only to Qualified Institutional Buyers. Offers and sales of the Securities shall only be made to persons whom the offeror or seller reasonably believes to be qualified institutional buyers, as defined in Rule 144A under the 1933 Act ("Qualified Institutional Buyers"). (ii) No General Solicitation. No general solicitation or general advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used in the United States in connection with the offering or sale of the Securities. (iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank Subsequent Purchaser of a Security acting as a fiduciary for one or more third parties, in connection with an offer and sale to such purchaser pursuant to clause (i) above, each third party shall, in the judgment of the applicable Initial Purchaser, be a Qualified Institutional Buyer. (iv) Subsequent Purchaser Notification. Each Initial Purchaser will take reasonable steps to inform, and cause each of its U.S. Affiliates to take reasonable steps to inform, persons acquiring Securities from such Initial Purchaser or affiliate, as the case may be, in the United States that the Securities (A) have not been and will not be registered under the 1933 Act, (B) are being sold to them without registration under the 17 1933 Act in reliance on Rule 144A or in accordance with another exemption from registration under the 1933 Act, as the case may be, and (C) may not be offered, sold or otherwise transferred except (1) to the Company, (2) outside the United States in accordance with Regulation S, or (3) inside the United States in accordance with (x) Rule 144A to a person whom the seller reasonably believes is a Qualified Institutional Buyer that is purchasing such Securities for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A or (y) pursuant to another available exemption from registration under the 1933 Act. (v) Restrictions on Transfer. The transfer restrictions and the other provisions set forth in the Offering Memorandum under the heading "Notice to Investors", including the legend required thereby, shall apply to the Securities except as otherwise agreed by the Company and the Initial Purchasers. (vi) Delivery of Offering Memorandum. Each Initial Purchaser will deliver to each purchaser of the Securities from such Initial Purchaser, in connection with its original distribution of the Securities, a copy of the Offering Memorandum, as amended and supplemented at the date of such delivery. (b) Covenants of the Company. The Company covenants with each Initial Purchaser as follows: (i) Integration. The Company agrees that it will not and will cause its Affiliates not to, directly or indirectly, solicit any offer to buy, sell or make any offer or sale of, or otherwise negotiate in respect of, securities of the Company of any class if, as a result of the doctrine of "integration" referred to in Rule 502 under the 1933 Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Securities by the Company to the Initial Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the registration requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise. (ii) Rule 144A Information. The Company agrees that, in order to render the Securities eligible for resale pursuant to Rule 144A under the 1933 Act, while any of the Securities remain outstanding, it will make available, upon request, to any holder of Securities or prospective purchasers of Securities the information specified in Rule 144A(d)(4), unless the Company furnishes information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act. (iii) Restriction on Repurchases. Until the expiration of two years after the original issuance of the Securities, the Company will not, and will cause its Affiliates not to, resell any Securities which are "restricted securities" (as such term is defined under 18 Rule 144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise (except as agent acting as a securities broker on behalf of and for the account of customers in the ordinary course of business in unsolicited broker's transactions). (c) Qualified Institutional Buyer. Each Initial Purchaser severally and not jointly represents and warrants to, and agrees with, the Company that it is a Qualified Institutional Buyer and an "accredited investor" within the meaning of Rule 501(a) under the 1933 Act. SECTION 7. Indemnification. ---------------- (a) Indemnification of Initial Purchasers. The Company agrees to indemnify and hold harmless each Initial Purchaser and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum or the Final Offering Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 7(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Initial Purchaser through Merrill Lynch expressly for use in any Preliminary Offering Memorandum or the Final Offering Memoran- 19 dum (or any amendment or supplement thereto) and provided, further, that the Company shall not be liable to any Initial Purchaser under the indemnity agreement in this paragraph (a) with respect to any Preliminary Offering Memorandum to the extent that any such loss, claim, damage or liability of such Initial Purchaser results from the fact that such Initial Purchaser sold Notes to a person as to whom it shall be established that there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Final Offering Memorandum as then amended or supplemented in any case where such delivery is required by the 1933 Act if the Company has previously furnished copies thereof in sufficient quantity to such Initial Purchaser and the loss, claim, damage or liability of such Initial Purchaser results from an untrue statement or omission or a material fact contained in the Preliminary Offering Memorandum which was identified in writing at such time to such Initial Purchaser and corrected in the Final Offering Memorandum as then amended or supplemented. (b) Indemnification of Company. Each Initial Purchaser severally agrees to indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in any Preliminary Offering Memorandum or the Final Offering Memorandum (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Initial Purchaser through Merrill Lynch expressly for use in any Preliminary Offering Memorandum or the Final Offering Memorandum(or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 7(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch, and, in the case of parties indemnified pursuant to Section 7(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section or Section 8 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of 20 such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 7(a) and 7(b) above, effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 8. Contribution. If the indemnification provided for in Section 7 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Initial Purchasers on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discount received by the Initial Purchasers, bear to the aggregate initial offering price of the Securities. The relative fault of the Company on the one hand and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Initial Purchasers and the parties= relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of 21 allocation which does not take account of the equitable considerations referred to above in this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased and sold by it hereunder exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser and each director and officer of the Company, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers= respective obligations to contribute pursuant to this Section 8 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A hereto and not joint. SECTION 9. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Initial Purchaser or controlling person, or by or on behalf of the Company, and shall survive delivery of the Securities to the Initial Purchasers. SECTION 10. Termination of Agreement. ------------------------- (a) Termination; General. The Representatives may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Offering Memorandum, any Material Adverse Effect or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or 22 economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the NASDAQ System has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or (iv) if a banking moratorium has been declared by either Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 7, 8 and 9 shall survive such termination and remain in full force and effect. SECTION 11. Default by One or More of the Initial Purchasers. If one or more of the Initial Purchasers shall fail at the Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representatives shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Initial Purchasers, or any other initial purchasers, to purchase, each severally and not jointly, all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Initial Purchasers to purchase and of the Company to sell the Additional Notes to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Initial Purchaser. No action pursuant to this Section shall relieve any defaulting Initial Purchaser from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Initial Purchasers to purchase and of the Company to sell the Additional Notes to be purchased and sold on such Date of Delivery, as the case may be, either the Representatives or the Company shall have the right to postpone the Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Offering Memorandum or in any other documents or arrangements. SECTION 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Initial Purchasers shall be directed to the Representatives at North Tower, World Financial Center, New York, New York 10281, attention of Larry Santoro; notices to the Company shall be directed to it at 1375 Lenoir-Rhyne Blvd., Hickory, North Carolina 28601, attention of Frank B. Wyatt, II, Vice President, General Counsel and Secretary. SECTION 13. Parties. This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchasers and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 7 and 8 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Initial Purchasers and the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor by reason merely of such purchase. SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 15. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Initial Purchasers and the Company in accordance with its terms. Very truly yours, COMMSCOPE, INC. By: /s/ Jearld Leonhardt ------------------------------ Title: Executive Vice President and Chief Financial Officer CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED CIBC WORLD MARKETS CORP. By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ David Rosenberg ---------------------------------- Authorized Signatory For themselves and as Representatives of the other Initial Purchasers named in Schedule A hereto. SCHEDULE A Principal Amount Name of Initial Purchaser of Securities ------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated.................. $ 90,000,000 CIBC World Markets Corp............................ 60,000,000 ------------- Total.............................................. $150,000,000 ============= SCHEDULE B CommScope, Inc. $150,000,000 Convertible Subordinated Notes due 2006 1. The initial public offering price of the Securities shall be 100% of the principal amount thereof, plus accrued interest, if any, from the date of issuance. 2. The purchase price to be paid by the Initial Purchasers for the Securities shall be 97.5% of the principal amount thereof. 3. The interest rate on the Securities shall be 4% per annum. SCHEDULE C List of Subsidiaries CommScope, Inc. of North Carolina Incorporated: North Carolina Exhibit A-1 FORM OF OPINION OF FRIED, FRANK, HARRIS SHRIVER & JACOBSON TO BE DELIVERED PURSUANT TO SECTION 5(a) 212-859-8076 December 15, 1999 (FAX: 212-859-8587) MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith IncorporatedCIBC WORLD MARKETS CORP. as Representatives of the several Initial Purchasers c/o Merrill Lynch & Co.Merrill Lynch, Pierce, Fenner & Smith IncorporatedNorth TowerWorld Financial CenterNew York, New York 10281-1305 RE: COMMSCOPE, INC. Ladies and Gentlemen: We are acting as special counsel to CommScope, Inc., a Delaware corporation (the "Company"), in connection with the Company's offering and sale of $150,000,000 in aggregate principal amount of its 4% Convertible Subordinated Notes due 2006 (the "Notes") (plus up to $22,500,000 in additional principal amount issuable pursuant to the Initial Purchaser=s over-allotment option) pursuant to the terms of a Purchase Agreement, dated December 9, 1999 (the "Purchase Agreement"), by and among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp. This opinion is delivered to you pursuant to Section 5(a) of the Purchase Agreement. All capitalized terms used herein that are defined in, or by reference in, the Purchase Agreement have the meanings assigned to such terms therein, or by reference therein, unless otherwise defined herein. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we Sch A-1 express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. In connection with this opinion, we have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such agreements, instruments, documents and records of the Company, such certificates of public officials and such other documents and (iii) received such information from officers and representatives of the Company, as we have deemed necessary or appropriate for the purposes of this opinion. In all such examinations, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified documents of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracy of, representations and warranties contained in the Purchase Agreement and certificates and oral or written statements and other information of or from representatives of the Company and others and assume compliance on the part of all parties to the Purchase Agreement, the Registration Rights Agreement, dated as of December 15, 1999 (the "Registration Rights Agreement"), by and among the Company and the Initial Purchasers, and the Indenture, dated as of December 15, 1999 (the "Indenture"), among the Company and First Union National Bank, as trustee (the "Trustee") with their covenants and agreements contained therein. To the extent it may be relevant to the opinions expressed herein, we have assumed that (i) the Trustee has the power and authority to enter into and perform the Indenture, (ii) the Indenture has been duly authorized, executed and delivered by the Trustee and constitutes a valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms, (iii) the Notes have been duly authenticated and delivered by the Trustee and (iv) the Initial Purchasers have the power and authority to enter into and perform the Registration Rights Agreement and that the Registration Rights Agreement has been duly authorized, executed and delivered by each of the Initial Purchasers and constitutes a valid and binding obligation of each of the Initial Purchasers, enforceable against each of the Initial Purchasers in accordance with its terms. Based upon the foregoing and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that: (i) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as described in the Offering Memorandum and to enter into and perform its obligation under the Purchase Agreement; Sch A-2 (ii) the Notes are in the form contemplated by the Indenture, have been duly authorized by the Company and, when executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the terms of the Purchase Agreement, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms; (iii) the Indenture has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms; (iv) the Securities and the Indenture conform in all material respects to the descriptions thereof contained in the Offering Memorandum; (v) the Purchase Agreement has been duly authorized, executed and delivered by the Company; (vi) the Registration Rights Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms; (vii) the descriptions under the captions "Description of Capital Stock," "Description of Notes" and "Certain United States Federal Income Tax Consequences" in the Offering Memorandum, insofar as such descriptions constitute a summary of the legal matters or documents referred to therein, fairly summarize the matters referred to therein; (viii) no filing, consent, approval, authorization or order of or with any court or governmental agency or body of the States of New York or Delaware or the United States of America is required to be made or obtained by the Company for the performance of its obligations under the Purchase Agreement, the Registration Rights Agreement or the Indenture, or the consummation by the Company of the transactions therein contemplated, except such as have been made or obtained and such as may be required under federal and state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Initial Purchasers or by the federal and state securities laws in connection with the registration obligations under the Registration Rights Agreement; (ix) the Company is not an "investment company" as such term is defined in the Investment Company Act of 1940, as amended; Sch A-3 (x) it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchasers in the manner contemplated by the Purchase Agreement to qualify the Indenture under the TIA; and (xi) no registration under the Act of the Notes is required for the sale of the Notes to the Initial Purchasers and to each Subsequent Purchaser as contemplated by the Purchase Agreement and the Offering Memorandum assuming (i) that each Initial Purchaser is a QIB, (ii) the accuracy of, and compliance with, the Initial Purchasers' representations, warranties, and covenants contained in Section 6 of the Purchase Agreement, and (iii) the accuracy of the representations of the Company set forth in Sections 1(a) (xxii), (xxiii) and (xxiv) of the Purchase Agreement. In the course of the preparation by the Company of the Offering Memorandum, we participated in conferences with certain of the officers and representatives of, and the independent public accountants for, the Company at which the contents of the Offering Memorandum were discussed. Between the date of the Offering Memorandum and the time of delivery of this opinion, we participated in additional conferences with certain of the officers and representatives of, and independent public accountants for, the Company at which the contents of the Offering Memorandum were discussed to a limited extent. Given the limitations inherent in the independent verification of factual matters and the character of determinations involved in the process, we are not passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Offering Memorandum, except to the extent provided in paragraph (vii) above. Subject to the foregoing and on the basis of the information gained in the performance of the services referred to herein, including information obtained from the officers and other representatives of, and the independent public accountants for, the Company, no facts have come to our attention that cause us to believe that the Offering Memorandum, as of its date, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Also, subject to the foregoing, no facts have come to our attention in the course of the proceedings described in the second sentence of this paragraph that cause us to believe that the Offering Memorandum, as of the date and time of the delivery of this opinion, contains an untrue statement of a material fact or omits to the state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In each case, however, we express no view or belief, with respect to financial statements, or the notes or schedules thereto, or other financial data included in or omitted from the Offering Memorandum. The opinions set forth above are subject to the following qualifications: (A) We express no opinion as to the validity, binding effect or enforceability of any provision of the Indenture and the Registration Rights Agreement relating to indemnification or contribution. Sch A-4 (B) We express no opinion as to the validity, binding effect or enforceability of any provision of the Indenture, Registration Rights Agreement or the Notes: (1) containing any purported waiver, release, variation, disclaimer, consent or other agreement of similar effect (all of the foregoing, collectively, a "Waiver") by the Company under any of such agreements to the extent limited by provisions of applicable law (including judicial decisions), or to the extent that such a Waiver applies to a right, claim, duty, defense or ground for discharge otherwise existing or occurring as a matter of law (including judicial decisions), except to the extent that such a Waiver is effective under, and is not prohibited by or void or invalid under provisions of applicable law (including judicial decisions); (2) related to choice of governing law to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a court of the State of New York or a federal district court sitting in the State of New York and applying the law of the State of New York; (3) specifying that provisions thereof may be waived only in writing, to the extent that an oral agreement or an implied agreement by trade practice or course of conduct has been created that modifies any provision of such agreement; and (4) purporting to give any person or entity the power to accelerate obligations without any notice to the obligor. (C) Our opinions above are subject to the following: (1) bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect affecting creditors' rights generally; (2) general principles of equity, including, without limitation, standards of materiality, good faith, fair dealing and reasonableness equitable defenses and limits as to availability of equitable remedies (whether such principles are considered in a proceeding in equity or at law); and (3) the application of any applicable fraudulent conveyance, fraudulent transfer, fraudulent obligation, or preferential transfer law or any law governing the distribution of assets of any person now or hereafter in effect affecting creditors' rights and remedies generally. Sch A-5 The opinions expressed herein are limited to the federal laws of the United States of America, the laws of the State of New York and, to the extent relevant to the opinion expressed herein, the Delaware General Corporation Law, as currently in effect. The opinions expressed herein are given as of the date hereof, and we undertake no obligation to supplement this letter if any applicable laws change after the date hereof or if we become aware of any facts that might change the opinions expressed herein after the date hereof or for any other reason. The opinions expressed herein are solely for your benefit in connection with the Purchase Agreement and may not be relied on in any manner or for any purpose by any other person or entity and may not be quoted in whole or in part without our prior written consent. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: ----------------------------------------------- Lois Herzeca Sch A-6 Exhibit A-2 FORM OF OPINION OF FRANK B. WYATT, IITO BE DELIVERED PURSUANT TO SECTION 5(b) MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith Incorporated CIBC WORLD MARKETS CORP. as Representatives of the several Initial Purchasers c/o Merrill Lynch & Co.Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower, World Financial Center, New York, New York 10281-1305 Dear Sirs and Mesdames: I am General Counsel of CommScope, Inc., a Delaware corporation (the "Company"). This opinion is being delivered to you pursuant to Section 5(b) of the Purchase Agreement, dated December 9, 1999 (the "Purchase Agreement"), among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp. All capitalized terms used herein that are defined in the Purchase Agreement have the respective meanings set forth therein, unless otherwise defined herein. With your permission, with respect to the opinions expressed herein, all assumptions and statements of reliance herein have been made without any independent investigation or verification on my part, except to the extent otherwise expressly stated, and I express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. I, or outside attorneys under my direction and control, have examined the originals, or certified, conformed or reproduction copies, of all such records, agreements, instruments and documents as I have deemed relevant or necessary as the basis for the opinions hereinafter expressed. In all such examinations, I have assumed the authenticity of all records, agreements and documents and the truth of all representations set forth therein, the genuineness of all signatures on original or certified copies and the conformity to original or certified copies of all copies submitted to me as conformed or reproduction copies. As to various questions of fact relevant to such opinion, I have relied upon, and assumed the accuracy of, certificates and oral or written statements and other information of or from public officials, officers or representatives of the Company, and others. Sch A-7 Based upon the foregoing, and subject to the limitations, qualifications, and assumptions set forth herein, I am of the opinion that: (1) The Company is duly qualified to transact business as a foreign corporation, and is in good standing, under the laws of each jurisdiction in which it owns or leases properties or conducts business so as to require such qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction. (2) The Company has an authorized capitalization as set forth in the Offering Memorandum in the column entitled "Actual" under the caption "Capitalization", and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and nonassessable, and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any security holder of the Company. (3) Each Subsidiary has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and is duly qualified to transact business, as a foreign corporation, and is in good standing, in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to qualify or to be in good standing would not result in a Material Adverse Effect, except as otherwise disclosed in the Offering Memorandum; all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, to the best of my knowledge, is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (4) The Conversion Shares have been duly authorized and validly reserved for issuance upon conversion of the Notes by all necessary corporate action of the Company Sch A-8 and, when duly issued by the Company upon such conversion, will be validly issued, fully paid and nonassessable; no holder thereof will be subject to personal liability for obligations of the Company solely by reason of being such a holder; and the issuance of the Conversion Shares will not be subject to preemptive or similar rights. (5) To the best of my knowledge and other than as set forth in the Offering Memorandum, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, individually or in the aggregate, would have, or may reasonably be expected to have, a Material Adverse Effect; and, to the best of my knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (6) To the best of my knowledge, (a) neither the Company nor any of its subsidiaries is in violation of its respective Certificate of Incorporation or By-laws and (b) no default by the Company or any of its subsidiaries exists in the due performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument described or referred to in the Offering Memorandum, except as would not have or reasonably be expected to have a Material Adverse Effect. (7) The execution, delivery and performance of the Purchase Agreement, the DTC Agreement, the Indenture, the Registration Rights Agreement and the Notes and the consummation of the transactions contemplated in the Purchase Agreement and in the Offering Memorandum (including the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use Of Proceeds") and compliance by the Company with its obligations under the Purchase Agreement, the Indenture, the Registration Rights Agreement and the Notes do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any Agreement and Instruments which are material to the Company and its subsidiaries taken as a whole, nor will such action result in any violation of the provisions Sch A-9 of the Certificate of Incorporation or By-laws of the Company or any statute or any order, rule or regulation known to me of any court or governmental agency or body having jurisdiction over the Company or any of the subsidiaries or any of their properties. The opinions set forth above are subject to the following qualifications: A. With respect to the opinion expressed in paragraphs 6 and 7 above: (i) I have made no independent investigation as to whether the Agreements and Instruments which are material to the Company and its subsidiaries, taken as a whole, and which are governed by the laws of any jurisdiction other than the State of North Carolina, will be enforced as written under the laws of such jurisdiction; (ii) I express no opinion with respect to any conflict with or any breach or violation of, or default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument not ascertainable from the face of such indenture, mortgage, deed of trust, loan agreement or other agreement or instrument, or arising under or based upon any cross-default provisions insofar as such conflict, breach, violation or default related to a default under an agreement not known to me to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; and (iii) I have relied as to matters of fact upon, and assumed the accuracy of, a certificate of a senior financial officer of the Company, attached thereto as Annex A, with respect to any covenant of a financial or numerical nature or that requires computation in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to me to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject. Sch A-10 B. My opinions are subject to (i) applicable bankruptcy, insolvency, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights and remedies generally, and (ii) general principles of equity including, without limitation, standards of materiality, good faith, fair dealing and reasonableness, equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity. C. The opinions expressed above are subject to the effect of, and I express no opinions herein as to, the application of the securities or Blue Sky laws of any state of the United States. The opinions expressed herein are limited to the laws of the United States of America and the laws of the State of North Carolina and, to the extent relevant to the opinions expressed herein, the General Corporation Law of the State of Delaware, each as currently in effect. The opinions expressed herein are given as of the date hereof, and I undertake no obligation to supplement this letter if any applicable laws change after the date hereof or if I become aware of any facts that might change the opinions expressed herein after the date hereof or for any other reason. The opinions expressed herein are solely for your benefit in connection with the Purchase Agreement and may not be relied on in any manner or for any purpose by any other person or entity and may not be quoted in whole or in part without my prior written consent. Very truly yours, Frank B. Wyatt, II General Counsel cc: Jearld L. Leonhardt Sch A-11 FORM OF FINANCIAL OFFICER'S CERTIFICATE Annex A to Exhibit A The undersigned, Jearld L. Leonhardt, the Executive Vice President and Chief Financial Officer of CommScope, Inc., a Delaware corporation (the "Company"), hereby certifies, solely as a financial officer of the Company and not personally, that the compliance by the Company with all of the provisions of the purchase agreement, dated as of December 9, 1999 (the "Purchase Agreement"), among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and CIBC World Markets Corp., the DTC Agreement, the Indenture, the Registration Rights Agreement and the Notes and the consummation of the transactions therein contemplated will not conflict with or result in a breach or a violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to the undersigned to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject and which is material to the Company and its subsidiaries. Capitalized terms used herein without definitions shall have the meanings ascribed to them in the Purchase Agreement. Dated: December __, 1999 --------------------------------- Jearld L. Leonhardt Executive Vice President and Chief Financial Officer Annex A to Exhibit A Exhibit B Form of Registration Rights Agreement EX-4.5 3 EXHIBIT 4.5 COMMSCOPE, INC. AS ISSUER AND FIRST UNION NATIONAL BANK, AS TRUSTEE INDENTURE DATED AS OF DECEMBER 15, 1999 4% CONVERTIBLE SUBORDINATED NOTES DUE 2006 TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.1 Definitions.................................................2 Section 1.2 Compliance Certificates and Opinions.......................12 Section 1.3 Form of Documents Delivered to Trustee.....................13 Section 1.4 Acts of Holders; Record Dates..............................13 Section 1.5 Notices, Etc. to Trustee and the Company...................15 Section 1.6 Notice to Holders; Waiver..................................15 Section 1.7 Conflict with Trust Indenture Act..........................16 Section 1.8 Effect of Headings and Table of Contents...................16 Section 1.9 Successors and Assigns.....................................16 Section 1.10 Separability Clause........................................16 Section 1.11 Benefits of Indenture......................................16 Section 1.12 Governing Law..............................................17 Section 1.13 Legal Holidays.............................................17 Section 1.14 Counterparts...............................................17 ARTICLE II SECURITY FORMS Section 2.1 Forms Generally............................................17 Section 2.2 Form of Face of Security...................................19 Section 2.3 Form of Reverse of Security................................22 Section 2.4 Form of Trustee's Certificate of Authentication............31 Section 2.5 Form of Conversion Notice..................................31 Section 2.6 Form of Certification......................................33 Section 2.7 Form of Option of Holder to Elect Purchase.................34 Section 2.8 Form of Assignment.........................................35 i ARTICLE III THE SECURITIES Section 3.1 Title and Terms............................................36 Section 3.2 Denominations..............................................37 Section 3.3 Execution, Authentication, Delivery and Dating.............37 Section 3.4 Temporary Securities.......................................38 Section 3.5 Registration; Registration of Transfer and Exchange........38 Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities...........43 Section 3.7 Payment of Interest; Interest Rights Preserved.............44 Section 3.8 Persons Deemed Owners......................................46 Section 3.9 Cancellation...............................................46 Section 3.10 Computation of Interest....................................47 Section 3.11 CUSIP Numbers..............................................47 ARTICLE IV SATISFACTION AND DISCHARGE Section 4.1 Satisfaction and Discharge of Indenture....................47 Section 4.2 Application of Trust Money.................................49 ARTICLE V REMEDIES Section 5.1 Events of Default..........................................49 Section 5.2 Acceleration of Stated Maturity; Rescission and Annulment...................................51 Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee....................................52 Section 5.4 Trustee May File Proofs of Claim...........................53 Section 5.5 Trustee May Enforce Claims Without Possession of Securities.............................................54 Section 5.6 Application of Money Collected.............................54 Section 5.7 Limitation on Suits........................................55 Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert............55 ii Section 5.9 Restoration of Rights and Remedies.........................56 Section 5.10 Rights and Remedies Cumulative.............................56 Section 5.11 Delay or Omission Not Waiver...............................56 Section 5.12 Control by Holders.........................................56 Section 5.13 Waiver of Past Defaults....................................57 Section 5.14 Undertaking for Costs......................................57 Section 5.15 Waiver of Usury, Stay or Extension Laws....................58 ARTICLE VI THE TRUSTEE Section 6.1 Certain Duties and Responsibilities........................58 Section 6.2 Notice of Defaults.........................................58 Section 6.3 Certain Rights of Trustee..................................59 Section 6.4 Not Responsible for Recitals or Issuance of Securities.....60 Section 6.5 May Hold Securities........................................60 Section 6.6 Money Held in Trust........................................61 Section 6.7 Compensation and Reimbursement.............................61 Section 6.8 Disqualification: Conflicting Interests....................62 Section 6.9 Corporate Trustee Required; Eligibility....................62 Section 6.10 Resignation and Removal; Appointment of Successor..........62 Section 6.11 Acceptance of Appointment by Successor.....................64 Section 6.12 Merger, Conversion, Consolidation or Succession to Business...............................................64 Section 6.13 Preferential Collection of Claims Against Company..........65 ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.1 Company to Furnish Trustee Names and Addresses of Holders......................................65 Section 7.2 Preservation of Information; Communications to Holders.....66 Section 7.3 Reports by Trustee.........................................66 Section 7.4 Reports by Company.........................................66 iii ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.......67 Section 8.2 Successor Substituted......................................68 ARTICLE IX AMENDMENTS Section 9.1 Without Consent of Holders.................................68 Section 9.2 With Consent of Holders....................................69 Section 9.3 Compliance with Trust Indenture Act........................70 Section 9.4 Revocation and Effect of Consents, Waivers and Actions.....71 Section 9.5 Notation on or Exchange of Securities......................71 Section 9.6 Trustee to Sign Supplemental Indentures....................71 Section 9.7 Effect of Supplemental Indentures..........................71 ARTICLE X COVENANTS Section 10.1 Payment of Securities......................................72 Section 10.2 Maintenance of Office or Agency............................72 Section 10.3 Money for Security Payments To Be Held in Trust............73 Section 10.4 Statement by Officers as to Default........................74 Section 10.5 Existence..................................................75 Section 10.6 Delivery of Certain Information............................75 ARTICLE XI REDEMPTION OF SECURITIES Section 11.1 Right to Redeem; Notices to Trustee........................75 Section 11.2 Selection of Securities to Be Redeemed.....................76 iv Section 11.3 Notice of Redemption.......................................76 Section 11.4 Effect of Notice of Redemption.............................77 Section 11.5 Deposit of Redemption Price................................78 Section 11.6 Securities Redeemed in Part................................78 Section 11.7 Conversion Arrangement on Call for Redemption..............78 ARTICLE XII SUBORDINATION OF SECURITIES Section 12.1 Securities Subordinate to Senior Indebtedness..............79 Section 12.2 Payment Over of Proceeds upon Dissolution, Etc.............79 Section 12.3 No Payment When Senior Indebtedness in Default.............80 Section 12.4 Payment Permitted If No Default............................82 Section 12.5 Subrogation to Rights of Holders of Senior Indebtedness....82 Section 12.6 Provisions Solely To Define Relative Rights................83 Section 12.7 Trustee To Effectuate Subordination........................83 Section 12.8 No Waiver of Subordination Provisions......................83 Section 12.9 Notice to Trustee..........................................84 Section 12.10 Reliance on Judicial Order or Certificate of Liquidating Agent.......................................85 Section 12.11 Trustee Not Fiduciary for Holders of Senior Indebtedness...85 Section 12.12 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights..........................86 Section 12.13 Article Applicable to Paying Agents........................86 Section 12.14 Certain Conversions Deemed Payment.........................86 ARTICLE XIII CONVERSION OF SECURITIES Section 13.1 Conversion Privilege. .....................................87 Section 13.2 Exercise of Conversion Privilege...........................88 Section 13.3 Fractions of Shares........................................89 Section 13.4 Adjustment of Conversion Price.............................90 Section 13.5 Notice of Adjustments of Conversion Price..................99 Section 13.6 Notice of Certain Corporate Action........................100 Section 13.7 Company's Obligation Regarding Common Stock...............101 v Section 13.8 Taxes on Conversions......................................102 Section 13.9 Covenant as to Common Stock...............................102 Section 13.10 Cancellation of Converted Securities......................102 Section 13.11 Provisions in Case of Reclassification, Consolidation, Merger or Sale of Assets.................................102 Section 13.12 Company's Obligation......................................103 Section 13.13 Restrictions on Common Stock Issuable Upon Conversion.....103 ARTICLE XIV RIGHT TO REQUIRE REPURCHASE Section 14.1 Purchase of Securities at Option of the Holder upon Change in Control...................................104 Section 14.2 Notices; Method of Exercising Repurchase Right, Etc.......104 Section 14.3 Certain Definitions.......................................107 Section 14.4 References to Change in Control Purchase Price............109 Section 14.5 Covenant to Comply with Securities Laws upon Purchase of Securities...................................110 Section 14.6 Repayment to the Company..................................110 vi INDENTURE, dated as of December, 15 1999, between CommScope, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company") and First Union National Bank, a New York banking corporation (herein called the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company has duly authorized the creation of an issue of its Securities of substantially the tenor and amount hereinafter set forth and to provide therefor the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its 4% Convertible Subordinated Notes due 2006 (herein called the "Securities") by the Company; WHEREAS, the Company, pursuant to the Purchase Agreement (the "Purchase Agreement") dated December 9, 1999, among the Company and the Initial Purchasers named therein, will issue and sell up to $150,000,000 aggregate principal amount (or $172,500,000 if the overallotment option is exercised) of its Securities; WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE I 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 Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or Section, as the case may be, of this Indenture; 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. "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. 2 "Agent Members" has the meaning specified in Section 2.1(b). "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time. "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or a Committee thereof, and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means a day on which banking institutions are open for business and carrying out transactions in Dollars at the relevant place of payment. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Article Thirteen, shares issuable on conversion of Securities shall include only shares of the class designated as Common Stock of the Company at the date of this instrument or shares of any class or classes resulting from any reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the 3 Company; provided, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board and/or its Chief Executive Officer, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Conversion Agent" shall have the meaning set forth in Section 2.3(3). "Corporate Trust Office" means the principal office of the Trustee in Charlotte, North Carolina, at which at any particular time its corporate trust business shall be administered and which at the date of this Indenture is 401 S. Tryon Street, Charlotte, North Carolina, 12th Floor, Attention: Shannon Schwartz. "Corporation" means a corporation, association, company (including, without limitation, a limited liability company), joint-stock company or business trust. "Credit Agreement" means that certain Credit Agreement dated as of July 23, 1997 by and among the Company and the lenders party thereto from time to time and The Chase Manhattan Bank, as Administrative Agent, and the other financial institutions named therein as Co-Agents, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, increased, renewed, refunded, replaced or refinanced from time to time, whether or not with the same parties. 4 "Default" means any event that is, or after notice or passage of time or both would be, an Event of Default. "Defaulted Interest" has the meaning specified in Section 3.7. "Definitive Security" means a certificated Security registered in the name of the Holder thereof. "Depositary" means, with respect to the Securities issued in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 3.5. "Dollar" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "DTC" has the meaning specified in Section 2.3. "Event of Default" has the meaning specified in Section 5.1. "Exchange Act" means the Securities Exchange Act of 1934 as it may be amended from time to time, and any successor act thereto, and the rules and regulations of the Commission promulgated thereunder. "Financing Entity" has the meaning specified in the definition of the term "Senior Indebtedness". "Global Security" has the meaning specified in Section 2.1. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. 5 "Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Issue Date" means the date of first issuance of the Securities under this Indenture. "Liquidated Damages" shall mean liquidated damages paid to all holders of Registrable Securities (as defined in the Registration Rights Agreement) in accordance with and pursuant to the provisions of Section 2(e) of the Registration Rights Agreement. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, exercise of the conversion or repurchase right or otherwise. "Notice of Default" means a written notice of the kind specified in Section 5.1(3) or 5.1(7). "Officers' Certificate" means a certificate signed by any of the Chairman of the Board and/or its Chief Executive Officer, the President or a Vice President, and by any of the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of the Company. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; 6 (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made; (iii) Securities which have been paid pursuant to Section 3.6 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 (iv) Securities which have been converted pursuant to Article XIII; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. 7 "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. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Qualified Institutional Buyer" means a "qualified institutional buyer" as defined in Rule 144A. "Redemption Date"; when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed in whole or in part, means the price at which it is to be redeemed as set forth in the Securities. "Registration Rights Agreement" means that certain Registration Rights Agreement, dated December 15, 1999, between the Company and the Initial Purchasers. "Regular Record Date" for the interest payable on any Interest Payment Date means the close of business on June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer", when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. 8 "Restricted Security" means a Security required to bear the restrictive legend set forth in the form of Security set forth in Section 2.2 of this Indenture. "Rule 144A" has the meaning specified in Section 3.5. "Rule 144A Information" has the meaning specified in Section 10.6. "Sale Price" on any Trading Day means 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 and the average ask prices) on such Trading Day as reported by the New York Stock Exchange or, if the Common Stock is not then listed thereon, such other national or regional securities exchange upon which the Common Stock is listed on such Trading Day, as reported in composite transactions for such exchange. If the Common Stock is not listed on the New York Stock Exchange or a United States national or regional stock exchange or quoted on the Nasdaq National Market, the Company shall be entitled to determine the "Sale Price" on the basis of such quotation as it deems, in good faith, to be appropriate. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture and "Security" means one of such Securities. "Securities Act" means the Securities Act of 1933 as it may be amended from time to time, and any successor act thereto, and the rules and regulations of the Commission promulgated thereunder. "Security Register" and "Security Registrar" have the respective meanings specified in Section 3.5. "Senior Indebtedness" means in respect of the Company, whether now or hereafter incurred: (i) the principal, premium, if any, interest and all other amounts owed in respect of all of the Company's (A) indebtedness for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments, (ii) all obligations of the Company (including all interest accruing after the commencement of any bankruptcy proceeding, whether or not a claim for post-petition interest is allowed as a claim in any such proceeding) payable under the Credit Agreement whether outstanding on the date of this Indenture or thereafter created, incurred, assumed or guaranteed or in effect guaranteed by the 9 Company, (iii) all capital lease obligations of the Company, (iv) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business), (v) all obligations of the Company for the reimbursement of any letter of credit, banker's acceptance, security purchase facility or similar credit transaction, (vi) all obligations of the type referred to in clauses (i) through (v) above of other persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, and (vii) all obligations of the type referred to in clauses (i) through (vi) above of other persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by the Company), except for (1) any such indebtedness that is by its terms subordinated to or pari passu with the Securities and (2) any indebtedness between or among the Company or its 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 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. "Share Certificate" means a certificate evidencing ownership of shares of Common Stock. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" of any Person means (i) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. 10 "Surrendered Securities" has the meaning specified in Section 2.6. "Trading Day" means each day on which the securities exchange or quotation system which is used to determine the Sale Price is open for trading or quotation. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed and the rules and regulations thereunder; provided, however, that in the event the Trust Indenture Act of 1939 or such rules and regulations are amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 and such rules and regulations as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States" means the United States of America (including the States thereof and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. 11 "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Voting Stock" of any Person means capital stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions of such Person), whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 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 such certificates and opinions as may be required under the Trust Indenture Act or reasonably requested by the Trustee in connection with such application or request. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an opinion of Counsel, if to be given by counsel, and shall comply with the applicable requirements of the Trust Indenture Act and any other applicable requirement set forth in this Indenture. Every certificate or Opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. 12 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 with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.4 Acts of Holders; Record Dates. ----------------------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or 13 instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.3) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee or the Company, as the case may be, deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.1) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (d) The ownership of Securities shall be proved by the Security Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. 14 (f) Without limiting the foregoing, a Holder entitled hereunder to give or take any such action with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. Section 1.5 Notices, Etc. to Trustee and the 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: Shannon Schwartz, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office at CommScope, Inc., 1375 Lenoir-Rhyne Blvd., Hickory, N.C. 28601, Attention: General Counsel, 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 to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder whether or not actually received by such Holder. 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 15 shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Section 1.7 Conflict with Trust Indenture Act. --------------------------------- If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 1.8 Effect of Headings and Table of Contents. ---------------------------------------- The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.9 Successors and Assigns. ---------------------- All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.10 Separability Clause. ------------------- In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.11 Benefits of Indenture. --------------------- Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. 16 Section 1.12 Governing Law. ------------- THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. Section 1.13 Legal Holidays. -------------- In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or conversion of the Securities need not be made on such date, but may be made on the next succeeding Business Day (except that, if such Business Day is in the next succeeding calendar year, such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, shall be the immediately preceding Business Day) with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity or on such last day for conversion, provided, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. Section 1.14 Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. ARTICLE II SECURITY FORMS Section 2.1 Forms Generally. The Securities and the Trustee's certificate of authentication shall be in substantially the form set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. 17 The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. In certain cases described elsewhere herein, the legends set forth in the first through fourth paragraphs of Section 2.2 may be omitted from Securities issued hereunder. (a) Global Securities. The Securities shall be issued in fully registered book-entry form in one or more Global Securities (each a "Global Security"), without interest coupons, substantially in the form of Security set forth in Sections 2.2 and 2.3, with such applicable legends as are provided for in Section 2.2, except as otherwise permitted herein. Such Global Securities shall be registered in the name of a nominee of the Depositary and deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of a Global Security may from time to time be increased or decreased, as appropriate, by adjustments made on the records of the Trustee, as custodian for the Depositary, to reflect transfers to another Global Security, redemptions, repurchases and conversions. (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the 18 Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) Definitive Securities. Except as provided in Section 3.5(h), owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities. Section 2.2 Form of Face of Security. ------------------------ [INCLUDE UNLESS PURSUANT TO SECTION 3.5(d) OF THE INDENTURE, THE COMPANY DETERMINES THAT THE FOLLOWING LEGEND MAY BE REMOVED -- THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ASECURITIES ACT@), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE ARESALE RESTRICTION TERMINATION DATE@), WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) FOR SO LONG AS THE NOTES AND THE COMMON STOCK ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A AQUALIFIED INSTITUTIONAL BUYER@ AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) 19 PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY=S AND THE TRUSTEE=S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.] [INCLUDE IF SECURITY IS A GLOBAL SECURITY DEPOSITED WITH DTC B UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE THREE OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.] 20 CommScope, Inc. 4% Convertible Subordinated Debentures Due 2006 No. Principal Amount: $ Cusip No. 203372AA5 Issue Date: December 15, 1999 CommScope, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, the principal sum of ___________ Dollars [if this Security is a Global Security, then insert --(which principal amount may from time to time be increased or decreased to such other principal amounts (which, taken together with the principal amounts of all other Outstanding Securities, shall not exceed $________ in the aggregate at any time) by adjustments made on the records of the Trustee hereinafter referred to in accordance with the Indenture)] on December 15, 2006, and to pay interest thereon as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security. All capitalized terms used herein without definition shall have the respective meanings assigned thereto in the Indenture referred to on the other side of this Security. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: ------------------ 21 COMMSCOPE, INC. By: ------------------------------- Name: Title: [Seal] Attest: - --------------------------------------- Name: Title: Section 2.3 Form of Reverse of Security. --------------------------- (1) Interest. The Company promises to pay interest on the principal amount of this Security at the rate per annum of 4% from December 15, 1999 until maturity. The Company will pay interest semiannually on June 15, and December 15 of each year (each an "Interest Payment Date") to holders of record at the close of business on each June 1 or December 1 (whether or not a business day) (each a "Regular Record Date") immediately preceding such Interest Payment Date. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal, or if shares of Common Stock (or cash in lieu of fractional shares) in respect of a conversion of this Security in accordance with the terms of Article XIII of the Indenture are not delivered when due, at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. All such overdue interest shall be payable on demand. (2) Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of the principal of, premium, if any, and interest payable in cash on this Security, and in respect of Redemption Prices to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in 22 money of the United States of America that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. (3) Paying Agent; Registrar; Conversion Agent. Initially, First Union National Bank (the "Trustee"), will act as Paying Agent, Registrar and Conversion Agent (the "Conversion Agent"). The Company may appoint and change any Paying Agent, Registrar or co-registrar or Conversion Agent without notice, other than notice to the Trustee, except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan. The Company or any of its Subsidiaries or Affiliates incorporated in the United States may act as Paying Agent, Registrar or co-registrar or Conversion Agent. (4) Indenture. The Company issued the Securities under an Indenture dated as of December 15, 1999 (the "Indenture"), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of those terms. The Securities are unsecured subordinated obligations of the Company limited to the aggregate principal amount specified in Section 3.1 of the Indenture. (5) Redemption at the Option of the Company. No sinking fund is provided for this Security. The Securities may not be redeemed at the option of the Company prior to December 15, 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) to each Holder of Securities, as a whole or from time to time in part, at any time on or after December 15, 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: 23 PERIOD REDEMPTION PRICE - ------ ---------------- December 15, 2002 through December 14, 2003 102.2857% December 15, 2003 through December 14, 2004 101.7143% December 15, 2004 through December 14, 2005 101.1429% and thereafter at a Redemption Price equal to 100.5714% 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 selects. 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. (6) Notice of Redemption. Notice of Redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee) to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of all Securities (or portions thereof which are in an integral multiple of $1,000 in principal amount) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date interest shall cease to accrue on such Securities or portions thereof. (7) Purchase by the Company at the Option of the Holder. In certain circumstances involving a Change in Control (as defined in the Indenture), subject to the terms and conditions of the Indenture, 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 Change in Control Purchase Date (as defined in the Indenture) 24 (subject to the right of holders of record on the Regular Record Date to receive interest on the related Interest Payment Date). The Holder has the right to withdraw any Change in Control Purchase Notice by delivering to the Paying Agent prior to the close of business on the Change in Control Purchase Date a written notice, in substantially the form and manner set forth in Article XIV of the Indenture. If cash sufficient to pay the Change in Control Purchase Price of all Securities (or any portion thereof which is in an integral multiple of $1,000 in principal amount) to be purchased prior to or on the Change in Control Purchase Date is deposited with the Paying Agent on the Change in Control Purchase Date, this Security shall cease to be outstanding and interest shall cease to accrue on this Security (or such portions thereof) and will be deemed paid, whether or not this Security is delivered to the Paying Agent, immediately after such Change in Control Purchase Date and the Holder shall have no other rights as such (other than the right to receive the Change in Control Purchase Price upon surrender of this Security or portion hereof). (8) Conversion Rights. At the option of the Holder and subject to the terms and conditions of the Indenture, this Security (or any portion hereof which is an integral multiple of $1,000 in principal amount) may be surrendered for conversion into shares of Common Stock at an initial conversion rate (the "Conversion Rate") of 20.7512 shares of Common Stock per $1,000 principal amount of this Security. The Conversion Rate is subject to adjustment as provided in Article XIII of the Indenture. The right to surrender this Security for conversion pursuant to Article XIII of the Indenture shall terminate on the close of business on December 15, 2006, or, if this Security or any portion hereof shall be called for redemption pursuant to the terms hereof, then in respect of any portion so called for redemption, at the close of business on the Redemption Date (unless in the case of any such redemption the Company shall default in the payment due upon the redemption hereof). Except as otherwise expressly provided in the Indenture, no payment or adjustment shall be made on account of any dividends or distributions on Common Stock delivered upon such conversion. The Conversion Rate will not be adjusted at any time during the term of this Security for accrued interest. Upon conversion of this Security, (except as provided below) that portion of accrued and unpaid interest thereon attributable to the period from the Issue Date through the 25 Conversion Date with respect to this Security shall not be canceled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through the delivery of the Common Stock (together with the cash payment in lieu of fractional interests therein) in exchange for this Security; and the fair market value of such Common Stock (together with any cash payment for fractional shares), if any, shall be treated as delivered or paid, to the extent thereof, first in exchange for accrued and unpaid interest through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any cash payment for fractional shares) shall be treated as delivered or paid in exchange for the principal amount of this Security. Notwithstanding the foregoing, accrued but unpaid interest will be payable upon conversion of this Security if such conversion is made concurrently with or after acceleration of the indebtedness represented by this Security following an Event of Default subject to Article XII. No fractional shares of Common Stock shall be delivered upon exchanges but the Conversion Agent on behalf of the Company shall make a cash payment in lieu thereof equal to the product of such fractional share and the Sale Price on the Trading Day immediately preceding the Conversion Date subject to Article XII. To convert this Security the Holder must (i) complete and manually sign the conversion notice hereon (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent (initially the Trustee) or, if applicable, complete and deliver to The Depository Trust Company ("DTC") the appropriate instruction form for conversion pursuant to DTC's book entry conversion program, (ii) surrender (or arrange for book-entry delivery of) this Security to the Conversion Agent (which is not necessary in the case of conversion pursuant to DTC's book entry conversion program), (iii) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (iv) pay any transfer or similar tax if required. Book entry delivery of a Security to the Conversion Agent may be made by any financial institution that is a participant in DTC; conversion through DTC's book entry conversion program is available for any security that is held in an account maintained at DTC by any such Participant. A conversion shall be deemed to have been effected at the close of business on the date all such requirements have been satisfied (the "Conversion Date"). A Holder may convert a portion of this Security only if the portion is $1,000 principal amount or an integral multiple of $1,000. 26 Securities 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 such Interest Payment Date (except Securities to be redeemed on a date within such period) must be accompanied by payment of an amount equal to the interest thereon that the registered Holder is to receive. Except where Securities surrendered for conversion must be accompanied by payment as described above, no interest on converted Securities will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. (9) Arrangement on Call for Redemption. Any Securities called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price plus accrued and unpaid interest to the Redemption Date, by one or more third parties who may agree with the Company to purchase such Securities from the Holders, to exchange them for Common Stock and to make payment for such Securities to the Trustee in trust for such Holders. (10) Subordination. The Securities are subordinated to Senior Indebtedness of the Company. To the extent provided in the Indenture, Senior Indebtedness of the Company must be paid in cash before the Securities may be paid. The Company and each Holder of Securities, by accepting a Security, agrees to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. (11) Denominations; Transfer; Exchange. The Securities are in fully registered form, without coupons, in denominations of $1,000 of principal amount and integral multiples of $1,000 in excess thereof. The Holder may transfer or exchange this Security in accordance with the Indenture. The Registrar may require the Holder, among other things, to furnish appropriate endorsements and transfer documents. The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Change in Control Purchase Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed. 27 (12) Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of this Security for all purposes. (13) Unclaimed Money for Securities. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to this Security that remain unclaimed for two years. After return to the Company, the Holder must look solely to the Company for payment. (14) Amendment; Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time Outstanding and (ii) certain Defaults may be waived with the written consent of the Holders of a majority in the aggregate principal amount of the Securities at the time Outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect, or inconsistency, or to comply with Article VIII or Section 13.11 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities, to make any change that does not adversely affect the rights of any Holder, to comply with any requirement of the Commission in connection with the qualification of the Indenture under the TIA or to add to the covenants or obligations of the Company under the Indenture or surrender any right, power or option conferred by the Indenture on the Company. (15) Defaults and Remedies. Under the Indenture, Events of Default include, among other things (i) default by the Company in (A) payment of the principal amount, the Redemption Price or the Change in Control Purchase Price, as the case may be, in respect of the Securities when the same becomes due and payable, (B) interest when due (if such default in payment of any such interest shall continue for 31 days) or (C) the delivery of shares of Common Stock (including cash in lieu of fractional shares of Common Stock) in accordance with the terms of the Indenture when such are required to be delivered upon conversion of a Security (if such default shall continue for 10 days); (ii) failure by the Company to comply with any other agreements in the Indenture or the Securities upon the receipt by the Company of notice of such default from the Trustee or Holders of not less than 25% in aggregate principal amount of the Securities then Outstanding and the Company's failure to cure such default within 90 days after receipt by the Company of such notice; (iii) default under any bond, debenture, note or other evidence of 28 indebtedness for money borrowed of the Company having an aggregate outstanding principal amount of in excess of $12,500,000, which default shall have resulted in such indebtedness being accelerated, without such indebtedness being discharged or such acceleration having been rescinded or annulled within 60 days after receipt of notice thereof by the Company from the Trustee or the Company and the Trustee from the Holders of not less than 25% in aggregate principal amount of the Securities then Outstanding (unless such default has been cured or waived); and (iv) certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate principal amount of the Securities at the time Outstanding, may by notice to the Company declare the principal amount of, and accrued and unpaid interest through the date of such declaration on, all the Securities to be immediately due and payable. The Company's obligation to pay the Securities following acceleration may be deferred under certain circumstances, if Senior Indebtedness is outstanding. Certain events of bankruptcy or insolvency are Events of Default which will result in the principal amount plus accrued and unpaid interest through the occurrence of such Event of Default on the Securities becoming due and payable immediately upon the occurrence of such Event of Default. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities at the time Outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withheld from Holders notice of any continuing Default (except a Default in payment of amounts specified in clause (i) above) if it in good faith determines that withholding notice is in their interests. (16) Registration Rights Agreement. The Holder of this Security and the Common Stock issuable upon conversion thereof is entitled to the benefits of a Registration Rights Agreement (subject to the provisions thereof), dated as of December 15, 1999, among the Company and the Initial Purchasers. (17) Trustee Dealings with the Company. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates with the same rights it would have if it were not Trustee. 29 (18) No Recourse Against Others. A director, officer, employee, agent or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under this Security or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. (19) Authentication. This Security shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Security. (20) Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (-tenants in common), TEN ENT (-tenants by the entireties), JT TEN (-joint tenants with right of survivorship and not as tenants in common), CUST (-custodian), and U/G/M/A (-Uniform Gift to Minors Act). 30 (21) Governing Law. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. Section 2.4 Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within-mentioned Indenture. Dated: ------------------------ First Union National Bank, as Trustee By: ----------------------------------- Authorized Signatory Section 2.5 Form of Conversion Notice. ------------------------- CONVERSION NOTICE To: CommScope, Inc. and First Union National Bank The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof), below designated into shares of Common Stock (in the form of a Share Certificate) in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for a fractional share and any Security representing any unconverted principal amount hereof, be issued and delivered to the registered owner hereof unless a different name has been provided below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith a certificate in proper form certifying that the applicable restrictions on transfer have been complied with. Any amount required to be paid by the undersigned on account of interest accompanies this Security. DATE: ---------------------- ------------------------------- Signature(s) 31 (If a corporation, partnership or fiduciary, the title of the Person signing must be stated.) 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 issued, or Securities to be delivered, other than to and in the name of the registered holder. - ------------------------------------ Signature Guarantee Fill in for registration of shares if they are to be delivered, or unconverted Securities if they are to be issued, other than to and in the name of the registered holder: - ------------------------------------ (Name) - ------------------------------------ (Street Address) - ------------------------------------ (City, State and zip code) (Please print name and address) Register: Common Stock -- Securities -- (Check appropriate line(s)) Principal Amount to be converted (if less than all): 32 $ ,000 ----- ---------------------------------- Social Security or other Taxpayer Identification Number of owner Section 2.6 Form of Certification. --------------------- TRANSFER CERTIFICATE In connection with any transfer of any of the Securities within the period prior to the expiration of the holding period applicable to the sales thereof under Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act") (or any successor provision), the undersigned registered owner of this Security hereby certifies with respect to $________ principal amount of the above-captioned securities presented or surrendered on the date hereof (the "Surrendered Securities") for registration of transfer, or for exchange or conversion where the securities issuable upon such exchange or conversion are to be registered in a name other than that of the undersigned registered owner (each such transaction being a "transfer"), that such transfer complies with the restrictive legend set forth on the face of the Surrendered Securities for the reason checked below: [_] The transfer of the Surrendered Securities complies with Rule 144 under the U.S. Securities Act of 1933, as amended (the "Securities Act"); or [_] The transfer of the Surrendered Securities complies with Rule 144A under the Securities Act; or [_] The transfer of the Surrendered Securities complies with another available exemption from the registration requirements under the Securities Act; or [_] The transfer of the Surrendered Securities is pursuant to an effective registration statement under the Securities Act. 33 and unless the box below is checked, the undersigned confirms that, to the undersigned's knowledge, such Securities are not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act (an "Affiliate"). [_] The transferee is an Affiliate of the Company. DATE: ----------------- ------------------------------- Signature(s) (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) Section 2.7 Form of Option of Holder to Elect Purchase. ------------------------------------------ OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 14.1 of the Indenture, check the following box: [_] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 14.1 of the Indenture, state the amount you elect to have purchased: $ ------------------------ Dated: ----------------- Signature: ----------------------------- 34 NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Security in every particular without alteration or enlargement or any change whatsoever and be guaranteed. Signature Guarantee: --------------------- 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 issued, or Securities to be delivered, other than to and in the name of the registered holder. Section 2.8 Form of Assignment. ------------------ For value received ______________ hereby sell(s), assign(s) and transfer(s) unto _______ (Please insert social security or Taxpayer Identification number of assignee) the within Security, and hereby irrevocably constitutes and appoints ___________ attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises. Dated: --------------- Signature(s) 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 issued, or Securities to be delivered, other than to and in the name of the registered holder. 35 Signature Guarantee: -------------------- ARTICLE III THE SECURITIES Section 3.1 Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered for issuance under this Indenture is $150,000,000 upon a Company Order without any further action by the Company (except for Securities authenticated and delivered for exchange for, or in lieu of, other Securities pursuant to Sections 3.4, 3.5, 3.6, 9.5, 11.6, 13.2 or 14.2); provided, however, that if the Company sells any Securities pursuant to the over-allotment option granted pursuant to the Purchase Agreement among the Company and the Initial Purchasers dated December 9, 1999, then the Trustee shall authenticate and deliver Securities for issuance in an aggregate principal amount of $150,000,000 plus up to $22,500,000 aggregate principal amount upon receipt by the Trustee of a Company Order, except as aforesaid. The principal amount, Redemption Price, Liquidated Damages, change in Control Purchase Price and interest on the Securities shall be payable at the Corporate Trust Office and at any other office or agency maintained by the Company for such purpose; provided, however, that upon application by the Holder to the Security Registrar not later than the June 1 or December 1 immediately preceding the relevant Interest Payment Date, such Holder may receive payment by wire transfer to a U.S. Dollar account (such transfers to be made only to Holders of an aggregate principal amount in excess of U.S. $5,000,000 in principal amount) maintained by the payee with a bank in the United States upon compliance with the reasonable regulations of the Trustee. The Securities shall be redeemable by the Company as provided in Article XI. The Securities shall be subordinated in right of payment to the prior payment in full of Senior Indebtedness as provided in Article XII. The Securities shall be convertible as provided in Article XIII. 36 The Securities shall be subject to purchase by the Company at the option of the Holder as provided in Article XIV. Section 3.2 Denominations. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 in principal amount and any integral multiple thereof. Section 3.3 Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by any of its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon and attested by its Treasurer or one of its Assistant Treasurers or Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee or to its order for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and make available for delivery such Securities as in this Indenture provided and not otherwise. In connection with any Company Order for authentication, an Officers' Certificate and Opinion of Counsel pursuant to Section 1.2 shall be required. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Each security shall be dated the date of its authentication. 37 Section 3.4 Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 10.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. Section 3.5 Registration; Registration of Transfer and Exchange. (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.2 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers and exchanges thereof. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers and exchanges thereof as herein provided. Upon surrender for registration of transfer or exchange of any Security at an office or agency of the Company designated pursuant to Section 10.2 for such purpose, accompanied by a written instrument of transfer or exchange in the form provided by the Company, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees (in the case of a transfer) or to the Holder (in the case of an exchange), one or more new Securities, of any authorized denominations and of a like aggregate principal amount and tenor bearing such restrictive legends as may be required by this Indenture. 38 (b) Notwithstanding any other provisions of this Indenture or the Securities, (A) transfers of a Global Security, in whole or in part, shall be made only in accordance with Section 3.5(b)(i) and (B) transfers of a Definitive Security shall comply with Section 3.5(b)(ii) below. (i) Transfer of Global Security. A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Nothing in this Section 3.5(b)(i) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 3.5(b). (ii) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Security Registrar with a request: (x) to register the transfer of such Definitive Securities; or (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Security Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (ii) so long as such Securities are Restricted Securities, such Securities are being transferred or 39 exchanged pursuant to an effective registration statement under the Securities Act or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Securities are being delivered to the Security Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth in Section 2.6); or (B) if such Definitive Securities are being transferred to the Company, a certification to that effect; or (C) if such Definitive Securities are being transferred pursuant to an exemption from registration to a Qualified Institutional Buyer in accordance with Rule 144A under the Securities Act ("Rule 144A"), in accordance with Rule 144 or pursuant to another available exemption under the Act, (i) a certification to that effect (in the form set forth in Section 2.6) and (ii) if the Company or Security Registrar so requests, an opinion of counsel or other evidence reasonably satisfactory to them as to the compliance with the restrictions set forth in the legend set forth in Section 2.2. (c) Subject to the succeeding paragraph, every Security shall be subject to the restrictions on transfer provided in the legend set forth in the first paragraph of Section 2.2. Whenever any Restricted Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, such Security must be accompanied by a certificate in substantially the form set forth in Section 2.6, dated the date of such surrender and signed by the Holder of such Security, as to compliance with such restrictions on transfer. The Security Registrar shall not be required to accept for such registration of transfer or exchange any Security not so accompanied by a properly completed certificate. (d) The restrictions imposed by the legend set forth in the first paragraph of Section 2.2 upon the transferability of any Security shall cease and terminate when such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(k) under 40 the Securities Act (or any successor provision). Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon surrender of such Security for exchange to the Security Registrar in accordance with the provisions of this Section 3.5 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144 or any successor provision, by an opinion of counsel having substantial experience in practice under the Securities Act and otherwise reasonably acceptable to the Company, addressed to the Company and in form acceptable to the Company, to the effect that the transfer of such Security has been made in compliance with Rule 144 or such successor provision), be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive legend set forth in the first paragraph of Section 2.2. If any such transfer is effected a time when a Global Security without such restrictive legend has not yet been issued, unless an event specified in Section 3.5(h)(1) has occurred, the Company shall issue and, upon receipt of a Company Order in accordance with Section 3.3 hereof, the Trustee shall authenticate one or more Global Securities, without such restrictive legend, in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to the preceding sentence. The Company shall inform the Trustee of the effective date of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. (e) As used in the preceding two paragraphs of this Section 3.5, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Security. (f) No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax, assessment 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, 9.5, 11.6, 13.2 or 14.2 not involving any transfer. (g) The Company shall not be required (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities 41 selected for redemption under Section 11.2 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part or (iii) to register the transfer of or exchange any Securities in respect of which a Change of Control Purchase Notice has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture and such Securities (except, in the case of Securities to be purchased in part, the portion thereof not be purchased). (h) The provisions of clauses (1) through (5) below shall apply only to Global Securities: (1) Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a "clearing agency" registered under Exchange Act, and a successor Depositary is not appointed by the Company within 90 days or (ii) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clause (i) or (ii) above shall be so exchanged in whole and not in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (2) Securities issued in exchange for a Global Security shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Security to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Security Registrar. Upon any such surrender, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. 42 (3) Subject to the provisions of clause (5) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a holder is entitled to take under this Indenture or the Securities. (4) In the event of the occurrence of any of the events specified in clause (1) above, the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive, fully registered form, without interest coupons. (5) Neither the Agent Members nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. (i) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security is surrendered to the Trustee, or if there shall be delivered to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of 43 notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously Outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion, but subject to any conversion rights, may, instead of issuing a new Security, pay such Security. Upon the issuance, authentication and delivery by the Trustee of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued, authenticated and delivered by the Trustee pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 3.7 Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for payment of such interest. If the Company shall be required by law to deduct any taxes from any sum of interest payable hereunder to a Holder, (i) the Company shall make such deductions and shall pay the full amount deducted to the relevant taxing authority in accordance with applicable law and (ii) the amount of such deduction shall be treated for purposes hereof as a payment of interest. 44 Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date (a "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause (1) provided. Thereupon, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (2), such manner of payment shall be deemed practicable by the Trustee. 45 Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. In the case of any Security which is converted after any Regular Record Date and on or prior to the corresponding Interest Payment Date, interest on such Security whose Stated Maturity is on such Interest Payment Date shall be deemed to continue to accrue and shall be payable on such Interest Payment Date notwithstanding such conversion and notwithstanding that such Security may have been called for redemption on a Redemption Date within such period, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable (although such accrued and unpaid interest will be deemed paid by the appropriate portion of the Common Stock received by the holders upon such conversion). Section 3.8 Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 3.7) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company nor 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 Global Security or from maintaining, supervising or reviewing any records relating to such beneficial ownership interests and they shall be protected in acting on any such information provided by the Depositary. Section 3.9 Cancellation. All Securities surrendered for payment, redemption, registration of transfer or exchange or conversion shall, if surrendered to 46 any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order; provided, however, that the Trustee shall not be required to destroy the certificates representing such cancelled securities. Section 3.10 Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. Section 3.11 CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the trustee of any change in the "CUSIP" numbers. ARTICLE IV SATISFACTION AND DISCHARGE Section 4.1 Satisfaction and Discharge of Indenture. This Indenture shall upon Company request cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either 47 (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (B) above, has deposited or caused to be deposited irrevocably with the Trustee as trust cash or, if expressly permitted by the terms hereof, Common Stock or U.S. Government Obligations in trust for the benefit of Holders of Outstanding Securities in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for the aggregate principal amount thereof plus any interest due on overdue installments and interest to the date of such deposit (in the case of securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; and (4) no Event of Default or event which, with notice or lapse of time, or both, would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit. 48 Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7, the obligations of the Trustee and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. Section 4.2 Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the aggregate principal amount thereof plus any interest due on overdue installments and interest for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 4.1 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. ARTICLE V REMEDIES Section 5.1 Events of Default. "Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article XII or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest or Liquidated Damages, if any, upon any Security when it becomes due and payable, and continuance of such default for a period of 31 days; or (2) the Company defaults in the payment of the principal amount, Redemption Price or Change in Control Purchase Price on any Security, when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase by the Company or otherwise, whether or not such payment shall be prohibited by this Indenture; 49 (3) the Company fails to comply with any of its agreements in the Securities or this Indenture and such failure continues for 90 days after receipt by the Company of a Notice of Default; (4) the Company 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 or the commencement of any case against it; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; (D) makes a general assignment for the benefit of its creditors; (E) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (F) consents to the filing of such petition or the appointment of or taking possession by a Custodian; (5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, or adjudicates the Company insolvent or bankrupt; (B) appoints a Custodian of the Company for any substantial part of their respective properties; or (C) orders the winding up or liquidation of the Company and the order or decree remains unstayed and in effect for 60 days; 50 (6) the Company fails to deliver shares of Common Stock (including cash in lieu of fractional shares) when such Common Stock (and cash in lieu of fractional shares) is required to be delivered, upon conversion of a Security and such failure is not remedied for a period of 10 days; or (7) default under any bond, note or other evidence of indebtedness for money borrowed of the Company having an aggregate outstanding principal amount of in excess of $12,500,000, which default shall have resulted in such indebtedness being accelerated, without such indebtedness being discharged or such acceleration having been rescinded or annulled within 60 days after receipt of notice thereof by the Company from the Trustee or the Company and the Trustee from the Holders of not less than 25% in aggregate principal amount of the Securities then Outstanding (unless such default has been cured or waived) specifying such default and requiring the Company to cause such indebtedness to be discharged or such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder. A Default under clause (3) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time Outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default within the time specified in clause (3) above after receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee, within 90 days after it becomes aware of the occurrence thereof, written notice of any event which with the giving of notice or the lapse of time or both would become an Event of Default under clause (3) or clause (7), its status and what action the Company is taking or proposes to take with respect thereto. Section 5.2 Acceleration of Stated Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 5.1(4) or 5.1(5)) occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal amount and accrued and unpaid interest through the date of declaration on all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount and accrued and unpaid interest shall become 51 immediately due and payable. If an Event of Default specified in Section 5.1(4) or 5.1(5) occurs, the principal amount and accrued and unpaid interest through the date of declaration 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. Payment of the Securities following acceleration is subject to Section 12.3. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article V provided, the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, 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) the principal amount and accrued and unpaid interest through the date of declaration on the Securities, (B) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities, and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, and actual expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee. If 52 (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 31 days, or (2) default is made in the payment of the principal amount, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and payable on such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, and actual out-of-pocket expenses, disbursements and advances, of the Trustee, its agents and counsel. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 5.4 Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount 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, and actual out-of-pocket expenses, disbursements and advances, of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claim and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the 53 reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. Section 5.5 Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, and actual out-of-pocket expenses, disbursements and advances, of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 5.6 Application of Money Collected. Any money collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: Subject to Article XII to the payment of all amounts due the Trustee under Section 6.7; SECOND: To the holders of Senior Indebtedness to the extent provided in Article XII; THIRD: Subject to Article XII to the payment of the amounts then due and unpaid for first, interest on, and, second, for principal of the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, 54 according to the amounts due and payable on such Securities for interest and principal respectively; and FOURTH: The balance, if any, to the Company. Section 5.7 Limitation on Suits. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or Securities, 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; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses, losses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and 55 unconditional, to receive payment of the principal amount and accrued and unpaid interest (subject to Sections 3.7 and 4.2) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption or repurchase, on the Redemption Date or Change in Control Purchase Date, as the case may be) and to convert such Security in accordance with Article XIII and to institute suit for the enforcement of any such payment on or after such respective dates or the right to convert, and such rights shall not be impaired without the consent of such Holder. Section 5.9 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 5.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 5.12 Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, 56 method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 5.13 Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except (1) an Event of Default described in Section 5.1(1) or 5.1(2), or (2) a Default in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security affected, or (3) a Default under Article XIII. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 5.14 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, including reasonable attorneys' fees and expenses, and may assess costs against any such party litigant, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, that this Section 5.14 shall not be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Trustee and the Company or in any suit for the enforcement of the right to convert any Security in accordance with Article XIII. 57 Section 5.15 Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI THE TRUSTEE Section 6.1 Certain Duties and Responsibilities. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, 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, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 6.2 Notice of Defaults. Within 90 days after the occurrence of any default hereunder, the Trustee shall give the Holders, in the manner provided in Section 1.6, notice of any default hereunder of which the Trustee shall be aware, unless such default shall have been cured or waived before the giving of such notice; provided, however, that, except in the case of a default in any payment on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or any Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the character specified in Section 5.1(3), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. 58 For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 6.3 Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel of its choice and the advice of such counsel or any opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its 59 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 reasonable examination of the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence or willful misconduct, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this indenture. (i) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; and (j) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. Section 6.4 Not Responsible for Recitals or Issuance of Securities. ------------------------------------------- The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. Section 6.5 May Hold Securities. ------------------- The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner 60 or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar, 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 under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 6.7 Compensation and Reimbursement. ------------------------------ The Company agrees (1) to pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all actual expenses, fees, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the actual out-of-pocket expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify, the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, damage, claims, liability or expense, including taxes other than taxes based upon, measured by or determined by the income of the Trustee, incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the actual 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 5.1(4) or Section 5.1(5), the expenses (including the actual out-of-pocket charges and expenses of its counsel) and the 61 compensation for the services are intended to constitute expenses of administration under any applicable Bankruptcy Law. The provisions of this Section shall survive the termination of this Indenture. Section 6.8 Disqualification: Conflicting Interests. --------------------------------------- If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. Section 6.9 Corporate Trustee Required; Eligibility. --------------------------------------- There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000 and has its Corporate Trust Office in New York, New York. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 6.10 Resignation and Removal; Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time 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. 62 (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If 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 at the expense of the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company by Board Resolution may remove the Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the 63 manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.6. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 6.11 Acceptance of Appointment by Successor. -------------------------------------- Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; provided, that 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. Upon request of any such successor Trustee, the Company shall execute any and all instruments required to more fully and certainly vest in and confirm to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 6.12 Merger, Conversion, Consolidation or Succession to Business. -------------------------------------------------- Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of 64 any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 6.13 Preferential Collection of Claims Against Company. ------------------------------------------------- If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.1 Company to Furnish Trustee Names and Addresses of Holders. ------------------------------------------------- The Company will furnish or cause to be furnished to the Trustee (a) semiannually, not later than five Business Days immediately preceding each Interest Payment Date in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of the immediately preceding Regular Record Date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. 65 Section 7.2 Preservation of Information; Communications to Holders. ---------------------------------------------- (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. Section 7.3 Reports by Trustee. ------------------ (a) Within 60 days after May 15 of each year, commencing May 15, 2000, the Trustee shall transmit by mail to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange and of any delisting thereof. Section 7.4 Reports by Company. ------------------ The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such 66 summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 8.1 Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be a Person (other than an individual) organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Section 13.11; 67 (2) immediately after giving effect to such transaction, no Event of Default (as defined in Article V), and no event that, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with and if a supplemental indenture is required that such supplemental indenture constitutes the legal, valid and binding obligation of the Company in accordance with its terms. Section 8.2 Successor Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE IX AMENDMENTS Section 9.1 Without Consent of Holders. The Company and the Trustee may amend this Indenture or the Securities without the consent of any Holder of Securities: (1) to cure any ambiguity, omission, defect or inconsistency or to make any other provision with respect to matters or questions arising under the Indenture or the Securities; provided, however, that such amendment does not materially adversely affect the rights of any Holder; 68 (2) to comply with Article VIII or Section 13.11; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1986, as amended; (4) to make any change that does not adversely affect the rights of any Holder; (5) to make any change to comply with the TIA or any amendment of the TIA, or any requirement by the Commission in connection with the qualification of this Indenture under the TIA or any amendment thereof; or (6) to add to the covenants or obligations of the Company hereunder, for the benefit of the Holders, or to surrender any right, power or option herein conferred upon the Company. Section 9.2 With Consent of Holders. With the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time Outstanding, the Company and the Trustee may amend this Indenture or the Securities. However, without the consent of each Holder affected, an amendment or supplement to this Indenture or the Securities may not: (1) reduce the principal amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of interest referred to in paragraph 1 of the Securities or extend the time for payment of interest on any Security; (3) reduce the principal amount or extend the Stated Maturity of any Security; (4) reduce the Redemption Price or Change in Control Purchase Price of any Security or extend the date on which the Change in Control Purchase Price of any Security is payable; (5) make any Security payable in money or securities other than that stated in the Security; 69 (6) make any change in Article XII that adversely affects the rights of any Holder; (7) make any change in Section 5.13 or this Section 9.2, except to increase any percentage referred to therein, or make any change in Section 5.8; (8) make any change that adversely affects the right to convert any Security; (9) make any change that adversely affects the right to require the Company to purchase the Securities in accordance with the terms thereof and this Indenture; (10) make any change to the provisions of this Indenture relating to the purchase of Securities at the option of the Holder pursuant to Section 14.1 which change would result in a violation of applicable federal or state securities laws (including positions of the Commission under applicable no-action letters), whether as a result of the exercise or performance of any rights or obligations under such provisions or otherwise; or (11) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the Securities. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section 9.2 or Section 9.1 may not make any change that adversely affects the rights under Article XII of any holder of Senior Indebtedness then outstanding unless the requisite holders of such Senior Indebtedness consent to such change pursuant to the terms of such Senior Indebtedness. After an amendment under this Section 9.2 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment. Section 9.3 Compliance with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article IX shall comply with the TIA as then in effect. 70 Section 9.4 Revocation and Effect of Consents, Waivers and Actions. Until an amendment or waiver becomes effective, a consent to it or any other action by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder's Security, even if notation of the consent, waiver or action is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, waiver or action becomes effective. After an amendment, waiver or action becomes effective, it shall bind every Holder, except as provided in Section 9.2. Section 9.5 Notation on or Exchange of Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX 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 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. Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee shall sign any supplemental indenture authorized pursuant to this Article IX if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment the Trustee shall be entitled to receive, and (subject to the provisions of Section 6.3) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. Section 9.7 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 71 ARTICLE X COVENANTS Section 10.1 Payment of Securities. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture, including, without limitation, Article XII herein. The principal amount, Redemption Price, Change in Control Purchase Price and interest and Liquidated Damages, if any, shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, cash or securities, if expressly permitted hereunder, sufficient to pay all such amounts then due. The Company shall, to the extent permitted by law, pay interest on overdue amounts at the per annum rate of interest set forth in paragraph 1 of the reverse of the security, compounded semiannually, which interest on overdue amounts (to the extent payment of such interest shall be legally enforceable) shall accrue from the date such overdue amounts were originally due and payable. Section 10.2 Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The office or agency in the Borough of Manhattan, the City of New York, shall initially be at the Corporate Trust Office of the Trustee, and shall be the office or agency for all of the aforesaid purposes unless the Company shall appoint some other office or agency for such purposes and shall give prompt written notice to the Trustee of the location, and any change in the location, of such other office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. 72 The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 10.3 Money for Security Payments To Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal amount, Redemption Price, Change in Control Purchase Price and interest and Liquidated Damages, if any, on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal amount, Redemption Price, Change in Control Purchase Price and interest and Liquidated Damages, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal amount, Redemption Price, Change in Control Purchase Price and interest and Liquidated Damages, if any, on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held in trust for the benefit of the Persons entitled to such principal amount, Redemption Price, Change in Control Purchase Price and interest and Liquidated Damages, if any, 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 10.3, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of, premium, if any, or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; 73 (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal, premium, if any, or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of principal amount, Redemption Price, Change in Control Purchase Price or interest on the Securities and remaining unclaimed for two years after such principal amount, Redemption Price, Change in Control Purchase Price or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 10.4 Statement by Officers as to Default. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this 74 Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. The Company shall file with the Trustee written notice of the occurrence of any Default or Event of Default within five Business Days of its becoming aware of such Default or Event of Default. Section 10.5 Existence. Subject to Article VIII, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 10.6 Delivery of Certain Information. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder or the holder of shares of Common Stock issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder or such holder of shares of Common Stock issued upon conversion of Securities, or to a prospective purchaser of any such security designated by any such Holder or holder, as the case may be, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act in connection with the resale of any such security. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE XI REDEMPTION OF SECURITIES Section 11.1 Right to Redeem; Notices to Trustee. On or after December 15, 2002, the Company, at its option, may redeem the Securities as a whole at any time, or from time to time in part, for cash in accordance with the provisions set forth in paragraphs 5 and 6 of the Securities. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the principal amount of Securities to be redeemed and the Redemption Price. 75 The Company shall give the notice to the Trustee provided for in this Section 11.1 at least 35 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee. Section 11.2 Selection of Securities to Be Redeemed. If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed by lot, pro rata or by any other method the Trustee selects. The Trustee shall make the selection at least 30 but not more than 60 days before the Redemption Date from Outstanding Securities not previously called for redemption. Securities and portions of them the Trustee selects shall be in principal amounts of $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. If any Security selected for partial redemption is thereafter surrendered for conversion in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be), solely for purposes of determining the aggregate principal amount of Securities to be redeemed by the Company, to be the portion selected for redemption. Securities that have been converted during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. Nothing in this Section 11.2 shall affect the right of any Holder to convert any Security pursuant to Article XIII before the termination of the conversion right with respect thereto. Section 11.3 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Trustee, in the name and at the expense of the Company, shall cause notice of redemption to be mailed, first-class postage prepaid, to each Holder of Securities to be redeemed at such Holder's address as it appears on the list of Holders maintained pursuant to Section 7.1. At the Company's written request, the Trustee shall, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper of national circulation designated by the Company. The notice shall identify the Securities to be redeemed and shall state: 76 (a) the Redemption Date (upon which the Redemption Price shall be paid); (b) the Redemption Price; (c) the Conversion Price; (d) the name and address of the Paying Agent and Conversion Agent and of the office or agency referred to in Section 10.2; (e) that Securities called for redemption may be converted at any time before the close of business on the Redemption Date; (f) that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 8 of the Securities; (g) that Securities called for redemption must be surrendered to the Paying Agent or at the office or agency referred to in Section 10.2 to collect the Redemption Price; (h) the CUSIP number of the Securities called for redemption; (i) if fewer than all the Outstanding Securities are to be redeemed, the certificate numbers and principal amounts of the particular Securities to be redeemed; and (j) that, unless the Company defaults in payment of the Redemption Price, interest on Securities called for redemption will cease to accrue on and after the Redemption Date. Section 11.4 Effect of Notice of Redemption. Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date stated in the notice and at the Redemption Price therefor except for Securities that are converted in accordance with the terms of this Indenture and after such date (unless the Company shall default in the payment of the Redemption Price), such Securities shall cease to bear interest. Upon the later of the Redemption Date and the date such Securities are surrendered to the Paying Agent or at the office or agency referred to in Section 10.2, such Securities called for redemption shall be paid at the Redemption Price therefor. 77 Section 11.5 Deposit of Redemption Price. Prior to 11:00 a.m., New York City time on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of, and accrued and unpaid interest on, all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which prior thereto have been delivered by the Company to the Trustee for cancellation. The Paying Agent shall as promptly as practicable return to the Company any money, with interest, if any, thereon not required for that purpose because of conversion of Securities pursuant to Article XIII. If such money is then held by the Company or a Subsidiary or an Affiliate of the Company in trust and is not required for such purpose it shall be discharged from such trust. Section 11.6 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security of the same tenor in an authorized denomination equal in principal amount to the unredeemed portion of the Security surrendered. Section 11.7 Conversion Arrangement on Call for Redemption. In connection with any redemption of Securities, the Company may arrange, in lieu of redemption, for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase all or a portion of such Securities by paying to the Trustee in trust for the Holders whose Securities are to be so purchased, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for redemption of such Securities, is not less than the Redemption Price, together with interest, if any, accrued to the Redemption Date, of such Securities. Notwithstanding anything to the contrary contained in this Article XI, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers, but no such agreement shall relieve the Company of its obligation to pay such Redemption Price and such accrued interest, if any. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article XIII) surrendered by such purchasers for conversion, all as of 78 immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Trustee shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it would moneys deposited with it by the Company for the redemption of Securities. Without the Trustee's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture except to the extent arising from its willful misconduct or negligence. ARTICLE XII SUBORDINATION OF SECURITIES Section 12.1 Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII, the indebtedness represented by the Securities and the payment of the principal amount, Redemption Price, Liquidated Damages, Change in Control Purchase Price, interest and all other amounts and claims owing on and with respect to each and all of the Securities and all obligations of the Company under this Indenture (collectively, the "Subordinated Obligations") are hereby expressly made subordinate and junior in right of payment to the prior payment in full in cash or other payment satisfactory to the holders of Senior Indebtedness of all Senior Indebtedness and that said subordination is for the benefit of the holders of Senior Indebtedness and they and or each of them severally may enforce such subordination. Section 12.2 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 79 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 in cash or other payment satisfactory to the holders of Senior Indebtedness of all amounts due or to become due on or in respect of all Senior Indebtedness before the Holders of the Securities are entitled to receive any payment or distribution on account of the Subordinated Obligations, and to that end the holders of Senior Indebtedness or their representative or representatives or the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, shall be entitled to receive from the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full in cash of all Senior Indebtedness remaining unpaid, 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 Subordinated Obligations in any such case, proceeding, dissolution, liquidation or other winding up or event, assignment or marshalling. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article VIII shall not be deemed a dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors or marshaling of assets and liabilities of the Company for the purposes of this Section 12.2 if the Person formed by such consolidation or into which the Company is merged or which acquires by conveyance or transfer such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions set forth in Article VIII. Section 12.3 No Payment When Senior Indebtedness in Default. ---------------------------------------------- (a) The Company may not make any payment of or distribution with respect to the Subordinated Obligations nor may the Company acquire, defease or redeem any Securities if (a) a payment default on any Senior Indebtedness has 80 occurred and is continuing 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) a default (other than a default referred to in the preceding clause (a)) on any Senior Indebtedness occurs and is continuing that permits holders of such Senior Indebtedness to accelerate the maturity thereof and the default is the subject of judicial proceedings or the Company receives a notice of default thereof from any person who may give such notice pursuant to the instrument evidencing or document governing such Senior Indebtedness (a "Senior Indebtedness Default Notice"); provided, however, that only a holder of more than $10 million of Senior Indebtedness (or a representative of holders who collectively hold more than $10 million of Senior Indebtedness) can provide a Senior Indebtedness Default Notice. 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 for purposes of this Section 12.3. The Company may resume payment on the Securities and may acquire Securities if and when (i) the default referred to in clause (a) or (b) of the preceding paragraph above is cured or waived in writing or ceases to exist; or (ii) in the case of a default referred to in clause (b) of the preceding paragraph, 179 or more days pass after the receipt by the Company of the Senior Indebtedness Default Notice; and this Article XII otherwise permits the payment or acquisition at that time. Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent the conversion by a Holder of any Securities into Common Stock in accordance with the provisions for conversion of such Securities set forth in this Indenture. (b) In the event that any Securities are declared due and payable before their Stated Maturity pursuant to Section 5.2, then and in such event the Company shall promptly notify holders of Senior Indebtedness of such acceleration. The Company may not pay the Securities until the earlier of (i) the passage of 120 or more days have passed after such acceleration occurs or (ii) the payment in full in cash or other payment satisfactory to the holders of Senior Indebtedness of all Senior Indebtedness, and may thereafter pay the Securities if this Article XII permits the payment at that time. (c) In the event that, notwithstanding the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or 81 securities (including, without limitation, by way of setoff or otherwise), prohibited by this Article XII, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness of the Company is paid in full in cash or other payment satisfactory to the holders of such Senior Indebtedness of the Company, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness of the Company or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness of the Company may have been issued, as their respective interests may appear for application to the payment of all Senior Indebtedness of the Company remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Company in full in cash or other payment satisfactory to the holders of such Senior Indebtedness of the Company, after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of such Senior Indebtedness of the Company. Section 12.4 Payment Permitted If No Default. Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent the Company, at any time except in the circumstances described in Sections 12.2 and 12.3, from making payments at any time of the principal amount, Redemption Price, Liquidated Damages, Change in Control Purchase Price or interest, as the case may be, on the Securities. Section 12.5 Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness in cash, and until the Securities are paid in full, the Holders of the Securities shall be subrogated (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness to the extent that payments and distributions otherwise payable to Holders of Securities have been applied to the payment of Senior Indebtedness as provided by this Article XII. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article XII, and no payments over pursuant to the provisions of this Article XII to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than 82 holders of Senior Indebtedness and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. Section 12.6 Provisions Solely To Define Relative Rights. The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article XII of the holders of Senior Indebtedness, is intended to rank equally with all other general obligations of the Company), to pay to the Holders of the Securities the principal amount, Redemption Price, Liquidated Damages, Change in Control Purchase Price or interest, as the case may be, on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XII of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. Section 12.7 Trustee To Effectuate Subordination. Each Holder of a Security by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XII and appoints the Trustee his attorney-in-fact for any and all such purposes. Section 12.8 No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to 83 time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew, exchange, increase or alter, Senior Indebtedness, or otherwise amend, modify or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness or any security thereof or guarantee thereof is outstanding; (ii) sell, exchange, release, surrender, realize upon, enforce 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. The provisions of this Article XII shall continue to be effective or be reinstated as the case may be if at any time any payment of the Senior Indebtedness is rescinded or must otherwise be returned by the holder thereof upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. Section 12.9 Notice to Trustee. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or distribution or by the Trustee in respect of the Securities, unless and until a Responsible Officer of 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, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 12.9 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose, 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 84 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, the Trustee shall be entitled to rely conclusively on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article XII (although the Trustee is not obligated to make such determination), the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 12.10 Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII. Section 12.11 Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and (subject to Section 12.9 hereof) shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or 85 securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article XII or otherwise. Section 12.12 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7. Section 12.13 Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee; provided, however, that Section 12.12 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. Section 12.14 Certain Conversions Deemed Payment. For the purposes of this Article XII only, the payment, issuance or delivery of cash, property or securities (other than Common Stock issued in accordance with Article XIII) upon conversion of a Security in accordance with Article XIII shall be deemed to constitute payment on account of such Security subject to Article XII. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article XIII. 86 ARTICLE XIII CONVERSION OF SECURITIES Section 13.1 Conversion Privilege. Subject to and upon compliance with the provisions of this Article XIII, at the option of the Holder thereof, any Security or any portion of the principal amount thereof which is $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 Securities at the conversion price, determined as hereinafter provided, in effect at the time of conversion. Such conversion right shall expire at the close of business on December 15, 2006, subject, in the case of conversion of any global security, to any Applicable Procedures. In case a Security or portion thereof has previously been called for redemption at the election of the Company, such conversion right in respect of the Security 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 Security in respect of which a Holder has delivered a Change in Control Purchase Notice (as defined in Article XIV hereof) exercising the option of such Holder to require the Company to purchase such Security 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 this Indenture. The price at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Price") shall be initially $48.19 per share of Common Stock. The Conversion Price shall be adjusted in certain instances as provided in Section 13.4. In case the Company shall, by dividend or otherwise, declare or make a distribution on its Common Stock referred to in paragraph (4) or (5) of Section 13.4 (including dividends or distributions referred to in the last sentence of paragraph (4) of Section 13.4) which would result in an adjustment to the Conversion Price, the Holder of each Security, upon the conversion thereof pursuant to this Article XIII subsequent to the close of business on the date fixed for the determination of 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) 87 or (5) of Section 13.4, shall also be entitled to receive for each share of Common Stock into which such Security is converted, the portion of the evidences of indebtedness, shares of capital stock, securities, cash and other property so distributed applicable to one share of Common Stock; provided, however, that, at the election of the Company (whose election shall be evidenced by a Board Resolution) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution). If any conversion of a Security described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the Holder of the Security so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a Board Resolution) to distribute to such Holder a due bill for the evidences of indebtedness, shares of capital stock, securities, cash or assets to which such Holder is so entitled; provided that such due bill (i) meets any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and (ii) requires payment or delivery of such evidences of indebtedness, shares of capital stock, securities, cash or assets no later than the date of payment or delivery thereof to holders of Common Stock receiving such distribution. Section 13.2 Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any Security to be converted shall surrender such Security, duly endorsed or assigned to the Company or in blank, at any office or agency maintained by the Company pursuant to Section 10.2 hereof, accompanied by (a) written notice, in substantially the form and manner set forth in Section 2.5 hereof, to the Company at such office or agency that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted and (b) if shares or any portion of such Security not to be converted are to be issued in the name of a Person other than the Holder thereof, the name of the Person in which to issue such shares. Except as provided in Section 5.2 hereof, no Holder of Securities will be entitled upon conversion thereof to any payment or adjustment on account of accrued and unpaid interest thereon or on account of dividends on the shares of Common Stock issued in connection therewith. Securities surrendered for conversion during the period from the close of business on any Regular Record Date 88 to the opening of business on the corresponding Interest Payment Date (except Securities called for redemption on a Redemption Date within such period between and including such Regular Record Date and such Interest Payment Date) must be accompanied by payment to the Company in same day funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount converted. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions (the "Conversion Date"), and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the Conversion Date, 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 13.3. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Security. Any requirements for notice, surrender or delivery of Securities pursuant to this Article XIII shall, with respect to any global security, be subject to any Applicable Procedures. Section 13.3 Fractions of Shares. No fractional shares of Common Stock shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock which would otherwise be issuable upon conversion of any Security (or 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. 89 "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. If on the Conversion Date, the Common Stock is not quoted by any such organization, the fair market value of such Common Stock on such day, as reasonably determined in good faith by the Board of Directors of the Company, shall be used. Section 13.4 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 on the outstanding shares of such class of Common Stock, such reduction to become effective immediately after the opening of business on the day next following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (2) In case the Company shall pay or make a dividend or other distribution on its Common Stock consisting exclusively of, or shall otherwise issue to all holders of its Common Stock, rights, warrants or options entitling the holders thereof, 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 90 (determined as provided in paragraph (7) of this Section 13.4) 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. Notwithstanding the foregoing, in case the Company shall issue rights, options or warrants ("Stockholder Rights") to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock, which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or event ("Trigger Event"), such Stockholder Rights shall for purposes of this Section 13.4 not be deemed issued or distributed until the occurrence of the earliest Trigger Event and the conversion price shall not be reduced until the occurrence of such earliest Trigger Event. If at the end of the period during which all such warrants, options or rights are exercisable, not all such warrants, options or rights shall have been exercised, the conversion price shall be immediately readjusted to what it would have been had the above fraction been computed based on the number of shares of Common Stock actually issued in respect of such warrants, options or rights, as the case may be. (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 by multiplying such conversion price by a fraction of which the numerator shall be the number of shares 91 of Common Stock outstanding at the close of business on the day upon which such subdivision becomes effective before giving effect to such subdivision and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the day such subdivision becomes effective after giving effect to such subdivision, 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 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 day upon which such combination becomes effective before giving effect to such combination and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the day such combination becomes effective after giving effect to such combination 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, options or Stockholder Rights referred to in paragraph (2) of this Section 13.4, any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in paragraph (1) of this Section 13.4), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this paragraph (4) by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (7) of this Section 13.4) 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), on the date of such effectiveness, of the portion of the evidences of indebtedness, shares of capital stock, securities, cash and property so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day next following the later of (a) the date fixed for the payment of such distribution and (b) the date 20 days after the notice relating to such distribution is given pursuant to Section 13.6(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 92 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, among any other facts or advice it deems relevant, 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 13.4, 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 13.4 and (ii) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (1) of this Section 13.4). (5) In case the Company shall, by dividend or otherwise, make a distribution to all holders of its Common Stock exclusively in cash in an aggregate amount that, together with (i) the aggregate amount of any other distributions to all holders of its Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution and in respect of which no Conversion Price adjustment pursuant to this paragraph (5) has been made and (ii) the aggregate of any cash plus the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of the tender or exchange offer referred to below, of consideration payable in respect of any tender or exchange offer by the Company or a Subsidiary for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of such distribution and in respect of which no Conversion Price adjustment pursuant to paragraph (6) of this Section 13.4 has been made, exceeds 10% of the product of the current market price per share (determined as provided in paragraph (7) of this Section 13.4) 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 93 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 13.4) 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 13.6(a). (6) In case a successful tender or exchange offer made by the Company or any Subsidiary for all or any portion of the Common Stock shall involve an aggregate consideration having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) that, together with (i) the aggregate of the cash plus the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of the other tender or exchange offer referred to below, of consideration payable in respect of any other tender or exchange offer by the Company or a Subsidiary for all or any portion of the Common Stock concluded within the preceding 12 months and in respect of which no Conversion Price adjustment pursuant to this paragraph (6) has been made and (ii) the aggregate amount of any distributions to all holders of the Common Stock made exclusively in cash within the preceding 12 months and in respect of which no Conversion Price adjustment pursuant to paragraph (5) of this Section 13.4 has been made, exceeds 10% of the product of the current market price per share (determined as provided in paragraph (7) of this Section 13.4) of the Common Stock on the Expiration Time times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, the Conversion Price shall be reduced (but not increased) so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be (i) the product of the current market price per share (determined as provided in paragraph (7) of this Section 13.4) of the Common Stock on the Trading Day next succeeding the Expiration Time times the 94 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 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 (including any tendered shares) 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; provided, that if the number of Purchased Shares or the aggregate consideration payable therefor have not been finally determined by such opening of business, the adjustment required by this subsection (6) shall, pending such final determination, be made based upon the number of Purchased Shares and the aggregate consideration payable therefor as so finally determined, effectively immediately prior to the opening of business on the day immediately following the day such final determination shall have been made. (7) For the purpose of any computation under this paragraph and paragraphs (2), (4) and (5) of this Section 13.4, 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 10 consecutive Trading Days immediately preceding 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 10th 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 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 95 Other Event, and (iv) if the "ex" date for the Current Event is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value on the date in question (as determined in good faith by the Board of Directors in a manner consistent with any determination of such value for purposes of paragraph (4) or (5) of this Section 13.4, whose determination shall be conclusive and described in a Board Resolution) of the portion of the rights, warrants, options, evidences of indebtedness, shares of capital Stock, securities, cash or property being distributed applicable to one share of Common Stock. For the purpose of any computation under paragraph (6) of this Section 13.4, 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 10 consecutive Trading Days commencing on or after the latest (the "Commencement Date") of (i) the date 10 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 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. 96 (8) In addition to the foregoing adjustments in paragraphs (1), (2), (3), (4), (5) and (6) above, the Company, from time to time and to the extent permitted by law, may reduce the Conversion Price by any amount for at least 20 Business Days, if the Board of Directors has made a determination, which determination shall be conclusive, that such reduction would be in the best interests of the Company. The Company shall give notice to the Trustee and cause notice of such reduction to be mailed to each Holder of Securities at such Holder's address as the same appears on the registry books of the Registrar, at least 15 days prior to the date on which such reduction commences. The Company may, at its option, also make such reductions in the Conversion Price in addition to those set forth above, as the Board of Directors deems advisable to avoid or diminish any income tax to holders of shares of Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for United States federal income tax purposes. (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 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, the Company shall make proper provision so that the Holder of any Security 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 97 accordance 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 Security so converted was convertible immediately prior to such Distribution Date would have been entitled on such Distribution Date in accordance with the terms and provisions of and applicable to the 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 13.4(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 13.4(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 13.4(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 98 Exchange or such other national or regional exchange or market on which the shares of Common Stock are listed or quoted. (11) Notwithstanding the foregoing provisions, (i) no adjustment need be made for a transaction to which any of the adjustment provisions described above applies if Holders may participate in the transaction on a basis and with notice that the Board of Directors determines to be the fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction, and (ii) the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any such plan, and the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any employee benefit plan or program of the Company or pursuant to any option, warrant, right or exercisable, exchangeable or convertible Security outstanding as of the date the Securities were first issued, shall not be deemed to constitute an issuance of Common Stock or exercisable, exchangeable or convertible securities by the Company to which any of the adjustment provisions described above applies. (12) Notwithstanding any other provision of this Article XIII, no adjustment to the conversion price shall result in zero or in a negative number or shall reduce the conversion price below the then par value per share of the Common Stock, and any such purported adjustment shall instead reduce the conversion price to such par value. The Company hereby covenants not to take any action to increase the par value per share of the Common Stock. (13) No adjustment in the Conversion Price shall be required for any increase or decrease in the par value of the Common Stock. Section 13.5 Notice of Adjustments of Conversion Price. Whenever the Conversion Price is adjusted as herein provided: (a) the Company shall compute the adjusted Conversion Price in accordance with Section 13.4 and shall prepare a certificate signed by the Chief Financial Officer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed (with a copy to the Trustee) at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 10.2 hereof; and 99 (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 13.6 Notice of Certain Corporate Action. In case: ---------------------------------- (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that would require a Conversion Price adjustment pursuant to paragraph (5) of Section 13.4; or (b) the Company shall authorize the granting to all holders of its Common Stock of rights, warrants or options to subscribe for or purchase any shares of capital Stock of any class or of any other rights (excluding rights distributed pursuant to any 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 is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding, up of the Company; or (e) the Company or any Subsidiary of the Company shall commence a tender or exchange offer for all or a portion of the Company's outstanding shares of Common Stock (or shall amend any such tender or exchange offer); then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 10.2 hereof, 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 100 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 which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Section 13.7 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 Securities, the whole number of shares of Common Stock then issuable upon the conversion in full of all outstanding Securities. 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 Securities, 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 Securities 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 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 Securities. 101 Section 13.8 Taxes on Conversions. The Company will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid. Section 13.9 Covenant as to Common Stock. The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities 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 13.13, the Company shall pay all taxes, liens and charges with respect to the issue thereof. Section 13.10 Cancellation of Converted Securities. All Securities delivered for conversion shall be delivered to the Trustee to be cancelled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 3.9 hereof. Section 13.11 Provisions in Case of Reclassification, Consolidation, Merger or Sale of Assets. In the event that the Company shall be a party to any transaction (including 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 Security then Outstanding shall have the right thereafter to convert such Security only into (subject to funds being legally available for such purpose under applicable law at the time of such conversion) the kind and amount of securities, cash and other property receivable upon such transaction by a holder of the number of shares of 102 Common Stock into which such Security might have been converted immediately prior to such transaction. The Company or the person formed by such consolidation or resulting from such merger or which acquired such assets or which acquired the Company's shares 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 13.11 shall similarly apply to successive transactions of the foregoing type. Section 13.12 Company's Obligation. All calculations, adjustments, conversions and other determinations under this Article 13 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 13. Section 13.13 Restrictions on Common Stock Issuable Upon Conversion. ------------------------------------------ (1) Shares of Common Stock to be issued upon conversion of a Security in respect of restricted Securities shall bear such restrictive legends as the Company may provide in accordance with applicable law. (2) If shares of Common Stock to be issued upon conversion of a Security in respect of restricted Securities are to be registered in a name other than that of the Holder of such Security, then the Person in whose name such shares of Common Stock are to be registered must deliver to the Conversion Agent a certificate satisfactory to the Company and signed by such Person, as to compliance with the restrictions on transfer applicable to such Security. Neither the Trustee nor any Conversion Agent or Registrar shall be required to register in a name other than that of the Holder shares of Common Stock or such Securities issued upon conversion of any such Security in respect of such Securities not so accompanied by a properly completed certificate. 103 ARTICLE XIV RIGHT TO REQUIRE REPURCHASE Section 14.1 Purchase of Securities at Option of the Holder upon Change in Control. In the event that a Change in Control 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 12.3 hereof), and upon the exercise of such right the Company shall repurchase, all of such Holder's Securities, or any portion of the principal amount thereof that is an integral multiple of $1,000 (provided that no single Security may be repurchased in part unless the portion of the principal amount of such Security to be outstanding after such repurchase is equal to $1,000 or an integral multiple of $1,000), on the date (the "Change in Control Purchase Date") that is not later than 45 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 (but excluding) the Change in Control Purchase Date (subject to the right of Holders of record on the Regular Record Date to receive interest on the relevant Interest Payment Date) (the "Change in Control Purchase Price"). If the Change in Control Purchase Date is between a Regular Record Date and the related Interest Payment Date, then the interest payable on such Interest Payment Date shall be paid to the Holder of record of the Security on such Regular Record Date. Section 14.2 Notices; Method of Exercising Repurchase Right, Etc. ----------------------------------------------- (a) Unless the Company shall have theretofore called for redemption all of the outstanding Securities, on or before the 25th day after the occurrence of a Change in Control, the Company or, at 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 Securities (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; 104 (2) the date by which the Change in Control Purchase Notice (as defined below) must be delivered; (3) the Change in Control Purchase Date; (4) the Change in Control Purchase Price; (5) the place or places where such Securities are to be surrendered for payment of the Change in Control Purchase Price and accrued interest, if any; (6) the Conversion Price and any adjustments thereto, the date on which the right to convert the Securities will terminate and the places where such Securities may be surrendered for conversion; (7) a description of the procedure which a Holder must follow to exercise a repurchase right; (8) the procedures for withdrawing a Change in Control Purchase Notice; (9) that Holders who want to convert Securities must satisfy the requirements set forth in the Securities; and (10) briefly, the conversion rights of Holders of Securities. 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 Securities. (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 or before the Change in Control Purchase 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, (ii) the certificate numbers of the Securities with respect to which the repurchase right is being exercised, (iii) the principal amount of the Securities to be repurchased (and, if any Security 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 105 registered) and (iv) a statement that an election to exercise the repurchase right is being made thereby pursuant to the applicable provisions of the Securities. (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 Change in Control Purchase Price in cash, for payment to the Holder on the Change in Control Purchase Date, payable with respect to the Securities (or portion thereof) as to which the repurchase right has been exercised; provided, however, that such Security for which a repurchase right has been exercised has been delivered to the Paying Agent (together with all necessary endorsements) at any time after the notice of exercise of a repurchase right shall have been given. Payment of the Change in Control Purchase Price for such Security shall be made promptly following the later of the Business Day following the Change in Control Purchase Date and time of delivery of the Security. If the Paying Agent holds money sufficient to pay the Change in Control Purchase Price on the Business Day following the Change in Control Purchase Date, then, immediately after the Change in Control Purchase Date, such Security shall cease to be outstanding and interest will cease to accrue and will be deemed paid regardless of whether such Security 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 Change in Control Purchase Price upon delivery of such Security). Securities in respect of which a Change in Control Purchase Notice has been given by the Holder thereof may not be converted into shares of Common Stock on or after the date of the delivery of such Change in Control Purchase Notice, unless such Change in Control Purchase Notice has first been validly withdrawn as specified in Section 14.2(g). (d) On or prior to the Change in Control Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 6.6 hereof) an amount of money sufficient to pay the Change in Control Purchase Price of the Securities which are to be repaid on the Change in Control Purchase Date. (e) If any Security (or portion thereof) surrendered for repurchase shall not be so paid on the Business Day following the Change in Control Purchase Date, the principal amount of such Security (or portion thereof, as the case may be) shall, until paid, bear interest from the Change in Control Purchase Date at the rate of 4% per annum, and each Security shall remain convertible into Common Stock in 106 accordance with Article XIII herein until the principal of such Security (or portion thereof, as the case may be) shall have been paid or duly provided for. (f) Any Security 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 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, 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 Security 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 Change in Control Purchase 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 Securities 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 Security 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. (h) There shall be no purchase of any Securities pursuant to Section 14.1 if there has occurred (or on or after the giving, by the Holders of such Securities, of the required Change in Control Purchase Notice) and is continuing an Event of Default (other than a default in the payment of the Change in Control Purchase Price with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Securities (x) with respect to which a Change in Control Purchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Change in Control Purchase Price with respect to such Securities) in which case, upon such return, the Change in Control Purchase Notice with respect thereto shall be deemed to have been withdrawn. Section 14.3 Certain Definitions. For purposes of this Article XIV: 107 (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. (c) "Change in Control" shall be deemed to have occurred at such time after the original issuance of the Securities as: (1) 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 50% of the total outstanding voting power of all classes of the Company's capital Stock entitled to vote generally in the election of directors; (2) 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: (i) 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 (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 cash, securities and other property (other than capital Stock of the surviving entity), and (ii) immediately after such transaction, no Person is the beneficial owner, directly or indirectly, of more than 50% of the total outstanding voting Stock of the surviving or transferee corporation; 108 (3) 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; (4) 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 8 hereof. (d) "Redeemable Capital Stock" means any class of 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 Securities 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; and provided further, however, that any class or series of capital Stock that would not constitute Redeemable Capital Stock but for provisions thereof giving the holder thereof the right to require the issuer of such capital Stock to repurchase or redeem such capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the final stated maturity of the Securities shall not constitute Redeemable Capital Stock if the "asset sale" or "change of control" provisions applicable to such class or series of capital Stock are no more favorable to the holders of such capital Stock in any material respect than the provisions of this Article XIV and such class or series of capital Stock specifically provides that the issuer of such capital Stock will not repurchase or redeem any such Stock pursuant to such provision prior to the Company's repurchase of the Securities as required pursuant to this Article XIV. Section 14.4 References to Change in Control Purchase Price. Whenever in this Indenture there is a reference, in any context, to the principal of any Security as of any time, such reference shall be deemed to include reference to the Change in Control Purchase Price payable in respect of such Security to the extent 109 that such Change in Control Purchase Price is, was or would be so payable at such time, and express mention of the Change in Control Purchase Price in any provision of this Indenture shall not be construed as excluding the Change in Control Purchase Price in those provisions of this Indenture when such express mention is not made. Section 14.5 Covenant to Comply with Securities Laws upon Purchase of Securities. In connection with any offer to purchase or purchase of Securities under Section 14.1, the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, if applicable, (ii) file the related Schedule 13E-4 (or any successor schedule, form or report) under the Exchange Act, if applicable, and (iii) otherwise comply with all Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon purchase of the Securities (including positions of the Commission under applicable no-action letters) so as to permit the rights and obligations under Sections 14.1 to be exercised in the time and in the manner specified in Sections 14.1. Section 14.6 Repayment to the Company. The Trustee and the Paying Agent shall return to the Company, upon written request, any cash or shares of Common Stock, together with interest on such cash as hereinafter provided and dividends on such shares of Common Stock, if any, held by them for the payment of a Change in Control Purchase Price of the Securities that remain unclaimed as provided in paragraph 13 of the Securities; provided, however, that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 14.3 exceeds the aggregate Change in Control Purchase Price of the Securities or portions thereof to be purchased, then promptly after the Business Day following the Change in Control Purchase Date the Trustee shall return any such excess to the Company together with interest as hereinafter provided or dividends, if any, thereon. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 110 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written. COMMSCOPE, INC. By: /s/ Jearld Leonhardt -------------------------------- Name: Jearld Leonhardt Title: Executive Vice President and Chief Financial Officer FIRST UNION NATIONAL BANK, as Trustee By: /s/ Shannon Schwartz -------------------------------- Name: Shannon Schwartz Title: Assistant Vice President EX-4.6 4 EXHIBIT 4.6 COMMSCOPE, INC. $150,000,000 4% CONVERTIBLE SUBORDINATED NOTES DUE 2006 REGISTRATION RIGHTS AGREEMENT ----------------------------- December 15, 1999 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated CIBC WORLD MARKETS CORP. c/o MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1305 Ladies and Gentlemen: This Registration Rights Agreement (the "Agreement") is made and entered into this fifteenth day of December, 1999, among CommScope, Inc., a Delaware corporation (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp. (collectively, the "Initial Purchasers"). This Agreement is made pursuant to the Purchase Agreement, dated December 9, 1999, among the Company and the Initial Purchasers (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of an aggregate of $150,000,000 million principal amount of the Company's 4% Convertible Subordinated Notes due 2006 (the "Firm Notes"), and, at the election of the Initial Purchasers, solely to cover overallotments, if any, in connection with the offering of the Firm Notes, up to $22,500,000 aggregate principal amount of additional 4% Convert- ible Subordinated Notes due 2006 (the "Additional Notes," and, together with the Firm Notes, the "Notes"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company agrees with you, (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Notes and the holders from time to time of the Common Stock, par value $0.01 per share (the "Common Stock"), of the Company initially issuable upon conversion of the Notes (each of the foregoing, a "Holder" and, together, the "Holders"), as follows: Section 1. Definitions. Capitalized terms used in this Agreement without definition shall have their respective meanings set forth in the Purchase Agreement. All references to Sections herein are to Sections of this Agreement unless otherwise indicated. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 Act" means the Securities Act of 1933, as amended from time to time. "1934 Act" means the Securities Exchange Act of l934, as amended from time to time. "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. "Commission" means the Securities and Exchange Commission. "Conversion Rate" means the term "Conversion Rate" as defined in the Indenture. 2 "Damages Payment Date" means each June 15 and December 15 in the case of Notes and the Common Stock. "DTC" means The Depository Trust Company. "Effectiveness Period" has the meaning set forth in Section 2(b). "Indenture" means the Indenture dated as of the date hereof among the Company and First Union National Bank, as trustee, pursuant to which the Notes are being issued. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, as set forth in Section 6. "Notice and Questionnaire" means a written notice delivered to the Company containing substantially the information called for by the Form of Selling Securityholder Notice and Questionnaire attached as Annex A to the Offering Memorandum of the Company dated December 9, 1999 relating to the Notes. "Notice Holder" means, on any date, any Holder that has delivered a Notice and Questionnaire to the Company on or prior to such date. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" means the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the 1933 Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities. "Record Holder" means, with respect to any Damages Payment Date relating to any Note or Common Stock as to which any Liquidated Damages Amount has accrued, the registered holder of such Note or Common Stock, as 3 the case may be, 15 days prior to the next succeeding Damages Payment Date. "Registrable Securities" means the Notes and the shares of Common Stock issuable upon conversion of the Notes, and any security issued with respect thereto upon any stock dividend, split or similar event until, in the case of any such security, the earliest of (i) its effective registration under the 1933 Act and resale in accordance with the Registration Statement covering it, (ii) expiration of the holding period that would be applicable thereto under Rule 144(k) were it not held by an Affiliate of the Company or (iii) its sale to the public pursuant to Rule 144. "Shelf Registration" means a registration effected pursuant to Section 2. "Shelf Registration Statement" means a "shelf" registration statement of the Company pursuant to the provisions of Section 2 filed with the Commission which covers some or all of the Registrable Securities, as applicable, on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Trustee" means First Union National Bank (or any successor entity), the trustee under the Indenture. "underwriter" means any underwriter of Registrable Securities in connection with an offering thereof under a Shelf Registration Statement. Section 2. Shelf Registration. (a) The Company shall prepare and file or cause to be prepared and filed with the Commission, as soon as practicable, but in any event, no later than the date (the "Filing Deadline Date") that is 90 days after the date of original issuance (the "Issue Date") of the Notes, a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement and, thereafter, shall use all reasonable efforts to cause such Shelf Registration Statement to be declared effective under the 1933 Act as soon as practicable, but in any event no later than the 4 date (the "Effectiveness Deadline Date") that is 180 days following the Issue Date; provided, however, that no Holder shall be entitled to have the Registrable Securities held by it covered by such Shelf Registration unless such Holder shall have provided a Notice and Questionnaire in accordance with Section 2(c) and is in compliance with Section 3(m). None of the Company's securityholders (other than the Holders of Registrable Securities) shall have the right to include any of the Company's securities in the Shelf Registration Statement. (b) The Company shall use all reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration Statement is declared effective or such shorter period that will terminate upon the earliest of the following: (A) when all the Notes covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement, (B) when all shares of Common Stock issued upon conversion of any such Notes that had not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement and (C) when, in the written opinion of counsel to the Company, all outstanding Registrable Securities held by persons which are not affiliates of the Company may be resold without registration under the 1933 Act pursuant to Rule 144(k) under the 1933 Act or any successor provision thereto (in any such case, such period being called the "Effectiveness Period"). (c) Each Holder of Registrable Securities wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire to the Company at least five (5) Business Days prior to any intended distribution of Registrable Securities under the Shelf Registration Statement. From and after the date the Shelf Registration Statement is declared effective, the Company shall, as promptly as is practicable after the date a Notice and Questionnaire and such other information as the Company may reasonably require pursuant to Section 3(m) is delivered, and in any event within five (5) Business Days after such date, (i) if required by applicable law, file with the Commission a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file 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 the Holder delivering such Notice and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with 5 applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use all reasonable efforts to cause such post-effective amendment to be declared effective under the 1933 Act as promptly as is practicable, but in any event by the date (the "Amendment Effectiveness Deadline Date") that is 45 days after the date such post-effective amendment is required by this clause to be filed; (ii) provide such Holder copies of any documents filed pursuant to Section 2(c)(i); and (iii) notify such Holder as promptly as practicable after the effectiveness under the 1933 Act of any post-effective amendment filed pursuant to Section 2(c)(i); provided, that if such Notice and Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in accordance with Section 2(d), provided, further , that if under applicable law the Company has more than one option as to the type or manner of making any such filing, it will make the required filing or filings in the manner or of a type that is reasonably expected to result in the earliest availability of the Prospectus for effecting resales of Registrable Securities. Notwithstanding anything contained herein to the contrary, the Company shall not be under any obligation to name any Holder that is not a Notice Holder as a selling securityholder in the Shelf Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the provisions of Section 2(c) of this Agreement (whether or not such Holder was a Notice Holder at the time the Shelf Registration Statement was declared effective) shall be named as a selling securityholder in the Shelf Registration Statement or related Prospectus in accordance with the requirements of this Section 2(c). (d) The Company shall be deemed not to have used all reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if either the Company voluntarily takes any action that would result in Holders of Registrable Securities covered thereby not being able to offer and sell any such Registrable Securities during that period, unless (i) such action is required by applicable law, (ii) upon the occurrence of any event contemplated by paragraph 3(c)(2)(iii) below, and such action is taken by the Company in good faith and for valid business reasons or (iii) the continued effectiveness of the Shelf Registration 6 Statement would require the Company to disclose a material financing, acquisition or other corporate development, and the proper officers of the Company shall have determined in good faith that such disclosure is not in the best interests of the Company and its stockholders, and, in the case of clause (ii) above, the Company thereafter promptly comply with the requirements of Section 3(i) below. The duration of all periods during which the availability of the Shelf Registration Statement and the Prospectus is suspended in accordance with clauses (i) through (iii) of the preceding sentence (each such period of suspension being referred to herein as a "Deferral Period") shall, without the Company incurring any obligation to pay liquidated damages pursuant to Section 2(e), not to exceed, in the aggregate, 90 days in any 12-month period. (e) The parties hereto agree that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages with precision, if (i) the Shelf Registration Statement has not been filed on or prior to the Filing Deadline Date, (ii) the Shelf Registration Statement has not been declared effective under the 1933 Act on or prior to the Effectiveness Deadline Date, (iii) either the Company has failed to perform its obligations set forth in Section 2(c) within the time period require therein or (iv) the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 2(d) hereof (each of the events of a type described in any of the foregoing clauses (i) through (iv) are individually referred to herein as an "Event," and the Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date in the case of clause (ii), the date by which the Company is required to perform its obligations set forth in Section 2(c) in the case of clause (iii) (including the filing of any post-effective amendment prior to the Amendment Effectiveness Deadline Date) and the date on which the aggregate duration of Deferral Periods in any period exceeds the number of days permitted by Section 2(d) hereof in the case of clause (iv), being referred to herein as an "Event Date"). Events shall be deemed to continue until the "Event Termination Date," which shall be the following dates with respect to the respective types of Events: the date the Shelf Registration Statement is filed in the case of an Event of the type described in clause (i), the date the Shelf Registration Statement is declared effective under the Securities Act in the case of an Event of the type described in clause (ii), the latest date on which the Company perform its obligations set forth in Section 2(c) in the case of an Event of the type described in clause (iii) (including, without limitation, the date the relevant post-effective amendment to the Shelf Registration Statement is declared effective under the 1933 Act), and termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods in a period set forth in Section 2(d) to be exceeded in the case of the commencement of an Event of the type described in clause (iv). Accordingly, commencing on (and including) any Event Date and ending on (but excluding) the next date on which there are no Events that have occurred and are continuing (a "Damages Accrual Period"), the Company agrees to 7 pay, as liquidated damages and not as a penalty, an amount (the "Liquidated Damages Amount"), payable on the Damages Payment Dates to Record Holders of then outstanding Notes that are Registrable Securities and of then outstanding shares of Common Stock issued upon conversion of Notes that are Registrable Securities, as the case may be, accruing, for each portion of such Damages Accrual Period beginning on and including a Damages Payment Date (or, in respect of the first time that the Liquidation Damages Amount is to be paid to Holders on a Damages Payment Date as a result of the occurrence of any particular Event, from the Event Date) and ending on but excluding the first to occur of (A) the date of the end of the Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum equal to 0.25% of the principal amount of the Notes for the first 90 day period after the occurrence of such event and 0.25% for each 90 day period thereafter, provided that the maximum amount of Liquidated Damages will in no event exceed 1.0% per annum of the principal amount of the Notes or, in respect of any shares of Common Stock into which the Notes have been converted, at a rate equal to $2.50 per annum per 20.7512 shares of Common Stock (being equal to the number of shares of common stock issuable upon conversion of $1,000 principal amount of Notes as of the date hereof, such number being subject to adjustment as of any subsequent date according to the Conversion Rate in effect as of such date of determination) for the first 90 day period after the occurrence of such event and $2.50 per annum per 20.7512 shares of Common Stock (subject to adjustment as stated above) for each 90 day period thereafter, provided that the maximum amount of Liquidated Damages will in no event exceed $10.00 per annum per 20.7512 shares of Common Stock (subject to adjustment as stated above); provided, that in the case of a Damages Accrual Period that is in effect solely as a result of an Event of the type described in clause (iii) of the immediately preceding Paragraph, such Liquidated Damages Amount shall be paid only to the Holders that have delivered Notice and Questionnaires that caused the Company to incur the obligations set forth in Section 2(c) the non-performance of which is the basis of such Event; provided further, that any Liquidated Damages Amount accrued with respect to any Note or portion thereof called for redemption on a redemption date or converted into Common Stock on a conversion date prior to the Damages Payment Date, shall, in any such event, be paid instead to the Holder who submitted such Note or portion thereof for redemption or conversion on the applicable redemption date or conversion date, as the case may be, on such date (or promptly following the conversion date, in the case of conversion). Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to any Registrable Security from and after the earlier of (x) the date such security is no longer a Registrable Security and (y) termination of the Effectiveness Period pursuant to Section 2(b). The rate of accrual of the Liquidated Damages Amount with 8 respect to any period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence of multiple concurrent Events. Following the cure of all Events requiring the payment by the Company of Liquidated Damages Amounts to the Holders of Registrable Securities pursuant to this Section, the accrual of Liquidated Damages Amounts will cease (without in any way limiting the effect of any subsequent Event requiring the payment of Liquidated Damages Amount by the Company). The Trustee shall be entitled, on behalf of Holders of Notes or Common Stock issued upon conversion of Notes, to seek any available remedy for the enforcement of this Agreement, including for the payment of any Liquidated Damages Amount. Notwithstanding the foregoing, the parties agree that the sole damages payable for a violation of the terms of this Agreement with respect to which liquidated damages are expressly provided shall be such liquidated damages. Nothing shall preclude a Notice Holder or Holder of Registrable Securities from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement. All of the Company's obligations set forth in this Section 2(e) that are outstanding with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security have been satisfied in full. The parties hereto agree that the liquidated damages provided for in this Section 2(e) constitute a reasonable estimate of the damages that may be incurred by Holders of Registrable Securities by reason of the failure of the Shelf Registration Statement to be filed or declared effective or available for effecting resales of Registrable Securities in accordance with the provisions hereof. Section 3. Registration Procedures. In connection with any Shelf Registration Statement, the following provisions shall apply: (a) The Company shall furnish to the Initial Purchasers, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as the Initial Purchasers reasonably may propose. 9 (b) The Company shall take such action as may be necessary so that (i) any Shelf Registration Statement, and any amendment thereto, and any Prospectus forming part thereof, and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the 1933 Act and the 1934 Act and the respective rules and regulations thereunder, (ii) any Shelf Registration Statement, and any amendment thereto, does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (c) (1) The Company shall advise the Initial Purchasers and, in the case of clause (i), the Holders and, if requested by the Initial Purchasers or any such Holder, confirm such advice in writing: (i) when a Shelf Registration Statement, and any amendment thereto, has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information. (2) The Company shall advise the Initial Purchasers and the Holders and, if requested by the Initial Purchasers or any such Holder, confirm such advice in writing of: (i) the issuance by the Commission of any stop order suspending effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; (ii) the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and 10 (iii) the happening of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, the Shelf Registration Statement and the Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (d) The Company shall use its best efforts to prevent the issuance, and, if issued, to obtain the withdrawal, of any order suspending the effectiveness of any Shelf Registration Statement at the earliest possible time. (e) The Company shall furnish to each Holder of Registrable Securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendments thereto, including financial statements and schedules, and, if the Holder so requests in writing, all reports and other documents incorporated by reference in the Shelf Registration Statement and exhibits (including those incorporated by reference) except that the foregoing provision will not apply to regular periodic reports filed with the Commission on Forms 10-Q or 10-K or Current Reports on Form 8-K (or any similar successor forms), or exhibits to any such documents unless requested. (f) The Company shall, during the Effectiveness Period, deliver to each Holder of Registrable Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents (except upon and during the continuance of any event described in paragraphs 2(d) or 3(c)(2)(iii) above or Section 6(c)) to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto during the Shelf Registration Period. (g) Prior to any offering of Registrable Securities pursuant to any Shelf Registration Statement, the Company shall register or qualify or cooperate with the Holders of Registrable Securities included therein and their respective counsel in 11 connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions in the United States as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by such Shelf Registration Statement; provided, however, that in no event shall the Company be obligated to (i) qualify generally to do business or as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Section 3(g), (ii) file any general consent to service of process in any jurisdiction where it is not as of the date hereof then so subject or (iii) subject itself to taxation in any such jurisdiction if it is not so subject. (h) Unless any Registrable Securities shall be in book-entry only form, the Company shall cooperate with the Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such permitted denominations and registered in such names as Holders may request in connection with the sale of Registrable Securities pursuant to such Shelf Registration Statement. (i) Upon the occurrence of any event contemplated by paragraph 3(c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment to any Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Prospectus will not include 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 (except, in each case, for an untrue statement of a material fact or omission of a material fact made in reliance on and in conformity with written information furnished to the Company by or on behalf of Holders specifically for use therein). The Company agrees to notify the Holders to suspend use of the Prospectus, and the Holders shall suspend use of the Prospectus, and not communicate such material non-public information to any third party, and not sell or purchase, or offer to sell or purchase, any securities of the Company, until the Company has amended or supplemented the Prospectus so it does not contain any such misstatement or omission. Subject to Section 2(d), at such time as such public disclosure is otherwise made or the Company determines in good faith that such disclosure is not necessary, the Company agrees to notify the Holders of such determination and to amend or supplement the Prospectus if necessary, so it does not 12 contain any such untrue statement or omission therein and to furnish the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request. (j) Not later than the effective date of any Shelf Registration Statement hereunder, the Company shall provide a CUSIP number for all Registrable Securities covered by any Shelf Registration Statement and provide the Trustee with certificates for the Notes that are in a form eligible for deposit with DTC. (k) The Company shall use its best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to its securityholders or otherwise provide in accordance with Section 11(a) of the 1933 Act as soon as practicable after the effective date of the applicable Shelf Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the 1933 Act. (l) The Company shall its best efforts to cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (m) The Company may require each Holder of Registrable Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement and the Company may exclude from such registration the Registrable Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request, and the Company shall have no obligation to register under the Securities Act the Registrable Securities of any Holder who fails to furnish such information as provided in this paragraph. (n) The Company will use its best efforts to cause the Common Stock issuable upon conversion of the Notes to be listed on the New York Stock Exchange on or prior to the effective date of any Shelf Registration Statement hereunder. (o) Upon (i) the filing of any Shelf Registration Statement and (ii) the effectiveness of any Shelf Registration Statement, the Company shall announce the same, in each case by release to Reuters Economic Services and Bloomberg Business News (or any successor thereto). 13 (p) The Company shall use its best efforts to take all other steps necessary to effect the registration, offering and sale of the Registrable Securities covered by the Shelf Registration Statement contemplated hereby. Section 4. Registration Expenses. Except as otherwise provided in Section 6, the Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 2 and 3 and shall bear or reimburse the Holders for the reasonable fees and disbursements of not more than one counsel designated by the Company and reasonably acceptable to the Holders of a majority of the Registrable Securities covered by the Shelf Registration Statement to act as counsel therefor in connection therewith. Notwithstanding the foregoing, the Holders of Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions and transfer taxes, if any, attributable to such sale of Registrable Securities. Section 5. Indemnification and Contribution . (a) In connection with any Shelf Registration Statement, the Company shall indemnify and hold harmless the Initial Purchasers, each Holder, each underwriter who participates in an offering of Registrable Securities, and each person, if any, who controls any of such parties within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement (or any amendment thereto) covering Registrable Securities, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, 14 provided that (subject to Section 5(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expenses whatsoever, as incurred (including fees and disbursements of counsel chosen by an indemnified party), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers, such Holder or any underwriter in writing expressly for use in the Shelf Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Initial Purchasers, each underwriter who participates in an offering of Registrable Securities and the other selling Holders and each of their respective directors and officers and each Person, if any, who controls the Company, the Initial Purchasers, any underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 5(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such selling Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided , however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to the Shelf Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding 15 commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 5(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (e) If the indemnification provided for in this Section 5 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Company on the 16 one hand and the Holders and the Initial Purchasers on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and the Holders and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Holders or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 5 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 5, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Notes sold by it were offered exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 5, each Person, if any, who controls an Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser or Holder, and each director of the Company, and each Person, if any, who 17 controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant to this Section 5(e) are several in proportion to the principal amount of Notes set forth opposite their respective names in Schedule A to the Purchase Agreement and not joint. Section 6. Underwritten Offering. --------------------- (a) The Holders of Registrable Securities covered by the Shelf Registration Statement who desire to do so may sell such Registrable Securities in an underwritten offering in accordance with the conditions set forth below. In any such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Holders of a majority of the Registrable Securities to be included in such offering; provided, however , that (i) such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the Company and (ii) the Company shall not be obligated to arrange for more than one underwritten offering during the Effectiveness Period. No Holder may participate in any underwritten offering contemplated hereby unless such Holder (i) agrees to sell such Holder's Registrable Securities in accordance with any approved underwriting arrangements, (ii) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements and (iii) at least 30% of the outstanding Registrable Securities are included in such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to the selling securityholders and shall reimburse the Company for the fees and disbursements of its counsel, its independent public accountants and any printing expenses incurred in connection with such underwritten offering. Notwithstanding the foregoing, upon receipt of a request from the Managing Underwriter or a representative of Holders of a majority of the Registrable Securities outstanding to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 90 days if the Company in good faith have a valid business reason for such delay. (b) The Company shall enter into such customary agreements (including underwriting agreements in customary form) which are reasonably 18 acceptable to the Company, and take all other reasonably requested actions in order to expedite or facilitate the registration or the disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 5 (or such other provisions and procedures acceptable to the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 5. (c) Each Holder of Registrable Securities agrees, if requested (pursuant to a timely written notice) by the managing underwriters in an underwritten offering made pursuant to a Shelf Registration Statement, not to effect any private sale or distribution (including a sale pursuant to Rule 144(k) and Rule 144A, but excluding non-public sales to any of its affiliates, officers, directors, employees and controlling person) of any of the Notes in the case of an underwritten offering of the Notes, or the Common Stock, in the case of an underwritten offering of shares of Comon Stock constituting Registrable Securities, during the period beginning 10 days prior to, and ending 90 days after the closing date of such underwritten offering. (d) The Company shall (i) make reasonably available for inspection by the Holders of Registrable Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to make reasonably available for inspection all relevant information reasonably requested by such Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement, in each case as is customary for similar due diligence examinations; 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 Holders or any such underwriter, attorney, accountant or agent, 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 Holders and the other parties entitled thereto by one counsel designated by and on behalf of such Holders and other parties reasonably acceptable to the Company; (iii) make such representations and warranties to the Holders of Registrable Securities registered thereunder and the underwriters, if any, 19 in form, substance and scope as are customarily made by companies to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company (who may be the general counsel of the Company) and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) in customary form addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters (it being agreed that the matters to be covered by such opinion or a written statement by such counsel delivered in connection with such opinions shall include, without limitation, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, including the documents incorporated by reference therein, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading); (v) obtain "comfort letters" and updates thereof from the independent public accountants of the Company (and, if necessary, any other independent public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each such Holder of Registrable Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "comfort letters" in connection with primary underwritten offerings; and (vi) deliver such other customary documents and certificates as may be reasonably requested by any such Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 6(d) shall be performed at each closing under any underwritten offering to the extent required thereunder. Section 7. Miscellaneous. ------------- (a) Rule 144 and Rule 144A. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file the reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and regulations 20 adopted by the Commission thereunder. If the Company ceases to be so required to file such reports, the Company covenants that it will upon the request of any Holder of Registrable Securities (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will take such further action as any Holder of Registrable Securities may reasonably request, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the Commission. (b) No Conflicting Agreements. The Company is not, as of the date hereof, a party to, nor shall it, on or after the date of this Agreement, enter into, any agreement with respect to its securities that conflicts with the rights granted to the Holders of Registrable Securities in this Agreement. The Company represents and warrants that the rights granted to the Holders of Registrable Securities hereunder do not in any way conflict with the rights granted to the holders of the Company's securities under any other agreements. (c) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Initial Purchasers. (d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: 1. if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 7(d); 2. if to the Initial Purchasers, initially at the address set forth in the Purchase Agreement; and 21 3. if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have duly given when received. The Initial Purchasers or the Company by notice to the other may designate additional or different addresses for subsequent notices or communications. (e) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and the Holders, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Registrable Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Registrable Securities and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (f) 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. (g) Headings. The headings in this agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. (i) Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 22 Please confirm that the foregoing correctly sets forth the agreement among the Company and you. Very truly yours,COMMSCOPE, INC. By: /s/ Jearld Leonhardt -------------------------------- Name: Jearld Leonhardt Title: Executive Vice President and Chief Financial Officer [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated CIBC WORLD MARKETS CORP. By: MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ David Rosenberg -------------------------- Name: David Rosenberg Title: Vice President EX-5 5 EXHIBIT 5 [LETTERHEAD OF FRIED FRANK HARRIS SHRIVER & JACOBSON] 212-859-8076 (FAX: 212-859-4000) January 14, 2000 CommScope, Inc. 1375 Lenoir-Rhyne Boulevard Hickory, North Carolina 28601 Ladies and Gentlemen: We are acting as special counsel to CommScope, Inc., a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended, covering the registration of $172,500,000 in aggregate principal amount of the Company's 4% Convertible Subordinated Notes due 2006 (the "Notes") issued pursuant to the Indenture, dated as of December 15, 1999 (the "Indenture"), by and between the Company and First Union National Bank, as trustee (the "Trustee"). The Notes are convertible into shares (the "Shares") of common stock, par value $.01 per share, of the Company. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. In connection with this opinion, we have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such agreements, instruments, documents and records of the Company, such certificates of public officials and such other documents, and (iii) received such information from officers and representatives of the Company as we have deemed necessary or appropriate for the purposes of this opinion. In all such examinations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified documents of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracy of, representations and warranties contained in the documents and certificates and oral or written statements and other information of or from representatives of the Company and others and assume compliance on the part of all parties to the documents with their covenants and agreements contained therein. To the extent it may be relevant to the opinions expressed herein, we have assumed that the Trustee has the power and authority to enter into and perform the Indenture and to consummate the transactions contemplated thereby, and that the Indenture has been duly authorized, executed and delivered by, and constitutes a valid and binding obligation of, the Trustee. Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that: (1) The Notes constitute valid and binding obligations of the Company; and (2) The Shares have been duly authorized and, when issued and delivered upon conversion of the Notes in accordance with the terms of the Indenture and as contemplated in the Registration Statement, will be validly issued, fully paid and non-assessable. The opinion in paragraph (1) above is subject to the following: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting creditors' rights and remedies generally; and (ii) general principles of equity, including, without limitation, standards of materiality, good faith, fair dealing and reasonableness, equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity. The opinions expressed herein are limited to the laws of the State of New York and, to the extent relevant to the opinions expressed herein, the Delaware General Corporation Law, as currently in effect. The opinions expressed herein are given as of the date hereof, and we undertake no obligation to supplement this letter if any applicable laws change after the date hereof or if we become aware of any facts that might change the opinions expressed herein after the date hereof or for any other reason. 2 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to this firm under the caption "Validity of Securities" in the Prospectus forming a part of the Registration Statement. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ Lois Herzeca ------------------------------------- Lois Herzeca 3 EX-12 6 EXHIBIT 12
Nine Months Ended Years ended December 31, September 30, ------------------------------------------------- ---------------------- 1994 1995 1996 1997 1998 1998 1999 ------------------------------------------------- ---------------------- Actual ratio of earnings to fixed charges: Income before income taxes 75,485 76,713 92,103 61,514 60,214 41,024 75,528 Add fixed charges: Interest expense 12,281 8,891 10,091 13,615 15,298 11,990 7,673 Amortization of deferred financing fees - - - 70 150 112 116 ------------------------------------------------- ---------------------- Total earnings as defined 87,766 85,604 102,194 75,199 75,662 53,126 83,317 Fixed charges: Interest expense 12,281 8,891 10,091 13,615 15,298 11,990 7,673 Amortization of deferred financing fees - - - 70 150 112 116 ------------------------------------------------- ---------------------- Total fixed charges as defined 12,281 8,891 10,091 13,685 15,448 12,102 7,789 ------------------------------------------------- ---------------------- ACTUAL RATIO OF EARNINGS TO FIXED CHARGES 7.15 9.63 10.13 5.49 4.90 4.39 10.70 ================================================= ====================== Pro forma Pro forma Nine months Year ended ended December 31, September 30, 1998 1999 Adjusted Adjusted -------------- -------------- Pro forma ratio of earnings to fixed charges: Income before income taxes 62,921 76,149 Add fixed charges: Interest expense 11,871 6,512 Amortization of deferred financing fees 870 656 -------------- -------------- Total earnings as defined 75,662 83,317 Fixed charges: Interest expense 11,871 6,512 Amortization of deferred financing fees 870 656 -------------- -------------- Total fixed charges as defined 12,741 7,168 -------------- -------------- PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES 5.94 11.62 ============== ==============
EX-23.1 7 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of CommScope, Inc. on Form S-3 of our report dated January 29, 1999 appearing in the Annual Report on Form 10-K of CommScope, Inc. for the year ended December 31, 1998 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Hickory, North Carolina January 10, 2000 EX-25 8 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------- FIRST UNION NATIONAL BANK (Exact name of trustee as specified in its charter) United States National Bank 22-1147033 (State of incorporation if (I.R.S. employer not a national bank) identification no.) First Union National Bank 230 South Tryon Street, 9th Floor Charlotte, North Carolina 28288-1179 (Address of principal (Zip Code) executive offices) Same as above ------------- (Name, address and telephone number, including area code, of trustee's agent for service) CommScope, Inc. (Exact name of obligor as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 36-4135495 (I.R.S. employer identification no.) Frank B. Wyatt, II Vice President, General Counsel & Secretary CommScope, Inc. 1375 Lenoir-Rhyne Boulevard P.O. Box 339 Hickory, NC 28603-0339 (Address, including zip code, of principal executive offices) -------------------- Convertible Subordinated Notes (Title of the indenture securities) ------------------------------------------------ 1. General information. Furnish the following information as to the trustee: (a)Name and address of each examining or supervising authority to which it is subject - ---------------------------------------------------------------------- Name Address - ----------------------------------------------------------------------- Federal Reserve Bank of Richmond, Richmond, VA Comptroller of the Currency Washington, D.C. Securities and Exchange Commission Division of Market Regulation Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. (b)Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. Affiliations with obligor and underwriters. If the obligor or any underwriter for the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note 1 on Page 4.) Because the obligor is not in default on any securities issued under indentures under which the applicant is trustee, Items 3 through 15 are not required herein. 16. List of Exhibits. ---------------- All exhibits identified below are filed as a part of this statement of eligibility. 1. A copy of the Articles of Association of First Union National Bank as now in effect, which contain the authority to commence business and a grant of powers to exercise corporate trust powers. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the Articles of Association. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in exhibits (1) or (2) above. 4. A copy of the existing By-laws of First Union National Bank, or instruments corresponding thereto. 5. Inapplicable. 6. The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement. 7. A copy of the latest report of condition of the trustee published pursuant to law or to the requirements of its supervising or examining authority is attached hereto. 8. Inapplicable. 9. Inapplicable. 3 NOTE Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, First Union National Bank, a national association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Charlotte, and State of North Carolina, on the ___day of January, 2000. FIRST UNION NATIONAL BANK (trustee) By: ----------------------------- Its: -------------------------- CONSENT OF TRUSTEE Under section 321(b) of the Trust Indenture Act of 1939, as amended, and in connection with the proposed issuance by CommScope, Inc., First Union National Bank as the trustee herein named, hereby consents that reports of examinations of said Trustee by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. FIRST UNION NATIONAL BANK By: ----------------------------- Name: -------------------------- Title: ------------------------- Dated: January __, 2000 4 CHARTER NO. 22693 FIRST UNION NATIONAL BANK ARTICLES OF ASSOCIATION ----------------------- (as restated effective February 26, 1998) For the purpose of organizing an Association to carry on the business of banking under the laws of the United States, the undersigned do enter into the following Articles of Association: FIRST. The title of this Association shall be FIRST UNION NATIONAL BANK. SECOND. The main office of the Association shall be in Charlotte, County of Mecklenburg, State of North Carolina. The general business of the Association shall be conducted at its main office and its branches. THIRD. The Board of Directors of this Association shall consist of not less than five nor more than twenty-five directors, the exact number of directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the Board of Directors for any reason, including an increase in the number thereof, may be filled by action of the Board of Directors. FOURTH. The annual meeting of the shareholders for the election of directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the Board of Directors may designate, on the day of each year specified therefor in the ByLaws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the Board of Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the bank entitled to vote for election of directors. Nominations, other than those made by or on behalf of the existing management of the bank, shall be made in writing and shall be delivered or mailed to the President of the bank and to the Comptroller of the Currency, Washington, D.C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided, however, that if less than 21 days' notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the Chairman of the meeting, and upon his instructions, the vote tellers may disregard all votes cast for each such nominee. FIFTH. ----- (a) General. The amount of capital stock of this Association shall be (1) 25,000,000 shares of common stock of the par value of twenty dollars ($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred stock of the par value of one dollar ($ 1. 00) each (the "Non-Cumulative Preferred Stock"), having the rights, privileges and preferences set forth below, but said capital stock may be increased or decreased from time to time in accordance with the provisions of the laws of the United States. (b) Terms of the Non-Cumulative Preferred Stock. ------------------------------------------- 1. General. Each share of Non-Cumulative Preferred Stock shall be identical in all respects with the other shares of Non-Cumulative Preferred Stock. The authorized number of shares of Non-Cumulative Preferred Stock may from time to time be increased or decreased (but not below the number then outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred Stock redeemed by the Association shall be canceled and shall revert to authorized but unissued shares of Non-Cumulative Preferred Stock. 2. Dividends. --------- (a) General. The holders of Non-Cumulative Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, but only out of funds legally available therefor, non-cumulative cash dividends at the annual rate of $83.75 per share, and no more, payable quarterly on 2 the first days of December, March, June and September, respectively, in each year with respect to the quarterly dividend period (or portion thereof) ending on the day preceding such respective dividend payment date, to shareholders of record on the respective date, not exceeding fifty days preceding such dividend payment date, fixed for that purpose by the Board of Directors in advance of payment of each particular dividend. Notwithstanding the foregoing, the cash dividend to be paid on the first dividend payment date after the initial issuance of Non-Cumulative Preferred Stock and on any dividend payment date with respect to a partial dividend period shall be $83.75 per share multiplied by the fraction produced by dividing the number of days since such initial issuance or in such partial dividend period, as the case may be, by 360. (b) Non-cumulative Dividends. Dividends on the shares of Non-cumulative Stock shall not be cumulative and no rights shall accrue to the holders of shares of Non-Cumulative Preferred Stock by reason of the fact that the Association may fail to declare or pay dividends on the shares of NonCumulative Preferred Stock in any amount in any quarterly dividend period, whether or not the earnings of the Association in any quarterly dividend period were sufficient to pay such dividends in whole or in part, and the Association shall have no obligation at any time to pay any such dividend. (c) Payment of Dividends. So long as any share of Non-Cumulative Preferred Stock remains outstanding, no dividend whatsoever shall be paid or declared and no distribution made on any junior stock other than a dividend payable in junior stock, and no shares of junior stock shall be purchased, redeemed or otherwise acquired for consideration by the Association, directly or indirectly (other than as a result of a reclassification of junior stock, or the exchange or conversion of one junior stock for or into another junior stock, or other than through the use of the proceeds of a substantially contemporaneous sale of other junior stock), unless all dividends on all shares of non-cumulative Preferred Stock and non-cumulative Preferred Stock ranking on a parity as to dividends with the shares of Non-Cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full and all dividends on all shares of cumulative Preferred Stock ranking on a parity as to dividends with the shares of NonCumulative Stock (notwithstanding that dividends on such stock are cumulative) for all past dividend periods shall have been paid in full. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any junior stock from time to time out of any 3 funds legally available therefor, and the Non-Cumulative Preferred Stock shall not be entitled to participate in any such dividends, whether payable in cash, stock or otherwise. No dividends shall be paid or declared upon any shares of any class or series of stock of the Association ranking on a parity (whether dividends on such stock are cumulative or non-cumulative) with the Non-Cumulative Preferred Stock in the payment of dividends for any period unless at or prior to the time of such payment or declaration all dividends payable on the Non-cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full. When dividends are not paid in full, as aforesaid, upon the Non-Cumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends (whether dividends on such stock are cumulative or non-cumulative) with the NonCumulative Preferred Stock, all dividends declared upon the NonCumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Non-Cumulative Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on the Non-cumulative Preferred Stock and such other Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Non-Cumulative Preferred Stock (but without any accumulation in respect of any unpaid dividends for prior dividend periods on the shares of Non-Cumulative Stock) and such other Preferred Stock bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the NonCumulative Preferred Stock which may be in arrears. 3. Voting. The holders of Non-Cumulative Preferred Stock shall not have any right to vote for the election of directors or for any other purpose. 4. Redemption. ---------- (a) Optional Redemption. The Association, at the option of the Board of Directors, may redeem the whole or any part of the shares of NonCumulative Preferred Stock at the time outstanding, at any time or from time to time after the fifth anniversary of the date of original issuance of the Non-Cumulative Preferred Stock, upon notice given as hereinafter specified, at the redemption price per share equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-Cumulative Preferred Stock) to the redemption date. 4 (b) Procedures. Notice of every redemption of shares of Non-Cumulative Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses as they shall appear on the books of the Association. Such mailing shall be at least 10 days and not more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the shareholder receives such notice, and failure duly to give such notice by mail, or any defect in such notice, to any holder of shares of Non-Cumulative Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Non-Cumulative Preferred Stock. In case of redemption of a part only of the shares of Non-Cumulative Preferred Stock at the time outstanding the redemption may be either pro rata or by lot or by such other means as the Board of Directors of the Association in its discretion shall determine. The Board of Directors shall have full power and authority, subject to the provisions herein contained, to prescribe the terms and conditions upon which shares of the NonCumulative Preferred Stock shall be redeemed from time to time. If notice of redemption shall have been duly given, and, if on or before the redemption date specified therein, all funds necessary for such redemption shall have been set aside by the Association, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, all shares so called for redemption shall no longer be deemed outstanding on and after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to, receive the amount payable on redemption thereof, without interest. If such notice of redemption shall have been duly given or if the Association shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and, if on or before the redemption date specified therein, the funds necessary for such redemption shall have been deposited by the Association with such bank or trust company in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for 5 cancellation, from and after the time of such deposit, all shares so called for redemption shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America or any state thereof, shall have capital, surplus and undivided profits aggregating at least $50,000,000 ACCORDING TO its last published statement of condition, and shall be identified in the notice of redemption. Any interest accrued on such funds shall be paid to the Association from time to time. In case fewer than all the shares of Non-Cumulative Preferred Stock represented by a stock certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of the relevant escheat period under applicable state law from such redemption date shall, to the extent permitted by law, be released or repaid to the Association, after which repayment the holders of the shares so called for redemption shall look only to the Association for payment thereof. 5. Liquidation. ----------- (a) Liquidation Preference. In the event of any voluntary liquidation, dissolution or winding up of the affairs of the Association, the holders of Non-cumulative Preferred Stock shall be entitled, before any distribution or payment is made to the holders of any junior stock, to be paid in full an amount per share equal to an amount equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends per share from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-cumulative Preferred Stock) per share to such distribution or payment date (the "liquidation amount"). In the event of any involuntary liquidation, dissolution or winding up of the affairs of the Association, then, before any distribution or payment shall be made to the holders of any junior stock, the holders of Non-Cumulative Preferred Stock shall be entitled to be paid in full an amount per share equal to the liquidation amount. 6 If such payment shall have been made in full to all holders of shares of Non-Cumulative Preferred Stock, the remaining assets of the Association shall be distributed among the holders of junior stock, according to their respective rights and preferences and in each case according to their respective numbers of shares. (b) Insufficient Assets. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Association are insufficient to pay such liquidation amount on all outstanding shares of Non-cumulative Preferred Stock, then the holders of Non-Cumulative Preferred Stock shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled. 7 (c) Interpretation. For the purposes of this paragraph 5, the consolidation or merger of the Association with any other corporation or association shall not be deemed to constitute a liquidation, dissolution or winding up of the Association. 6. Preemptive Rights. The Non-Cumulative Preferred Stock is not entitled to any preemptive, subscription, conversion or exchange rights in respect of any securities of the Association. 7. Definitions. As used herein with respect to the Non-Cumulative Preferred Stock, the following terms shall have the following meanings: (a) The term "junior stock" shall mean the Common Stock and any other class or series of shares of the Association hereafter authorized over which the Non-Cumulative Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Association. (b) The term "accrued dividends", with respect to any share of any class or series, shall mean an amount computed at the annual dividend rate for the class or series of which the particular share is a part, from, if such share is cumulative, the date on which dividends on such share became cumulative to and including the date to which such dividends are to be accrued, less the aggregate amount of all dividends theretofore paid thereon and, if such share is noncumulative, the relevant date designated to and including the date to which such dividends are accrued, less the aggregate amount of all dividends theretofore paid with respect to such period. (c) The term "Preferred Stock" shall mean all outstanding shares of all series of preferred stock of the Association as defined in this Article Fifth of the Articles of Association, as amended, of the Association. 8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock, or any interest therein, may be sold, pledged, transferred or otherwise disposed of without the prior written consent of the Association. The foregoing restriction shall be stated on any certificate for any shares of Non-Cumulative Preferred Stock. 9. Additional Rights. The shares of Non-Cumulative Preferred Stock shall not have any relative, participating, optional or other special rights and powers other than as set forth herein. SIXTH. The Board of Directors shall appoint one of its members President of this Association, who shall be Chairman of the Board, unless the Board appoints another director to be the Chairman. The Board of Directors shall have the power to appoint one or more Vice Presidents; and to appoint a cashier or such other officers and employees as may be required to transact the business of this Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association, to fix the salaries to be paid to them; to dismiss them, to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all By-Laws that it may be lawful for them to make; and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. SEVENTH. The Board of Directors shall have the power to change the location of the main office to any other place within the limits of Charlotte, North Carolina, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. 8 NINTH. The Board of Directors of this Association, or any three or more shareholders owning, in the aggregate, not less than 10 percent of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of this Association. TENTH. Each director and executive officer of this Association shall be indemnified by the association against liability in any proceeding (including without limitation a proceeding brought by or on behalf of the Association itself) arising out of his status as such or his activities in either of the foregoing capacities, except for any liability incurred on account of activities which were at the time taken known or believed by such person to be clearly in conflict with the best interests of the Association. Liabilities incurred by a director or executive officer of the Association in defending a proceeding shall be paid by the Association in advance of the final disposition of such proceeding upon receipt of an undertaking by the director or executive officer to repay such amount if it shall be determined, as provided in the last paragraph of this Article Tenth, that he is not entitled to be indemnified by the Association against such liabilities. The indemnity against liability in the preceding paragraph of this Article Tenth, including liabilities incurred in defending a proceeding, shall be automatic and self-operative. Any director, officer or employee of this Association who serves at the request of the Association as a director, officer, employee or agent of a charitable, notfor-profit, religious, educational or hospital corporation, partnership, joint venture, trust or other enterprise, or a trade association, or as a trustee or administrator under an employee benefit plan, or who serves at the request of the Association as a director, officer or employee of a business corporation in connection with the administration of an estate or trust by the Association, shall have the right to be indemnified by the Association, subject to the provisions set forth in the following paragraph of this Article Tenth, against liabilities in any manner arising out of or attributable to such status or activities in any such capacity, except for any liability incurred on account of activities which were at the time taken known or believed by such person to be clearly in conflict with the best interests of the Association, or of the corporation, partnership, joint venture, trust, enterprise, Association or plan being served by such person. 9 In the case of all persons except the directors and executive officers of the Association, the determination of whether a person is entitled to indemnification under the preceding paragraph of this Article Tenth shall be made by and in the sole discretion of the Chief Executive Officer of the Association. In the case of the directors and executive officers of the Association, the indemnity against liability in the preceding paragraph of this Article Tenth shall be automatic and self-operative. For purposes of this Article Tenth of these Articles of Association only, the following terms shall have the meanings indicated: (a) "Association" means First Union National Bank and its direct and indirect wholly-owned subsidiaries. (b) "Director" means an individual who is or was a director of the Association. (c) "Executive officer" means an officer of the Association who by resolution of the Board of Directors of the Association has been determined to be an executive officer of the Association for purposes of Regulation 0 of the Federal Reserve Board. (d) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses, including counsel fees and expenses, incurred with respect to a proceeding. (e) "Party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (f) "Proceeding" means any threatened, pending, or completed claim, action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. The Association shall have no obligation to indemnify any person for an amount paid in settlement of a proceeding unless the Association consents in writing to such settlement. The right to indemnification herein provided for shall apply to persons who are directors, officers, or employees of banks or other entities that are hereafter merged or otherwise combined with the Association only after the effective date 10 of such merger or other combination and only as to their status and activities after such date. The right to indemnification herein provided for shall inure to the benefit of the heirs and legal representatives of any person entitled to such right. No revocation of, change in, or adoption of any resolution or provision in the Articles of Association or By-laws of the Association inconsistent with, this Article Tenth shall adversely affect the rights of any director, officer, or employee of the Association with respect to (i) any proceeding commenced or threatened prior to such revocation, change, or adoption, or (ii) any proceeding arising out of any act or omission occurring prior to such revocation, change, or adoption, in either case, without the written consent of such director, officer, or employee. The rights hereunder shall be in addition to and not exclusive of any other rights to which a director, officer, or employee of the Association may be entitled under any statute, agreement, insurance policy, or otherwise. The Association shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, or employee of the Association, or is or was serving at the request of the Association as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, trade association, employee benefit plan, or other enterprise, against any liability asserted against such director, officer, or employee in any such capacity, or arising out of their status as such, whether or not the Association would have the power to indemnify such director, officer, or employee against such liability, excluding insurance coverage for a formal order assessing civil money penalties against an Association director or employee. Notwithstanding anything to the contrary provided herein, no person shall have a right to indemnification with respect to any liability (i) incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the Association, (ii) to the extent such person is entitled to receive payment therefor under any insurance policy or from any corporation, partnership, joint venture, trust, trade association, employee benefit plan, or other enterprise other than the Association, or (iii) to the extent that a court of competent jurisdiction determines that such indemnification is void or prohibited under state or federal law. 11 ELEVENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of holders of a greater amount of stock is required by law, and in that case, by the vote of the holders of such greater amount. 12 BY-LAWS OF FIRST UNION NATIONAL BANK Charter No. 1 Effective May 18, 1998 BY-LAWS OF FIRST UNION NATIONAL BANK ARTICLE I Meetings of Shareholders Section 1 . 1 Annual Megttg. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the third Tuesday of April in each year, commencing with the year 1998, except that the Board of Directors may, from time to time and upon passage of a resolution specifically setting forth its reasons, set such other date for such meeting during the month of April as the Board of Directors may deem necessary or appropriate; provided, however, that if an annual meeting would otherwise fall on a legal holiday, then such annual meeting shall be held on the second business day following such legal holiday. The holders of a majority of the outstanding shares entitled to vote which are represented at any meeting of the shareholders may choose persons to act as Chairman and as Secretary of the meeting. Section 1.2 Special Meetings. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the Board of Directors or by any three or more shareholders owning, in the aggregate, not less than ten percent of the stock of the Association. Every such special meeting, unless otherwise provided by law, shall be called by mailing, postage prepaid, not less than ten days prior to the date fixed for such meeting, to each shareholder at his address appearing on the books of the Association, a notice stating the purpose of the meeting. Section 1.3 Nominations for Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the bank entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the bank, shall be made in writing and shall be delivered or mailed to the President of the Bank and to the Comptroller of the Currency, Washington, D. C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided however, that if less than 21 days' notice of such meeting is given to shareholders, such 2 nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the chairman of the meeting, and upon his instructions, the vote tellers may disregard all votes cast for each such nominee. Section 1.4 Judges of Election. The Board may at any time appoint from among the shareholders three or more persons to serve as Judges of Election at any meeting of shareholders; to act as judges and tellers with respect to all votes by ballot at such meeting and to file with the Secretary of the meeting a Certificate under their hands, certifying the result thereof. Section 1.5 Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing, but no officer or employee of this Association shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and shall be filed with the records of the meeting. Section 1.6 Quorum. A majority of the outstanding capital stock, represented 'in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association. ARTICLE II Directors Section 2.1 Board of Directors. The Board of Directors (hereinafter referred to as the "Board"), shall have power to manage and administer the business and affairs of the Association. Except as expressly limited by law, all corporate powers of the Association shall be vested in and may be exercised by said Board. 3 Section 2.2 Number. The Board shall consist of not less than five nor more than twenty-five directors, the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board or by resolution of the shareholders at any meeting thereof; provided, however, that a majority of the full Board of Directors may not increase the number of directors to a number which, (1) exceeds by more than two the number of directors last elected by shareholders where such number was fifteen or less, and (2) to a number which exceeds by more than four the number of directors last elected by shareholders where such number was sixteen or more, but 'in no event shall the number of directors exceed twenty-five. Section 2.3. Organization Meeting. The Secretary of the meeting upon receiving the certificate of the judges, of the result of any election, shall notify the directors-elect of their election and of the time at which they are required to meet at the Main Office of the Association for the purpose of organizing the new Board and electing and appointing officers of the Association for the succeeding year. Such meeting shall be held as soon thereafter as practicable. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting from time to time, until a quorum is obtained. Section 2.4 Regular Meetings. Regular meetings of the Board of Directors shall be held at such place and time as may be designated by resolution of the Board of Directors. Upon adoption of such resolution, no further notice of such meeting dates or the places or times thereof shall be required. Upon the failure of the Board of Directors to adopt such a resolution, regular meetings of the Board of Directors shall be held, without notice, on the third Tuesday in February, April, June, August, October and December, commencing with the year 1997, at the main office or at such other place and time as may be designated by the Board of Directors. When any regular meeting of the Board would otherwise fall on a holiday, the meeting shall be held on the next business day unless the Board shall designate some other day. Section 2.5 Special Meetings. Special meetings of the Board of Directors may be called by the President of the Association, or at the request of three (3) or more directors. Each member of the Board of Directors shall be given notice stating the time and place, by telegram, letter, or in person, of each such special meeting. Section 2.6 Quorum. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; but a less number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. 4 Section 2.7 Vacancies. When any vacancy occurs among the directors, the remaining members of the Board, in accordance with the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose. Section 2.8 Advisory Boards. The Board of Directors may appoint Advisory Boards for each of the states in which the Association conducts operations. Each such Advisory Board shall consist of as many persons as the Board of Directors may determine. The duties of each Advisory Board shall be to consult and advise with the Board of Directors and senior officers of the Association in such state with regard to the best interests of the Association and to perform such other duties as the Board of Directors may lawfully delegate. The senior officer in such state, or such officers as directed by such senior officer, may appoint advisory boards for geographic regions within such state and may consult with the State Advisory Boards prior to such appointments. ARTICLE III Committees of the Board Section 3.1 The Board of Directors, by resolution adopted by a majority of the number of directors fixed by these By-Laws, may designate two or more directors to constitute an Executive Committee and other committees, each of which, to the extent authorized by law and provided in such resolution, shall have and may exercise all of the authority of the Board of Directors and the management of the Association. The designation of any committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility or liability imposed upon it or any member of the Board of Directors by law. The Board of Directors reserves to itself alone the power to act on (1) dissolution, merger or consolidation, or disposition of substantially all corporate property, (2) designation of committees or filling vacancies on the Board of Directors or on a committee of the Board (except as hereinafter provided), (3) adoption, amendment or repeal of By-laws, (4) amendment or repeal of any resolution of the Board which by its terms is not so amendable or repealable, and (5) declaration of dividends, issuance of stock, or recommendations to stockholders of any action requiring stockholder approval. The Board of Directors or the Chairman of the Board of Directors of the Association may change the membership of any committee at any time, fill vacancies therein, discharge any committee or member thereof either with or without cause at any time, and change at any time the authority and responsibility of any such committee. 5 A majority of the members of any committee of the Board of Directors may fix such committee's rules of procedure. All action by any committee shall be reported to the Board of Directors at a meeting succeeding such action, except such actions as the Board may not require to be reported to it in the resolution creating any such committee. Any action by any committee shall be subject to revision, alteration, and approval by the Board of Directors, except to the extent otherwise provided in the resolution creating such committee; provided, however, that no rights or acts of third parties shall be affected by any such revision or alteration. ARTICLE IV Officers and Employees Section 4.1 Officers. The officers of the Association may be a Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or Vice Chairmen (who shall not be required to be directors of the Association), a President, one or more Vice Presidents, a Secretary, a Cashier or Treasurer, and such other officers, including officers holding similar or equivalent titles to the above in regions, divisions or functional units of the Association, as may be appointed by the Board of Directors. The Chairman of the Board and the President shall be members of the Board of Directors. Any two or more offices may be held by one person, but no officer shall sign or execute any document in more than one capacity. Section 4.2 Election, Term of Office, and Qualification. Each officer shall be chosen by the Board of Directors and shall hold office until the annual meeting of the Board of Directors held next after his election or until his successor shall have been duly chosen and qualified, or until his death, or until he shall resign, or shall have been disqualified, or shall have been removed from office. Section 4.2(a) Officers Actinq as Assistant Secretary. Notwithstanding Section 1 of these By-laws, any Senior Vice President, Vice President, or Assistant Vice President shall have, by virtue of his office, and by authority of the By-laws, the authority from time to time to act as an Assistant Secretary of the Bank, and to such extent, said officers are appointed to the office of Assistant Secretary. Section 4.3 Chief Executive Officer. The Board of Directors shall designate one of its members to be the President of this Association, and the officer so designated shall be an ex officlo member of all committees of the Association except the Examining Committee, and its Chief Executive Officer unless some other officer is so designated by the Board of Directors. 6 Section 4.4 Duties of Officers. The duties of all officers shall be prescribed by the Board of Directors. Nevertheless, the Board of Directors may delegate to the Chief Executive Officer the authority to prescribe the duties of other officers of the corporation not inconsistent with law, the charter, and these By-laws, and to appoint other employees, prescribe their duties, and to dismiss them. Notwithstanding such delegation of authority, any officer or employee also may be dismissed at any time by the Board of Directors. Section 4.5 Other Employees. The Board of Directors may appoint from time to time such tellers, vault custodians, bookkeepers, and other clerks, agents, and employees as it may deem advisable for the prompt and orderly transaction of the business of the Association, define their duties, fix the salary to be paid them, and dismiss them. Subject to the authority of the Board of Directors, the Chief Executive Officer or any other officer of the Association authorized by him, may appoint and dismiss all such tellers, vault custodians, bookkeepers and other clerks, agents, and employees, prescribe their duties and the conditions of their employment, and from time to time fix their compensation. Section 4.6 Removal and Resignation. Any officer or employee of the Association may be removed either with or without cause by the Board of Directors. Any employee other than an officer elected by the Board of Directors may be dismissed in accordance with the provisions of the preceding Section 4.5. Any officer may resign at any time by giving written notice to the Board of Directors or to the Chief Executive Officer of the Association. Any such resignation shall become effective upon its being accepted by the Board of Directors, or the Chief Executive Officer. ARTICLE V Fiduciary Powers Section 5.1 Capital Management Group. There shall be an area of this Association known as the Capital Management Group which shall be responsible for the exercise of the fiduciary powers of this Association. The Capital Management Group shall consist of four service areas: Fiduciary Services, Retail Services, Investments and Marketing. The Fiduciary Services unit shall consist of personal trust, employee benefits, corporate trust and operations. The General Office for the Fiduciary Services unit shall be located in Charlotte, N.C., with City Trust Offices located in such cities within the State of North Carolina as designated by the Board of Directors. Section 5.2 Trust Officers. There shall be a General Trust Officer of this Association whose duties shall be to manage, supervise and direct all the activities 7 of the Capital Management Group. Further, there shall be one or more Senior Trust Officers designated to assist the General Trust Officer in the performance of his duties. They shall do or cause to be done all things necessary or proper in carrying out the business of the Capital Management Group in accordance with provisions of applicable law and regulation. Section 5.3 Capital Management/General Trust Committee. There shall be a Capital Management/General Trust Committee composed of not less than four (4) members of the Board of Directors or officers of this Association who shall be appointed annually or from time to time by the Board of Directors of the Association. The General Trust Officer shall serve as an ex-officio member of the Committee. Each member shall serve until his successor is appointed. The Board of Directors or the Chairman of the BOARD may change the membership of the Capital Management/General Trust Committee at any time, fill vacancies therein, or discharge any member thereof with or without cause at any time. The Committee shall counsel and advise on all matters relating to the business or affairs of the Capital Management Group and shall adopt overall policies for the conduct of the business of the Capital Management Group including but not limited to: general administration, investment policies, new business development, and review for approval of major assignments of functional responsibilities. The Committee shall meet at least quarterly or as called for by its Chairman or any three (3) members of the Committee. A quorum shall consist of three (3) members. In carrying out its responsibilities, the Capital Management/General Trust Committee shall review the actions of all officers, employees and committees utilized by this Association in connection with the activities of the Capital Management Group and may assign the administration and performance of any fiduciary powers or duties to any of such officers or employees or to the Investment Policy Committee, Personal Trust Administration Committee, Account Review Committee, Corporate and Institutional Accounts Committee, or any other committees it shall designate. One of the methods to be used in the review process will be the thorough scrutiny of the Report of Examination by the Office of the Comptroller of the Currency and the reports of the Audit Division of First Union Corporation, as they relate to the activities of the Capital Management Group. These reviews shall be in addition to reviews of such reports by the Audit Committee of the Board of Directors. The Chairman of the Capital Management/ General Trust Committee shall be appointed by the Chairman of the Board of Directors. He shall cause to be recorded in appropriate minutes all actions taken by the Committee. The minutes shall be signed by its Secretary and approved by its Chairman. Further, the Committee shall summarize all actions taken by it and shall submit a report of its proceedings to the Board of Directors at its next regularly scheduled meeting following a meeting of the Capital Management/General Trust Committee. As required by Section 9.7 of Regulation 8 9 of the Comptroller of the Currency, the Board of Directors retains responsibility for the proper exercise of the fiduciary powers of this Association. The Fiduciary Services unit of the Capital Management Group will maintain a list of securities approved for investment in fiduciary accounts and will from time to time provide the Capital Management/General Trust Committee with current information relative to such list and also with respect to transactions in other securities not on such list. It is the policy of this Association that members of the Capital Management/General Trust Committee should not buy, sell or trade in securities which are on such approved list or in any other securities in which the Fiduciary Services unit has taken, or intends to take, a position in fiduciary accounts in any circumstances in which any such transaction could be viewed as a possible conflict of interest or could constitute a violation of applicable law or regulation. Accordingly, if any such securities are owned by any member of the Capital Management/General Trust Committee at the time of appointment to such Committee, the Capital Management Group shall be promptly so informed in writing. If any member of the Capital Management/General Trust Committee intends to buy, sell, or trade in any such securities while serving as a member of the Committee, he should first notify the Capital Management Group in order to make certain that any proposed transaction will not constitute a violation of this policy or of applicable law or regulation. Section 5.4 Investment Policy Committee. There shall be an Investment Policy Committee composed of not less than seven (7) officers and/or employees of this Association who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor is appointed. Meetings shall be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of five (5) members. The Investment Policy Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All actions taken by the Investment Policy Committee shall be recorded in appropriate minutes, signed by the Secretary thereof, approved by its Chairman and submitted to the Capital Management/General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.5 Personal Trust Administration Committee. There shall be a Personal Trust Administration Committee composed of not less than five (5) officers, who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor is appointed. Meetings shall be called by the Chairman or any three (3) members of the Committee. A quorum shall consist of three (3) members. The Personal Trust Administration Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All action 9 taken by the Personal Trust Administration Committee shall be recorded in appropriate minutes signed by the Secretary thereof, approved by its Chairman, and submitted to the Capital Management/General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.6 Account Review Committee. There shall be an Account Review Committee composed of not less than four (4) officers and/or employees of this Association, who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor 'is appointed. Meetings shall be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of three (3) members. The Account Review Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All actions taken by the Account Review Committee shall be recorded in appropriate minutes, signed by the Secretary thereof, approved by its Chairman and submitted to the Capital Management/ General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.7 Corporate and Institutional Accounts Committee. There shall be a Corporate and Institutional Accounts Committee composed of not less than five (5) officers and/or employees of this Association, who shall be appointed annually, or from time to time, by the Capital Management/General Trust Committee and approved by the Board of Directors. Meetings may be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of three (3) members. The Corporate and Institutional Accounts Committee shall exercise such fiduciary powers and duties as may be assigned to it by the General Trust Committee. All actions taken by the Corporate and Institutional Accounts Committee shall be recorded in APPROPRIATE minutes, signed by the Secretary thereof, approved by its Chairman and made available to the General Trust Committee at 'its next ensuing regular meeting for its review and approval. ARTICLE VI Stock and Stock Certificates Section 6.1 Transfers. Shares of stock shall be transferable on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all rights and liabilities of the prior holder of such shares. 10 Section 6.2 Stock Certificates. Certificates of stock shall bear the signature of the Chairman, the Vice Chairman, the President, or a Vice President (which may be engraved, printed, or impressed), and shall be signed manually or by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant Cashier, or any other officer appointed by the Board of Directors for that purpose, to be known as an Authorized Officer, and the seal of the Association shall be engraved thereon. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. ARTICLE VII Corporate Seal Section 7.1 The President, the Cashier, the Secretary, or any Assistant Cashier, or Assistant Secretary, or other officer thereunto designated by the Board of Directors shall have authority to affix the corporate seal to any document requiring such seal, and to attest the same. Such seal shall be substantially in the following form. ARTICLE VIII Miscellaneous Provisions Section 8.1 Fiscal Year. The fiscal year of the Association shall be the calendar year. Section 8.2 Execution of Instruments. All agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, notices, applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted in behalf of the Association by the Chairman of the Board, the Vice Chairman of the Board, any Chairman or Vice Chairman, the President, any Vice President or Assistant Vice President, the Secretary or any Assistant Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant Treasurer, or any officer holding similar or equivalent titles to the above in any regions, divisions or functional units of the Association, or, if in connection with the exercise of fiduciary powers of the Association, by any of said officers or by any Trust Officer or Assistant Trust Officer (or equivalent titles); provided, however, that where required, any such instrument shall be attested by one of 11 said officers other than the officer executing such instrument. Any such instruments may also be executed, acknowledged, verified, delivered or accepted in behalf of the Association in such other manner and by such other officers as the Board of Directors may from time to time direct. The provisions of this Section 8.2 are supplementary to any other provision of these By-laws. Section 8.3 Records. The Articles of Association, the By-laws, and the proceedings of all meetings of the shareholders, the Board of Directors, standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary, Cashier, or other officer appointed to act as Secretary of the meeting. ARTICLE IX By-laws Section 9.1 Inspection. A copy of the By-laws, with all amendments thereto, shall at all times be kept in a convenient place at the Head Office of the Association, and shall be open for inspection to all shareholders, during banking hours. Section 9.2 Amendments. The By-laws may be amended, altered or repealed, at any regular or special meeting of the Board of Directors, by a vote of a majority of the whole number of Directors. 12 Exhibit A First Union National Bank Article X Emergency By-laws In the event of an emergency declared by the President of the United States or the person performing his functions, the officers and employees of this Association will continue to conduct the affairs of the Association under such guidance from the directors or the Executive Committee as may be available except as to matters which by statute require specific approval of the Board of Directors and subject to conformance with any applicable governmental directives during the emergency. OFFICERS PRO TEMPORE AND DISASTER Section 1. The surviving members of the Board of Directors or the Executive Committee shall have the power, in the absence or disability of any officer, or upon the refusal of any officer to act, to delegate and prescribe such officer's powers and duties to any other officer, or to any director, for the time being. Section 2. In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of this Association by its directors and officers as contemplated by these By-laws, any two or more available members of the then incumbent Executive Committee shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Association in accordance with the provisions of Article 11 of these By-laws; and in addition, such Committee shall be empowered to exercise all of the powers reserved to the General Trust Committee under Section 5.3 of Article V hereof. In the event of the unavailability, at such time, of a minimum of two members of the then incumbent Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Association in accordance with the foregoing provisions of this section. This By-law shall be subject to implementation by resolutions of the Board of Directors passed from time to time for that purpose, and any provisions of these By-laws (other than this section) and any resolutions which are contrary to the provisions of this section or to the provisions of any such implementary resolutions shall be suspended until it shall be 13 determined by an interim Executive Committee acting under this section that it shall be to the advantage of this Association to resume the conduct and management of its affairs and business under all of the other provisions of these By-laws. Officer Succession BE IT RESOLVED, that if consequent upon war or warlike damage or disaster, the Chief Executive Officer of this Association cannot be located by the then acting Head Officer or is unable to assume or to continue normal executive duties, then the authority and duties of the Chief Executive Officer shall, without further action of the Board of Directors, be automatically assumed by one of the following persons in the order designated: Chairman President Division Head/Area Administrator - Within this officer class, officers shall take seniority on the basis of length of service in such office or, in the event of equality, length of service as an officer of the Association. Any one of the above persons who in accordance with this resolution assumes the authority and duties of the Chief Executive Officer shall continue to serve until he resigns or until five-sixths of the other officers who are attached to the then acting Head Office decide in writing he is unable to perform said duties or until the elected Chief Executive Officer of this Association, or a person higher on the above list, shall become available to perform the duties of Chief Executive Officer of the Association. BE IT FURTHER RESOLVED, that anyone dealing with this Association may accept a certification by any three officers that a specified individual is acting as Chief Executive Officer in accordance with this resolution; and that anyone accepting such certification may continue to consider it in force until notified in writing of a change, said notice of change to carry the signatures of three officers of the Association. Alternate Locations The offices of the Association at which its business shall be conducted shall be the main office thereof in each city which is designated as a City Office (and branches, if any), and any other legally authorized location which may be leased or acquired by this Association to carry on its business. During an emergency resulting in any authorized place of business of this Association being unable to function, the business ordinarily conducted at such location shall be relocated 14 elsewhere in suitable quarters, in addition to or in lieu of the locations heretofore mentioned, as may be designated by the Board of Directors or by the Executive Committee or by such persons as are then, in accordance with resolutions adopted from time to time by the Board of Directors dealing with the exercise of authority in the time of such emergency, conducting the affairs of this Association. Any temporarily relocated place of business of this Association shall be returned to its legally authorized location as soon as practicable and such temporary place of business shall then be discontinued. Acting Head Offices BE IT RESOLVED, that in case of and provided because of war or warlike damage or disaster, the General Office of this Association, located in Charlotte, North Carolina, is unable temporarily to continue its functions, the Raleigh office, located in Raleigh, North Carolina, shall automatically and without further action of this Board of Directors, become the "Acting Head Office of this Association"; BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage or disaster, both the General Office of this Association and the said Raleigh Office of this Association are unable to carry on their functions, then and in such case, the Asheville Office of this Association, located in Asheville, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association"; and if neither the Raleigh Office nor the Asheville Office can carry on their functions, then the Greensboro Office of this Association, located in Greensboro, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association"; and if neither the Raleigh Office, the Asheville Office, nor the Greensboro Office can carry on their functions, then the Lumberton Office of this Association, located in Lumberton, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association". The Head Office shall resume its functions at its legally authorized location as soon as practicable. 15 Legal Title of Bank: First Union National Bank Call Date: 09/30/99 FFIEC 031 Address: Two First Union Center Page RC-1 City, State, Zip: Charlotte, NC 28288-0201 FDIC Certificate #: 33869 ----- CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1999 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 Dollar Amount in Thousands RCFD Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------------------- ASSETS //////////////////// 1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////// a. Noninterest-bearing balances and currency and coin (1)...................................... 0081 8,946,000 1.a. b. Interest-bearing balances (2)............................................................... 0071 266,000 1.b. 2. Securities: //////////////////// a. Held-to-maturity securities (from Schedule RC-B, column A).................................. 1754 1,644,000 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)................................ 1773 47,356,000 2.b. 3. Federal funds sold and securities purchased under agreements to resell......................... 1350 2,856,000 3. 4. Loans and lease financing receivables //////////////////// a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 132,839,000 //////////////////// 4.a. b. LESS: Allowance for loan and lease losses RCFD 3123 1,743,000//////// 4.b. c. LESS: Allocated transfer risk reserve RCFD 3128 0 ///////////// d. Loans and leases, net of unearned income, /////////////// allowance, and reserve (item 4.a minus 4.b and 4.c)......................................... 2125 131,096,000 4.d. 5. Trading assets (from Schedule RC-D............................................................. 3545 8,333,000 5. 6. Premises and fixed assets (including capitalized leases)....................................... 2145 3,070,000 6. 7. Other real estate owned (from Schedule RC-M)................................................... 2150 134,000 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)....... 2130 262,000 8. 9. Customers' liability to this bank on acceptances outstanding................................... 2155 807,000 9. 10. Intangible assets (from Schedule RC-M)......................................................... 2143 5,115,000 10. 11. Other assets (from Schedule RC-F).............................................................. 2160 10,789,000 11. 12. Total assets (sum of items 1 through 11)....................................................... 2170 220,674,000 12. - ---------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading.
Legal Title of Bank: First Union National Bank Call Date: 09/30/99 FFIEC 031 Address: Two First Union Center Page RC-2 City, State, Zip: Charlotte, NC 28288-0201 FDIC Certificate #: 33869 -----
Dollar Amount in Thousands Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------------------- LIABILITIES ////////////////////// 13. Deposits: ////////////////////// a. In domestic offices (sum of totals of columns A and C from Schedule RC-E ////////////////////// part I)................................................................................... RCON 2200 129,621,000 13.a. (1) Noninterest-bearing (1) RCON 6631..... 21,341,000 ////////////////////// 13.a.(1) (2) Interest-bearing...............................................RCON 6636 108,280,000 ////////////////////// 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, ////////////////////// part II).................................................................................. RCFN 2200 9,838,000 13.b. (1) Noninterest-bearing............................................RCFN 6631 466,000 ////////////////////// 13.b.(1) (2) Interest-bearing...............................................RCFN 6636 9,372,000 ////////////////////// 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase................... RCFD 2800 23,796,000 14. 15. a. Demand notes issued to the U.S. Treasury................................................. RCON 2840 782,000 15.a. b. Trading liabilities (from Schedule RC-D)................................................. RCFD 3548 4,984,000 15.b. 16. Other borrowed money (includes mortgage indebtedness and obligations under ////////////////////// capitalized leases):......................................................................... ////////////////////// a. With a remaining maturity of one year or less........................................... RCFD 2332 14,643,000 16.a. b. With a remaining maturity of more than one year through three years..................... RCFD A547 5,639,000 16.b. c. With a remaining maturity of more than three years...................................... RCFD A548 2,872,000 16.c. 17. Not applicable............................................................................... ////////////////////// 18. Bank's liability on acceptances executed and outstanding..................................... RCFD 2920 807,000 18. 19. Subordinated notes and debentures (2)........................................................ RCFD 3200 4,269,000 19. 20. Other liabilities (from Schedule RC-G)....................................................... RCFD 2930 6,515,000 20. 21. Total liabilities (sum of items 13 through 20)............................................... RCFD 2948 203,766,000 21. 22. Not applicable............................................................................... ////////////////////// EQUITY CAPITAL ////////////////////// 23. Perpetual preferred stock and related surplus................................................ RCFD 3838 161,000 23. 24. Common stock................................................................................. RCFD 3230 455,000 24. 25. Surplus (exclude all surplus related to preferred stock)..................................... RCFD 3839 13,306,000 25. 26. a. Undivided profits and capital reserves................................................... RCFD 3632 3,553,000 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities................... RCFD 8434 (562,000)26.b. c. Accumulated net gains (losses) on cash flow hedges....................................... RCFD 4336 0 26 c. 27. Cumulative foreign currency translation adjustments.......................................... RCFD 3284 (5,000)27. 28. Total equity capital (sum of items 23 through 27)............................................ RCFD 3210 16,908,000 28. 29. Total liabilities and equity capital (sum of items 21 and 28)................................ RCFD 3300 220,674,000 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1998............................................................ RCFD 6724 N/A M.1. 1 =Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 =Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 =Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 =Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 =Review of the bank's financial statements by external auditors 6 =Compilation of the bank's financial statements by external auditors 7 =Other audit procedures (excluding tax preparation work) 8 =No external audit work - ---------- (1) Includes total demand deposits and noninterest-bearing time and savings deposit. (2) Includes limited-life preferred stock and related surplus.
-----END PRIVACY-ENHANCED MESSAGE-----