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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 2000
REGISTRATION NO. 333-34212
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CHIRON CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 2834 94-2754624
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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4560 HORTON STREET
EMERYVILLE, CALIFORNIA 94608
(510) 655-8730
(Address, Including Zip Code and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------
WILLIAM G. GREEN
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CHIRON CORPORATION
4560 HORTON STREET
EMERYVILLE, CALIFORNIA 94608
(510) 655-8730
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of
Agent for Service)
COPIES TO:
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ROBERT E. BUCKHOLZ, JR., ESQ. ABIGAIL ARMS, ESQ.
Sullivan & Cromwell Shearman & Sterling
125 Broad Street 801 Pennsylvania Avenue, N.W.
New York, New York 10004-2498 Washington, DC 20006-5805
(212) 558-4000 (202) 508-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
----------------
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, check the following box. / /
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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / /
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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[LOGO]
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EXCHANGE OFFER OF
4.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 15, 2007 FOR OUR 1.90% CONVERTIBLE
SUBORDINATED NOTES DUE NOVEMBER 17, 2000
-----------
If you elect to participate in the exchange offer, you will receive from us
$1,000 principal amount of the 4.50% Convertible Subordinated Notes due May 15,
2007 for each $1,000 principal amount at maturity of the 1.90% Convertible
Subordinated Notes due November 17, 2000. In addition, for each $1,000 principal
amount at maturity of the existing notes tendered, you will also receive a cash
payment in the amount equal to the difference between (i) the product of
(A) 34.5924 and (B) the average of the closing market prices of our common stock
for the five trading days immediately preceding the second trading day prior to
the expiration date and (ii) $1,000.
Any existing note that is validly tendered and accepted prior to an interest
payment date, May 17 and November 17 in the case of the existing notes, will not
be entitled to any payment or adjustment on account of accrued original issue
discount or accrued and unpaid interest on such note.
This exchange offer will expire at 12:01 a.m., Eastern Standard Time, on May
15, 2000, unless we extend the offer. The exchange offer is conditional, among
other things, upon a minimum principal amount at maturity of 75% of the existing
notes being tendered and upon the average of the closing market prices of our
common stock for the five trading days immediately preceding the second trading
day prior to the expiration date remaining between $40 and $55, which conditions
may be waived or amended by us.
Our common stock is traded on The Nasdaq National Market under the symbol
"CHIR". On April 14, 2000, the last reported sale price of our common stock on
The Nasdaq National Market was $39 1/16 per share.
We are mailing this prospectus and the letter of transmittal on April 17,
2000.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF FACTORS
THAT YOU SHOULD CONSIDER BEFORE YOU DECIDE TO PARTICIPATE IN THIS EXCHANGE
OFFER.
We have retained Georgeson Shareholder Communications Inc. as our
information agent to assist you in connection with the exchange offer. You may
call Georgeson Shareholder Communications Inc. at (800) 233-2064, toll free, to
receive additional documents and to ask questions.
--------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY AND
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
THE DEALER MANAGER FOR THE EXCHANGE OFFER:
GOLDMAN, SACHS & CO.
Prospectus dated April 17, 2000.
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus is accurate as of any date other than the date of this prospectus.
TABLE OF CONTENTS
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Summary..................................................... 1
Risk Factors................................................ 7
Special Note Regarding Forward Looking Statements........... 13
Use of Proceeds............................................. 13
Price Range of Common Stock................................. 13
Dividend Policy............................................. 13
Capitalization.............................................. 14
Selected Consolidated Financial Data........................ 16
The Exchange Offer.......................................... 17
Description of Exchange Notes............................... 26
Description of Existing Notes............................... 39
Description of Capital Stock................................ 47
Book-Entry System--The Depository Trust Company............. 49
Federal Income Tax Considerations........................... 51
Legal Matters............................................... 57
Experts..................................................... 57
Where You Can Find Additional Information................... 57
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i
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SUMMARY
THIS SUMMARY DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER BEFORE
EXCHANGING YOUR EXISTING NOTES FOR THE EXCHANGE NOTES OR INVESTING IN ADDITIONAL
EXCHANGE NOTES. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY. UNLESS
OTHERWISE INDICATED, "WE," "US," "OUR" AND SIMILAR TERMS REFER TO CHIRON
CORPORATION.
OUR COMPANY
We are a biotechnology company that participates in three global healthcare
businesses: biopharmaceuticals, vaccines and blood testing. We apply a broad and
integrated scientific approach to the development of innovative products for
preventing and treating cancer, infectious diseases and cardiovascular diseases.
Our products include Proleukin-Registered Trademark- (aldesleukin), a
recombinant form of interleukin-2, which we market as a treatment for metastatic
renal cell carcinoma and metastatic melanoma. We manufacture recombinant human
platelet-derived growth factor, the active ingredient in
Regranex-Registered Trademark- (becaplermin) Gel, which is marketed by
Ortho-McNeil Pharmaceutical, Inc., a Johnson & Johnson company, as a treatment
for diabetic foot ulcers. We also manufacture Betaseron-Registered Trademark-
(interferon beta-1b) for Berlex Laboratories, Inc. and its parent company,
Schering AG, which is marketed by Berlex and Schering AG as a treatment for
multiple sclerosis. In addition, we sell a line of traditional pediatric and
adult vaccines. We also have an interest in a number of other products through
collaborations and joint businesses, including a joint immunodiagnostics
business with Ortho-Clinical Diagnostics, Inc., a Johnson & Johnson company,
which sells a full line of tests required to screen blood for hepatitis viruses
and retroviruses, and a separate collaboration with Gen-Probe Incorporated,
which develops products using nucleic acid testing technology to screen blood in
blood banks and plasma in the plasma industry for virus infections.
We have a strong commitment to research and development and focus our
research and development activities primarily on areas in which we have
particular strengths, including cancer, infectious diseases and cardiovascular
diseases. An important part of our research and development effort is undertaken
through collaborations with third parties who are able to contribute significant
enabling technologies and other resources to the development and
commercialization of the product, including in some cases, marketing and sales
expertise.
In January 1995, we established an alliance with Novartis AG, a life
sciences company headquartered in Basel, Switzerland. As of February 1, 2000,
Novartis held shares representing approximately 44% of our outstanding common
stock.
We were incorporated in California in 1981 and were merged into a Delaware
corporation in November 1986. Our principal executive offices are located at
4560 Horton Street, Emeryville, California 94608, and our telephone number at
that address is (510) 655-8730.
RECENT DEVELOPMENTS
In January 2000, we repaid an outstanding note payable to Novartis AG of
$67.8 million. In April 2000, our Board of Directors delegated to us the
authority to call, for redemption in common stock, all of the outstanding 5.25%
Convertible Subordinated Notes prior to the next interest payment of May 21,
2000. We have determined to call the 5.25% Convertible Subordinated Notes prior
to such date and will take all the necessary actions to do so. The redemption
price for each $5,000 principal amount of the bonds will equal $5,260.31, which
includes accrued interest of $260.31 to the redemption date. As an alternative
to redemption, bondholders may elect to convert into shares of Chiron common
stock at a conversion price of $30.83 per share, or 162 shares for each $5,000
principal amount of bonds held, plus cash in lieu of fractional shares. The
bondholders' right to convert into shares will expire at the close of business
on May 11, 2000.
1
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
We have summarized the terms of the exchange offer in this section. Before
you decide whether to tender your existing notes in this offer, you should read
the detailed description of the offer under "The Exchange Offer" and of the
exchange notes under "Description of Exchange Notes" for further information.
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Terms of the exchange offer............... We are offering up to $243,800,000 aggregate principal
amount of new 4.50% Convertible Subordinated Notes due
May 15, 2007 for up to $243,800,000 aggregate principal
amount at maturity of 1.90% Convertible Subordinated
Notes due November 17, 2000. We are offering to exchange
$1,000 principal amount of exchange notes for each
$1,000 principal amount at maturity of existing notes.
In addition, for each $1,000 principal amount at
maturity of the existing notes tendered, you will also
receive a cash payment in the amount equal to the
difference between (i) the product of (A) 34.5924 and
(B) the average of the closing market prices of our
common stock for the five trading days immediately
preceding the second trading day prior to the expiration
date and (ii) $1,000. You may tender all, some or none
of your existing notes.
Any existing note that is validly tendered and accepted
prior to an interest payment date, May 17 and
November 17 in the case of the existing notes, will not
be entitled to any payment or adjustment on account of
accrued original issue discount or accrued and unpaid
interest on such note.
Conversion price.......................... You may convert the exchange notes at any time prior to
maturity at a conversion price that is equivalent to a
33% premium over the average of the closing market
prices of our common stock for the five trading days
immediately preceding the second trading day prior to
the expiration date, subject to customary anti-dilution
adjustments.
Expiration date; extension; termination... The exchange offer and withdrawal rights will expire at
12:01 a.m., Eastern Standard Time, on May 15, 2000, or
any subsequent date to which we extend it. We may extend
the expiration date for any reason. In the case of any
extension, we will issue a press release or other public
announcement no later than 9:00 a.m., Eastern Standard
Time, on the next business day after the previously
scheduled expiration date. You must tender your existing
notes prior to this date if you wish to participate in
the offer. We have the right to:
- extend the expiration date of the exchange offer
and retain all tendered existing notes, subject to
your right to withdraw your tendered notes; or
- waive any condition or otherwise amend the terms
of the exchange offer in any respect.
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2
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Conditions to the exchange offer.......... The offer is conditioned upon 75% of the existing notes
being tendered in the exchange offer and upon the
average of the closing market prices of our common stock
for the five trading days immediately preceding the
second trading day prior to the expiration date
remaining between $40 and $55. The exchange offer is
also subject to customary conditions, which we may
waive. Please read "The Exchange Offer--Conditions for
completion of the exchange offer" for more information.
Withdrawal rights......................... You may withdraw a tender of your existing notes at any
time before the exchange offer expires by delivering a
written notice of withdrawal to State Street Bank and
Trust Company of California, N.A., the exchange agent,
before the expiration date. If you change your mind, you
may retender your existing notes by again following the
exchange offer procedures before the exchange offer
expires.
Procedures for tendering existing notes... If you hold existing notes through a broker, dealer,
commercial bank, trust company or other nominee, you
should contact that person promptly if you wish to
tender your existing notes. Tenders of your existing
notes will be effected by book-entry transfers through
The Depository Trust Company.
If you hold your existing notes through a broker,
dealer, commercial bank, trust company or other nominee,
you may also tender your existing notes by complying
with the procedures for guaranteed delivery.
Please do not send letters of transmittal to us. You
should send those letters to State Street Bank and Trust
Company of California, N.A., the exchange agent. The
exchange agent can answer your questions regarding how
to tender your existing notes.
Interest.................................. Interest on the exchange notes will accrue from the
issue date at a rate of 4.50% per year, payable on
May 15 and November 15 of each year.
Exchange agent............................ State Street Bank and Trust Company of California, N.A.
Information agent......................... Georgeson Shareholder Communications Inc.
For information regarding the exchange offer, please
call (toll free (800) 223-2064; collect (212) 440-9800).
Dealer manager............................ Goldman, Sachs & Co.
To ascertain the conversion price to be used for the
exchange notes two days prior to the expiration date,
please call (212) 357-6221.
Accounting and tax treatment for the
exchange offer............................ In accordance with SFAS No. 125, "ACCOUNTING FOR
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES," we will account for the
exchange offer as an extinguishment of debt and
recognize an extraordinary loss.
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3
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Substantially all of the cash consideration to be paid
by us in the exchange offer will not qualify as a
deduction for us for federal and state tax purposes.
Federal income tax consequences........... The exchange constitutes a recapitalization, and
therefore, if you are a U.S. Holder, it will generally
be tax-free to the extent that an exchange note is
received in exchange for an existing note. You will be
taxed on the exchange only in respect of (a) the amount
of any accrued but unpaid interest on your existing
notes that you have not already included in income and
(b) cash that you receive to the extent of your gain on
the exchange. Any loss on the exchange will not be
recognized. Your basis in the exchange notes will
generally equal your basis in your existing notes,
increased by the amount of gain you recognize on the
exchange, further increased by the amount of income you
recognize on the exchange that is attributable to
accrued interest, and decreased by the amount of cash
you receive in the exchange. Your holding period for the
exchange notes will include your holding period for the
existing notes, except to the extent that an exchange
note is deemed to be received in exchange for accrued
interest. See "Federal Income Tax Considerations".
Risk factors.............................. You should consider carefully the matters described
under "Risk Factors," as well as other information set
forth in this prospectus and in the letter of
transmittal.
Deciding whether to participate in the
exchange offer............................ Neither we nor our officers or directors make any
recommendation as to whether you should tender or
refrain from tendering all or any portion of your
existing notes in the exchange offer. Further, we have
not authorized anyone to make any such recommendation.
You must make your own decision whether to tender your
existing notes in the exchange offer and, if so, the
aggregate amount of existing notes to tender after
reading this prospectus and the letter of transmittal
and consulting with your advisers, if any, based on your
own financial position and requirements.
Consequences of not exchanging existing
notes..................................... The liquidity and trading market for existing notes not
tendered in the exchange could be adversely affected to
the extent existing notes are tendered and accepted in
the exchange offer.
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COMPARISON OF EXCHANGE NOTES AND EXISTING NOTES
THE FOLLOWING IS A BRIEF SUMMARY OF THE TERMS OF THE EXCHANGE NOTES AND THE
EXISTING NOTES. FOR A MORE COMPLETE DESCRIPTION OF THE EXCHANGE NOTES, SEE
"DESCRIPTION OF EXCHANGE NOTES."
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EXCHANGE NOTES EXISTING NOTES
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SECURITIES.......... $243,800,000 aggregate principal $243,800,000 aggregate principal
amount of 4.50% Convertible amount at maturity of 1.90%
Subordinated Notes due May 15, Convertible Subordinated Notes due
2007. The exchange notes will be November 17, 2000.
issued in the principal amount of
$1,000 and integral multiples of
$1,000.
ISSUER.............. Chiron Corporation. Chiron Corporation.
MATURITY............ May 15, 2007. November 17, 2000.
INTEREST............ Interest on the exchange notes Interest on the existing notes is
will be payable in cash at a rate payable in cash at the rate of
of 4.50% per year, payable on 1.90% per year, payable on May 17
May 15 and November 15 of each and November 17 of each year.
year.
CONVERSION:
GENERAL........... The exchange notes will be The existing notes are convertible
convertible at any time prior to at any time prior to their
their maturity at a conversion maturity at a conversion rate of
price that is equivalent to a 33% 34.5924 shares for each $1,000
premium over the average of the principal amount at maturity of
closing market prices of our existing notes, subject to
common stock for the five trading customary anti-dilution
days immediately preceding the adjustments.
second trading day prior to the
expiration date of the exchange
offer, subject to customary
anti-dilution adjustments.
AUTO-
CONVERSION........ None. None.
RANKING............. The exchange notes will be The existing notes are
subordinated to all of our senior subordinated to all of our senior
debt and will rank equal in right debt and will rank equal in right
of payment to our existing notes. of payment with the exchange
The exchange notes also are notes. The existing notes also are
effectively subordinated to all effectively subordinated to all
indebtedness and other liabilities indebtedness and other liabilities
of our subsidiaries, including of our subsidiaries, including
trade payables but excluding trade payables but excluding
intercompany liabilities. intercompany liabilities. As of
December 31, 1999, we had
approximately $91.4 million of
outstanding senior debt.
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EXCHANGE NOTES EXISTING NOTES
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OPTIONAL
REDEMPTION.......... We may redeem the exchange notes We may redeem the existing notes
on or after May 15, 2003, in whole prior to their maturity, in whole
or in part, on not less than 30 or in part, on not less than 30
but no more than 60 days' notice, but no more than 60 days' notice,
at the redemption prices set forth at 100% of their principal amount
in this prospectus and the at maturity, plus accrued and
indenture, plus accrued and unpaid unpaid interest, if any, to the
interest, if any, to the redemption date.
redemption date.
REPURCHASE AT OPTION
OF HOLDERS.......... You may require us to repurchase You may require us to repurchase
all or part of your exchange notes all or part of your existing notes
upon a change in control at a upon a fundamental change at a
repurchase price equal to the repurchase price equal to 100% of
exchange notes being repurchased, the outstanding principal amount
plus any accrued and unpaid of the issue price plus accrued
interest. A change of control original issue discount to the
generally occurs if a person date of repurchase, plus any
acquires 50% or more of the total accrued and unpaid interest;
voting power of our capital stock provided that if the applicable
and certain other conditions are price (as defined below) is less
met, except that such threshold is than the reference market price
79.9% or more of the total voting (as defined below), we must
power if the acquiring person is repurchase the existing notes to
Novartis AG or any person be repurchased at a price equal to
affiliated therewith. the foregoing repurchase price
We have the option to pay the multiplied by the fraction
repurchase price in cash, common obtained by dividing the
stock or a combination of cash and applicable price by the reference
common stock. If we elect to pay market price, plus any accrued and
the repurchase price in common unpaid interest.
stock, the shares of common stock Depending on the type of
will be valued at 95% of the fundamental change, the applicable
average of the closing market price is either the amount of cash
prices of our common stock for the received by the holder of one
five trading days immediately share of our common stock or the
preceding the second trading day average of the last reported sale
prior to the repurchase date. price for our common stock during
the ten trading days prior to the
record date for the determination
of the holders of common stock in
connection with the change of
control. The reference market
price is $12.875, subject to
customary anti-dilution
adjustments.
LISTING............. The exchange notes are expected to The existing notes trade in the
trade in the over-the-counter over-the-counter market.
market.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO
EXCHANGE YOUR EXISTING NOTES FOR EXCHANGE NOTES. THE RISKS AND UNCERTAINTIES
DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR COMPANY. ADDITIONAL RISKS AND
UNCERTAINTIES THAT WE DO NOT PRESENTLY KNOW OR THAT WE CURRENTLY DEEM IMMATERIAL
ALSO MAY IMPAIR OUR BUSINESS OPERATIONS.
IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THEY COULD HARM OUR BUSINESS,
FINANCIAL CONDITION OR OPERATING RESULTS. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK AND THE EXCHANGE NOTES COULD DECLINE.
WE ARE FOCUSED ON RESEARCH AND DEVELOPMENT OF EMERGING TECHNOLOGIES THAT MAY NOT
ULTIMATELY RESULT IN COMMERCIAL PRODUCTS, WHICH WOULD HARM OUR BUSINESS.
We focus our research and development activities on unproven technologies
that appear promising. These technologies often are on the cutting edge of
modern science. As a result, the outcome of any research or development program
is highly uncertain. Only a very small fraction of our programs ultimately
result in commercial products or even product candidates. Product candidates
that initially appear promising often fail to yield successful products. In many
cases, preclinical or clinical studies will show that a product candidate does
not have the intended therapeutic or prophylactic effect, or that it raises
safety concerns or has other side effects which outweigh the intended benefit.
Success in preclinical or early clinical trials, which generally focus on safety
issues, may not translate into success in large-scale clinical trials, which are
designed to show efficacy, often for reasons that are not fully understood. Even
after a product is approved and launched, general usage or post-marketing
studies may identify safety or other previously unknown problems with the
product which may result in regulatory approvals being suspended, limited to
narrow indications or revoked, or which may otherwise prevent successful
commercialization. Any of these adverse results would seriously harm our
business.
IF WE FAIL TO OBTAIN AND MAINTAIN THE REGULATORY APPROVALS WE NEED TO MARKET OUR
PRODUCTS, OUR BUSINESS WILL SUFFER.
We are required to obtain and maintain regulatory approval in order to
market most of our products. If we cannot obtain and maintain the necessary
approvals, we will be unable to sell the affected products, which would cause
our business to suffer. Generally, these approvals are on a product-by-product
and country-by-country basis. In the case of therapeutic products, a separate
approval is required for each therapeutic indication. Product candidates that
appear promising based on early, and even large-scale, clinical trials may not
receive regulatory approval. The results of clinical trials often are
susceptible to varying interpretations that may delay, limit or prevent approval
or result in the need for post-marketing studies.
OUR PRODUCTS ARE COMPLEX AND DIFFICULT TO MANUFACTURE ON A LARGE-SCALE BASIS,
WHICH COULD CAUSE US TO DELAY PRODUCT LAUNCHES, EXPERIENCE SHORTAGES OF PRODUCTS
OR PREVENT US FROM OFFERING PRODUCTS ON A VOLUME BASIS.
Most of our products are biologics and are complex and difficult to
manufacture. Unlike chemical pharmaceuticals, a biologic product generally
cannot be sufficiently characterized in terms of its physical and chemical
properties to rely on assaying of the finished product alone to ensure that the
product will perform in the intended manner. Accordingly, it is essential to be
able to both validate and control the manufacturing process, that is, to show
that the process works and that the product is made strictly and consistently in
compliance with that process. Slight deviations in the manufacturing process may
result in unacceptable changes in the products that may result in failures of
entire lots. Manufacturing processes which are used to produce the smaller
quantities of
7
<PAGE>
material needed for research and development purposes may not be successfully
scaled up to allow production of commercial quantities at reasonable cost or at
all. All of these difficulties are compounded when dealing with novel biologic
products that require novel manufacturing processes. Further, our manufacturing
processes are subject to extensive government regulation. Even minor changes in
the manufacturing process require regulatory approval, which, in turn, may
require further clinical studies.
IF WE CANNOT OBTAIN NECESSARY LICENSES TO THIRD PARTY PATENTS FOR THE
MANUFACTURE OR SALE OF OUR PRODUCTS, WE MAY HAVE TO WITHDRAW FROM THE MARKET OR
DELAY THE INTRODUCTION OF THE AFFECTED PRODUCT.
Third parties, including competitors, have patents and patent applications
in the U.S. and other significant markets that may be useful or necessary for
the manufacture, use or sale of some of our products and products in
development. It is likely that third parties will obtain other such patents in
the future. Some of these patents may be sufficiently broad to prevent or delay
us from manufacturing or marketing products important to our current and future
business. The scope, validity and enforceability of these patents, if granted,
the extent to which we may wish or need to obtain licenses to these patents, and
the cost and availability of the licenses cannot be accurately predicted. If we
cannot obtain these necessary licenses, we may have to withdraw the affected
products from the market or we may experience delays in market introduction of
the affected products while an attempt is made to design around these patents.
Alternatively, we could find that the development, manufacture or sale of the
affected products is foreclosed. We could also incur substantial costs in
challenging the validity and scope of these patents.
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
COMPETITORS MAY BE ABLE TO RAPIDLY INTRODUCE COMPETITIVE PRODUCTS BASED ON OUR
INVENTIONS WITHOUT HAVING TO PAY US ROYALTIES.
We seek to obtain patents on our inventions. Without the protection of
patents, competitors may be able to use our inventions to manufacture and market
competing products without being required to undertake the lengthy and expensive
development efforts made by us and without having to pay royalties or otherwise
compensate us for the use of the invention. Patents and patent applications
owned or licensed to us may not provide substantial protection. Important legal
questions remain to be resolved as to the extent and scope of available patent
protection for biotechnology products and processes in the U.S. and other
important markets. We do not know how many of our pending patent applications
will be granted, or the effective coverage of those that are granted. In the
U.S. and other important markets, the issuance of a patent is neither conclusive
as to its validity nor the enforceable scope of its claims. We have engaged in
significant litigation to determine the scope and validity of some of our
patents and expect to continue to do so in the future. Even if we are successful
in obtaining and defending patents, we cannot be sure that these patents will
provide substantial protection. The length of time necessary to successfully
resolve patent litigation may allow infringers of our patents to gain
significant market advantage. Third parties may also be able to design around
our patents and develop competitive products that do not infringe our patents.
Many countries, including some countries in Europe, have compulsory
licensing laws under which a patent owner may be compelled to grant licenses to
third parties. For example, we may be compelled to grant a license if the third
party's product is needed to meet a threat to public health or safety in a
country, or we failed to work the invention in that country, or a third party
has patented improvements. In addition, most countries limit the enforceability
of patents against government agencies or government contractors. In these
countries, we may be limited to monetary
8
<PAGE>
relief and may be unable to enjoin infringement, which could materially diminish
the value of our patent.
BECAUSE MOST OF OUR PRODUCTS ARE BASED ON TECHNOLOGIES THAT ARE UNFAMILIAR TO
THE HEALTHCARE COMMUNITY, THEY MAY NOT BE ACCEPTED BY HEALTHCARE PROVIDERS AND
PATIENTS, WHICH WOULD HARM OUR BUSINESS.
We may experience difficulties in launching new products, many of which are
novel products based on technologies that are unfamiliar to the healthcare
community. Healthcare providers and patients may not accept our products. In
addition, government agencies, as well as private organizations involved in
healthcare, from time to time publish guidelines or recommendations to
healthcare providers and patients. These guidelines or recommendations can be
very influential and may directly or indirectly adversely affect the usage of
our products. For example, these guidelines could recommend a decreased dosage
of our products in conjunction with a concomitant therapy or recommend a
competitive product over our product.
IF WE ARE UNABLE TO SUCCESSFULLY COMPETE IN THE HIGHLY COMPETITIVE HEALTHCARE
INDUSTRY, OUR BUSINESS COULD BE HARMED.
We operate in a highly competitive environment and competition is expected
to increase. Competitors include large pharmaceutical, chemical and blood
testing companies, as well as biotechnology companies. Some of these
competitors, particularly large pharmaceutical and blood testing companies, have
greater resources than we have. Accordingly, even if we are successful in
launching a product, we may find that a competitive product dominates the market
for any number of reasons, including the possibility that
- the competitor may have launched its product first,
- the competitor may have greater marketing capabilities; or
- the competitive product may have increased therapeutic or other
advantages.
The technologies applied by us and our competitors are also rapidly
evolving, and new developments frequently result in price competition and
product obsolescence, which would harm our business.
SALES OF OUR PRODUCTS MAY BE ADVERSELY AFFECTED BY THE AVAILABILITY AND AMOUNT
OF REIMBURSEMENT TO THE USER OF OUR PRODUCTS FROM THIRD PARTIES, SUCH AS THE
GOVERNMENT AND INSURANCE COMPANIES.
In the U.S. and other significant markets, sales of our products may be
affected by the availability of reimbursement from the government or other third
parties, such as insurance companies. It is difficult to predict the
reimbursement status of newly approved, novel biotechnology products such as
ours, and current reimbursement policies for existing products may change. In
some foreign markets, governments have issued regulations relating to the
pricing and profitability of pharmaceutical companies. There have been proposals
in the U.S. at both the federal and state level to implement these controls. The
growth of managed care in the U.S. also has placed pressure on the pricing of
healthcare products. These pressures can be expected to continue and could
decrease our margins on affected products.
WE EXPECT TO GROW OUR BUSINESS THROUGH TRANSACTIONS AND MAY INCUR COSTS WHICH
MAY IMPACT OUR PROFITABILITY.
Our management expects to grow our business in areas in which we can be most
competitive, either through licensing, collaborations or acquisitions of
products or companies. In connection with
9
<PAGE>
these efforts, we may incur significant charges, costs and expenses, which could
impact our profitability, including impairment losses, restructuring charges,
the write-off of purchased in-process technology, transaction-related expenses,
costs associated with integrating new businesses and the cost of amortizing
goodwill and other intangibles.
IF WE CANNOT INITIATE AND MAINTAIN REVENUE-GENERATING RELATIONSHIPS WITH THIRD
PARTIES, WE MAY NOT BE ABLE TO GROW OUR REVENUES IN THE NEAR TO MEDIUM TERM.
Many products in our current pipeline are in relatively early stages of
research or development. Our ability to grow earnings in the near to medium term
may depend, in part, on our ability to initiate and maintain other
revenue-generating relationships with third parties, such as licenses to some of
our technologies, and on our ability to identify and successfully acquire rights
to later-stage products from third parties. We cannot assure you that these
other sources of revenue will be established.
WE COLLABORATE WITH THIRD PARTIES TO DEVELOP AND COMMERCIALIZE NEW PRODUCTS;
CONFLICTS WITH OR DECISIONS BY OUR PARTNERS COULD HARM OUR BUSINESS.
An important part of our business strategy depends upon collaborations with
third parties, including research collaborations and joint efforts to develop
and commercialize new products. As circumstances change, we and our corporate
partners may develop conflicting priorities or other conflicts of interest. We
may experience significant delays and incur significant expenses in resolving
these conflicts and may not be able to resolve these matters on acceptable
terms. Even without conflicts of interest, the parties may differ in their views
as to how best to realize the value associated with a current product or a
product in development. In some cases, our corporate partner may have
responsibility for formulating and implementing key strategic or operational
plans. Decisions by our corporate partners on key clinical, regulatory,
marketing, pricing, inventory management and other issues may prevent successful
commercialization of the product or otherwise impact our profitability.
OUR FINANCIAL RESULTS ARE SENSITIVE TO INTEREST RATE AND FOREIGN CURRENCY
EXCHANGE RATE FLUCTUATIONS AS A RESULT OF OUR SIGNIFICANT CASH BALANCES AND
SHORT-TERM INVESTMENTS.
In 1998, we sold portions of our businesses for cash, including our IN VITRO
diagnostics and ophthalmics businesses, and as a result have significant cash
balances and short-term investments. Our financial results, therefore, are
sensitive to interest rate fluctuations in the U.S. In addition, we sell
products in many countries throughout the world, and our financial results could
be significantly affected by fluctuations in foreign currency exchange rates or
by weak economic conditions in foreign markets.
WE ARE SUBJECT TO TAXATION IN A NUMBER OF JURISDICTIONS AND CHANGES TO THE
CORPORATE TAX RATE AND LAWS OF ANY OF THESE JURISDICTIONS COULD INCREASE THE
AMOUNT OF CORPORATE TAXES WE HAVE TO PAY.
We are taxable principally in the U.S., Germany, Italy and The Netherlands.
All of these jurisdictions have in the past and may in the future make changes
to their corporate tax rates and other tax laws, which could increase our tax
provision in the future. We have negotiated a number of rulings regarding income
and other taxes that are subject to periodic review and renewal. If these
rulings are not renewed or are substantially modified, taxes payable in
particular jurisdictions could increase. While we believe that all material tax
liabilities are properly reflected in our balance sheet, we are presently under
audit in several jurisdictions, and we may not prevail in all cases in the event
the taxing authorities disagree with our interpretations of the tax law. In
addition and subject to some limitations, we have assumed liabilities for all
income taxes incurred prior to the sales of
10
<PAGE>
our former subsidiaries, Chiron Vision Corporation and Chiron Diagnostics
Corporation. Future levels of research and development spending, capital
investment and export sales will impact our entitlement to related tax credits
and benefits that lower our effective tax rate.
WE EXPECT TO EXPERIENCE VOLATILITY IN THE TRADING PRICE OF THE EXCHANGE NOTES
AND THE UNDERLYING COMMON STOCK, WHICH COULD ADVERSELY AFFECT THE VALUE OF YOUR
INVESTMENT.
The trading price of the exchange notes and the underlying common stock is
subject to significant volatility due to any number of events, both internal and
external to us. These include, without limitation:
- results of clinical trials conducted by us or by our competitors;
- announcements by us or our competitors regarding product development
efforts, including the status of regulatory approval applications;
- the outcome of legal proceedings, including claims filed by us against
third parties to enforce our patents and claims filed by third parties
against us relating to patents held by the third parties;
- the launch of competing products;
- the resolution of or the failure to resolve disputes with collaboration
partners;
- our corporate restructuring activities;
- our licensing activities; and
- the acquisition or sale by us of products, products in development or
businesses.
In connection with our research and development collaborations, from time to
time we invest in equity securities of our corporate partners. The price of
these securities also is subject to significant volatility and may be affected
by, among other things, the types of events that affect our stock. Changes in
the market price of these securities may impact our profitability and the
trading price of our exchange notes and common stock.
THE EXCHANGE NOTES ARE SUBORDINATED TO OUR SENIOR DEBT; IN THE EVENT OF A
DEFAULT, WE MAY NOT HAVE ENOUGH ASSETS REMAINING TO PAY AMOUNTS DUE ON ANY OR
ALL OF THE EXCHANGE NOTES THEN OUTSTANDING AND YOU MAY LOSE ANY OR ALL OF YOUR
INVESTMENT.
The exchange notes will be unsecured and subordinated in right of payment to
our senior debt. As a result of such subordination, in the event of our
liquidation or insolvency, a payment default with respect to senior debt, a
covenant default with respect to designated senior debt or upon acceleration of
the exchange notes due to an event of default, our assets will be available to
pay obligations on the exchange notes only after all senior debt has been paid
in full, and there may not be sufficient assets remaining to pay amounts due on
any or all of the exchange notes then outstanding. Neither we nor our
subsidiaries are prohibited under the exchange note indenture from incurring
debt. As of December 31, 1999, we had approximately $91.4 million of outstanding
senior debt.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the exchange notes or to provide us
with funds for our payment obligations, whether by dividends, distributions,
loans or other payments. In addition, any payment of dividends, distributions,
loans or advances by our subsidiaries to us could be subject to statutory or
contractual restrictions. Payments to us by our subsidiaries also will be
contingent upon our subsidiaries' earnings and business considerations.
11
<PAGE>
IF AN ACTIVE MARKET FOR THE EXCHANGE NOTES FAILS TO DEVELOP, THE TRADING PRICE
AND LIQUIDITY OF THE EXCHANGE NOTES COULD BE MATERIALLY ADVERSELY AFFECTED.
Prior to the offering there has been no trading market for the exchange
notes. The dealer manager has advised us that it currently intends to make a
market in the exchange notes. The liquidity of the trading market for the
exchange notes will depend in part on the level of participation of the holders
of existing notes in the exchange offer. The greater the participation in the
exchange offer, the greater the liquidity of the trading market for the exchange
notes and the lesser the liquidity of the trading market for the existing notes
not tendered in the exchange offer. However, Goldman, Sachs & Co. is not
obligated to make a market and may discontinue this market making activity at
any time without notice. In addition, market making activity by Goldman,
Sachs & Co. will be subject to the limits imposed by the Securities Act and the
Exchange Act. As a result, we cannot assure you that any market for the exchange
notes will develop or, if one does develop, that it will be maintained. If an
active market for the exchange notes fails to develop or be sustained, the
trading price and liquidity of the exchange notes could be materially adversely
affected.
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<PAGE>
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus, including material incorporated into this prospectus by
reference, contains forward-looking statements. These include statements
concerning plans, goals, strategies, future events or performance and all other
statements which are other than statements of historical fact, including,
without limitation, statements containing words such as "believes,"
"anticipates," "expects," "estimates," "projects," "will," "may," "might" and
words of a similar nature. Actual results, performance or outcomes may differ
materially. Some of the important factors which, in our view, could cause actual
results to differ from those expressed in the forward-looking statements are
discussed under the heading "Risk Factors".
USE OF PROCEEDS
We will not receive any proceeds from the exchange of the existing notes for
the exchange notes pursuant to the exchange offer.
PRICE RANGE OF COMMON STOCK
The following table sets forth the high and low closing sales prices of a
share of our common stock reported on The Nasdaq National Market during the
indicated periods.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal year ending December 31, 1998
First Quarter......................................... $22 $16 9/16
Second Quarter........................................ 22 15 11/16
Third Quarter......................................... 21 1/16 13 3/4
Fourth Quarter........................................ 26 5/8 18 1/16
Fiscal year ending December 31, 1999
First Quarter......................................... $23 1/4 $20 7/8
Second Quarter........................................ 22 7/16 20
Third Quarter......................................... 33 5/16 20 3/4
Fourth Quarter........................................ 43 1/4 27 1/2
Fiscal year ending December 31, 2000
First Quarter......................................... $67 9/16 $39 7/16
Second Quarter (through April 14, 2000)............... 49 3/4 39 1/16
</TABLE>
On April 14, 2000, the last reported sales price of our common stock on The
Nasdaq National Market was $39 1/16 per share.
DIVIDEND POLICY
We do not pay any dividends on our common stock. We currently intend to
retain earnings, if any, for use in our business and do not anticipate paying
cash dividends to holders of our common stock.
13
<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1999, (i) our actual
capitalization and (ii) our capitalization as adjusted after giving effect to
(a) the issuance of the exchange notes in the exchange offer on the assumption
that the outstanding existing 1.90% Convertible Subordinated Notes due
November 17, 2000, except for those held by Novartis that will not be included
in the exchange offer, were validly tendered and accepted for exchange at face
value; (b) to reflect an extraordinary loss of $160.2 million on the assumed
early extinguishment of the outstanding existing 1.90% Convertible Subordinated
Notes, except for those held by Novartis that will not be included in the
exchange offer; (c) the repayment in January 2000 of an outstanding note payable
to Novartis AG of $67.8 million; and (d) the issuance of shares on the
assumption that all of our 5.25% Convertible Subordinated Notes are called and
redeemed for common stock.
To the extent that existing notes are not validly tendered or accepted in
the exchange offer, the amount attributed to the exchange notes would decrease
and the amount attributed to the existing notes would increase. This information
should be read in conjunction with our consolidated financial statements and
notes to consolidated financial statements which are incorporated by reference
herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------------------------------------------------
ADJUSTMENTS FOR ADJUSTMENTS
SIGNIFICANT FOR DEBT
ACTUAL EVENTS EXCHANGE AS ADJUSTED
------ --------------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C>
Long-term debt, including current portion:
4.50% Convertible Subordinated Notes due 2007
(exchange notes).............................. $ -- -- $ 243,800 (5) $ 243,800
1.90% Convertible Subordinated Notes due 2000
(existing notes).............................. 238,371 -- (238,371)(5) --
Other long-term debt............................ 196,212 (1) (162,785)(2)(3)(4) -- 33,427
---------- --------- ---------- -----------
Total long-term debt.......................... $ 434,583 (162,785) 5,429 $ 277,227
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000
shares authorized; none outstanding........... -- -- -- --
Common stock, $0.01 par value; 499,500,000
shares authorized; 181,863,000 shares issued
and outstanding............................... 1,819 32 (4) -- 1,851
Restricted common stock, $0.01 par value;
500,000 shares authorized; none outstanding... -- -- -- --
Additional paid-in capital...................... 2,057,418 100,221 (4) -- 2,157,639
Accumulated deficit............................. (323,037) -- (160,587)(6) (483,624)
Accumulated other comprehensive income.......... 3,351 -- -- 3,351
Treasury stock, at cost (1,230,000 shares)...... (46,714) -- -- (46,714)
---------- --------- ---------- -----------
Total stockholders' equity.................... 1,692,837 100,253 (160,587) 1,632,503
---------- --------- ---------- -----------
Total capitalization........................ $2,127,420 $ (62,532) $ (155,158) $ 1,909,730
========== ========= ========== ===========
</TABLE>
- ----------------
(1) Long-term debt includes a $67.8 million note payable to Novartis AG,
$20.3 million that was outstanding under certain credit facilities,
$95.0 million of the 5.25% Convertible Subordinated Notes due in 2002 and
$9.8 million of the 1.90% Convertible Subordinated Notes due November 2000
held by Novartis AG that will not be included in the exchange offer. Also
see note 10 of the consolidated financial statements which is incorporated
by reference herein.
(2) In January 2000, we repaid the outstanding note payable to Novartis AG of
$67.8 million.
(3) In April 2000, our Board of Directors delegated to us the authority to call,
for redemption in common stock, the outstanding $95.0 million 5.25%
Convertible Subordinated Notes prior to the next interest
14
<PAGE>
payment of May 21, 2000. We have determined to call the 5.25% Convertible
Subordinated Notes prior to such date and will take all the necessary
actions to do so. The redemption price for each $5,000 principal amount of
the bonds will equal $5,260.31, which includes accrued interest of $260.31
to the redemption date. As an alternative to redemption, bondholders may
elect to convert into shares of Chiron common stock at a conversion price of
$30.83 per share, or 162 shares for each $5,000 principal amount of bonds
held, plus cash in lieu of fractional shares. The bondholders' right to
convert into shares will expire at the close of business on May 11, 2000.
(4) Upon the call of the 5.25% Convertible Subordinated Notes, full redemption
will result in the issuance of 3,243,594 common stock shares, $.01 par
value.
(5) This adjustment assumes the existing 1.90% Convertible Subordinated Notes
were validly tendered and accepted for exchange.
(6) This adjustment represents the $160.2 million extraordinary loss on the
assumed early extinguishment of all outstanding existing 1.90% Convertible
Subordinated Notes for the exchange notes and cash. The amount of the cash
payment assumes that the existing 1.90% Convertible Subordinated Notes were
validly tendered and accepted for exchange at face value, for a coupon rate
of 4.50%, and a market price of $47.50 (midpoint of $40 to $55 range).
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements and the notes thereto.
The selected data presented below under captions "Consolidated Statement of
Operations Data" and "Consolidated Balance Sheet Data" for, and as of the end
of, each of the years in the five-year period ended December 31, 1999 are
derived from our audited consolidated financial statements. The consolidated
financial statements as of December 31, 1998 and 1999, and for each of the years
in the three-year period ended December 31, 1999, are incorporated by reference
in this prospectus.
The following transactions materially effect the comparability of the
information reflected below:
- On December 29, 1997, we completed the sale of our ophthalmics business to
Bausch & Lomb Incorporated. On November 30, 1998, we completed the sale of
our IN VITRO diagnostics business to Bayer Corporation. Our consolidated
statements of operations reflect the after-tax results of our ophthalmics
business and our IN VITRO diagnostics business as discontinued operations
for all periods presented; and
- On March 31, 1998, in an acquisition accounted for under the purchase
method of accounting, we acquired the remaining 51% interest in Chiron
Behring GmbH & Co from Hoechst AG. Beginning in the second quarter of
1998, the results of Chiron Behring were consolidated with our results.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues............................ $ 393,566 $ 537,149 $ 574,599 $ 736,673 $ 762,646
Income (loss) from continuing
operations.............................. (469,802) 45,658 25,782 75,998 128,404
Income (loss) from continuing operations
per share (basic)....................... (2.89) 0.27 0.15 0.43 0.71
Income (loss) from continuing operations
per share (diluted)..................... (2.89) 0.26 0.14 0.42 0.69
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term and
long-term investments................... $ 224,217 $ 128,835 $ 258,472 $1,590,003 $1,554,787
Working capital........................... 268,408 223,599 298,866 1,073,507 726,369
Total assets.............................. 1,489,847 1,688,670 1,768,478 2,524,264 2,458,769
Long-term debt, including current
portion(1).............................. 470,224 560,072 556,172 421,309 434,583
Stockholders' equity...................... 672,061 764,855 873,945 1,545,802 1,692,837
RATIO OF EARNINGS TO FIXED CHARGES(2)..... $ (377.26) 1.94x 1.54x 3.38x 4.89x
</TABLE>
- ----------------
(1) Long-term debt includes a note payable to Novartis AG, amounts outstanding
under certain credit facilities, the 5.25% Convertible Subordinated Notes
due May 2002 and the 1.90% Convertible Subordinated Notes due
November 2000, including those held by Novartis AG that will not be included
in the exchange offer.
(2) For purposes of this ratio, "earnings" consist of earnings before income
taxes and fixed charges. "Fixed charges" consist of interest on indebtedness
and capital lease obligations, the interest component of rental expense,
amortization of debt discount and issuance expenses. Dollars in millions.
16
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES
We are offering to exchange $1,000 principal amount of exchange notes for
each $1,000 principal amount at maturity of existing notes that are validly
tendered on the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal. In addition, for each $1,000
principal amount at maturity of the existing notes tendered, you will also
receive a cash payment in the amount equal to the difference between (i) the
product of (A) 34.5924 and (B) the average of the closing market prices of our
common stock for the five trading days immediately preceding the second trading
day prior to the expiration date and (ii) $1,000.
Any existing note that is validly tendered and accepted prior to an interest
payment date, May 17 and November 17 in the case of the existing notes, will not
be entitled to any payment or adjustment on account of accrued original issue
discount or accrued and unpaid interest on such note.
Holders must tender existing notes in a principal amount of $1,000 and any
integral multiple of $1,000.
You may tender all, some or none of your existing notes.
The exchange offer is not being made to, and we will not accept tenders for
exchange from, holders of existing notes in any jurisdiction in which the
exchange offer or the acceptance of the offer would not be in compliance with
the securities or blue sky laws of that jurisdiction.
Our board of directors and officers do not make any recommendation to the
holders of existing notes as to whether or not to tender all or any portion of
their existing notes. In addition, we have not authorized anyone to make any
recommendation. You must make your own decision whether to tender your existing
notes and, if so, the amount of existing notes to tender.
EXPIRATION DATE
The expiration date for the offer is 12:01 a.m., Eastern Standard Time, on
May 15, 2000, unless we extend the offer. We may extend this expiration date for
any reason. The last date on which tenders will be accepted, whether on May 15,
2000 or any later date to which the exchange offer may be extended, is referred
to as the expiration date.
EXTENSIONS; AMENDMENTS
We expressly reserve the right, in our discretion, for any reason to:
- delay the acceptance of existing notes for exchange;
- extend the time period during which the exchange offer is open, by giving
oral or written notice of an extension to the holders of existing notes in
the manner described below. During any extension, all existing notes
previously tendered and not withdrawn will remain subject to the exchange
offer; and
- amend the terms of the exchange offer.
If we consider an amendment to the exchange offer to be material, or if we
waive a material condition of the exchange offer, we will promptly disclose the
amendment in a prospectus supplement, and, if required by law, we will extend
the exchange offer for a period of five to ten business days.
We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the existing notes as promptly
as practicable. In the case of any extension, we will
17
<PAGE>
issue a press release or other public announcement no later than 9:00 a.m.,
Eastern Standard Time, on the next business day after the previously scheduled
expiration date.
PROCEDURES FOR TENDERING EXISTING NOTES
Your tender to us of existing notes and our acceptance of your tender will
constitute a binding agreement between you and us upon the terms and subject to
the conditions set forth in this prospectus and in the accompanying letter of
transmittal.
TENDER OF EXISTING NOTES HELD THROUGH A CUSTODIAN. If you are a beneficial
holder of the existing notes that are held of record by a custodian bank,
depository institution, broker, dealer, trust company or other nominee, you must
instruct the custodian to tender the existing notes on your behalf. Your
custodian will provide you with their instruction letter which you must use to
give these instructions. Any beneficial owner of existing notes held of record
by The Depository Trust Company or its nominee, through authority granted by The
Depository Trust Company, may direct The Depository Trust Company participant
through which the beneficial owner's existing notes are held in The Depository
Trust Company to tender on the beneficial owner's behalf.
TENDER OF EXISTING NOTES HELD THROUGH THE DEPOSITORY TRUST COMPANY. To
effectively tender existing notes that are held through The Depository Trust
Company, Depository Trust Company participants should transmit their acceptance
through the Automated Tender Offer Program ("ATOP"), for which the transaction
will be eligible, and The Depository Trust Company will then edit and verify the
acceptance and send an agent's message to the exchange agent for its acceptance.
Delivery of tendered existing notes must be made to the exchange agent pursuant
to the book-entry delivery procedures set forth below or the tendering
Depository Trust Company participant must comply with the guaranteed delivery
procedures set forth below.
In addition, the exchange agent must receive:
- a completed and signed letter of transmittal or an electronic confirmation
pursuant to The Depository Trust Company's ATOP system indicating the
principal amount of existing notes to be tendered and any other documents,
if any, required by the letter of transmittal, and
- prior to the expiration date, a confirmation of book-entry transfer of
such existing notes, into the exchange agent's account at The Depository
Trust Company, in accordance with the procedure for book-entry transfer
described below, or
- the holder must comply with the guaranteed delivery procedures described
below.
No letters of transmittal will be required to tender existing notes through
ATOP.
Your existing notes must be tendered by book-entry transfer. The exchange
agent will establish an account with respect to the existing notes at The
Depository Trust Company for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in The Depository Trust Company must make book-entry delivery of
existing notes by having The Depository Trust Company transfer such existing
notes into the exchange agent's account at The Depository Trust Company in
accordance with The Depository Trust Company's procedures for transfer. Although
your existing notes will be tendered through The Depository Trust Company
facility, the letter of transmittal, or facsimile, or an electronic confirmation
pursuant to The Depository Trust Company's ATOP system, with any required
signature guarantees and any other required documents, if any, must be
transmitted to and received or confirmed by the exchange agent at its address
set forth below under "Exchange agent," prior to 12:01 a.m. Eastern Standard
Time on the expiration date. You or your broker must ensure that the exchange
agent receives an agent's message from The Depository Trust Company confirming
the book-entry transfer of your existing notes. An agent's message is a message
transmitted by The Depository
18
<PAGE>
Trust Company and received by the exchange agent that forms a part of the
book-entry confirmation which states that The Depository Trust Company has
received an express acknowledgement from the participant in The Depository Trust
Company tendering the shares that such participant agrees to be bound by the
terms of the letter of transmittal. Delivery of documents to The Depository
Trust Company in accordance with its procedures does not constitute delivery to
the exchange agent.
If you are an institution which is a participant in The Depository Trust
Company's book-entry transfer facility, you should follow the same procedures
that are applicable to persons holding existing notes through a financial
institution.
Do not send letters of transmittal or other exchange offer documents to us,
Goldman Sachs & Co. or Georgeson Shareholder Communications Inc., the
information agent.
It is your responsibility that all necessary materials get to the exchange
agent before the expiration date. If the exchange agent does not receive all of
the required materials before the expiration date, your existing notes will not
be validly tendered.
Any existing notes not accepted for exchange for any reason will be returned
without expense to the tendering holder as promptly as practicable after the
expiration or termination of the exchange offer.
We will have accepted the validity of tendered existing notes if and when we
give oral or written notice to State Street Bank and Trust Company of
California, N.A., the exchange agent. The exchange agent will act as the
tendering holders' agent for purposes of receiving the exchange notes from us.
If we do not accept any tendered existing notes for exchange because of an
invalid tender or the occurrence of any other event, State Street Bank and Trust
Company of California, N.A. will return those existing notes to you, without
expense, promptly after the expiration date via book-entry transfer through The
Depository Trust Company.
OUR INTERPRETATIONS ARE BINDING
We will determine, in our sole discretion, all questions as to the validity,
form, eligibility and acceptance of existing notes tendered for exchange. Our
determination will be final and binding. We reserve the absolute right to reject
any and all tenders of any particular existing notes not properly tendered or to
not accept any particular existing note which acceptance might, in our judgment
or our counsel's judgment, be unlawful. We also reserve the absolute right to
waive any defects or irregularities or conditions of the exchange offer as to
any particular existing notes either before or after the expiration date,
including the right to waive the ineligibility of any holder who seeks to tender
existing notes in the exchange offer. Our interpretation of the terms and
conditions of the exchange offer as to any particular existing note either
before or after the expiration date, including the letter of transmittal and the
instructions to such letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of existing notes for exchange must be cured within such reasonable period of
time as we shall determine. Neither we, the exchange agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of existing notes for exchange, nor shall any of them
incur any liability for failure to give such notification.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Once all of the conditions to the exchange offer are satisfied or waived, we
will accept, promptly after the expiration date, all existing notes properly
tendered, and will issue the exchange notes promptly after acceptance of the
existing notes. The discussion under the heading "Conditions for completion of
the exchange offer" provides further information regarding the
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conditions to the exchange offer. For purposes of the exchange offer, we shall
be deemed to have accepted properly tendered existing notes for exchange when,
as and if we have given oral or written notice to the exchange agent, with
written confirmation of any oral notice to be given promptly after giving such
notice.
For each $1,000 principal amount of existing notes accepted for exchange,
you will receive an exchange note having a principal amount of $1,000 and you
will also receive a cash payment in the amount equal to the difference between
(i) the product of (A) 34.5924 and (B) the average of the closing market prices
of our common stock for the five trading days immediately preceding the second
trading day prior to the expiration date and (ii) $1,000. The exchange notes
will bear interest from the issue date, which is anticipated to be three
business days following acceptance of the existing notes.
Any existing note that is validly tendered and accepted prior to an interest
payment date, May 17 and November 17 in the case of the existing notes, will not
be entitled to any payment or adjustment on account of accrued original issue
discount or accrued and unpaid interest on such note.
In all cases, issuance of exchange notes for existing notes that are
accepted for exchange in the offer will be made only after timely receipt by the
exchange agent of:
- a timely book-entry confirmation of such existing notes into the exchange
agent's account at the book-entry transfer facility,
- a properly completed and duly executed letter of transmittal or an
electronic confirmation of the submitting holder's acceptance through The
Depository Trust Company's ATOP system, and
- all other required documents, if any.
If we do not accept any tendered existing notes for any reason set forth in
the terms and conditions of the exchange offer, or if existing notes are
submitted for a greater principal amount than the holder desires to exchange,
the unaccepted or non-exchanged existing notes tendered by book-entry transfer
into the exchange agent's account at the book-entry transfer facility will be
returned in accordance with the book-entry procedures described above, and the
existing notes that are not exchanged will be credited to an account maintained
with The Depository Trust Company, as promptly as practicable after the
expiration or termination of the exchange offer.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your existing notes and you cannot complete the
procedures for book-entry transfer set forth above on a timely basis, you may
still tender your existing notes if:
- your tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from the
eligible institution a properly completed and duly executed letter of
transmittal, or a facsimile of such letter of transmittal or an electronic
confirmation pursuant to the Depository Trust Company's ATOP system, and
notice of guaranteed delivery, substantially in the form provided by us,
by facsimile transmission, mail or hand delivery, that:
(a) sets forth the name and address of the holder of existing notes and the
amount of existing notes tendered,
(b) states that the tender is being made thereby, and
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(c) guarantees that within three New York Stock Exchange trading days after
the expiration date a book-entry confirmation and any other documents
required by the letter of transmittal, if any, will be deposited by the
eligible institution with the exchange agent; and
- book-entry confirmation and all other documents, if any, required by the
letter of transmittal are received by the exchange agent within three New
York Stock Exchange trading days after the expiration date.
WITHDRAWAL RIGHTS
You may withdraw your tender of existing notes at any time prior to
12:01 a.m., Eastern Standard Time, on the expiration date.
For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal at the address or, in the case of eligible institutions, at
the facsimile number, set forth below under the heading "Exchange agent" prior
to 12:01 a.m. Eastern Standard Time, on the expiration date. Any notice of
withdrawal must:
- specify the name of the person who tendered the existing notes to be
withdrawn;
- contain a statement that you are withdrawing your election to have your
existing notes exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the existing notes were tendered,
including any required signature guarantees; and
- if you have tendered your existing notes in accordance with the procedure
for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at The Depository Trust Company
to be credited with the withdrawn existing notes and otherwise comply with
the procedures of such facility.
Any existing notes that have been tendered for exchange, but which are not
exchanged for any reason, will be credited to an account maintained with the
book-entry transfer facility for the existing notes, as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn existing notes may be retendered by following the procedures
described under the heading "Procedures for tendering existing notes" above at
any time on or prior to 12:01 a.m., Eastern Standard Time, on the expiration
date.
CONDITIONS FOR COMPLETION OF THE EXCHANGE OFFER
The exchange offer is conditional upon a minimum principal amount of 75% of
the existing notes being tendered and upon the average of the closing market
prices of our common stock for the five trading days immediately preceding the
second trading day prior to the expiraton date remaining between $40 and $55,
which conditions may be waived or amended.
We may not accept existing notes for exchange and may terminate or not
complete the exchange offer if:
- any action, proceeding or litigation seeking to enjoin, make illegal or
delay completion of the exchange offer or otherwise relating in any manner
to the exchange offer is instituted or threatened;
- any order, stay, judgment or decree is issued by any court, government,
governmental authority or other regulatory or administrative authority and
is in effect, or any statute, rule, regulation, governmental order or
injunction shall have been proposed, enacted, enforced or deemed
applicable to the exchange offer, any of which would or might restrain,
prohibit or
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delay completion of the exchange offer or impair the contemplated benefits
of the exchange offer to us;
- any of the following occurs and the adverse effect of such occurrence
shall, in our reasonable judgment, be continuing:
- any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market in the United States;
- any extraordinary or material adverse change in U.S. financial markets
generally, including, without limitation, a decline of at least twenty
percent in either the Dow Jones Average of Industrial stocks or the
Standard & Poor's 500 Index from April 17, 2000;
- a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States;
- any limitation, whether or not mandatory, by any governmental entity
on, or any other event that would reasonably be expected to materially
adversely affect, the extension of credit by banks or other lending
institutions;
- a commencement of a war or other national or international calamity
directly or indirectly involving the United States, which would
reasonably be expected to affect materially and adversely, or to delay
materially, the completion of the exchange offer;
- if any of the situations described above existed at the time of
commencement of the exchange offer and that situation deteriorates
materially after commencement of the exchange offer;
- any tender or exchange offer, other than this exchange offer by us, with
respect to some or all of our outstanding common stock or any merger,
acquisition or other business combination proposal involving us shall have
been proposed, announced or made by any person or entity;
- any event or events occur that have resulted or may result, in our
judgment, in an actual or threatened change in our business condition,
income, operations, stock ownership or prospects and our subsidiaries,
taken as a whole;
- as the term "group" is used in Section 13(d)(3) of the Exchange Act,
- any person, entity or group acquires more than five percent of our
outstanding shares of common stock, other than a person, entity or
group which had publicly disclosed such ownership with the Securities
and Exchange Commission, or SEC, prior to April 17, 2000;
- any such person, entity or group which had publicly disclosed such
ownership prior to such date shall acquire additional common stock
constituting more than two percent of our outstanding shares; or
- any new group shall have been formed that beneficially owns more than
five percent of our outstanding shares of common stock which in our
judgment in any such case, and regardless of the circumstances, makes
it inadvisable to proceed with the exchange offer or with such
acceptance for exchange of shares.
If any of the above events occur, we may:
- terminate the exchange offer and as promptly as practicable return all
tendered existing notes to tendering note holders;
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- extend the exchange offer and, subject to the withdrawal rights described
in "--Withdrawal rights" on page 21, retain all tendered existing notes
until the extended exchange offer expires;
- amend the terms of the exchange offer; or
- waive the unsatisfied condition and, subject to any requirement to extend
the period of time during which the exchange offer is open, complete the
exchange offer.
The conditions are for our sole benefit. We may assert these conditions with
respect to all or any portion of the exchange offer regardless of the
circumstances giving rise to them. We may waive any condition in whole or in
part at any time in our discretion. Our failure to exercise our rights under any
of the above conditions does not represent a waiver of these rights. Each right
is an ongoing right which may be asserted at any time. Any determination by us
concerning the conditions described above will be final and binding upon all
parties. All conditions, other than conditions relating to governmental
approval, will either be deemed satisfied or waived by us on or before the
expiration date.
If a stop order issued by the SEC is in effect with respect to the
registration statement of which this document is a part, we will not accept any
existing notes tendered and we will not issue exchange notes in exchange for any
existing notes.
NOVARTIS RELATIONSHIP AND WAIVER
Novartis AG, a life sciences company headquartered in Basel, Switzerland,
was formed as a result of the December 1996 merger between Ciba-Geigy Limited
and Sandoz Limited. Through a series of transactions that became effective in
January 1995, Ciba acquired shares of our common stock which, when combined with
shares already held by Ciba, represented 49.9% of our then-outstanding common
stock. As a result of dilution stemming primarily from the issuance of common
stock under our employee stock option and stock purchase plans and in connection
with certain acquisitions, as of February 1, 2000, Novartis held shares
representing approximately 44% of our outstanding common stock.
In connection with these transactions, we and Novartis entered into a series
of agreements which provide, among other things and subject to certain
conditions and exceptions, that:
- Novartis will not increase its ownership interest in us above 55% before
January 5, 2001 and thereafter will not increase its ownership above 55%
unless it acquires all of our outstanding capital stock in a "buy-out"
transaction;
- Novartis may not propose or consummate a "buy-out transaction" before
January 5, 2001;
- Novartis may exceed these standstill amounts and increase its ownership
interest up to 79.9% if the transaction is approved by a majority of the
independent members of our Board of Directors;
- Novartis has the right to nominate three members to our Board of
Directors, which will be reduced from twelve members to eleven members
after our year 2000 annual meeting;
- We may require Novartis to purchase shares of our common stock directly
from us at fair market value, up to a maximum subscription amount,
initially $500 million and subject to adjustment, as noted below;
- Novartis will provide certain funding to us for research services and has
agreed to guarantee up to a maximum amount of $402.5 million of our debt;
Chiron can increase the maximum borrowing amount under the guaranteed
credit facilities by up to $300 million. In exchange for this increase,
the amount of Chiron's common stock required to be purchased by
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Novartis (as noted above) would be reduced by an equal amount. Under the
Investment Agreement, Novartis has guaranteed $172.6 million of Chiron's
operating lease commitments as of December 31, 1999. In addition, Novartis
has guaranteed a $100 million bank line of credit but there were no
borrowings outstanding at December 31, 1999.
- Novartis has an option to purchase newly issued shares of our common stock
directly from us at fair market value, subject to the standstill
restrictions described above; and
- We and Novartis will cooperate in research, development, manufacturing and
marketing of biotechnology products on an arm's-length basis while
remaining independent to pursue other opportunities.
Novartis has waived its subscription rights related to the issuance of the
exchange notes.
FEES AND EXPENSES
Goldman, Sachs & Co. is acting as the dealer manager in connection with the
exchange offer. Goldman, Sachs & Co. will receive a fee in the manner described
below for its services as dealer manager, in addition to being reimbursed for
its out-of-pocket expenses, including reasonable attorneys' fees, in connection
with the exchange offer. The fees below will be payable if and when the exchange
offer is completed.
The fee will be equal to the greater of (i) 0.75% of the principal amount at
maturity of the existing notes validly tendered and accepted for exchange in the
exchange offer or (ii) $500,000.
We have agreed to indemnify Goldman, Sachs & Co. against specified
liabilities relating to or arising out of the offer, including civil liabilities
under the federal securities laws, and to contribute to payments which Goldman,
Sachs & Co. may be required to make in respect thereof. However, in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. Goldman, Sachs & Co. may from
time to time hold existing notes, exchange notes and our common stock in its
proprietary accounts, and to the extent it owns existing notes in these accounts
at the time of the exchange offer, Goldman, Sachs & Co. may tender these
existing notes.
We have retained Georgeson Shareholder Communications Inc. to act as the
information agent and State Street Bank and Trust Company of California, N.A. to
act as the exchange agent in connection with the exchange offer. The information
agent may contact holders of existing notes by mail, telephone, facsimile
transmission and personal interviews and may request brokers, dealers and other
nominee stockholders to forward materials relating to the exchange offer to
beneficial owners. The information agent and the exchange agent each will
receive reasonable compensation for their respective services, will be
reimbursed for reasonable out-of-pocket expenses and will be indemnified against
liabilities in connection with their services, including liabilities under the
federal securities laws.
Neither the information agent nor the exchange agent has been retained to
make solicitations or recommendations. The fees they receive will not be based
on the principal amount of existing notes tendered under the exchange offer.
We will not pay any fees or commissions to any broker or dealer or any other
person, other than Goldman, Sachs & Co., for soliciting tenders of existing
notes under the exchange offer. Brokers, dealers, commercial banks and trust
companies will, upon request, be reimbursed by us for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their customers.
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LEGAL LIMITATION
The above conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition, or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any existing notes tendered,
and no exchange notes will be issued in exchange for any such existing notes, if
at such time any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939, as
amended.
EXCHANGE AGENT
State Street Bank and Trust Company of California, N.A., has been appointed
as the exchange agent for the exchange offer. All executed letters of
transmittal should be directed to the exchange agent at the address set forth
below. Questions, requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent addressed as
follows:
STATE STREET BANK
AND TRUST COMPANY
OF CALIFORNIA, N.A.
Exchange Agent
BY MAIL, OVERNIGHT DELIVERY OR HAND:
State Street Bank and Trust Company of California, N.A.
c/o State Street Bank and Trust Company
Avenue de Lafayette, 5th Floor
Corporate Trust
Boston, MA 02110
Attention: Susan Lavey
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(617) 662-1544
FACSIMILE TRANSMISSIONS:
(617) 662-1452
If you deliver the letter of transmittal to an address other than as set
forth above or transmission of instructions via facsimile other than as set
forth above, then such delivery or transmission does not constitute a valid
delivery of such letter of transmittal.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the exchange offer. The estimated expenses to be incurred in
connection with the exchange offer are customary and will be paid by us.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE EXISTING NOTES
Holders who tender their existing notes for exchange will not be obligated
to pay any related transfer taxes.
The existing notes that are not exchanged for exchange notes pursuant to the
exchange offer will be pari passu in payment to the exchange notes.
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DESCRIPTION OF EXCHANGE NOTES
We will issue the exchange notes under a document called the "Indenture."
The Indenture is a contract between us and State Street Bank and Trust Company
of California, N.A., as Trustee (the "Trustee"). The Indenture and the exchange
notes are governed by New York law. Because this section is a summary, it does
not describe every aspect of the exchange notes and the Indenture. This summary
is subject to and qualified in its entirety by reference to all of the
provisions of the Indenture, including definitions of certain terms used in the
Indenture. For example, in this section we use capitalized words to signify
defined terms that have been given special meaning in the Indenture. We describe
the meaning of only the more important terms. Wherever we refer to particular
defined terms, those defined terms are incorporated by reference herein. In this
section, references to "Chiron," "we," "our" or "us" refer solely to Chiron
Corporation and not its subsidiaries.
GENERAL
The exchange notes will be general, unsecured obligations of Chiron. The
exchange notes will be subordinated, which means that they will rank behind
certain of our indebtedness as described below. The exchange notes will be
limited to $243,800,000 aggregate principal amount. We are required to repay the
principal amount of the exchange notes in full on May 15, 2007. The exchange
notes will bear interest at the rate per annum shown on the front cover of this
prospectus from the issue date. We will pay interest on the exchange notes on
May 15 and November 15 of each year, commencing on November 15, 2000.
You may convert the exchange notes into shares of our common stock initially
at the conversion rate stated on the front cover of this prospectus at any time
before the close of business on May 15, 2007, unless the exchange notes have
been previously redeemed or repurchased. The conversion rate may be adjusted as
described below.
We may redeem the exchange notes at our option at any time on or after
May 15, 2003, in whole or in part, at the redemption prices set forth below
under "--Optional Redemption by Chiron," plus accrued and unpaid interest to the
redemption date. If there is a Change in Control of Chiron, you may have the
right to require us to repurchase your exchange notes as described below under
"--Repurchase at Option of Holders Upon a Change in Control."
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The exchange notes will be issued:
- only in fully registered form;
- without interest coupons; and
- in denominations of $1,000 or multiples thereof.
The exchange notes will be evidenced by one or more global notes which will
be deposited with the Trustee as custodian for DTC and registered in the name of
Cede & Co. ("Cede"), as nominee of DTC. The global note and any notes issued in
exchange for the global note will be subject to restrictions on transfer and
will bear the legend regarding those restrictions set forth under "Notice to
Investors." Except as set forth below, record ownership of the global note may
be transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
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The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee unless either of the following occurs:
- DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note; or
- an Event of Default with respect to the notes represented by the global
note has occurred and is continuing.
In those circumstances, DTC will determine in whose names any securities issued
in exchange for the global note will be registered.
DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes, and as a result:
- you cannot get notes registered in your name if they are represented by
the global note;
- you cannot receive certificated (physical) notes in exchange for your
beneficial interest in the global notes;
- you will not be considered to be the owner or holder of the global note or
any note it represents for any purpose; and
- all payments on the global note will be made to DTC or its nominee.
The laws of some jurisdictions require that certain kinds of purchasers (for
example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global note to these types of purchasers.
Only institutions, such as a securities broker or dealer, that have accounts
with the DTC or its nominee, called participants, and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global note. The only place where the ownership of beneficial interests in the
global note will appear and the only way the transfer of those interests can be
made will be on the records kept by DTC for their participants' interests, and
the records kept by those participants for interests of persons held by
participants on their behalf.
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearinghouse, that is, next-day funds. In contrast, beneficial
interests in a global note usually trade in DTC's same-day funds settlement
system, and settle in immediately available funds. We make no representations as
to the effect that settlement in immediately available funds will have on
trading activity in those beneficial interests.
We will make cash payments of interest on and principal of and the
redemption or repurchase price of the global note to Cede, the nominee for DTC,
as the registered owner of the global note. We will make these payments by wire
transfer of immediately available funds on each payment date.
We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the notes represented by the global note as
shown on DTC's records, unless DTC has reason to believe that it will not
receive payment on that payment date. Payments by participants to owners of
beneficial interests in notes represented by the global note held through
participants will be the responsibility of those participants, as is now the
case with securities held for the accounts of customers registered in "street
name".
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We will send any redemption notices to Cede. We understand that if less than
all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes (including the presentation of notes for exchange) only at the
direction of one or more participants to whose account with DTC interests in the
global note are credited and only in respect of such portion of the principal
amount of the notes represented by the global note as to which such participant
or participants has or have given such direction.
DTC has also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Some of these participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the Trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the Trustee are not responsible for maintaining,
supervising or reviewing any of those records.
CONVERSION RIGHTS
You may, at your option, convert any portion of the principal amount of any
exchange note that is an integral multiple of $1,000 into shares of our common
stock at any time on or prior to the close of business on the maturity date,
unless the exchange notes have been previously redeemed or repurchased, at a
conversion price equivalent to a 33% premium over the average of the closing
market prices of our common stock for the five trading days immediately
preceding the second trading day prior to the expiration date. Your right to
convert an exchange note called for redemption or delivered for repurchase will
terminate at the close of business on the redemption date or repurchase date for
that exchange note, unless we default in making the payment due upon redemption
or repurchase.
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You may convert all or part of any exchange note by delivering the exchange
note at the Corporate Trust Office of the Trustee in the Borough of Manhattan,
The City of New York, accompanied by a duly signed and completed notice of
conversion, a copy of which may be obtained by the Trustee. The conversion date
will be the date on which the exchange note and the duly signed and completed
notice of conversion are so delivered.
As promptly as practicable on or after the conversion date, we will issue
and deliver to the Trustee a certificate or certificates for the number of full
shares of our common stock issuable upon conversion, together with a cash
payment in lieu of any fraction of a share. The certificate will then be sent by
the Trustee to the conversion agent for delivery to the holder. The shares of
our common stock issuable upon conversion of the exchange notes will be fully
paid and nonassessable and will rank equally with the other shares of our common
stock.
If you surrender an exchange note for conversion on a date that is not an
Interest Payment Date, you will not be entitled to receive any interest for the
period from the next preceding Interest Payment Date to the conversion date,
except as described below in this paragraph. Any exchange note surrendered for
conversion during the period from the close of business on any Regular Record
Date to the opening of business on the next succeeding Interest Payment Date
(except exchange notes (or portions thereof) called for redemption on a
redemption date or to be repurchased on a repurchase date for which the right to
convert would terminate during such period) must be accompanied by payment of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of the exchange notes being surrendered for conversion. In the
case of any exchange note which has been converted after any Regular Record Date
but before the next succeeding Interest Payment Date, interest payable on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest shall be paid to the holder
of such exchange note on such Regular Record Date.
No other payment or adjustment for interest, or for any dividends in respect
of our common stock, will be made upon conversion. Holders of our common stock
issued upon conversion will not be entitled to receive any dividends payable to
holders of our common stock as of any record time or date before the close of
business on the conversion date. We will not issue fractional shares upon
conversion. Instead, we will pay cash based on the market price of our common
stock at the close of business on the conversion date.
You will not be required to pay any taxes or duties relating to the issue or
delivery of our common stock on conversion but you will be required to pay any
tax or duty relating to any transfer involved in the issue or delivery of our
common stock in a name other than yours. Certificates representing shares of our
common stock will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.
The conversion rate will be subject to adjustment for, among other things:
- dividends (and other distributions) payable in our common stock on shares
of our capital stock,
- the issuance to all holders of our common stock of rights, options or
warrants entitling them to subscribe for or purchase our common stock at
less than the then Current Market Price of such common stock (determined
as provided in the Indenture) as of the record date for shareholders
entitled to receive such rights, options or warrants,
- subdivisions, combinations and reclassifications of our common stock,
- distributions to all holders of our common stock of evidences of
indebtedness of Chiron, shares of capital stock, cash or assets (including
securities, but excluding those dividends,
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rights, options, warrants and distributions referred to above, dividends
and distributions paid exclusively in cash and distributions upon mergers
or consolidations discussed below),
- distributions consisting exclusively of cash (excluding any cash portion
of distributions referred to in the immediately preceding clause, or cash
distributed upon a merger or consolidation to which the next succeeding
paragraph applies) to all holders of our common stock in an aggregate
amount that, combined together with (1) other such all-cash distributions
made within the preceding 365-day period in respect of which no adjustment
has been made and (2) any cash and the fair market value of other
consideration payable in connection with any tender offer by us or any of
our subsidiaries for our common stock concluded within the preceding
365-day period in respect of which no adjustment has been made, but not in
excess of the Tender Premium in such tender offer, exceeds 10% of our
market capitalization (being the product of the Closing Price Per Share of
the common stock on the record date for such distribution and the number
of shares of common stock then outstanding), and
- the successful completion of a tender offer made by us or any of our
subsidiaries for our common stock (i) at a price per share in excess of
the average of the Current Market Prices of our common stock for the
twenty trading days immediately preceding the date of announcement of the
tender offer and (ii) which involves an aggregate consideration that,
together with (1) any cash and other consideration payable in a tender
offer by us or any of our subsidiaries for our common stock expiring
within the 365-day period preceding the expiration of such tender offer in
respect of which no adjustment has been made and (2) the aggregate amount
of any such all-cash distributions referred to in the immediately
preceding clause above to all holders of our common stock within the
365-day period preceding the expiration of such tender offer in respect of
which no adjustments have been made, exceeds 10% of our market
capitalization on the expiration of such tender offer (such adjustment
being limited, in respect of the excess over our market capitalization, to
the amount in excess of 10% of such market capitalization, but not in
excess of the Tender Premium).
The term "Closing Price Per Share" means, with respect to our common stock,
for any day, (i) the last reported sale price regular way on the Nasdaq National
Market or, (ii) if our common stock is not quoted on the Nasdaq National Market,
the last reported sale price regular way per share or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case, on the principal national securities
exchange on which our common stock is listed or admitted to trading, or
(iii) if our common stock is not quoted on the Nasdaq National Market or listed
or admitted to trading on any national securities exchange, the average of the
closing bid prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by us for that purpose.
The term "Tender Premium" means the amount equal to (i) the price per share
offered by us in the tender offer in excess of the average of the Closing Prices
Per Share of our common stock for the twenty trading days immediately preceding
the date of announcement of the tender offer, multiplied by (ii) the number of
shares of our common stock accepted for tender in the tender offer.
We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. We will not be required to make any adjustment to the conversion
rate until the cumulative adjustments amount to 1.0% or more of the conversion
rate. We will compute all adjustments to the conversion rate and will give
notice by mail to holders of the registered exchange notes of any adjustments.
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In case of any consolidation or merger of Chiron with or into another entity
or any merger of another entity into Chiron (other than a merger which does not
result in any reclassification, conversion, exchange or cancellation of our
common stock), or in case of any sale or transfer of all or substantially all of
our assets, each exchange note then outstanding will become convertible only
into the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of common stock into which the exchange notes were convertible immediately prior
to the consolidation or merger or sale or transfer.
We may increase the conversion rate for any period of at least 20 days, upon
at least 15 days' notice, if our Board of Directors determines that the increase
would be in our best interest. The Board of Directors' determination in this
regard will be conclusive. We will give holders of exchange notes at least
15 days' notice of such an increase in the conversion rate. Any increase,
however, will not be taken into account for purposes of determining whether the
closing price of our common stock equals or exceeds 105% of the conversion price
of the exchange notes in connection with an event which otherwise would be a
Change In Control as defined below.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, such as distributions of evidences of indebtedness or
assets of Chiron, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
Indenture, the number of shares into which exchange notes are convertible is
increased, that increase may be deemed for United States federal income tax
purposes to be the payment of a taxable dividend to holders of exchange notes.
See "Federal Income Tax Considerations--United States Holders."
SUBORDINATION
The exchange notes are subordinated and, as a result, the payment of the
principal, any premium and interest (including Liquidated Damages) on the
exchange notes, including amounts payable on any redemption or repurchase, will
be subordinated to the prior payment in full, in cash or other payment
satisfactory to holders of Senior Debt, of all of our Senior Debt. The exchange
notes are also effectively subordinated to any debt or other liabilities of our
subsidiaries. On December 31, 1999 we had approximately $91.4 million of Senior
Debt.
"Senior Debt" is defined in the Indenture to mean: the principal of (and
premium, if any) and interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding) on, and
all fees and other amounts payable in connection with, the following, whether
absolute or contingent, secured or unsecured, due or to become due, outstanding
on the date of the Indenture or thereafter created, incurred or assumed:
- our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other written obligation,
- all of our obligations for money borrowed,
- all of our obligations evidenced by a note or similar instrument given in
connection with the acquisition of any businesses, properties or assets of
any kind,
- our obligations (1) as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles or (2) as lessee under other leases for facilities, capital
equipment or related assets, whether or not capitalized, entered into or
leased for financing purposes,
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- all of our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts or similar agreements
or arrangements,
- all of our obligations with respect to letters of credit, bankers'
acceptances and similar facilities (including reimbursement obligations
with respect to the foregoing),
- all of our obligations issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business),
- all obligations of the type referred to in the above clauses of another
person and all dividends of another person, the payment of which, in
either case, we have assumed or guaranteed, or for which we are
responsible or liable, directly or indirectly, jointly or severally, as
obligor, guarantor or otherwise, or which are secured by a lien on our
property, and
- renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for,
any such indebtedness or obligation described in the above clauses of this
definition.
Senior Debt will not include the existing notes or any other indebtedness or
obligation if its terms or the terms of the instrument under which or pursuant
to which it is issued expressly provide that it is not superior in right of
payment to the exchange notes.
We may not make any payment on account of principal, premium or interest
(including Liquidation Damages, if any) on the exchange notes, or redemption or
repurchase of the exchange notes, if we default in our obligations to pay
principal, premium, interest or other amounts on our Senior Debt, including a
default under any redemption or repurchase obligation, and the default continues
beyond any grace period that we may have to make those payments. However, any
amounts previously deposited by us with the Trustee or paying agent in
accordance with the subordination provisions of the Indenture at the time of the
deposit may be paid to the holders of the exchange notes.
We may resume payments on the exchange notes or redeem or repurchase the
exchange notes upon the date on which this payment default is cured or waived or
ceases to exist.
In addition, upon any acceleration of the principal due on the exchange
notes as a result of an Event of Default or payment or distribution of our
assets to creditors upon any dissolution, winding up, liquidation or
reorganization, whether voluntary or involuntary, marshaling of assets,
assignment for the benefit of creditors, or in bankruptcy, insolvency,
receivership or other similar proceedings, all principal, premium, if any,
interest and other amounts due on all Senior Debt must be paid in full before
you are entitled to receive any payment. By reason of such subordination, in the
event of insolvency, our creditors who are holders of Senior Debt are likely to
recover more, ratably, than you are, and you will likely experience a reduction
or elimination of payments on the exchange notes.
In addition, the exchange notes will be "structurally subordinated" to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because any right of Chiron to
receive any assets of our subsidiaries upon their liquidation or reorganization,
and the right of the holders of the exchange notes to participate in those
assets, will be effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors, except to the extent that Chiron itself is
recognized as a creditor of such subsidiary, in which case the claims of Chiron
would still be subordinate to any security interest in the assets of the
subsidiary and any indebtedness of the subsidiary senior to that held by Chiron.
The Indenture does not limit our ability to incur Senior Debt or our ability
or the ability of our subsidiaries to incur any other indebtedness.
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OPTIONAL REDEMPTION BY CHIRON
On or after May 15, 2003 we may redeem the exchange notes, in whole or in
part, at the prices set forth below. If we elect to redeem all or part of the
exchange notes, we will give at least 30, but no more than 60, days notice to
you.
The redemption price, expressed as a percentage of principal amount, is as
follows for the 12-month periods beginning on May 15 of the following years:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ------------------
<S> <C>
2003........................................................ 102.571%
2004........................................................ 101.929%
2005........................................................ 101.286%
2006........................................................ 100.643%
</TABLE>
and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest to the date of redemption.
No sinking fund is provided for the exchange notes, which means that the
Indenture does not require us to redeem or retire the exchange notes
periodically.
PAYMENT AND CONVERSION
Payments on any global note registered in the name of DTC or its nominee
will be payable by the Trustee to DTC or its nominee in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, we and
the Trustee will treat the persons in whose names the exchange notes, including
any global note, are registered as the owners for the purpose of receiving
payments and for all other purposes. Consequently, neither we, the Trustee nor
any of our agents or the Trustee's agents has or will have any responsibility or
liability for (1) any aspect of DTC's records or any participant's or indirect
participant's records relating to or payments made on account of beneficial
ownership interests in the global note, or for maintaining, supervising or
reviewing any of DTC's records or any participant's or indirect participant's
records relating to the beneficial ownership interests in the global note, or
(2) any other matter relating to the actions and practices of DTC or any of its
participants or indirect participants.
We will not be required to make any payment on the exchange notes due on any
day which is not a business day until the next succeeding business day. The
payment made on the next succeeding business day will be treated as though it
were paid on the original due date and no interest will accrue on the payment
for the additional period of time.
Exchange notes may be surrendered for conversion at the Corporate Trust
Office of the Trustee in the Borough of Manhattan, The City of New York.
Exchange notes surrendered for conversion must be accompanied by appropriate
notices and any payments in respect of interest or taxes, as applicable, as
described above under "--Conversion Rights."
We have initially appointed the Trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the exchange notes have been delivered to the Trustee for cancellation, or
moneys sufficient to pay the principal of, premium, if any, and interest on the
exchange notes have been made available for payment and either paid or returned
to us as provided in the Indenture, the Trustee will maintain an office or
agency in the Borough of Manhattan, The City of New York for surrender of
exchange notes for conversion. Notice of any termination or appointment and of
any change in the office through which any paying agent or conversion agent will
act will be given in accordance with the notice procedures described under
"--Repurchase at Option of Holders Upon a Change of Control" below.
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All moneys deposited with the Trustee or any paying agent, or then held by
us, in trust for the payment of principal of, premium, if any, or interest on
any exchange notes which remain unclaimed at the end of two years after the
payment has become due and payable will be repaid to us, and you will then look
only to us for payment.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control as defined below occurs, you will have the right, at
your option, to require us to repurchase all of your exchange notes not
previously called for redemption, or any portion of the principal amount
thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we
are required to pay is 100% of the principal amount of the exchange notes to be
repurchased, together with interest accrued to, but excluding, the repurchase
date.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock valued at 95% of the average of the
closing prices of the our common stock for the five trading days immediately
preceding the second trading day prior to the repurchase date. We may only pay
the repurchase price in our common stock if we satisfy conditions provided in
the Indenture.
Within 30 days after the occurrence of a Change in Control, we are obligated
to give to you notice of the Change in Control and of the repurchase right
arising as a result of the Change of Control. We must also deliver a copy of
this notice to the Trustee. To exercise the repurchase right, you must deliver
on or before the 30th day after the date of our notice irrevocable written
notice to the Trustee of your exercise of your repurchase right, together with
the exchange notes with respect to which the right is being exercised. We are
required to repurchase the exchange notes on the date that is 45 days after the
date of our notice.
A Change in Control will be deemed to have occurred at the time after the
exchange notes are originally issued that any of the following occurs:
(1) any person, including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of our
capital stock entitling the person to exercise 50% or more of the total
voting power of all shares of our capital stock that is entitled to vote
generally in elections of directors, other than an acquisition by us, any
of our subsidiaries or any of our employee benefit plans; provided,
however, that such threshold shall be 79.9% or more of the voting power
if the acquiring person is Novartis AG or any person affiliated
therewith; or
(2) we merge or consolidate with or into any other person, any merger of
another person into us, or we convey, sell, transfer or lease all or
substantially all of our assets to another person, other than (a) any
such transaction (i) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of our capital
stock and (ii) pursuant to which the holders of our common stock
immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of all
shares of capital stock entitled to vote generally in the election of
directors of the continuing or surviving corporation immediately after
such transaction; provided, however, that such threshold shall be more
than 20.1% of the total voting power if the acquiring person is Novartis
AG or any person affiliated therewith; and (b) any merger which is
effected solely to change our jurisdiction of incorporation and results
in a reclassification, conversion or exchange of outstanding shares of
our common stock into solely shares of common stock.
However, a Change in Control will not be deemed to have occurred if the
closing price per share of our common stock for any five trading days within the
period of 10 consecutive trading
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days ending immediately after the later of the Change in Control or the public
announcement of the Change in Control, in the case of a Change in Control
relating to an acquisition of capital stock, or the period of 10 consecutive
trading days ending immediately before the Change in Control, in the case of
Change in Control relating to a merger, consolidation or asset sale, equals or
exceeds 105% of the conversion price of the exchange notes in effect on each of
those trading days.
For purposes of these provisions:
- the conversion price is equal to $1,000 divided by the conversion rate;
- whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Exchange Act; and
- "person" includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of prescribed
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to you. We will
comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase
exchange notes in the open market, by tender at any price or by private
agreement. Any exchange note that we purchase may, to the extent permitted by
applicable law, be re-issued or resold or may, at our option, be surrendered to
the Trustee for cancellation. Any exchange notes surrendered for cancellation
may not be re-issued or resold and will be canceled promptly.
The definition of Change in Control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your exchange notes as a result of conveyance, transfer, sale,
lease or other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may adversely
affect you.
Our ability to repurchase exchange notes upon the occurrence of a Change in
Control is subject to important limitations. Some of the events constituting a
Change in Control could result in an event of default under our Senior Debt.
Moreover, a Change in Control could cause an event of default under, or be
prohibited or limited by, the terms of our Senior Debt. As a result, unless we
were to obtain a waiver, a repurchase of the exchange notes in cash could be
prohibited under the subordination provisions of the Indenture until the Senior
Debt is paid in full. Although we have the right to repurchase the exchange
notes with our common stock, subject to certain conditions, we cannot assure you
that we would have the financial resources, or would be able to arrange
financing, to pay the repurchase price in cash for all the exchange notes that
might be delivered by holders of exchange notes seeking to exercise the
repurchase right. If we were to fail to repurchase the exchange notes when
required following a Change in Control, an Event of Default under the Indenture
would occur, whether or not such repurchase is permitted by the subordination
provisions of the Indenture. Any such default may, in turn, cause a default
under our Senior Debt. See "--Subordination".
MERGERS AND SALES OF ASSETS BY THE COMPANY
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any
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person to consolidate with or merge into us or convey, transfer, sell or lease
such person's properties and assets substantially as an entirety to us unless:
- the person formed by such consolidation or into or with which we are
merged or the person to which our properties and assets are so
conveyed, transferred, sold or leased, shall be a corporation, limited
liability company, partnership or trust organized and existing under
the laws of the United States, any State within the United States or
the District of Columbia and, if we are not the surviving person, the
surviving person assumes the payment of the principal of, premium, if
any, and interest on the exchange notes and the performance of our
other covenants under the Indenture, and
- immediately after giving effect to the transaction, no Event of
Default, and no event that, after notice or lapse of time or both,
would become an Event of Default, will have occurred and be continuing.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture:
- we fail to pay principal of or premium, if any, on any exchange note
when due, whether or not prohibited by the subordination provisions of
the Indenture;
- we fail to pay any interest on any exchange note when due, which
failure continues for 30 days, whether or not prohibited by the
subordination provisions of the Indenture;
- we fail to provide notice of a Change in Control, whether or not such
repurchase is prohibited by the subordination provisions of the
Indenture;
- we fail to perform any other covenant in the Indenture, which failure
continues for 60 days after written notice as provided in the
Indenture;
- any indebtedness under any bonds, debentures, notes or other evidences
of indebtedness for money borrowed (or any guarantee thereof) by us or
any of our significant subsidiaries in an aggregate principal amount in
excess of $10,000,000 is not paid when due either at its stated
maturity or upon acceleration thereof, and such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a
period of 30 days after notice as provided in the Indenture; and
- certain events of bankruptcy, insolvency or reorganization involving us
or any of our significant subsidiaries.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any holder, unless the holder shall
have offered reasonable indemnity to the Trustee. Subject to providing
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the outstanding exchange notes will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee.
If an Event of Default other than an Event of Default arising from events of
insolvency, bankruptcy or reorganization with respect to Chiron occurs and is
continuing, either the Trustee or the holders of at least 25% in principal
amount of the outstanding exchange notes may, subject to the subordination
provisions of the Indenture, accelerate the maturity of all exchange notes.
However, after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding exchange notes may, under certain circumstances, rescind and annul
the acceleration if all Events of Default, other than the non-payment of
principal of the exchange notes which have become due solely by such declaration
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of acceleration, have been cured or waived as provided in the Indenture. If an
Event of Default arising from events of insolvency, bankruptcy or reorganization
with respect to Chiron occurs, then the principal of, and accrued interest on,
all the exchange notes will automatically become immediately due and payable
without any declaration or other act on the part of the holders of the exchange
notes or the Trustee. For information as to waiver of defaults, see "--Meetings,
Modification and Waiver."
You will not have any right to institute any proceeding with respect to the
Indenture, or for any remedy under the Indenture, unless you give the Trustee
written notice of a continuing Event of Default and the holders of at least 25%
in aggregate principal amount of the outstanding exchange notes have made
written request, and offered reasonable indemnity, to the Trustee to institute
proceedings, and the Trustee has not received from the holders of a majority in
aggregate principal amount of the outstanding exchange notes direction
inconsistent with the written request and shall have failed to institute such
proceeding within 60 days. However, these limitations do not apply to a suit
instituted by you for the enforcement of payment of the principal of, premium,
if any, or interest, including Liquidated Damages, on your exchange note on or
after the respective due dates expressed in your exchange note or your right to
convert your exchange note in accordance with the Indenture.
We will be required to furnish to the Trustee annually a statement as to our
performance of certain of our obligations under the Indenture and as to any
default in such performance.
MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of the holders of
exchange notes to consider matters affecting their interests.
Certain limited modifications of the Indenture may be made without the
necessity of obtaining the consent of the holders of the exchange notes. Other
modifications and amendments of the Indenture may be made, and certain past
defaults by us may be waived, either (i) with the written consent of the holders
of not less than a majority in aggregate principal amount of the exchange notes
at the time outstanding or (ii) by the adoption of a resolution, at a meeting of
holders of the exchange notes at which a quorum is present, by the holders of at
least 66 2/3% in aggregate principal amount of the exchange notes represented at
such meeting. The quorum at any meeting called to adopt a resolution will be
persons holding or representing a majority in aggregate principal amount of the
exchange notes at the time outstanding and, at any reconvened meeting adjourned
for lack of a quorum, 25% of such aggregate principal amount.
However, a modification or amendment requires the consent of the holder of
each outstanding exchange note affected if it would:
- change the stated maturity of the principal or interest of an exchange
note;
- reduce the principal amount of, or any premium or interest on, any
exchange note;
- reduce the amount payable upon a redemption or mandatory repurchase;
- modify the provisions with respect to the repurchase rights of holders
of exchange notes in a manner adverse to the holders;
- change the place or currency of payment on an exchange note;
- impair the right to institute suit for the enforcement of any payment
on any exchange note;
- modify our obligation to maintain an office or agency in New York City;
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- modify the subordination provisions in a manner that is adverse to the
holders of the exchange notes;
- adversely affect the right to convert the exchange notes;
- modify our obligation to deliver information required under Rule 144A
to permit resales of the exchange notes and common stock issued upon
conversion of the exchange notes if we cease to be subject to the
reporting requirements under the Exchange Act;
- reduce the above-stated percentage of the principal amount of the
holders whose consent is needed to modify or amend the Indenture;
- reduce the percentage of the principal amount of the holders whose
consent is needed to waive compliance with certain provisions of the
Indenture or to waive certain defaults; or
- reduce the percentage required for the adoption of a resolution or the
quorum required at any meeting of holders of exchange notes at which a
resolution is adopted.
The holders of a majority in aggregate principal amount of the outstanding
exchange notes may waive compliance by us with certain restrictive provisions of
the Indenture by written consent. Holders of a majority of the principal amount
of exchange notes attending a meeting may also waive compliance by us with
certain restrictive provisions of the Indenture by the adoption of a resolution
at the meeting if a quorum of holders are present and certain other conditions
are met. The holders of a majority in aggregate principal amount of the
outstanding exchange notes also may waive by written consent any past default
under the Indenture, except a default in the payment of principal, premium, if
any, or interest.
REPLACEMENT OF EXCHANGE NOTES
We will replace any exchange note that becomes mutilated, destroyed, stolen
or lost at the expense of the holder upon delivery to the Trustee of the
mutilated notes or evidence of the loss, theft or destruction satisfactory to us
and the Trustee. In the case of a lost, stolen or destroyed exchange note,
indemnity satisfactory to the Trustee and us may be required at the expense of
the holder of the exchange note before a replacement exchange note will be
issued.
PAYMENT OF STAMP AND OTHER TAXES
We will pay all stamp and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or taxing authority thereof
or therein with respect to the issuance of the exchange notes. We will not be
required to make any payment with respect to any other tax, assessment or
governmental charge imposed by any government or any political subdivision
thereof or taxing authority thereof or therein.
GOVERNING LAW
The Indenture and the exchange notes will be governed by and construed in
accordance with the laws of the State of New York, United States of America.
THE TRUSTEE
If an Event of Default occurs and is continuing, the Trustee will be
required to use the degree of care of a prudent person in the conduct of his 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 exchange notes, unless they
shall have offered to the Trustee reasonable security or indemnity.
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DESCRIPTION OF EXISTING NOTES
We issued the existing notes under an indenture, dated as of November 15,
1993, between us and The State Street Bank and Trust Company of California,
N.A., as trustee. In this description, we refer to the indenture as the
"indenture." The following description is a summary of the material provisions
of the existing notes and the indenture. This summary is subject to and is
qualified by reference to all the provisions of the indenture.
As used in this "Description of Existing Notes" section, references to
"Chiron," "we," "our" or "us" refer solely to Chiron Corporation and not our
subsidiaries.
GENERAL
The existing notes are limited to $243,800,000 aggregate principal amount at
maturity. The existing notes mature on November 17, 2000 and are payable at a
price of 100% of the principal amount of the existing notes. The existing notes
bear interest at the rate of 1.90% per year. Interest is payable on May 17 and
November 17 of each year.
The existing notes are unsecured obligations of Chiron. The existing notes
are subordinated to all of our present and future senior debt. Neither we nor
our subsidiaries are restricted from incurring debt under the indenture. There
are no financial covenants in the indenture. The existing notes are effectively
subordinated in right of payment to all indebtedness and liabilities of our
subsidiaries.
The existing notes are convertible into common stock at the current
conversion rate of 34.5924 shares of common stock for each $1,000 principal
amount at maturity of existing notes, subject to adjustment as described under
"--Conversion Rights," at any time prior to maturity, unless previously redeemed
or repurchased.
We pay principal and premium, if any, on the existing notes, and you may
submit your existing notes for conversion, transfer or exchange, without service
charge, at our office maintained for that purpose in the Borough of Manhattan,
The City of New York, which shall initially be an office or agency of the
trustee.
BOOK-ENTRY SYSTEM
The existing notes were originally issued in the form of a global security
held in book-entry form. The Depository Trust Company or its nominee is the sole
registered holder of the existing notes represented by the global security for
all purposes under the indenture. Owners of beneficial interests in the existing
notes represented by the global security hold these interests pursuant to the
procedures and practices of The Depository Trust Company. Owners of beneficial
interest in the global security must exercise any rights in respect of their
interests, including any right to convert or require repurchase of their
interests, in accordance with The Depository Trust Company's procedures and
practices. At any time at the request of the beneficial holder of an interest in
the global security, the beneficial holder is entitled to obtain a definitive
note upon written request to the trustee in accordance with the procedures of
The Depository Trust Company for the issuance thereof. Upon receipt of any such
request, the trustee will cause the aggregate principal amount at maturity of
the global security to be reduced and, following such reduction, we will execute
and the trustee will authenticate and deliver to such beneficial holder a note
or notes in the name of such beneficial owner and with the appropriate aggregate
principal amount at maturity.
CONVERSION RIGHTS
You may convert your existing note, in whole or in part, into common stock
at any time prior to the close of business on the maturity date, unless
previously redeemed or repurchased. Your right
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to convert an existing note called for redemption or submitted for repurchase
terminates at the close of business on the last business day prior to the
redemption date or repurchase date.
To exercise your conversion right, you must surrender your existing note at
the office of any conversion agent. If you are a beneficial owner of existing
notes through The Depository Trust Company, you may exercise your conversion
right by delivering to The Depository Trust Company the appropriate conversion
instruction form pursuant to The Depository Trust Company's conversion program.
You can obtain this conversion notice from the office of any conversion agent.
The conversion date will be the date when you deliver your existing note and the
duly signed and completed notice of conversion to the conversion agent. As
promptly as practicable on or after the conversion date, we will issue and
deliver to the trustee a certificate or certificates for the number of full
shares of common stock issuable upon conversion, together with payment for any
fractional shares. These certificates will be sent by the trustee to the
conversion agent for delivery to the holder. The shares of common stock issuable
upon conversion of the existing notes will be fully paid and nonassessable and
will rank pari passu with our other shares of common stock.
If you surrender your existing note for conversion during the period from
the close of business on any regular record date to the opening of business on
the next succeeding interest payment date, your existing note must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of surrendered existing notes.
However, you will not be required to submit payment in this period if existing
notes, or portions of existing notes, are called for redemption on a redemption
date during the period beginning at the close of business on a regular record
date and ending on the opening of business on the first business day after the
next succeeding interest payment date, or if such interest payment date is not a
business day, the second succeeding business day. We will not make any payment
or adjustment for interest or dividends upon conversion. If you convert your
existing notes, you will not be entitled to receive any dividends payable to
holders of common stock as of any record time or date before the close of
business on the conversion date. We will not issue fractional shares but will
instead pay cash based on the market bid price of common stock at the close of
business on the last trading day prior to conversion.
You will not be required to pay any taxes or duties upon conversion but will
be required to pay any tax or duty if the common stock issued upon conversion of
the existing notes is in a name other than your name. Certificates representing
shares of common stock will not be issued or delivered unless all taxes and
duties, if any, payable by the holder have been paid.
We will adjust the conversion rate if the following events occur:
(1) we issue common stock as a dividend or distribution on our common stock;
(2) we issue to all holders of our common stock rights, options or warrants
entitling them to subscribe for or purchase common stock at less than the
current market price of our common stock, provided the conversion rate
will be readjusted if these rights, options or warrants are not exercised
prior to expiration;
(3) we subdivide, combine or reclassify our common stock;
(4) we distribute to all holders of our common stock evidences of
indebtedness of Chiron, shares of capital stock or assets, including
securities, but excluding:
- those dividends and distributions listed in (1) above,
- those rights, options and warrants listed in (2) above, and
- all-cash distributions listed in (5) below;
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(5) we make distributions consisting exclusively of cash to all holders of
our common stock, other than (i) any quarterly cash dividend on our
common stock to the extent the aggregate cash dividend per share in any
fiscal quarter does not exceed the greater of (A) the per share cash
dividend of the next preceding quarterly cash dividend on the common
stock to the extent the preceding quarterly dividend did not require any
adjustment of the conversion rate, and (B) 3.75% of the average of the
last reported sale price of our common stock during the ten trading days
next preceding the date of declaration of the dividend and (ii) any
dividend or distribution in connection with the liquidation, dissolution
or winding up of our business; and
(6) we or any of our subsidiaries successfully complete a tender offer for
common stock and the tender offer involves the payment by us or our
subsidiary of consideration per share of common stock having a fair
market value that exceeds the then current market price of our common
stock on the trading day next succeeding the expiration date of the
tender offer.
We reserve the right to make reductions in the conversion rate in addition
to those specified above as we consider advisable in order that any event
treated for United States federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the recipients. We will not make any
conversion rate adjustment until the cumulative adjustments amount to 1.0% or
more of the conversion rate. We will compute any adjustments to the conversion
rate pursuant to this paragraph and will give you notice by mail of any
adjustments.
If we consolidate or merge with or into another person or any person merges
into us, or in case of any sale, transfer or lease of all or substantially all
of our assets, each existing note then outstanding will, without the consent of
the holder of any existing note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer or lease by a holder of number of shares
of common stock into which the existing note was convertible immediately prior
this event. However, this provision will not apply to any merger that does not
result in any reclassification, conversion, exchange or cancellation of our
common stock.
To the extent permitted by applicable law, we may from time to time increase
the conversion rate by any amount for any period of at least 20 days if our
board of directors has made a determination that such increase would be in the
best interests of Chiron, which determination shall be conclusive. We shall give
at least 15 days' notice of any proposed increase.
If we make a distribution of property to our stockholders that would be
taxable to such stockholders as a dividend for United States federal income tax
purposes and the number of shares into which existing notes are convertible is
increased as a result of above antidilution provisions, this increase may be
deemed to be a payment of a taxable dividend to holders. See "Federal Income Tax
Considerations."
SUBORDINATION
The existing notes are subordinate in right of payment to the prior payment
in full of all senior debt. In the event of:
- any insolvency or bankruptcy case or proceeding, or
- any receivership, liquidation, reorganization or debt restructuring, or
- any liquidation, dissolution or other winding up of Chiron, or
- any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of Chiron,
the holders of senior debt will be entitled to receive payment in full of all
senior debt in cash or other payment satisfactory to the holders of senior debt
before the holders of the existing notes are
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entitled to receive any payment. However, any amounts previously deposited by us
with the trustee or paying agent in accordance with the subordination provisions
of the indenture at the time of the deposit may be paid to the holders of the
existing notes (called "defeased payments").
In the event of our liquidation or insolvency, creditors of Chiron who are
not holders of senior debt may recover less, ratably, than holders of senior
debt and may recover more, ratably, than the holders of the existing notes.
In the event that any existing notes are declared due and payable before
their stated maturity as a result of an event of default, the holders of the
senior debt will be entitled to receive payment in full of all senior debt
before the holders of the existing notes are entitled to receive any payment by
us on the existing notes, other than defeased payments. If the payment of
existing notes is accelerated because of an event of default, we are required
under the indenture to promptly notify holders of senior debt of this
acceleration.
We may not make any payment on the existing notes or purchase, redeem or
acquire the existing notes or make any defeasance payment on the existing notes
to the trustee or paying agent, other than defeased payments, if a default in
the payment of senior debt occurs and is continuing beyond the applicable grace
period.
We may resume payments on the existing notes or purchase, redeem or
otherwise acquire the existing notes or make a defeasance payment upon the date
on which this payment default is cured or waived or ceases to exist.
DEFINITIONS
"Senior debt" means the principal of, premium, if any, interest on, and any
other payment due under any of the following:
- all indebtedness for money borrowed;
- all indebtedness evidenced by notes, debentures, bonds or other
securities;
- all indebtedness or other obligations with respect to interest rate and
currency swap agreements, cap, floor and collar agreements, currency spot
and forward contracts and other similar agreements and arrangements;
- all lease obligations which are capitalized on our books in accordance
with generally accepted accounting principles;
- all indebtedness of others of the kinds previously described and all lease
obligations of others of the kind previously described assumed by or
guaranteed in any manner by us or in effect guaranteed by us through an
agreement to purchase, contingent or otherwise; and
- all renewals, extensions or refundings of indebtedness of the kinds
previously described and all renewals or extensions of lease obligations
of the kinds previously described;
unless in the case of any particular indebtedness, lease, renewal, extension or
refunding, the instrument or lease creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such indebtedness,
lease, renewal, extension or refunding is subordinate to any other indebtedness
of ours or is not superior in right of payment to, or is pari passu with, the
existing notes. Notwithstanding the foregoing, senior debt does not include
(i) any of our indebtedness or lease obligation of any kind to any subsidiary, a
majority of the voting stock of which is owned by us and (ii) indebtedness for
trade payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business.
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OPTIONAL REDEMPTION
We may redeem the existing notes, in whole or in part, upon not less than 30
nor more than 60 days' notice, at $974.85 per $1,000 principal amount at
maturity and $1,000 at November 17, 2000, in each case together with original
issue discount and accrued interest to, but excluding, the redemption date.
If fewer than all the existing notes are to be redeemed, the trustee will
select the existing notes to be redeemed in principal amounts of $1,000 or
multiples of $1,000 by lot or, in its discretion, on a pro rata basis. If any
existing note is to be redeemed in part, a new existing note or existing notes
in principal amount equal to the unredeemed principal portion thereof will be
issued. If a portion of a holder's existing notes is selected for partial
redemption and the holder converts a portion of this existing note, the
converted portion shall be deemed to be taken from the portion selected for
redemption.
No sinking fund is provided for the existing notes.
REPURCHASE AT OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE
If a fundamental change occurs, you have the right, at your option, to
require us to repurchase all of your existing notes, in whole or in part, on the
repurchase date that is 30 days after the date of the company notice, at a price
equal to the issue price plus original issue discount on the note to the date of
repurchase, together with interest accrued to, but excluding, the repurchase
date; provided that if the applicable price is less than the reference market
price, we must repurchase the existing notes to be repurchased at a price equal
to the foregoing repurchase price multiplied by the fraction obtained by
dividing the applicable price by the reference market price, together with
interest accrued to, but excluding, the repurchase date. Depending on the type
of fundamental change, the applicable price is either the amount of cash
received by the holder of one share of our common stock or the average of the
last reported sale price for our common stock during the 10 trading days prior
to the fundamental change record date. The reference market price is currently
$12.875, subject to customary anti-dilution adjustments. The existing notes will
be repurchased in multiples of $1,000 principal amount.
We are obligated to give you notice of the fundamental change and your
repurchase right within 10 days after the occurrence of the fundamental change
(called the "company notice"). We must also promptly deliver a copy of the
company notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of the company notice
irrevocable written notice to the trustee of your decision to exercise your
repurchase right, together with your existing notes.
A "fundamental change" means the occurrence of any transaction or event in
connection with which all or substantially all our common stock is exchanged
for, converted into, acquired for or constitutes the right to receive
consideration which is not all or substantially all common stock listed on a
United States national securities exchange or approved for quotation in the
Nasdaq system or any similar United States system of automated dissemination of
quotations of securities prices, whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise.
Rule 13e-4 under the Exchange Act requires the dissemination of information
to security holders in the event of an issuer tender offer. These Exchange Act
rules may apply in the event that the repurchase option becomes available to
holders of the existing notes. We will comply with these rules to the extent
applicable at that time.
We may purchase existing notes in the open market or by tender at any price
or by private agreement. Any existing note so purchased by us may:
- be reissued or resold, to the extent permitted by applicable law, or
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- at our option, be surrendered to the trustee for cancellation.
Any existing notes surrendered to the trustee may not be reissued or resold and
will be canceled promptly.
The above provisions would not necessarily afford you protection in the
event of highly leveraged or other transactions involving us that may adversely
affect holders.
Our ability to repurchase existing notes upon the occurrence of a
fundamental change is subject to limitations. We may not have the financial
resources or be able to arrange financing to pay the repurchase price for all
the tendered existing notes. Our ability to repurchase existing notes may be
limited or prohibited by the terms of any future borrowing arrangements,
including senior debt existing at the time of a fundamental change. Our ability
to repurchase existing notes may also be limited by the terms of our
subsidiaries' then-existing borrowing arrangements due to dividend restrictions.
Any failure by us to repurchase the existing notes when required following a
fundamental change would result in an event of default under the indenture. Any
such default may, in turn, cause a default under our senior debt. In addition,
our repurchase of the existing notes as a result of the occurrence of a
fundamental change may be prohibited or limited by, or create an event of
default under, the terms of agreements related to other borrowings, including
agreements relating to senior debt.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a transaction
in which we are not the surviving corporation, or convey, transfer or lease our
properties and assets substantially as an entirety to, any person (called a
"successor person"), unless:
- the successor person, if any, is a corporation, limited liability company,
partnership, trust or other entity organized and existing under the laws
of any domestic jurisdiction,
- assumes our obligations on the existing notes and under the indenture, and
- certain other conditions are met.
MODIFICATION AND WAIVER
The consent of the holders of not less than 66 2/3% in aggregate principal
amount at maturity of the outstanding existing notes is required to amend or
modify the indenture. However, a modification or amendment requires the consent
of the holder of each outstanding existing note if it would:
- change the stated maturity of the principal of, or any installment of
principal of or interest on, any existing note,
- reduce the principal amount at maturity of, or any premium or interest on,
any existing note,
- reduce the amount of principal payable upon acceleration of the maturity,
- change the rate of accrual or extend the time of payment in connection
with original issue discount,
- reduce any amount payable on redemption of the existing notes,
- change our obligation to make redemption of existing notes upon the
happening of any fundamental change,
- change the place or currency of payment of principal of, or any premium or
interest on, any existing note,
- impair the right to institute suit for the enforcement of any payment on
any existing note,
- impair the right to convert the existing notes into common stock,
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- modify the subordination provisions in a manner adverse to the holders of
the existing notes,
- reduce the percentage in principal amount of existing notes required for
modification or amendment,
- reduce the percentage in principal amount of existing notes necessary for
waiver of compliance with certain provisions of the indenture or for
waiver of certain defaults, or
- modify such provisions with respect to modification and waiver.
Holders of a majority in principal amount of the existing notes may waive
any past default under the indenture, except a default in the payment of
principal amount at maturity, issue price, accrued original issue discount,
redemption price or interest and certain covenants and provisions of the
indenture which cannot be amended without the consent of the holder of each
outstanding existing note.
EVENTS OF DEFAULT
The following are events of default under the indenture:
- we fail to pay the principal amount at maturity, issue price, accrued
original issue discount, or redemption price on any existing note when
due, whether or not such payment is prohibited by the subordination
provisions of the indenture;
- we fail to pay any interest on existing notes when due, continued for
30 days, whether or not such payment is prohibited by the subordination
provisions of the indenture;
- we fail to perform any of our other covenants in the indenture continued
for 45 days after written notice has been given by the trustee or the
holders of at least 25% in aggregate principal amount of the existing
notes as provided in the indenture; and
- our bankruptcy, insolvency or reorganization.
If an event of default shall occur and be continuing, either the trustee or
the holders of at least 25% in aggregate principal amount at maturity of the
outstanding existing notes may declare the principal amount of the existing
notes to be immediately due and payable. In case of certain events of
bankruptcy, insolvency or reorganization involving Chiron, the principal,
premium, if any, and interest on the existing notes will automatically become
immediately due and payable. Any payment by us on the existing notes following
any such acceleration will be subject to the subordination provisions of the
indenture. After any acceleration, but before a judgment or decree based on
acceleration, holders of a majority in aggregate principal amount at maturity of
the outstanding existing notes may, under certain circumstances, rescind and
annul such acceleration if all events of default, other than the non-payment of
accelerated principal, or other specified amount, have been cured or waived as
provided in the indenture.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless such holders shall have
offered to the trustee reasonable indemnity. Subject to these indemnification
provisions, holders of a majority in aggregate principal amount at maturity of
the outstanding existing notes will have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee,
- or exercise any trust or power conferred on the trustee with respect to
the existing notes.
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No holder of an existing note of any series will have any right to institute
any proceeding with respect to the indenture unless:
- the holder has previously given to the trustee written notice of a
continuing event of default,
- the holders of at least 25% in aggregate principal amount at maturity of
the outstanding existing notes have made a written request and offered
reasonable indemnity to the trustee to institute this proceeding, and
- the trustee has failed to institute such proceeding, within 60 days after
this notice, request and offer.
However, these limitations do not apply to a suit instituted by a holder of
an existing note for the enforcement of payment of the principal amount at
maturity, issue price, accrued original issue discount, redemption price or
interest on the existing note on or after the applicable due date specified in
the existing note.
We are required to furnish to the trustee annually a statement by our
officers as to whether or not we are in default in the performance or observance
of any of the terms, provisions and conditions of the indenture and, if so,
specifying all such known defaults.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as security registrar, transfer
agent and conversion agent, acting through its corporate trust office. We
reserve the right to vary or terminate the appointment of the security registrar
or any transfer agent or conversion agent. In addition, we may appoint other
transfer agents or conversion agents or approve any change in any security
registrar, transfer agent or conversion agent's office.
PURCHASE AND CANCELLATION
Either we or one of our subsidiaries may, to the extent permitted by
applicable law, purchase existing notes at any price in the open market or
otherwise.
All existing notes surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall be delivered to the
trustee. All existing notes delivered to the trustee shall be canceled promptly
by the trustee. No existing notes shall be authenticated in exchange for any
canceled existing notes.
REPLACEMENT OF EXISTING NOTES
We will replace existing notes that become mutilated, destroyed, stolen or
lost at your expense upon delivery to the trustee of the mutilated existing
notes or evidence of the loss, theft or destruction of the existing notes
satisfactory to us and the trustee. In the case of a lost, stolen or destroyed
existing note, indemnity satisfactory to the trustee and us may be required at
the expense of the holder of the existing note before a replacement existing
note will be issued.
GOVERNING LAW
The indenture and the existing notes are governed by and construed in
accordance with the laws of the State of New York.
TRUSTEE
In case an event of default shall occur and not be cured, the trustee will
be required to use the degree of care of a prudent person in the conduct of his
or her affairs in the exercise of his or her powers. Subject to this provision,
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 existing notes,
unless they shall have offered to the trustee reasonable security or indemnity.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 499,500,000 shares of common stock,
$0.01 par value per share, 500,000 shares of restricted common stock, $0.01 par
value per share and 5,000,000 shares of preferred stock, $0.01 par value per
share. As of February 29, 2000, there were 180,590,023 shares of common stock
issued and outstanding and no shares of restricted common stock or preferred
stock issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably dividends, if any, as may be declared from time to
time by our board of directors out of legally available funds. In the event of
our liquidation, dissolution or winding up, the holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities,
subject to the prior liquidation rights of the preferred stock, if any, then
outstanding. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and non-assessable.
RESTRICTED COMMON STOCK
The holders of restricted common stock are entitled to certain limited
voting, dividend and liquidation rights, as well as a limited right to convert
or exchange restricted common stock into common stock. The specific rights and
restrictions are to be determined and fixed by our board of directors in the
resolution providing for the issuance of any series of restricted common stock.
However, in determining and fixing these rights, the board of directors' power
is restricted in the following manner: (i) the board of directors can provide
that the restricted common stock may be converted or exchanged into common
stock, however, only at a conversion or exchange ratio not exceeding one share
of common stock for each share of restricted common stock; (ii) the board of
directors can provide that the holders of restricted common stock may vote at
any meeting of our stockholders, however, the number of votes per share of
restricted common stock shall not exceed the proportionate vote of common stock
into which such restricted common stock is convertible or exchangeable;
(iii) the board of directors can provide that the holders of restricted common
stock may receive dividends, provided however, that dividends on each share of
restricted common stock shall be less than the proportionate dividend on each
share of common stock into which such restricted common stock is convertible or
exchangeable; and (iv) the board of directors can provide that the holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities, subject to the prior liquidation rights of the preferred stock,
if any, then outstanding; provided however, that the amount per share paid in
liquidation on each share of restricted common stock shall be less than the
proportionate amount per share paid on each share of common stock into which
such restricted common stock is convertible or exchangeable.
PREFERRED STOCK
The board of directors has the authority to issue any undesignated shares of
preferred stock in one or more series and to fix the rights, preferences,
privileges, qualifications, limitations and restrictions of the preferred stock
including dividend rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any series
or the designation of such series, without any further vote or action by the
stockholders. The issuance of
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preferred stock may have the effect of delaying or preventing a change in
control of Chiron without further action by the stockholders. The issuance of
preferred stock with voting and conversion rights may adversely affect the
voting power of the holders of common stock, including the loss of voting
control to others. We have no present plans to issue any of the preferred stock.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Under Section 203, we would generally be prohibited from
engaging in any business combination with any interested stockholder for a
period of three years following the time that this stockholder became an
interested stockholder unless:
(1) prior to this time, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
(2) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding shares owned:
- by persons who are directors and also officers, and
- by employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
(3) at or subsequent to such time, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
Under Section 203, a "business combination" includes:
- any merger or consolidation involving the corporation and the interested
stockholder;
- any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholders;
- any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested
stockholders, subject to limited exceptions;
- any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested stockholder; or
- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Norwest Bank
Minnesota, N.A.
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BOOK-ENTRY SYSTEM--THE DEPOSITORY TRUST COMPANY
The exchange notes will be evidenced by a global security initially
deposited with The Depository Trust Company, and registered in the name of
Cede & Co., as The Depository Trust Company's nominee. Except as set forth
below, the global security may be transferred only to another nominee of The
Depository Trust Company or to a successor of The Depository Trust Company or
its nominee.
Holders of exchange notes may hold their interests in the global security
directly through The Depository Trust Company or indirectly through
organizations which are participants in The Depository Trust Company (called
"participants"). Transfers between participants will be affected in the ordinary
way in accordance with The Depository Trust Company rules and will be settled in
clearinghouse funds. The laws of some states require that some persons take
physical delivery of securities in definitive form. As a result, holders may be
unable to transfer beneficial interests in the global security to those persons.
Holders that are not participants may beneficially own interests in the
global security held by The Depository Trust Company only through participants
or indirect participants, including banks, brokers, dealers, trust companies and
other parties that clear through or maintain a custodial relationship with a
participant. So long as Cede & Co., as the nominee of The Depository Trust
Company, is the registered owner of the global security, Cede & Co. will be
considered the sole holder of the global security for all purposes. Except as
provided below, owners of beneficial interests in the global security will not:
- be entitled to have certificates registered in their names.
- be entitled to receive physical delivery of certificates in definitive
form, and
- be considered registered holders.
We will make payments of interest on and principal of and the redemption or
repurchase price of the global security to Cede & Co., the nominee for The
Depository Trust Company, as the registered holder of the global security. We
will make these payments by wire transfer of immediately available funds.
Neither we, the trustee nor any paying agent will have any responsibility or
liability for:
- records or payments on beneficial ownership interests in the global
security; or
- maintaining, supervising or reviewing any records relating to those
beneficial ownership interests.
We have been informed that The Depository Trust Company's practice is to
credit participants' accounts on the payment date. These payments will be made
in amounts proportionate to participants' beneficial interests in the exchange
notes. Payments by participants to owners of beneficial interests in the
exchange notes represented by the global security held through participants will
be the responsibility of those participants.
We will send any redemption notices to Cede & Co. We understand that if less
than all of the exchange notes are being redeemed, The Depository Trust
Company's practice is to determine by lot the amount of the holdings of each
participant to be redeemed. We also understand that neither The Depository Trust
Company nor Cede & Co. will consent or vote with respect to the exchange notes.
We have been advised that under its usual procedures, The Depository Trust
Company will mail an "omnibus proxy" to us as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those participants to whose accounts the exchange notes are credited on the
record date identified in a listing attached to the omnibus proxy.
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A person having a beneficial interest in existing notes represented by the
global security may be unable to pledge that interest to persons or entities
that do not participate in The Depository Trust Company system, or to take other
actions in respect of that interest, because that interest is not represented by
a physical certificate.
The Depository Trust Company has advised us that it is:
- a limited purpose trust company organized under the laws of the State of
New York;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform Commercial
Code, and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
The Depository Trust Company was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to
accounts of its participants. Some of the participants, together with other
entities, own The Depository Trust Company. Indirect access to The Depository
Trust Company system is available to others such as banks, brokers, dealers and
trust companies that clear through, or maintain a custodial relationship with a
participant, either directly or indirectly.
The Depository Trust Company is under no obligation to perform or continue
to perform the above procedures. The Depository Trust Company may discontinue
these at any time. If The Depository Trust Company is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will cause existing notes to be issued in definitive form
in exchange for the global security.
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<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
This section describes the material United States federal income tax
consequences of the exchange and the ownership and disposition of exchange notes
and common stock received upon a conversion of the existing notes by persons
that receive their exchange notes in the exchange offer. This section does not
apply to you if you are a member of a class of holders subject to special rules,
such as:
- a dealer in securities or currencies,
- a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings,
- a bank,
- a life insurance company,
- a tax-exempt organization,
- a person that does not hold the existing notes, exchange notes or common
stock as a capital asset,
- a person that actually or constructively owns 10% or more by vote or value
of our voting stock,
- a person that owns notes that are a hedge or that are hedged against
interest rate risks,
- a person that owns notes as part of a straddle or conversion transaction
for tax purposes, or
- a person whose functional currency for tax purposes is not the U.S.
dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.
- --------------------------------------------------------------------------------
PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING THE CONSEQUENCES OF OWNING THESE
NOTES IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE
LAWS OF ANY OTHER TAXING JURISDICTION.
- --------------------------------------------------------------------------------
UNITED STATES HOLDERS
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of an existing note
and you are:
- a citizen or resident of the United States,
- a domestic corporation,
- an estate whose income is subject to United States federal income tax
regardless of its source, or
- a trust if a United States court can exercise primary supervision over the
trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you
and you should refer to "United States Alien Holders" below.
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<PAGE>
TAX TREATMENT OF EXCHANGE
The exchange constitutes a recapitalization, and will therefore generally be
tax-free to the extent that an exchange note is received in exchange for an
existing note. You will be taxed on the exchange only in respect of (a) the
amount of any accrued but unpaid interest on your existing notes that you have
not already included in income and (b) cash that you receive to the extent of
your gain on the exchange.
You must allocate any accrued interest you have not included in income pro
rata between the exchange notes you receive and the cash you receive, based on
fair market value. The full amount of this accrued interest will be taxable as
ordinary income.
You will recognize gain on the exchange in an amount equal to the lesser of
(x) the cash you receive in the exchange, decreased by the amount of accrued
interest allocated to the cash, and (y) the total gain you realize on the
exchange. The total gain you realize on the exchange is equal to the difference
between (m) the sum of the fair market value of the exchange notes you receive
and the cash you receive, decreased by the amount attributable to accrued
interest as discussed above, and (n) your basis in your existing notes. Your
basis in your existing notes will generally equal your cost for those notes,
increased by the amount of original issue discount accrued on your existing
notes. Any loss on the exchange will not be recognized.
Any gain you recognize on the exchange will generally be capital gain and
will be long-term capital gain if you have held your existing notes for more
than one year. However, under the market discount rules, any gain that you
recognize will be ordinary income to the extent of the accrued market discount
which you have not previously included in income.
For tax purposes, the exchange should generally be considered to take place
on the expiration date.
TAX TREATMENT OF THE OWNERSHIP AND DISPOSITION OF EXCHANGE NOTES AND COMMON
STOCK
TAXATION OF INTEREST AND OID AND THE SALE, EXCHANGE OR REDEMPTION OF NOTES
You will be required to recognize as ordinary income any interest paid or
accrued on the notes, in accordance with your regular method of accounting.
An exchange note will be treated as a discount note issued at an original
issue discount if the amount by which the exchange note's stated redemption
price at maturity exceeds its issue price is more than a de minimis amount.
Generally, an exchange note's issue price will be the fair market value of the
exchange note on the day of the exchange. Your exchange note's stated redemption
price at maturity is equal to its stated principal amount. If your exchange
note's stated redemption price at maturity does not exceed its issue price, then
the following rules relating to original issue discount will not apply to you.
In general, your exchange note will not be a discount note if the amount by
which its stated redemption price at maturity exceeds its issue price is less
than the de minimis amount of 1/4 of 1 percent of its stated redemption price at
maturity multiplied by the number of complete years to its maturity. Your note
will have de minimis original issue discount if the amount of the excess is less
than the de minimis amount. If your note has de minimis original issue discount,
you must generally include the de minimis amount in income as stated principal
payments are made on the note.
Generally, you must include original issue discount in income before you
receive cash attributable to that income. The amount of OID that you must
include in income is calculated using a constant-yield method, and generally you
will include increasingly greater amounts of OID in income over the life of your
note. More specifically, you can calculate the amount of OID that you
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<PAGE>
must include in income by adding the daily portions of OID with respect to your
discount note for each day during the taxable year or portion of the taxable
year that you hold your discount note. You can determine the daily portion by
allocating to each day in any accrual period a pro rata portion of the OID
allocable to that accrual period. You may select an accrual period of any length
with respect to your discount note and you may vary the length of each accrual
period over the term of your discount note. However, no accrual period may be
longer than one year and each scheduled payment of interest or principal on the
discount note must occur on either the first or final day of an accrual period.
You can determine the amount of OID allocable to an accrual period by:
- multiplying your discount note's adjusted issue price at the beginning of
the accrual period by your note's yield to maturity, and then
- subtracting from this figure the sum of the payments of stated interest on
your note allocable to the accrual period.
You must determine the discount note's yield to maturity on the basis of
compounding at the close of each accrual period and adjusting for the length of
each accrual period. Further, you determine your discount note's adjusted issue
price at the beginning of any accrual period by adding your discount note's
issue price and any accrued OID for each prior accrual period.
If an interval between payments of stated interest on your discount note
contains more than one accrual period, then, when you determine the amount of
OID allocable to an accrual period, you must allocate the amount of stated
interest payable at the end of the interval, including any stated interest that
is payable on the first day of the accrual period immediately following the
interval, pro rata to each accrual period in the interval based on their
relative lengths. In addition, you must increase the adjusted issue price at the
beginning of each accrual period in the interval by the amount of any stated
interest that has accrued prior to the first day of the accrual period but that
is not payable until the end of the interval. You may compute the amount of OID
allocable to an initial short accrual period by using any reasonable method if
all other accrual periods, other than a final short accrual period, are of equal
length.
The amount of OID allocable to the final accrual period is equal to the
difference between:
- the amount payable at the maturity of your note, other than any payment of
stated interest, and
- your note's adjusted issue price as of the beginning of the final accrual
period.
You will generally recognize capital gain or loss if you dispose of a note
in a sale, redemption or exchange other than a conversion of the note into
common stock. Your gain or loss will equal the difference between the proceeds
you receive and your adjusted tax basis in the note. The proceeds you receive
will include the amount of any cash and the fair market value of any other
property received for your note. Your tax basis in your notes will generally
equal your tax basis in the existing notes which you exchanged for the exchange
notes, increased by the amount of gain you recognized on the exchange, further
increased by the amount of income you recognized on the exchange that was
attributable to accrued interest and decreased by the amount of cash you
received in the exchange. If your exchange notes are discount notes as described
above, you will adjust your tax basis by adding the amount of OID you have
already included in income. The portion of any proceeds that is attributable to
accrued interest on the exchange note will be recognized as ordinary interest
income to the extent that you have not previously included the accrued interest
in income. The gain or loss that you recognize on a disposition of the note will
be long-term capital gain or loss if your holding period for your exchange rate
is more than one year. Your holding period for the exchange notes will include
the period for which you held the existing
53
<PAGE>
notes, except to the extent an exchange note is received in exchange for accrued
interest. Long-term capital gains of non-corporate taxpayers are generally taxed
at a maximum rate of 20 percent. The deductibility of capital losses is subject
to limitation.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on converting a
note into common stock. If you receive cash in lieu of a fractional share of
stock, however, you will be treated as if you received the fractional share and
then had the fractional share redeemed for the cash. You would recognize gain or
loss equal to the difference between the cash received and that portion of your
basis in the stock attributable to the fractional share. Your aggregate basis in
the common stock will equal your adjusted basis in the note. Your holding period
for the stock will include your holding period for your note.
DIVIDENDS
If, after you convert a note into common stock, we make a distribution in
respect of that stock, the distribution will be treated as a dividend which will
be taxable to you as ordinary income, to the extent it is paid from our current
or accumulated earnings and profits. If the distribution exceeds our current and
accumulated earnings and profits, the excess will be treated first as a tax-free
return of your investment up to your basis in the common stock. Any remaining
excess will be treated as capital gain. If you are a U.S. corporation, you would
generally be able to claim a deduction equal to a portion of any dividends
received.
The terms of the notes allow for changes in the conversion price of the
notes in certain circumstances. A change in conversion price that allows you to
receive more shares of common stock on conversion may increase your
proportionate interests in our earnings and profits or assets. In that case, you
would be treated as though you received a dividend in the form of our stock.
Such a constructive stock dividend could be taxable to you, although you would
not actually receive any cash or other property. A taxable constructive stock
dividend would result, for example, if the conversion price is adjusted to
compensate you for distributions of cash or property to our shareholders. Not
all changes in conversion price that allow noteholders to receive more stock on
conversion, however, increase your proportionate interest in the company. For
instance, a change in conversion price could simply prevent the dilution of your
interest upon a stock split or other change in capital structure. Changes of
this type, if made by a bona fide, reasonable adjustment formula, are not
treated as constructive stock dividends. Conversely, if an event occurs that
dilutes your interests and the conversion price is not adjusted, the resulting
increase in the proportionate interests of our shareholders could be treated as
a taxable stock dividend to them. Any taxable constructive stock dividends
resulting from a change to, or failure to change, the conversion price would be
treated like dividends paid in cash or other property. They would result in
ordinary income to you, to the extent of our current or accumulated earnings and
profits, with any excess treated as a tax-free return of capital or as capital
gain.
SALE OF COMMON STOCK
You will generally recognize capital gain or loss on a sale or exchange of
common stock. Your gain or loss will equal the difference between the proceeds
received by you and your adjusted tax basis in the stock. The proceeds received
by you will include the amount of any cash and the fair market value of any
other property received for the stock. The gain or loss recognized by you on a
sale or exchange of stock will be long-term capital gain or loss if your holding
period for the stock is more than one year.
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UNITED STATES ALIEN HOLDERS
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a note and are, for United States federal income tax purposes:
- a nonresident alien individual,
- a foreign corporation,
- a foreign partnership, or
- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a note.
If you are a United States holder, this section does not apply to you.
TAXATION OF INTEREST AND THE SALE, EXCHANGE OR REDEMPTION OF NOTES
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States alien
holder of a note:
- we and other payors will not be required to deduct United States
withholding tax from payments of interest, including OID, to you if, in
the case of interest;
1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Chiron entitled to
vote, and
2. you are not a controlled foreign corporation that is related to
Chiron through stock ownership, and
a. you certify to us or a U.S. payor, under penalties of perjury,
that you are not a United States holder and provide your name and
address, or
b. a non-U.S. securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business and holds the note
certifies to us or a U.S. payor under penalties of perjury that a
similar statement has been received from you by it or by a
similar financial institution between it and you and furnishes
the payor with a copy thereof, and
- no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your note or
coupon unless:
1. you were a citizen or resident of the United States and thus are
subject to special rules that apply to expatriates, or
2. the rules of the Foreign Investment in Real Property Tax Act
("FIRPTA") (described below) treat the gain as effectively connected
with a U.S. trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of
notes if we are, or were within five years before the transaction, a
"U.S. real property holding corporation" ("USRPHC"). In general, we would
be a USRPHC if interests in U.S. real estate comprised more than 50% of
our real estate and business assets. We do not believe that we are a
USRPHC or that we will become one in the future.
If you receive a payment after December 31, 2000, recently finalized Treasury
regulations will apply. Under these final withholding regulations, after
December 31, 2000, you may use an alternative method to satisfy the
certification requirement described above. Additionally, if you are a partner in
a foreign partnership, after December 31, 2000, you, in addition to the foreign
partnership, must
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provide the certification described above and the partnership must provide
certain information. The Internal Revenue Service will apply a look-through rule
in the case of tiered partnerships.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on converting a
note into common stock. Any gain recognized as a result of your receipt of cash
in lieu of a fractional share of stock would also generally not be subject to
U.S. federal income tax. See "United States Alien Holders--Sale of Common
Stock," below.
DIVIDENDS
Dividends paid to you on common stock received on conversion of a note will
generally be subject to U.S. withholding tax at a 30 percent rate. The
withholding tax might not apply, however, or might apply at a reduced rate,
under the terms of a tax treaty between the United States and your country of
residence. You must demonstrate your entitlement to treaty benefits by
certifying your residency status.
SALE OF COMMON STOCK
You will generally not be subject to a U.S. federal income tax on any gains
realized on the sale, exchange, or other disposition of common stock. This
general rule, however, is subject to exceptions, some of which are described
under "United States Alien Holders--Taxation of Interest and the Sale, Exchange
or Redemption of Notes."
BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, if you are a non-corporate United States holder, we and other
payors are required to report to the Internal Revenue Service all payments of
principal, any premium and interest on your note, and the accrual of OID on a
discount note. In addition, the proceeds of the sale of your note before
maturity within the United States will be reported to the Internal Revenue
Service. Additionally, backup withholding at a rate of 31% will apply to any
payments, including payments of OID, if you fail to provide an accurate taxpayer
identification number, or you are notified by the Internal Revenue Service that
you have failed to report all interest and dividends required to be shown on
your federal income tax returns.
UNITED STATES ALIEN HOLDERS
You are generally exempt from backup withholding and information reporting
with respect to any payments of principal, premium, dividends or interest, made
by us and other payors if you provide the certification described under "United
States Alien Holders" and the payor does not have actual knowledge that you are
a United States person. See "United States Alien Holders" above for a discussion
of the rules under the final withholding regulations. We and other payors,
however, may report payments of interest on your notes on Internal Revenue
Service Form 1042-S.
In general, payment of the proceeds from the sale of notes or common stock
to or through a United States office of a broker is subject to both United
States backup withholding and information reporting. If, however, you are a
United States alien holder, you will not be subject to information reporting and
backup withholding if you certify as to your non-United States status, under
penalties of perjury, or otherwise establish an exemption. Payments of the
proceeds from the sale by a United States alien 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. However, information
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reporting, but not backup withholding, may apply to a payment made outside the
United States of the proceeds of a sale of a note or common stock through an
office outside the United States if the broker is:
- a United States person,
- a controlled foreign corporation for United States tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period, or
- 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 U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in a United States trade or
business
unless the broker has documentary evidence in its records that you are a
non-U.S. person and does not have actual knowledge that you are a U.S. person,
or you otherwise establish an exemption.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by William G.
Green, our Senior Vice President, General Counsel and Secretary. Customary legal
matters will be passed upon for the dealer manager by Shearman & Sterling,
Washington, D.C.
EXPERTS
The consolidated financial statements and consolidated financial statement
schedule of Chiron Corporation as of December 31, 1999 and 1998 and for each of
the years in the three-year period ended December 31, 1999, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports, proxy statements and other information with the Commission,
in accordance with the Securities Exchange Act of 1934, as amended. You may read
and copy our reports, proxy statements and other information filed by us at the
public reference facilities of the Commission in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Our reports, proxy
statements and other information filed with the Commission are available to the
public over the Internet at the Commission's World Wide Web site at
http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
filed with them, which means that we can disclose important information by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until our offering is complete:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Investor Relations Department
Chiron Corporation
4560 Horton Street
Emeryville, California 94608
(510) 655-8730
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") enables a
corporation in its certificate of incorporation to eliminate or limit the
personal liability of members of its board of directors to the corporation or
its stockholders for monetary damages for violations of a director's fiduciary
duty of care. Such a provision would have no effect on the availability of
equitable remedies, such as an injunction or rescission, for breach of fiduciary
duty. In addition, no such provision may eliminate or limit the liability of a
director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, paying an
unlawful dividend or approving an illegal stock repurchase, or obtaining an
improper personal benefit.
Section 145 of the DGCL authorizes a court to award or a corporation's board
of directors to grant indemnification to directors and officers in terms
sufficiently broad to permit such indemnification under some circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended.
The registrant's certificate of incorporation limits the directors'
liability for monetary damages to the registrant and its stockholders for
breaches of fiduciary duty to the fullest extent permitted by Section 102(b)(7)
of the DGCL. The registrant's bylaws extend indemnification rights to the
fullest extent authorized by the DGCL to directors and officers involved in any
action, suitor proceeding where the basis of such involvement is such person's
alleged action in an official capacity or in any other capacity while serving as
a director or officer of the registrant. In addition, the registrant's bylaws
permit the registrant's board, in its discretion, to indemnify any person, other
than a director, made a party to any action, suit or proceeding by reason of the
fact that such person is or was an officer or employee of the registrant.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1* Form of Dealer Manager Agreement.
3.01** Restated Certificate of Incorporation of the Registrant, as
filed with the Office of the Secretary of State of Delaware
on August 17, 1987, incorporated by reference to
Exhibit 3.01 of the Registrant's report on Form 10-K for
fiscal year 1996.
3.02** Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant, as filed with the Office of
the Secretary of State of Delaware on December 12, 1991,
incorporated by reference to Exhibit 3.02 of the
Registrant's report on Form 10-K for fiscal year 1996.
3.03** Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant, as filed with the Office of
the Secretary of State of Delaware on May 22, 1996,
incorporated by reference to Exhibit 3.04 of the
Registrant's report on Form 10-Q for the period ended June
30, 1996.
3.04** Bylaws of the Registrant, as amended, incorporated by
reference to Exhibit 3.04 of the Registrant's report on Form
10-Q for the period ended June 30, 1999.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Form of Indenture between the Registrant and State Street
Bank and Trust Company of California, N.A., as exchange
notes trustee.
4.2 Form of Exchange Note (included in Exhibit 4.1).
5.1 Opinion of William G. Green, Senior Vice President, General
Counsel and Secretary of Chiron Corporation.
12.1 Statement re: computation of ratio of earnings to fixed
charges.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of William G. Green, Senior Vice President, General
Counsel and Secretary of Chiron Corporation (contained in
its opinion filed as Exhibit 5.1 to this registration
statement).
24.1* Power of Attorney (see page II-4).
25.1* Form T-1 Statement of Eligibility under the Trust indenture
Act of 1939, as amended, of State Street Bank and Trust
Company of California, N.A.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.
99.4* Form of Letter to Clients.
99.5 Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9.
</TABLE>
- --------------
* Previously filed
** Incorporated by reference
ITEM 22. UNDERTAKINGS
(a) The Company hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b),
11 or 13 of Form S-4, within one business day of receipt of such request, and to
send the incorporated documents by first-class mail or equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement throughout the date responding to
the request.
(b) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
(c) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the existing notes Exchange Act (and,
where applicable, each filing of any employee benefit plan's annual report
pursuant to Section 15(d) of the existing notes Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 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.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-4
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE
CITY OF EMERYVILLE, STATE OF CALIFORNIA ON APRIL 17, 2000.
<TABLE>
<S> <C> <C>
CHIRON CORPORATION
By: /s/ SEAN P. LANCE
-----------------------------------------
Name: Sean P. Lance
Title: PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-4 HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SEAN P. LANCE President, Chief Executive Officer and
--------------------------------- Chairman of the Board (Principal April 17, 2000
Sean P. Lance Executive Officer)
/s/ JAMES R. SULAT
--------------------------------- Vice President, Chief Financial Officer April 17, 2000
James R. Sulat (Principal Financial Officer)
/s/ DAVID V. SMITH
--------------------------------- Vice President, Controller (Principal April 17, 2000
David V. Smith Accounting Officer)
*
--------------------------------- Director April 17, 2000
Raymund Breu
*
--------------------------------- Director April 17, 2000
Vaughn D. Bryson
*
--------------------------------- Director April 17, 2000
Lewis W. Coleman
*
--------------------------------- Director April 17, 2000
Pierre E. Douaze
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
--------------------------------- Director April 17, 2000
Donald A. Glaser
*
--------------------------------- Director April 17, 2000
Paul L. Herrling
*
--------------------------------- Director April 17, 2000
Edward E. Penhoet
*
--------------------------------- Director April 17, 2000
William J. Rutter
*
--------------------------------- Director April 17, 2000
Jack W. Schuler
*
--------------------------------- Director April 17, 2000
Pieter J. Strijkert
*
--------------------------------- Director April 17, 2000
Lewis T. Williams
</TABLE>
<TABLE>
<S> <C>
*By: /s/ SEAN P. LANCE
---------------------------------
Sean P. Lance
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1* Form of Dealer Manager Agreement.
3.01** Restated Certificate of Incorporation of the Registrant, as
filed with the Office of the Secretary of State of Delaware
on August 17, 1987, incorporated by reference to
Exhibit 3.01 of the Registrant's report on Form 10-K for
fiscal year 1996.
3.02** Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant, as filed with the Office of
the Secretary of State of Delaware on December 12, 1991,
incorporated by reference to Exhibit 3.02 of the
Registrant's report on Form 10-K for fiscal year 1996.
3.03** Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant, as filed with the Office of
the Secretary of State of Delaware on May 22, 1996,
incorporated by reference to Exhibit 3.04 of the
Registrant's report on Form 10-Q for the period ended June
30, 1996.
3.04** Bylaws of the Registrant, as amended, incorporated by
reference to Exhibit 3.04 of the Registrant's report on Form
10-Q for the period ended June 30, 1999.
4.1 Form of Indenture between the Registrant and State Street
Bank and Trust Company of California, N.A., as exchange
notes trustee.
4.2 Form of Exchange Note (included in Exhibit 4.1).
5.1 Opinion of William G. Green, Senior Vice President, General
Counsel and Secretary of Chiron Corporation.
12.1 Statement re: computation of ratio of earnings to fixed
charges.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of William G. Green, Senior Vice President, General
Counsel and Secretary of Chiron Corporation (contained in
its opinion filed as Exhibit 5.1 to this registration
statement).
24.1* Power of Attorney (see page II-4).
25.1* Form T-1 Statement of Eligibility under the Trust indenture
Act of 1939, as amended, of State Street Bank and Trust
Company of California, N.A.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.
99.4* Form of Letter to Clients.
99.5 Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9.
</TABLE>
- --------------
* Previously filed
** Incorporated by reference
<PAGE>
EXHIBIT 4.1
------------------------------------
CHIRON CORPORATION
ISSUER
TO
STATE STREET BANK
AND TRUST COMPANY OF
CALIFORNIA, N.A.,
TRUSTEE
------------------
INDENTURE
Dated as of May [ ], 2000
--------------------
[ ]% CONVERTIBLE SUBORDINATED NOTES DUE NOVEMBER [ ], 2007
---------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.............1
SECTION 1.1 Definitions.................................................1
SECTION 1.2 Compliance Certificates and Opinions........................9
SECTION 1.3 Form of Documents Delivered to the Trustee.................10
SECTION 1.4 Acts of Holders of Securities..............................11
SECTION 1.5 Notices, etc. to the Trustee and Company...................13
SECTION 1.6 Notice to Holders of Securities; Waiver....................13
SECTION 1.7 Effect of Headings and Table of Contents...................14
SECTION 1.8 Successors and Assigns.....................................14
SECTION 1.9 Separability Clause........................................14
SECTION 1.10 Benefits of Indenture......................................14
SECTION 1.11 Governing Law..............................................14
SECTION 1.12 Legal Holidays.............................................14
SECTION 1.13 Conflict with Trust Indenture Act..........................15
ARTICLE II SECURITY FORMS....................................................15
SECTION 2.1 Form Generally.............................................15
SECTION 2.2 Form of Security...........................................16
SECTION 2.3 Form of Certificate of Authentication......................28
SECTION 2.4 Form of Conversion Notice..................................29
SECTION 2.5 Form of Assignment.........................................30
ARTICLE III THE SECURITIES...................................................31
SECTION 3.1 Title and Terms............................................31
SECTION 3.2 Denominations..............................................31
SECTION 3.3 Execution, Authentication, Delivery and Dating.............31
SECTION 3.4 Global Securities; Non-global Securities;
Book-entry Provisions......................................32
SECTION 3.5 Registration; Registration of Transfer and Exchange;
Restrictions on Transfer...................................33
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities............35
SECTION 3.7 Payment of Interest; Interest Rights Preserved.............36
SECTION 3.8 Persons Deemed Owners......................................37
SECTION 3.9 Cancellation...............................................37
SECTION 3.10 Computation of Interest....................................37
SECTION 3.11 CUSIP Numbers..............................................37
ARTICLE IV SATISFACTION AND DISCHARGE........................................37
SECTION 4.1 Satisfaction And Discharge of Indenture....................37
SECTION 4.2 Application of Trust Money.................................39
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE V REMEDIES...........................................................39
SECTION 5.1 Events of Default..........................................39
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.........41
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee.................................................42
SECTION 5.4 Trustee May File Proofs of Claim...........................42
SECTION 5.5 Trustee May Enforce Claims Without Possession
of Securities..............................................43
SECTION 5.6 Application of Money Collected.............................43
SECTION 5.7 Limitation on Suits........................................44
SECTION 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert........................44
SECTION 5.9 Restoration of Rights and Remedies.........................45
SECTION 5.10 Rights and Remedies Cumulative.............................45
SECTION 5.11 Delay or Omission Not Waiver...............................46
SECTION 5.12 Control by Holders of Securities...........................46
SECTION 5.13 Waiver of Past Defaults....................................46
SECTION 5.14 Undertaking for Costs......................................46
SECTION 5.15 Waiver of Stay, Usury or Extension Laws....................47
ARTICLE VI THE TRUSTEE.......................................................47
SECTION 6.1 Certain Duties and Responsibilities........................47
SECTION 6.2 Notice of Defaults.........................................48
SECTION 6.3 Certain Rights of Trustee..................................49
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities.....49
SECTION 6.5 May Hold Securities, Act as Trustee under Other
Indentures.................................................50
SECTION 6.6 Money Held in Trust........................................50
SECTION 6.7 Compensation and Reimbursement.............................50
SECTION 6.8 Corporate Trustee Required; Eligibility....................51
SECTION 6.9 Resignation and Removal; Appointment of Successor..........51
SECTION 6.10 Acceptance of Appointment by Successor.....................52
SECTION 6.11 Merger, Conversion, Consolidation or Succession to
Business...................................................53
SECTION 6.12 Authenticating Agents......................................53
SECTION 6.13 Disqualification; Conflicting Interests....................55
SECTION 6.14 Preferential Collection of Claims Against Company..........55
ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............55
SECTION 7.1 Company May Consolidate, etc.,.............................55
SECTION 7.2 Successor Substituted......................................56
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VIII SUPPLEMENTAL INDENTURES.........................................56
SECTION 8.1 Supplemental Indentures without Consent of Holders
of Securities..............................................56
SECTION 8.2 Supplemental Indentures with Consent of Holders
of Securities..............................................57
SECTION 8.3 Execution of Supplemental Indentures.......................58
SECTION 8.4 Effect of Supplemental Indentures..........................58
SECTION 8.5 Reference in Securities to Supplemental Indentures.........58
SECTION 8.6 Notice of Supplemental Indentures..........................59
ARTICLE IX MEETINGS OF HOLDERS OF SECURITIES.................................59
SECTION 9.1 Purposes for Which Meetings May Be Called..................59
SECTION 9.2 Call, Notice and Place of Meetings.........................59
SECTION 9.3 Persons Entitled to Vote at Meetings.......................59
SECTION 9.4 Quorum; Action.............................................60
SECTION 9.5 Determination of Voting Rights; Conduct and Adjournment
of Meetings................................................60
SECTION 9.6 Counting Votes and Recording Action of Meetings............61
ARTICLE X COVENANTS..........................................................61
SECTION 10.1 Payment of Principal, Premium and Interest.................62
SECTION 10.2 Maintenance of Offices or Agencies.........................62
SECTION 10.3 Money for Security Payments to be Held in Trust............62
SECTION 10.4 Existence..................................................63
SECTION 10.5 Maintenance of Properties..................................64
SECTION 10.6 Payment of Taxes and Other Claims..........................64
SECTION 10.7 Registration and Listing...................................64
SECTION 10.8 Statement by Officers as to Default........................65
SECTION 10.9 Waiver of Certain Covenants................................65
ARTICLE XI REDEMPTION OF SECURITIES..........................................65
SECTION 11.1 Right of Redemption........................................65
SECTION 11.2 Applicability of Article...................................66
SECTION 11.3 Election to Redeem; Notice to Trustee......................66
SECTION 11.4 Selection by Trustee of Securities to Be Redeemed..........66
SECTION 11.5 Notice of Redemption.......................................66
SECTION 11.6 Deposit of Redemption Price................................67
SECTION 11.7 Securities Payable on Redemption Date......................68
SECTION 11.8 Conversion Arrangement on Call for Redemption..............68
-iii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE XII CONVERSION OF SECURITIES.........................................69
SECTION 12.1 Conversion Privilege and Conversion Rate...................69
SECTION 12.2 Exercise of Conversion Privilege...........................69
SECTION 12.3 Fractions of Shares........................................71
SECTION 12.4 Adjustment of Conversion Rate..............................71
SECTION 12.5 Notice of Adjustments of Conversion Rate...................75
SECTION 12.6 Notice of Certain Corporate Action.........................76
SECTION 12.7 Company to Reserve Common Stock............................77
SECTION 12.8 Taxes on Conversions.......................................77
SECTION 12.9 Covenant as to Common Stock................................77
SECTION 12.10 Cancellation of Converted Securities.......................77
SECTION 12.11 Provision in Case of Consolidation, Merger or Sale
of Assets..................................................78
SECTION 12.12 Rights Issued in Respect of Common Stock...................79
SECTION 12.13 Responsibility of Trustee for Conversion Provisions........79
ARTICLE XIII SUBORDINATION OF SECURITIES.....................................80
SECTION 13.1 Securities Subordinate to Senior Debt......................80
SECTION 13.2 No Payment in Certain Circumstances, Payment over of
Proceeds upon Dissolution, etc..... .......................80
SECTION 13.3 Prior Payment to Senior Debt upon Acceleration
of Securities..............................................82
SECTION 13.4 Payment Permitted if no Default............................82
SECTION 13.5 Subrogation to Rights of Holders of Senior Debt............82
SECTION 13.6 Provisions Solely to Define Relative Rights................83
SECTION 13.7 Trustee to Effectuate Subordination........................83
SECTION 13.8 No Waiver of Subordination Provisions......................83
SECTION 13.9 Notice to Trustee..........................................84
SECTION 13.10 Reliance on Judicial Order or Certificate of
Liquidating Agent..........................................85
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Debt...........85
SECTION 13.12 Reliance by Holders of Senior Debt on Subordination
Provisions.................................................85
SECTION 13.13 Rights of Trustee as Holder of Senior Debt; Preservation
of Trustee's Rights........................................85
SECTION 13.14 Article Applicable to Paying Agents........................85
SECTION 13.15 Certain Conversions and Repurchases Deemed Payment.........86
ARTICLE XIV REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER
UPON A CHANGE IN CONTROL...................................86
SECTION 14.1 Right to Require Repurchase................................86
SECTION 14.2 Conditions to the Company's Election to
Pay the Repurchase
-iv-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Price in Common Stock......................................87
SECTION 14.3 Notices; Method of Exercising Repurchase Right, etc........88
SECTION 14.4 Certain Definitions........................................91
SECTION 14.5 Consolidation, Merger, etc.................................92
ARTICLE XV HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE....92
SECTION 15.1 Company to Furnish Trustee Names and Addresses of Holders..92
SECTION 15.2 Preservation of Information................................93
SECTION 15.3 Reserved...................................................93
SECTION 15.4 Reports by Trustee.........................................94
SECTION 15.5 Reports by Company.........................................94
ARTICLE XVI IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS..94
SECTION 16.1 Indenture and Securities Solely Corporate Obligations......94
-v-
<PAGE>
INDENTURE, dated as of May [ ], 2000 between CHIRON Corporation, a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 4560 Horton Street, Emeryville, California 94608
(herein called the "Company"), and STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association organized under the laws of
the United States, as Trustee hereunder (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its [ ]%
Convertible Subordinated Notes due May [ ], 2007 (herein called the
"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.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, 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. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, 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 accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation; and
-1-
<PAGE>
(3) 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 of a Security, 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.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of The Depository Trust Company or any successor
Depository, in each case to the extent applicable to such transaction and as in
effect from time to time.
"Authenticating Agent" means any Person authorized pursuant to
Section 6.12 to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place
of Conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion or other place, as
the case may be, are authorized or obligated by law or executive order to close;
provided, however, that a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close shall not be
a Business Day for purposes of Section 13.9.
"Change in Control" has the meaning specified in Section 14.4(2).
"Closing Price Per Share" means, with respect to the Common Stock, for
any day, (i) the last reported sale price regular way on the Nasdaq National
Market or, (ii) if the Common Stock is not quoted on the Nasdaq National Market,
the last reported sale price regular way per share or, in case
2
<PAGE>
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case, on the principal
national securities exchange on which the Common Stock is listed or admitted
to trading, or (iii) if the Common Stock is not quoted on the Nasdaq National
Market or listed or admitted to trading on any national securities exchange,
the average of the closing bid prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to
time by the Company for that purpose.
"Code" has the meaning specified in Section 2.l.
"Commission" means the United States 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" means 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. Subject to the
provisions of Article XII, however, shares issuable on conversion of Notes
shall include only shares of Common Stock, $.01 par value per share (which is
the class designated as Common Stock of the Company at the date of this
Indenture), or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which
are not subject to redemption by the company; PROVIDED that if at any time
there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion to 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.
"common stock" includes any stock of any class of capital stock 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
issuer thereof and which is not subject to redemption by the issuer thereof.
"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 Notice" has the meaning specified in Section 14.3.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its (i) Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President, an Executive
Vice President or a Vice President, and by its (ii) Principal financial officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
3
<PAGE>
"Constituent Person" has the meaning specified in Section 12.11.
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article XII. The Company has initially
appointed the Trustee as its Conversion Agent pursuant to Section 10.2 hereof.
"Conversion Price" has the meaning specified in Section 14.4(3).
"Conversion Rate" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time the trust created by this Indenture shall be principally
administered (which at the date of this Indenture is located at, Attention:
Corporate Trust Administration (Chiron Corporation, [ ] Convertible Subordinated
Notes due May [ ], 2007).
"corporation" means a corporation, company, association, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to any Securities (including any
Global Securities), a clearing agency that is registered as such under the
Exchange Act and is designated by the Company to act as Depositary for such
Securities (or any successor securities clearing agency so registered).
"Dollar" or "U.S. $" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934
(or any successor statute), as amended from time to time.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the Security is registered in
the Security Register.
4
<PAGE>
"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.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means May [ ], 2000.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security 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 repurchase right set forth in
Article XIV or otherwise.
"Nasdaq System: means the electronic inter-dealer quotation system
operated by Nasdaq, Inc., a subsidiary of the National Association of Securities
Dealers, Inc.
"Non-electing Share" has the meaning specified in Section 12.11.
"Notice of Default" has the meaning specified in Section 5.1.
Officers' Certificate: when used with respect to the Company, shall
mean a certificate signed both (a) by its Chairman of the Board of Directors, or
any Vice-Chairman of the Board of Directors, or its President or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President")and (b) by its Treasurer, or
Controller, or Secretary or any Assistant Secretary.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for the payment or redemption of which
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
5
<PAGE>
of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory
to the Trustee has been made;
(iii) Securities which have been paid 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 converted into Common Stock pursuant to
Article XII;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or 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 determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee has been notified in
writing 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 is not
the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor, and the Trustee shall be protected in relying
upon an Officer's Certificate to such effect.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent pursuant to Section 10.2 hereof.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
"Place of Payment" has the meaning specified in Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in
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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.
"Press Release" means any press release issued by the Company and
disseminated to Reuters Business News Services and Bloomberg News Services.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for interest payable in respect of any Security
on any Interest Payment Date means the [ ] or [ ] (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
"Representative" means the (a) indenture trustee or other trustee,
agent or representative for any Senior Debt or (b) with respect to any Senior
Debt that does not have any such trustee, agent or other representative, (i) in
the case of such Senior Debt issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Debt, any
holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii) in
the case of all other such Senior Debt, the holder or owner of such Senior Debt.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge and familiarity with the particular
subject.
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
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"Senior Debt" means the principal of (and premium, if any) and interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (a) indebtedness
of the Company evidenced by a credit or loan agreement, note, bond, debenture or
other written obligation, (b) all obligations of the Company for money borrowed,
(c) all obligations of the Company evidenced by a note or similar instrument
given in connection with the acquisition of any businesses, properties or assets
of any kind, (d) obligations of the Company (i) as lessee under leases required
to be capitalized on the balance sheet of the lessee under generally accepted
accounting principles and (ii) as lessee under other leases for facilities,
capital equipment or related assets, whether or not capitalized, entered into or
leased for financing purposes, (e) all obligations of the Company under interest
rate and currency swaps, caps, floors, collars, hedge agreements, currency spot
and forward contracts or similar agreements or arrangements, (f) all obligations
of the Company with respect to letters of credit, bankers' acceptances and
similar facilities (including reimbursement obligations with respect to the
foregoing), (g) all obligations of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable and
accrued liabilities arising in the ordinary course of business), (h) all
obligations of the type referred to in clauses (a) through (g) above of another
Person and all dividends of another Person, the payment of which, in either
case, the Company has assumed or guaranteed, or for which the Company is
responsible or liable, directly or indirectly, jointly or severally, as obligor,
guarantor or otherwise, or which is secured by a lien on the property of the
Company, and (i) renewals, extensions, modifications, replacements, restatements
and refundings of, or any indebtedness or obligation issued in exchange for, any
such indebtedness or obligation described in clauses (a) through (h) of this
paragraph; provided, however, that Senior Debt shall not include any such
indebtedness or obligation if the terms of such indebtedness or obligation (or
the terms of the instrument under which, or pursuant to which it is issued)
expressly provide that such indebtedness or obligation is not superior in right
of payment to the Securities.
"Significant Subsidiary" means, with respect to any Person, a
Subsidiary of such Person that would constitute a "significant subsidiary" as
such term is defined under Rule 1-02 of Regulation S-X under the Securities Act
and the Exchange Act.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Company pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock"
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means stock or other similar interests in the corporation which ordinarily
has or have voting power for the election of directors, or persons performing
similar functions, whether at all times or only so long as no senior class of
stock or other interests has or have such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security
issued after, and 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.
"Surrender Certificate" means a certificate substantially in the form
set forth in Annex B.
"Tender Premium" means the amount equal to (i) the price per share
offered by the Company in a tender offer in excess of the average of the
Closing Prices Per Share of the Common Stock for the twenty trading days
immediately preceding the date of announcement of the tender offer,
multiplied by (ii) the number of shares of Common Stock accepted for tender
in the tender offer.
"Trading Day" means (i) if the Common Stock is quoted on the Nasdaq
National Market or any other system of automated dissemination of quotations of
securities prices, days on which trades may be effected through such system,
(ii) if the Common Stock is listed or admitted for trading on any national or
regional securities exchange, days on which such national or regional securities
exchange is open for business, or (iii) if the Common Stock is not listed on a
national or regional securities exchange or quoted on the Nasdaq National Market
or any other system of automated dissemination of quotation of securities
prices, days on which the Common Stock is traded regular way in the
over-the-counter market and for which a closing bid and a closing asked price
for the Common Stock are available.
"Trust Indenture Act" means the Trust Indenture Act of 1939, and the
rules and regulations thereunder, as in force at the date as of which this
instrument was executed, provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939,
and the rules and regulations thereunder, 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 and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all
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such conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in Section 10.8) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO THE 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 such 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 or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, 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.
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SECTION 1.4 ACTS OF HOLDERS OF SECURITIES.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (A) one or
more instruments of substantially similar tenor signed by such Holders in
person or by an agent or proxy duly appointed in writing by such Holders or
(B) the record of Holders of Securities voting in favor thereof, either in
person or by proxies duly appointed in writing, at any meeting of Holders of
Securities duly called and held in accordance with the provisions of Article
IX. Such action shall become effective when such instrument or instruments or
record is delivered to the Trustee and, where it is hereby expressly
required, to the Company. The Trustee shall promptly deliver to the Company
copies of all such instruments and records delivered to the Trustee. Such
instrument or instruments and records (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders of Securities signing such instrument or instruments and so voting at
such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent or proxy, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject
to Section 6.1) conclusive in favor of the Trustee and the Company if made in
the manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 9.6.
(2) 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.
(3) The principal amount and serial number of any Security held by
any Person, and the date of his holding the same, shall be proved by the
Security Register.
(4) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to
in this Section 1.4.
(5) The Company may set any day as the record date for the purpose
of determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote
on any action, authorized or permitted by this Indenture to be given or taken
by Holders. Promptly and in any case not later than ten days after setting a
record date, the Company shall notify the Trustee and the Holders of such
record date. 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 15.1) prior to such first
solicitation or vote, as the case may be. With regard to any record date, the
Holders on such date (or their duly appointed agents or proxies), and only
such Persons,
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shall be entitled to give or take, or vote on, the relevant action, whether
or not such Holders remain Holders after such record date. Notwithstanding
the foregoing, the Company shall not set a record date for, and the
provisions of this paragraph shall not apply with respect to, any notice,
declaration or direction referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of
default or breach referred to in Section 5.1(4), if such default or breach has
occurred and is continuing and the Trustee shall not have given such a notice to
the Company, (ii) any declaration of acceleration referred to in Section 5.2, if
an Event of Default has occurred and is continuing and the Trustee shall not
have given such a declaration to the Company, or (iii) any direction referred to
in Section 5.12, if the Trustee shall not have taken the action specified in
such direction, then, with respect to clauses (ii) and (iii), a record date
shall automatically and without any action by the Company or the Trustee be set
for determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the tenth day (or, if such
day is not a Business Day, the first Business Day thereafter) following the day
on which the Trustee receives such declaration or direction, and, with respect
to clause (i), the Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in such notice of default. Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (ii) or (iii), and promptly after setting any record date with
respect to clause (i), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed. The Holders
on such record date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to join in such notice, declaration or direction,
whether or not such Holders remain Holders after such record date; provided
that, unless such notice, declaration or direction shall have become effective
by virtue of Holders of the requisite principal amount of Securities on such
record date (or their duly appointed agents or proxies) having joined therein on
or prior to the 90th day after such record date, such notice, declaration or
direction shall automatically and without any action by any Person be canceled
and of no further effect. Nothing in this paragraph shall be construed to
prevent a Holder (or a duly appointed agent or proxy thereof) from giving,
before or after the expiration of such 90-day period, a notice, declaration or
direction contrary to or different from, or, after the expiration of such
period, identical to, the notice, declaration or direction to which such record
date relates, in which event a new record date in respect thereof shall be set
pursuant to this paragraph. In addition, nothing in this paragraph shall be
construed to render ineffective any notice, declaration or direction of the type
referred to in this paragraph given at any time to the Trustee and the Company
by Holders (or their duly appointed agents or proxies) of the requisite
principal amount of Securities on the date such notice, declaration or direction
is so given.
(6) Except as provided in Sections 5.12 and 5.13, any request,
demand, authorization, direction, notice, consent, election, 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.
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(7) The provisions of this Section 1.4 are subject to the
provisions of Section 9.5.
SECTION 1.5 NOTICES, ETC. TO THE TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities 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 of Securities or by the Company
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with a Responsible Officer of the Trustee and received at
its Corporate Trust Office, Attention: Corporate Trust Administration (Chiron
Corporation, [ ]% Convertible Subordinated Notes due May [ ], 2007).
(2) the Company by the Trustee or by any Holder of Securities shall
be sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing, mailed, first-class postage prepaid, or telecopied
and confirmed by mail, first-class postage prepaid, or delivered by hand or
overnight courier, addressed to the Company at 4560 Horton Street,
Emeryville, California 94608, Attention: Chief Financial Officer, or at any
other address previously furnished in writing to the Trustee by the Company.
SECTION 1.6 NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid or delivered by an overnight delivery service, to each Holder of a
Security affected by such event, at the address of such Holder as it appears in
the Security Register, not earlier than the earliest date and not later than the
latest date prescribed for the giving of such notice.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Security shall affect the sufficiency
of such notice with respect to other Holders of Securities. 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 to Holders
of Securities as shall be made with the approval of the Trustee, which approval
shall not be unreasonably withheld, shall constitute a sufficient notification
to such Holders for every purpose hereunder.
Such notice shall be deemed to have been given when such notice is
mailed.
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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 of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 1.7 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.9 SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in anyway be affected or impaired thereby.
SECTION 1.10 BENEFITS OF INDENTURE.
Except as provided in the next sentence, nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article XIII are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Senior Debt.
SECTION 1.11 GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
Holder of a Security has a right to convert his Security shall not be a Business
Day at a Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of, premium, if any, or interest on, or the payment of the
Redemption Price or Repurchase
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Price (whether the same is payable in cash or in shares of Common Stock in
the case of the Repurchase Price) with respect to, or delivery for conversion
of, such Security need not be made at such Place of Payment or Place of
Conversion, as the case may be, on or by such day, but may be made on or by
the next succeeding Business Day at such Place of Payment or Place of
Conversion, as the case may be, with the same force and effect as if made on
the Interest Payment Date, Redemption Date or Repurchase Date, or at the
Stated Maturity or by such last day for conversion; provided, however, that
in the case that payment is made on such succeeding Business Day, no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date, Redemption Date, Repurchase Date, Stated Maturity or
last day for conversion, as the case may be.
SECTION 1.13 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.
ARTICLE II
SECURITY FORMS
SECTION 2.1 FORM GENERALLY.
The Securities 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, the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistent herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be in fully registered form.
The Trustee's certificates of authentication shall be in substantially
the form set forth in Section 2.3.
Conversion notices shall be in substantially the form set forth in
Section 2.4.
Repurchase notices shall be substantially in the form set forth in
Section 2.2.
The Securities shall be printed, lithographed, typewritten or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any automated quotation system or securities
exchange (including on steel engraved borders if so required by any securities
exchange upon which the Securities may be listed) on which the Securities
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may be quoted or listed, as the case may be, all as determined by the
officers executing such Securities, as evidenced by their execution thereof.
SECTION 2.2 FORM OF SECURITY.
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]
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CHIRON Corporation
5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE May [ ], 2007
No. _________ $_________
CUSIP NO. _________
CHIRON Corporation, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the
"Company", which term includes any successor Person under the Indenture
referred to on the reverse hereof), for value received, hereby promises to
pay to _________________, or registered assigns, the principal sum of
________ United States Dollars (U.S.$______ )
[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 $243,800,000) by adjustments made
on the records of the Trustee hereinafter referred to in accordance with the
Indenture)] on May [ ], 2007 and to pay interest thereon, from May [ ], 2000,
semi-annually in arrears on May [ ] and November [ ] in each year (each, an
"Interest Payment Date"), commencing [ ], at the rate of [ ] per annum, until
the principal hereof is due, and at the rate of [ ] per annum on any overdue
principal and premium, if any, and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the May [ ] or November [ ]
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Company, notice
whereof shall be given to Holders of Securities not less than 10 days prior
to the Special Record Date, or be paid at any time in any other lawful manner
not inconsistent with the requirements of any automated quotation system or
securities exchange on which the Securities may be quoted or listed, and upon
such notice as may be required by such exchange, all as more fully provided
in the Indenture. Payments of principal shall be made upon the surrender of
this Security at the option of the Holder at the Corporate Trust Office of
the Trustee, or at such other office or agency of the Company as may be
designated by it for such purpose in the Borough of Manhattan, The City of
New York, in such lawful monies of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, or at such other offices or agencies as the Company may designate, by
United States Dollar check drawn on, or wire transfer to, a United States
Dollar account (such a transfer to be made only to a Holder of an aggregate
principal amount of Securities in excess of U.S.$2,000,000 and only if such
Holder shall have furnished wire instructions in writing to the Trustee no
later than 15 days prior to the relevant payment date). Payment of interest
on this
17
<PAGE>
Security may be made by United States Dollar check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register, or, upon written application by the Holder to the Security
Registrar setting forth wire instructions not later than the relevant Record
Date, by transfer to a United States Dollar account (such a transfer to be
made only to a Holder of an aggregate principal amount of Securities in
excess of U.S. $2,000,000 and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date).
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
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 or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
18
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly executed.
CHIRON CORPORATION
By:_____________________________
Name:
Title:
Attest:
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
Dated:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Trustee
By: _______________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its [ ] Convertible Subordinated Notes due May [ ],
2007" (herein called the "Securities"), limited in aggregate principal amount
not to exceed $243,800,000, issued and to be issued under an Indenture, dated
as of May [ ], 2000 (herein called the "Indenture"), between the Company, and
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Debt and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. As provided in the Indenture and subject to certain limitations
therein set forth, Securities are exchangeable for a like aggregate principal
amount of Securities of any authorized denominations as requested by the
Holder surrendering the same upon surrender of the Security or Securities to
be exchanged, at the Corporate Trust Office of the Trustee. The Trustee upon
such surrender by the Holder will issue the new Securities in the requested
denominations.
No sinking fund is provided for the Securities. The Securities will not
be subject to redemption until on or after May [ ], 2003 and
will be redeemable on and after that date at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days notice to the Holders
prior to the Redemption Date at the Redemption Prices (expressed as percentages
of the principal amount) set forth below.
The following table sets forth the Redemption Prices (expressed as
percentages of the principal amount) if such Security is redeemed during the
12-month period beginning May [ ], 2003:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
--------------------- --------------------------
<S> <C>
2003
2004
2005
2006
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Securities whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer or exchange of any Security, or portion thereof, called for redemption.
-21-
<PAGE>
In any case where the due date for the payment of the principal of,
premium, if any, or interest, on any Security or the last day on which a
Holder of a Security has a right to convert his Security shall be, at any
Place of Payment or Place of Conversion as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or delivery for conversion of such
Security need not be made on or by such date at such place but may be made on
or by the next succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law or executive order to
close, with the same force and effect as if made on the date for such payment
or the date fixed for redemption or repurchase, or by such last day for
conversion, and no interest shall accrue on the amount so payable for the
period after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or
before the close of business on the date of Maturity, or in case this
Security or a portion hereof is called for redemption or the Holder hereof
has exercised his right to require the Company to repurchase this Security or
such portion hereof, then in respect of this Security until the Business Day
immediately preceding, but (unless the Company defaults in making the payment
due upon redemption or repurchase, as the case may be) not after, the close
of business on the Business Day immediately preceding the Redemption Date or
the Repurchase Date, as the case may be, to convert this Security (or any
portion of the principal amount hereof that is an integral multiple of
U.S.$1,000, provided that the unconverted portion of such principal amount is
U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof) into
fully paid and nonassessable shares of Common Stock of the Company at an
initial Conversion Rate of shares of Common Stock for each U.S.$1,000
principal amount of Securities (or at the current adjusted Conversion Rate if
an adjustment has been made as provided in the Indenture) by surrender of
this Security, duly endorsed or assigned to the Company or in blank and, in
case such surrender shall be made 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 if this
Security or portion thereof has been called for redemption on a Redemption
Date or is repurchasable on a Repurchase Date occurring, in either case,
during such period and, as a result, the right to convert this Security would
otherwise terminate in such period if not exercised), also accompanied by
payment in New York Clearing House or other funds acceptable to the Company
of an amount equal to the interest payable on such Interest Payment Date on
the principal amount of this Security then being converted, and also the
conversion notice hereon duly executed, to the Company at the Corporate Trust
Office of the Trustee, or at such other office or agency of the Company,
subject to any laws or regulations applicable thereto and subject to the
right of the Company to terminate the appointment of any Conversion Agent (as
defined below) as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, or at such other offices or agencies as the
Company may designate (each a "Conversion Agent"), provided, further, that if
this Security or portion hereof has been called for redemption on a
Redemption Date or is repurchasable on a Repurchase Date occurring, in either
case, 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
succeeding Interest Payment Date, and as a result, the right to convert this
Security would otherwise terminate in such period if not exercised and this
Security is surrendered for
22
<PAGE>
conversion during such period, then the Holder of this Security on such
Regular Record Date will be entitled to receive the interest accruing hereon
from the Interest Payment Date next preceding the date of such conversion to
such succeeding Interest Payment Date and the Holder of this Security who
converts this Security or a portion hereof during such period shall not be
required to pay such interest upon surrender of this Security for conversion.
Subject to the provisions of the preceding sentence and, in the case of a
conversion after the close of business on the Regular Record Date next
preceding any Interest Payment Date and on or before the close of business on
such Interest Payment Date, to the right of the Holder of this Security (or
any Predecessor Security of record as of such Regular Record Date) to receive
the related installment of interest to the extent and under the circumstances
provided in the Indenture, no cash payment or adjustment is to be made on
conversion for interest accrued hereon from the Interest Payment Date next
preceding the day of conversion, or for dividends on the Common Stock issued
on conversion hereof. The Company shall thereafter deliver to the Holder the
fixed number of shares of Common Stock (together with any cash adjustment, as
provided in the Indenture) into which this Security is convertible and such
delivery will be deemed to satisfy the Company's obligation to pay the
principal amount of this Security. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but instead of
any fractional interest (calculated to the nearest 1/100th of a share) the
Company shall pay a cash adjustment as provided in the Indenture. The
Conversion Rate is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party (other than a consolidation or merger
that does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock) or the conveyance, transfer, sale or lease
of all or substantially all of the property and assets of the Company, the
Indenture shall be amended, without the consent of any Holders of Securities,
so that this Security, if then Outstanding, will be convertible thereafter,
during the period this Security shall be convertible as specified above, only
into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance, transfer, sale or lease by a
holder of the number of shares of Common Stock of the Company into which this
Security could have been converted immediately prior to such consolidation,
merger, conveyance, transfer, sale or lease (assuming such holder of Common
Stock is not a Constituent Person or an Affiliate of a Constituent Person),
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of Non-electing Shares. No
adjustment in the Conversion Rate will be made until such adjustment would
require an increase or decrease of at least one percent of such rate,
provided that any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any subsequent
adjustment.
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is at least $1,000 or an integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
U.S.$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to the Repurchase Date. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the conditions
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value
23
<PAGE>
of shares of Common Stock shall be determined by the Company and shall be
equal to 95% of the average of the Closing Prices Per Share for the five
consecutive Trading Days immediately preceding the second Trading Day prior
to the Repurchase Date. Whenever in this Security 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 Repurchase Price payable in
respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price
in any provision of this Security shall not be construed as excluding the
Repurchase Price so payable in those provisions of this Security when such
express mention is not made; provided, however, that, for the purposes of the
second succeeding paragraph, such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH GLOBAL SECURITY:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.]
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH SECURITY THAT IS NOT A
GLOBAL SECURITY:
In the event of redemption, repurchase or conversion of this Security
in part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Debt of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities, together with accrued interest to the date of declaration,
may be declared due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the
24
<PAGE>
written consent of the Holders of not less than a majority in principal
amount of the Securities at the time Outstanding, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of at least 66-2/3% in aggregate principal
amount of the Outstanding Securities represented and entitled to vote at such
meeting. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued in exchange therefore or in lieu hereof whether or not
notation of such consent or waiver is made upon this Security or such other
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, 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 as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premiums if any, or interest hereon on or
after the respective due dates expressed herein or for the enforcement of the
right to convert this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, places and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable on the Security Register
upon surrender of this Security for registration of transfer at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose in the Borough of Manhattan, The City
of New York (which shall initially be an office or agency of the Trustee), or at
such other offices or agencies as the Company may designate, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees by the Registrar. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to recover any tax or other
governmental charge payable in connection therewith.
25
<PAGE>
Prior to due presentation 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 thereof for all purposes, whether or not such Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
26
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM as tenant in common UNIF GIFT MIN ACT ____ Custodian ____
TEN ENT as tenants by the entireties (Cust) (Cust) (Minor)
JT TEN as joint tenants with right of survivorship under Uniform Gifts to
and not as tenants in common Minors Act _____
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
27
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(1) Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
(2) The undersigned hereby directs the Trustee or the Company to
pay it or an amount in cash or, at the Company's election,
Common Stock valued as set forth in the Indenture, equal to 100% of the
principal amount to be repurchased (as set forth below), plus interest
accrued to the Repurchase Date, as provided in the Indenture.
Dated:
____________________________________
____________________________________
Signature(s)
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
____________________________________
Signature Guaranteed
Principal amount to be repurchased (at least
U.S. $1,000 or an integral multiple of $1,000
in excess thereof): ___________________
Remaining principal amount following such
repurchase (not less than U.S. $1,000):
_______________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
SECTION 2.3 FORM OF CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: ____________________
28
<PAGE>
STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By:____________________________________
Authorized Signatory
SECTION 2.4 FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is U.S.$1,000 or an integral multiple of U.S.$1,000 in excess
thereof, provided that the unconverted portion of such principal amount is
U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof) below
designated, into shares of Common Stock in accordance with the terms of the
Indenture referred to in this Security, and directs that such shares, together
with a check in payment for any fractional share and any Securities representing
any unconverted principal amount hereof, be delivered to and be registered in
the name of the undersigned unless a different name has been indicated below. If
shares of Common Stock or Securities are to be registered in the name of a
Person other than the undersigned, (a) the undersigned will pay all transfer
taxes payable with respect thereto and (b) signature(s) must be guaranteed by an
Eligible Guarantor Institution with membership in an approved signature
guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of
1934. Any amount required to be paid by the undersigned on account of interest
accompanies this Security.
Dated: ____________ ____________________________________________
Signature(s)
If shares or Securities are to be registered in the
name of a Person other than the Holder, please
print such Person's name and address:
____________________________________
(Name)
____________________________________
____________________________________
(Address)
____________________________________
Social Security or other Identification
Number, if any
29
<PAGE>
____________________________________
[Signature Guaranteed]
If only a portion of the Securities is to be converted, please indicate:
1. Principal amount to be converted: U.S. $ ___________
2. Principal amount and denomination of Securities representing
unconverted principal amount to be issued:
Amount: U.S. $___________ Denominations: U.S. $____________
(U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof, provided
that the unconverted portion of such principal amount is U.S. $1,000 or any
integral multiple of U.S. $1,000 in excess thereof)
SECTION 2.5 FORM OF ASSIGNMENT.
For value received hereby sell(s), assign(s) and
transfer(s) unto (Please insert social security or other
identifying number of assignee) the within Security, and hereby irrevocably
constitutes and appoints as 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 with membership in an
approved signature guarantee program pursuant
to Rule 17Ad - 15 under the Securities
Exchange Act of 1934.
___________________________________
Signature Guaranteed
30
<PAGE>
ARTICLE III
THE SECURITIES
SECTION 3.1 TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to an amount not to exceed
$243,800,000, except for Securities authenticated and delivered pursuant to
Section 3.4, 3.5, 3.6, 8.5, 12.2 or 14.3(5) in exchange for, or in lieu of,
other Securities previously authenticated and delivered under this Indenture.
(1) The Securities shall be known and designated as the [ ]%
Convertible Subordinated Notes due May [ ], 2007" of the Company. Their
Stated Maturity shall be May [ ], 2000 and they shall bear interest on their
principal amount from May [ ], 2000, payable semi-annually in arrears on
May [ ] and November [ ] in each year, commencing November [ ], 2000, at the
rate of [ ] per annum until the principal thereof is due and at the rate of [ ]
per annum on any overdue principal and, to the extent permitted by law, on
any overdue interest; provided, however, that payments shall only be made on
a Business Day as provided in Section 1.12.
The principal of, premium, if any, and interest on the Securities shall
be payable as provided in the form of Securities set forth in Section 2.2, and
the Repurchase Price, whether payable in cash or in shares of Common Stock,
shall be payable at such places as are identified in the Company Notice given
pursuant to Section 14.3 (any city in which any Paying Agent is located being
herein called a "Place of Payment").
The Securities shall be redeemable at the option of the Company at any
time on or after the third Business Day after [ ], in whole or in part, subject
to the conditions and as otherwise provided in Article XI and in the form of
Security set forth in Section 2.2.
The Securities shall be convertible as provided in Article XII (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior Debt
of the Company as provided in Article XIII.
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in Article XIV.
SECTION 3.2 DENOMINATIONS.
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in
excess thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
31
<PAGE>
The Notes shall be signed in the name and on behalf of the Company by
the facsimile signature of its President or its Chief Executive Officer and
attested by the facsimile signature of its Secretary or its Chief Financial
Officer (which may be printed, engraved or otherwise reproduced thereon, by
facsimile or otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, manually executed
by the Trustee, shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
SECTION 3.4 GLOBAL SECURITIES; NON-GLOBAL SECURITIES;
BOOK-ENTRY PROVISIONS.
(1) Global Securities
(i) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated by the Company
for such Global Security or a nominee thereof and delivered to such
Depositary or a nominee thereof or custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this
Indenture.
(ii) Except for exchanges of Global Securities for definitive,
Non-global Securities at the sole discretion of the Company, no Global
Security may be exchanged in whole or in part for Securities registered, and
no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or
a nominee thereof unless (A) such Depositary (i) has notified the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or (ii) has ceased to be a clearing agency registered as such under
the Exchange Act or announces an intention permanently to cease business or
does in fact do so or (B) there shall have occurred and be continuing an
Event of Default with respect to such Global Security. In such event, if a
successor Depositary for such Global Security is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of
such ineligibility, the Company will execute, and the Trustee, upon receipt
of an Officers' Certificate directing the authentication and delivery of
Securities, will authenticate and deliver, Securities, in any authorized
denominations in an aggregate principal amount equal to the principal amount
of such Global Security in exchange for such Global Security.
(iii) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of
the Depositary or its nominee to the Trustee, as
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Security Registrar, for exchange or cancellation, as provided in this Article
III. If any Global Security is to be exchanged for other Securities or
canceled in part, or if another Security is to be exchanged in whole or in
part for a beneficial interest in any Global Security, in each case, as
provided in Section 3.5, then either (A) such Global Security shall be so
surrendered for exchange or cancellation, as provided in this Article III, or
(B) the principal amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or canceled, or equal to the
principal amount of such other Security to be so exchanged for a beneficial
interest therein, as the case may be, by means of an appropriate adjustment
made on the records of the Trustee, as Security Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding
adjustment to its records. Upon any such surrender or adjustment of a Global
Security, the Trustee shall, subject to Section 3.5(3) and as otherwise
provided in this Article III, authenticate and deliver any Securities
issuable in exchange for such Global Security (or any portion thereof) to or
upon the order of, and registered in such names as may be directed by, the
Depositary or its authorized representative. Upon the request of the Trustee
in connection with the occurrence of any of the events specified in the
preceding paragraph, the Company shall promptly make available to the Trustee
a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any order, direction
or request of the Depositary or its authorized representative which is given
or made pursuant to this Article III if such order, direction or request is
given or made in accordance with the Applicable Procedures.
(iv) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Security or any portion thereof, whether pursuant to this Article III or
otherwise, shall be authenticated and delivered in the form of, and shall be,
a registered Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof, in which case such Security shall be authenticated and delivered in
definitive, fully registered form, without interest coupons.
(v) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes
under the Indenture and the Securities, and owners of beneficial interests in
a Global Security shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Security will be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its Agent Members and such owners of beneficial interests in a Global
Security will not be considered the owners or holders thereof.
(2) Non-global Securities. Securities issued upon the events
described in Section 3.4(l)(ii) shall be in definitive, fully registered
form, without interest coupons, and shall bear the Restricted Securities
Legend if and as required by this Indenture.
SECTION 3.5 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE;
RESTRICTIONS ON TRANSFER.
(1) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
referred to as the "Security Register") in which,
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subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers and exchanges of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.2 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 3.5, Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this Section 3.5, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities that the Holder making the exchange is
entitled to receive. Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Trustee and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits under this Indenture as the Securities
surrendered upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities except as provided in Section 3.6, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
3.4, 8.5, 12.2 or 14.3 (other than where the shares of Common Stock are to be
issued or delivered in a name other than that of the Holder of the Security) not
involving any transfer and other than any stamp and other duties, if any, which
may be imposed in connection with any such transfer or exchange by the United
States or any political subdivision thereof or therein, which shall be paid by
the Company.
In the event of a redemption of the Securities, neither the Company nor
the Securities Registrar will be required (a) to register the transfer of or
exchange Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.
(2) CERTAIN TRANSFERS AND EXCHANGES.
Notwithstanding any other provision of this Indenture or the Securities,
transfers and exchanges of Securities and beneficial interests in a Global
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Security of the kinds specified in this Section 3.5(2) shall be made only in
accordance with this Section 3.5(2).
(i) EXCHANGES BETWEEN GLOBAL SECURITY AND NON-GLOBAL SECURITY.
A beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security only as provided in Section 3.4.
SECTION 3.6 MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or
theft of any Security, and
(2) such security or indemnity as may be satisfactory to the
Company and the Trustee to save each of them and any agent of either of them
harmless, then, in the absence of actual notice to the Company or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security 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 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security, the date
of the proposed payment and the Special Record Date, 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 provided. The Special Record Date for the payment of such
Defaulted Interest shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee, in
the name and at the expense of the Company, shall 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 such
Holder's 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, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
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Interest on any Security that is converted in accordance with Section
12.2 during a Record Date Period shall be payable in accordance with the
provisions of Section 12.2.
SECTION 3.8 PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee, any Paying Agent and any agent of the Company, the
Trustee or any Paying Agent 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, the Trustee, any Paying Agent nor any agent of
the Company, the Trustee or any Paying Agent shall be affected by notice to the
contrary.
SECTION 3.9 CANCELLATION.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee (or its
agent). No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section 3.9. The Trustee shall dispose
of all canceled Securities in accordance with applicable law and its customary
practices in effect from time to time.
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 Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such 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, or registration of transfer or
exchange, or replacement of Securities
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herein expressly provided for and in the form of Securities set forth in
Section 2.2 and the Company's obligations to the Trustee pursuant to Section
6.7), and the Trustee, at the expense of the Company, shall execute proper
instruments in form and substance satisfactory to the Trustee acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities which have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 3.6 and (B) 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
(ii) all such Securities not theretofore delivered to the
Trustee or its agent for cancellation (other than Securities referred to in
clauses (A) and (B) of clause (1)(i) above)
(a) have become due and payable, or
(b) will have become due and payable at their Stated
Maturity within one year, or
(c) 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 clause (a), (b) or (c) above, has deposited
or caused to be deposited with the Trustee as trust funds (immediately
available to the Holders in the case of clause (a)) in trust for the purpose
an amount in cash sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation,
for principal, premium, if any, and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12, the obligations of
the Trustee under Section 4.2 and the last paragraph of Section 10.3 and the
obligations of the Company and the Trustee under Section 3.5 and Article XII
shall survive. Funds held in trust pursuant to this Section are not subject to
the provisions of Article XIII.
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 and in accordance with
the provisions of Article XIII shall be held in trust for the sole benefit of
the Holders and not be subject to the subordination provisions of Article XIII,
and such monies shall be applied by the Trustee, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent, to the Persons entitled thereto, of the principal,
premium, if any, and interest for whose payment such money has been deposited
with the Trustee.
All moneys deposited with the Trustee pursuant to Section 4.1 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon Company Request.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed or assessed against all money deposited with the Trustee
pursuant to Section 4.1 (other than income taxes and franchise taxes incurred or
payable by the Trustee and such other taxes, fees or charges incurred or payable
by the Trustee that are not directly the result of the deposit of such money
with the Trustee).
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 XIII 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 the principal of or premium, if
any, on any Security at its Maturity, whether or not such payment is
prohibited by the subordination provisions of the Securities or of this
Indenture; or
(2) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a period
of 30 days, whether or not such payment is prohibited by the subordination
provisions of the Securities or of this Indenture; or
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(3) failure by the Company to give a Company Notice in
accordance with Section 14.3 whether or not such Company Notice is prohibited
by the subordination provisions of the Securities or the Indenture; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty
a default in the performance or breach of which is specifically dealt with
elsewhere in this Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(5) any indebtedness under any bonds, debentures, notes or
other evidences of indebtedness for money borrowed (or guarantee thereof) by
the Company or any Significant Subsidiary or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company or any
Significant Subsidiary (an "Instrument") with an aggregate principal amount
in excess of U.S. $10,000,000, whether such indebtedness now exists or shall
hereafter be created, is not paid at final maturity of any Instrument (either
at its stated maturity or upon acceleration thereof), and such indebtedness
is not discharged, or such acceleration is not rescinded or annulled, within
a period of 30 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default and requiring the Company
to cause such indebtedness to be discharged or cause such default to be cured
or waived or such acceleration to be rescinded or annulled and stating that
such notice is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or any Significant
Subsidiary a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Significant Subsidiary under any applicable
Federal or State law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
any Significant Subsidiary or of any substantial part of the property of
either, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by either to the entry of a decree or order for relief in respect of
the Company or any Significant Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
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bankruptcy or insolvency case or proceeding against either, or the filing by
either of a petition or answer or consent seeking reorganization or similar
relief under any applicable Federal or State law, or the consent by either to
the filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Significant Subsidiary or of any
substantial part of the property of either, or the making by either of an
assignment for the benefit of creditors, or the admission by either in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company or any Significant Subsidiary
in furtherance of any such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 5.1(6) or 5.1(7) with respect to the Company) 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, subject to the provisions of
Article XIII, declare the principal of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders), and upon any such declaration such principal and all accrued
interest thereon shall become immediately due and payable. If an Event of
Default specified in Section 5.1(6) or 5.1(7) with respect to the Company
occurs, the principal of, and accrued interest on, all the Securities shall,
subject to the provisions of Article XIII, ipso facto become immediately due and
payable without any declaration or other Act of the Holders or any act on the
part of the Trustee.
At any time after such 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, on behalf of all Holders, rescind and annul such
declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue interest on all Securities,
(ii) the principal of and premium, if any, on any Securities
that have become due otherwise than by such declaration of acceleration and
any interest thereon at the rate borne by the Securities,
(iii) to the extent permitted by applicable law, interest upon
overdue interest at a rate of [ ]% per annum, and
(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
(2) all Events of Default, other than the nonpayment of the
principal of and any premium and interest on, Securities which have become
due solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13; and
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(3) such rescission and annulment would not conflict with any judgment
or decree issued in appropriate judicial proceedings regarding the payment by
the Trustee to the Holders of the amounts referred to in 5.2(1).
No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any Security
when it becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of or premium,
if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee but subject to the provisions of
Article XIII pay to it, for the benefit of the Holders of such Securities the
whole amount then due and payable on such Securities for principal and interest
and interest on any overdue principal and premium, if any, and, to the extent
permitted by applicable law, on any overdue interest, at a rate of [ ] per
annum, and in addition thereto, such further amount as shall be sufficient to
cover the reasonable costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
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 of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or
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otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Securities
and take such other actions, including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter,
and to file such other papers or documents, in each of the foregoing cases,
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders of
Securities 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
of Securities 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
of Securities to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.
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, 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 judgment
has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED.
Subject to Article XIII, 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, 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:
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FIRST: To the payment of all amounts due the Trustee under Section
6.7;
SECOND: To the payment of the amounts then due and unpaid for principal
of, premium, if any, or interest on, the Securities in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for principal, premium, if any, and interest, respectively;
THIRD: To such other Person or Persons, if any, to the extent entitled
thereto; and
FOURTH: Any remaining amounts shall be repaid 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 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 tTrustee 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, and if
requested, shall have provided, reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity (or if requested, receipt of indemnity) has
failed to institute any tsuch 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 seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, but subject to
the provisions of Article XIII, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 3.7) interest on such Security
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on the respective Stated Maturities expressed in such Security (or, in the
case of redemption or repurchase, on the Redemption Date or Repurchase Date,
as the case may be), and to convert such Security in accordance with Article
XII, and to institute suit for the enforcement of any such payment and 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 of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such 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 of Securities 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.
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SECTION 5.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security 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 any
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or (subject to the
limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12 CONTROL BY HOLDERS OF SECURITIES.
Subject to Section 6.3, the Holders of a majority in principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, provided that
(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, and
(3) the Trustee need not take any action that might involve it in
personal liability or be unjustly prejudicial to the Holders of Securities
not consenting.
SECTION 5.13 WAIVER OF PAST DEFAULTS.
The Holders, either (i) through the written consent of not less than a
majority in principal amount of the Outstanding Securities or (ii) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least 66-2/3% in principal
amount of the Outstanding Securities represented at such meeting, may on behalf
of the Holders of all the Securities waive any past default hereunder and its
consequences, except a default (A) in the payment of the principal of, premium,
if any, or interest on any Security, or (B) in respect of a covenant or
provision hereof which under Article VIII cannot be modified or amended without
the consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
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undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder of
any Security for the enforcement of the payment of the principal of, premium, if
any, or interest on any Security on or after the respective Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption or
repurchase, on or after the Redemption Date or Repurchase Date, as the case may
be) or for the enforcement of the right to convert any Security in accordance
with Article XII.
SECTION 5.15 WAIVER OF STAY, USURY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, usury or extension law wherever
enacted, now or at any time hereafter in force, that 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 by reason of such law 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.
(1) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture, but in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture, but not to verify the contents thereof.
(2) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill
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in their exercise, as a prudent man would exercise or use under the
cirtcumstances in the conduct of his own affairs.
(3) No provision of this
Indenture shall be construed to relieve the Trustee from liability for its own
netgligent action, its own negligent failure to act, or its own willful
misconduct, except that
(i) this paragraph (3) shall not be construed to limit
tthe effect of paragraph (1) of this Section;
(ii) the Trustee shall not be
liable for any error of judgment made in good faith by a Responsible Officer,
tunless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture; and
(iv) 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.
(4) 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 as to
which the Trustee has received written notice, the Trustee shall give to all
Holders of Securities, in the manner provided in Section 1.6, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of,
premium, if any, or interest 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 Responsible Officers 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(4), no such notice to Holders of
Securities shall be given until at least 60 days after the occurrence thereof
or, if applicable, the cure period specified therein. 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.
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SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon, other evidence of
indebtedness or other paper or document (collectively, the "Documents")
believed by it to be genuine and to have been signed or presented by the
proper party or parties, and the Trustee need not investigate any fact or
matter stated in such Documents;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be the one specifically prescribed) may, in the absence of bad faith
on its part, request and rely upon an Officers' Certificate or Opinion of
Counsel;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities pursuant to this Indenture, unless such
Holders shall have offered, and, if requested by the Trustee, delivered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other paper
or document, but the Trustee may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by
agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys 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.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
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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, of the Securities or of the Common Stock issuable upon the conversion
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 6.5 MAY HOLD SECURITIES, ACT AS TRUSTEE UNDER OTHER INDENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent or such other agent.
The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
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 its acceptance of this Indenture and for all services rendered by
it hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee (including costs and expenses of
enforcing this Indenture and defending itself against any claim (whether
asserted by the Company, any Holder of Securities or any other Person) or
liability in connection with the exercise of any of its powers or duties
hereunder) in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Trustee (and its directors, officers,
employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its
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part, arising out of or in connection with the acceptance or administration
of this trust, including the reasonable costs, expenses and reasonable
attorneys' fees of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
The Trustee shall have a lien prior to the Securities on all money or
property held or controlled by the Trustee to secure the Company's payment
obligations in this Section 6.7, except that held in trust to pay principal and
interest (including Liquidated Damages) on the Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(6) or Section 5.1(7), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8 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, having (or
be part of a holding company group with) a combined capital and surplus of at
least U.S. $50,000,000, subject to supervision or examination by federal or
state authority, and in good standing. The Trustee or an Affiliate of the
Trustee shall maintain an established place of business in the Borough of
Manhattan, The City of New York. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time 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 and a
successor shall be appointed pursuant to Section 6.9.
SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(1) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(2) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 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.
(3) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been
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delivered to the Trustee within 30 days after the giving of such notice of
removal, the removed Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(4) If at any time:
(i) the Trustee shall cease to be eligible under Section 6.8
and shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months, or
(ii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(5) 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 and
shall comply with the applicable requirements of this Section and Section 6.10.
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 majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.10, 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 of Securities
and accepted appointment in the manner required by this Section and Section
6.10, any Holder of a Security who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(6) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders of Securities 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 6.10 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
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and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11 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 of the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor of the Trustee hereunder, provided such corporation shall be
otherwise eligible under this Article, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.12 AUTHENTICATING AGENTS.
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities, which Authenticating Agent shall be authorized to act on behalf of
the Trustee to authenticate Securities issued upon exchange or substitution
pursuant to this Indenture.
Securities authenticated by an Authenticating Agent shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.12.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.12.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
STATE STREET BANK AND
TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
By:
__________________________
As Authenticating Agent
By:
__________________________
Authorized Signatory
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SECTION 6.13 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 6.14 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
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1 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 all 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, sell or lease
such Person's properties and assets substantially as an entirety to the Company
unless:
(1) the Person formed by such consolidation or into or with which
the Company is merged or the Person to which the properties and assets of the
Company are so conveyed, transferred, sold or leased shall be a corporation,
limited liability company, partnership or trust organized and validly
existing under the laws of the United States of America, any State thereof or
the District of Columbia and, if other than the Company, shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest (including Liquidated
Damages, if any) on all of the Securities as applicable, and the performance
or observance of every covenant of this Indenture on the part of the Company
to be performed or observed and shall have provided for conversion rights in
accordance with Article XII;
(2) immediately after giving effect to such transaction, no Event
of Default, and no event that after notice or lapse of time or both, would
become an Event of Default, shall have occurred 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, together with any
documents required under Section 8.3.
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SECTION 7.2 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 all or
substantially all the properties and assets of the Company in accordance with
Section 7.1, the successor Person formed by such consolidation or into or with
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 VIII
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS OF
SECURITIES.
Without the consent of any Holders of Securities the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities as permitted by Article VII of this
Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or to surrender any right or power herein conferred
upon the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11 or to make provision with
respect to the repurchase rights of Holders of Securities pursuant to Section
14.5; or
(5) to make any changes or modifications to this Indenture
necessary in connection with the registration of any Registrable Securities
under the Securities Act as contemplated by Section 10.11, provided such
action pursuant to this clause (5) shall not adversely affect the interests
of the Holders of Securities; or
(6) to comply with the requirements of the Trust Indenture Act or
the rules and regulations of the Commission thereunder in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act,
as contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
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(8) subject to Section 13.12, to make any change in Article XIII
that would limit or terminate the benefits available to any holder of Senior
Debt under such Article; or
(9) to cure any ambiguity, to correct or supplement any provision
herein that may be inconsistent with any other provision herein or that is
otherwise defective, or to make any other provisions with respect to matters
or questions arising under this Indenture as the Company and the Trustee may
deem necessary or desirable, provided such action pursuant to this clause (9)
shall not adversely affect the interests of the Holders of Securities in any
material respect.
Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall
join with the Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF
SECURITIES.
With either (i) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (ii) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of at least 66-2/3% in principal amount of the
Outstanding Securities represented at such meeting, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent or affirmative vote of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount of,
or the premium, if any, or the rate of interest payable thereon, or reduce
the amount payable upon a redemption or mandatory repurchase, or change the
place or currency of payment of the principal of, premium, if any, or
interest on any Security (including any payment of Liquidated Damages or
Redemption Price or Repurchase Price in respect of such Security) or impair
the right to institute suit for the enforcement of any payment in respect of
any Security on or after the Stated Maturity thereof (or, in the case of
redemption or any repurchase, on or after the Redemption Date or Repurchase
Date, as the case may be) or, except as permitted by Section 12.11, adversely
affect the right of Holders to convert any Security as provided in Article
XII, or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders; or
(2) reduce the requirements of Section 9.4 for quorum or voting, or
reduce the percentage in principal amount of the Outstanding Securities the
consent of whose Holders is required for any such supplemental indenture or
the consent of whose Holders is required for any waiver (of
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compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture; or
(3) modify the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York, pursuant to Section
10.2; or
(4) modify any of the provisions of this Section or Section 5.13 or
10.12, except to increase any percentage contained herein or therein or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; or
(5) modify the provisions of Article XIV in a manner adverse to the
Holders; or
(6) modify any of the provisions of Section 10.9.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 8.3 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 8.4 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
appertaining thereto shall be bound thereby.
SECTION 8.5 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation 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 Company and the
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Trustee, 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 8.6 NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE IX
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2 CALL, NOTICE AND PLACE OF MEETINGS.
(1) The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 9.1, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of Holders of Securities,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 1.6, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(2) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities shall have requested the Trustee to call a meeting of
the Holders of Securities for any purpose specified in Section 9.1, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of
such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then
the Company or the Holders of Securities in the amount specified, as the case
may be, may determine the time and the place in the Borough of Manhattan, The
City of New York, for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in paragraph (1) of this
Section.
SECTION 9.3 PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (i) a Holder of one or more Outstanding Securities, or (ii) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The
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only Persons who shall be entitled to be present or to speak at any meeting
of Holders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 9.4 QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Notice of
the reconvening of any adjourned meeting shall be given as provided in Section
9.2(1), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage of
the principal amount of the Outstanding Securities that shall constitute a
quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for a lack of a quorum, the Persons entitled to vote 25% in principal amount of
the Outstanding Securities at the time shall constitute a quorum for the taking
of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 8.2 and except to the extent Section 10.12
requires a different vote) shall be effectively passed and decided if passed or
decided by the lesser of (i) the Holders of not less than a majority in
principal amount of Outstanding Securities and (ii) the Persons entitled to vote
not less than 66-2/3% in principal amount of Outstanding Securities represented
and entitled to vote at such meeting.
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities whether or not present or represented at the meeting. The
Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.
SECTION 9.5 DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS.
(1) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 1.4 and the appointment of any
proxy
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shall be proved in the manner specified in Section 1.4 or by having the
signature of the Person executing the proxy guaranteed by any bank, broker or
other eligible institution participating in a recognized medallion signature
guarantee program.
(2) The Trustee shall, by an instrument in writing, appoint a
temporary chairman (which may be the Trustee) of the meeting, unless the
meeting shall have been called by the Company or by Holders of Securities as
provided in Section 9.2(1), in which case the Company or the Holders of
Securities calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary
of the meeting shall be elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securities represented at the
meeting.
(3) At any meeting, each Holder of a Security or proxy shall be
entitled to one vote for each U.S. $1,000 principal amount of Securities held
or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to vote, except as a Holder
of a Security or proxy.
(4) Any meeting of Holders of Securities duly called pursuant to
Section 9.2 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.
SECTION 9.6 COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE X
COVENANTS
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SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees that it will duly and punctually pay
the principal of and premium, if any, and interest on the Securities in
accordance with the terms of the Securities and this Indenture. The Company will
deposit or cause to be deposited with the Trustee, no later than the opening of
business on the date of the Stated Maturity of any Security or no later than the
opening of business on the due date for any installment of interest, all
payments so due, which payments shall be in immediately available funds on the
date of such Stated Maturity or due date, as the case may be.
SECTION 10.2 MAINTENANCE OF OFFICES OR AGENCIES.
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where the Securities may be surrendered for
registration of transfer or exchange or for presentation for payment or for
conversion, redemption or repurchase and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated or appointed by
the Trustee. 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 or the office or agency of the Trustee in the Borough of
Manhattan, The City of New York.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, 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 and conversion, which shall initially be
STATE STREET BANK AND TRUST COMPANY, N.A., an Affiliate of the Trustee, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee, and notice to the Holders in accordance with Section 1.6, of the
appointment or termination of any such agents and of the location and any change
in the location of any such office or agency.
The Company hereby initially designates the Trustee as Paying Agent,
Security Registrar and Conversion Agent, and each of the Corporate Trust Office
of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York, located at Chiron Corporation [ ] Convertible
Subordinated Notes due May [ ], 2007) as one such office or agency of the
Company for each of the aforesaid purposes.
SECTION 10.3 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
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If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest 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, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and the Company 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,
no later than the opening of business on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee
a sum in funds immediately payable on the payment date sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held
for the benefit of the Persons entitled to such principal, premium, if any,
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any 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 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 the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
SECTION 10.4 EXISTENCE.
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Subject to Article VII, 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
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 10.5 MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Significant Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Significant Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 10.6 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge, or cause to be paid or discharged,
before the same may become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property of the Company or any
Significant Subsidiary, (ii) all claims for labor, materials and supplies which,
if unpaid, might by law become a lien or charge upon the property of the Company
or any Significant Subsidiary, and (iii) all stamps and other duties, if any,
which may be imposed by the United States or any political subdivision thereof
or therein in connection with the issuance, transfer, exchange or conversion of
any Securities or with respect to this Indenture; provided, however, that, in
the case of clauses (i) and (ii), the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (A) if the failure to do so will not, in the aggregate, have a material
adverse impact on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.
SECTION 10.7 REGISTRATION AND LISTING.
The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) before the shares of Common Stock
issuable upon conversion of Securities are issued and delivered, and qualified
or listed as contemplated by clause (ii) will qualify the shares of Common Stock
required to be issued and delivered upon conversion of Securities, prior to such
issuance or delivery, for quotation on the Nasdaq National Market or, if the
Common Stock is not then quoted on the Nasdaq
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National Market, list the Common Stock on each national securities exchange
or quotation system on which outstanding Common Stock is listed or quoted at
the time of such delivery.
SECTION 10.8 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default or any Event of Default under the Indenture, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto. 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.
Any notice required to be given under this Section 10.8 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 10.9 WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 10.4 (other than with respect to the
existence of the Company (subject to Article VII)), 10.5 and 10. 6, inclusive
(other than a covenant or condition which under Article VIII cannot be modified
or amended without the consent of the Holder of each Outstanding Security
affected), if before the time for such compliance the Holders shall, through
(i) the written consent of not less than a majority in principal amount of the
Outstanding Securities or (ii) the adoption of a resolution at a meeting of
Holders of the Outstanding Securities at which a quorum is present by the
Holders of not less than 66-2/3% in principal amount of the Outstanding
Securities represented at such meeting, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee or any Paying or
Conversion Agent in respect of any such covenant or condition shall remain in
full force and effect.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 RIGHT OF REDEMPTION.
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The Securities may be redeemed in accordance with the provisions of the
form of Securities set forth in Section 2.2.
SECTION 11.2 APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article XI.
SECTION 11.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of any of the Securities, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
SECTION 11.4 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within five Business
Days after it receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption, by lot or by such other method
as the Trustee may deem fair and appropriate.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as Outstanding for the purpose of such selection. The Trustee shall
promptly notify the Company and each Security Registrar in writing of the
securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.5 NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section
1.6 to the Holders of Securities to be redeemed not less than 30 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable. The
Company shall, concurrently with the giving of such notice, publish a Press
Release including the information required to be included in such notice of
redemption hereunder.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest (including
Liquidated Damages, if any), if any, to the Redemption Date,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities which will be outstanding after such partial
redemption,
(4) the Conversion Rate, the date on which the right to convert the
Securities to be redeemed will terminate and the places where such Securities
may be surrendered for conversion, and
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest if any, to the
Redemption Date.
In case of a partial redemption, the notice shall specify the serial
and CUSIP numbers (if any) and the portions thereof called for redemption and
that transfers and exchanges may occur on or prior to the Redemption Date.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 11.6 DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall deposit with the
Trustee (or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 10.3) an amount of money (which shall be in
immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest to the Redemption Date on, all the Securities
which are to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or so segregated and held in trust for the redemption of such
Security shall (subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 3.7) be paid to the Company on Company Request or, if then held by the
Company, shall be discharged from such trust.
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SECTION 11.7 SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; provided, however, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of [ ]% per
annum and such Security shall remain convertible until the Redemption Price of
such Security (or portion thereof, as the case may be) shall have been paid or
duly provided for.
Any Security that is to be redeemed only in part shall be surrendered
at the Corporate Trust Office or an office or agency of the Company designated
for that purpose pursuant to Section 10.2 (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 make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
SECTION 11.8 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers (the "Purchasers") to
purchase such securities by paying to the Trustee in trust for the Holders, on
or before the Redemption Date, an amount not less than the applicable Redemption
Price, together with interest accrued to the Redemption Date, of such
Securities. Notwithstanding anything to the contrary contained in this
Article XI, the obligation of the Company to pay the Redemption Price,
together with interest accrued to the Redemption Date, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
Purchasers. If such an agreement is entered into (a copy of which shall be
filed with the Trustee prior to the close of business on the Business Day
immediately prior to the Redemption Date), any Securities called for
redemption that are 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, and consistent with any agreement or agreements with such
Purchasers, to be acquired by such Purchasers from such Holders and
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(notwithstanding anything to the contrary contained in Article XII)
surrendered by such Purchasers for conversion, all as of immediately prior to
the close of business on the Redemption Date (and the right to convert any
such Securities shall be extended through such time), subject to payment of
the above amount as aforesaid. At the direction of the Company, the Trustee
shall hold and dispose of any such amount paid to it by the Purchasers to the
Holders in the same manner as it would monies deposited with it by the
Company for the redemption of Securities. Without the Trustee's prior written
consent, no arrangement between the Company and such Purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect
any of the powers, duties, responsibilities or obligations of the Trustee as
set forth in this Indenture, and the Company agrees to indemnify the Trustee
from, and hold it harmless against, any loss, liability or expense arising
out of or in connection with any such arrangement for the purchase and
conversion of any Securities between the Company and such Purchasers,
including the costs and expenses, including reasonable legal fees, 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.
ARTICLE XII
CONVERSION OF SECURITIES
SECTION 12.1 CONVERSION PRIVILEGE AND CONVERSION RATE.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security may be converted into fully paid
and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the Company at the Conversion Rate,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence on the initial issuance date of the Securities
and expire at the close of business on the date of Maturity, subject, in the
case of conversion of any Global Security, to any Applicable Procedures. In case
a Security or portion thereof is called for redemption at the election of the
Company or the Holder thereof exercises his right to require the Company to
repurchase the Security, such conversion right in respect of the Security, or
portion thereof so called, shall expire at the close of business on the Business
Day immediately preceding the Redemption Date or the Repurchase Date, as the
case may be, unless the Company defaults in making the payment due upon
redemption or repurchase, as the case may be (in each case subject as aforesaid
to any Applicable Procedures with respect to any Global Security).
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially shares
of Common Stock for each U.S.$1,000 principal amount of Securities. The
Conversion Rate shall be adjusted in certain instances as provided in this
Article XII.
SECTION 12.2 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 in blank,
at any office or agency of the Company maintained
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for that purpose pursuant to Section 10.2, accompanied by a duly signed
conversion notice substantially in the form set forth in Section 2.4 stating
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. Each Security surrendered for conversion (in whole or in part)
during the Record Date Period shall (except in the case of any Security or
portion thereof which has been called for redemption on a Redemption Date, or
is repurchasable on a Repurchase Date, occurring, in either case, within such
Record Date Period and, as a result, the right to convert such Security would
otherwise terminate in such period if not exercised) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of such Security (or part thereof, as the case
may be) being surrendered for conversion. The interest so payable on such
Interest Payment Date with respect to any Security (or portion thereof, if
applicable) that is surrendered for conversion during the Record Date Period
shall be paid to the Holder of such Security as of such Regular Record Date
in an amount equal to the interest that would have been payable on such
Security if such Security had been converted as of the close of business on
such Interest Payment Date. Interest payable on any Interest Payment Date in
respect of any Security surrendered for conversion on or after such Interest
Payment Date shall be paid to the Holder of such Security as of the Regular
Record Date next preceding such Interest Payment Date, notwithstanding the
exercise of the right of conversion. Except as provided in this paragraph and
subject to the last paragraph of Section 3.7, no cash payment or adjustment
shall be made upon any conversion on account of any interest accrued from the
Interest Payment Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered for conversion, or
on account of any dividends on the Common Stock issued upon conversion. The
Company's delivery to the Holder of the number of shares of Common Stock (and
cash in lieu of fractions thereof, as provided in this Indenture) into which
a Security is convertible will be deemed to satisfy the Company's obligation
to pay the principal amount of the Security.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holder, 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 12.3.
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 an aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. A Security may
be converted in part, but only if the principal amount of such Security to be
converted is any integral multiple of U.S. $1,000 and the principal amount of
such security to remain
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Outstanding after such conversion is equal to U.S. $1,000 or any integral
multiple of $1,000 in excess thereof.
SECTION 12.3 FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion of
any Security or 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 that would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall calculate and pay a cash
adjustment in respect of such fraction (calculated to the nearest 1/100th of a
share) in an amount equal to the same fraction of the Closing Price Per Share at
the close of business on the day of conversion.
SECTION 12.4 ADJUSTMENT OF CONVERSION RATE.
The Conversion Rate shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on shares of any class of capital stock payable in shares of
Common Stock, the Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of shareholders entitled
to receive such dividend or other distribution shall be increased by dividing
such Conversion Rate by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such increase to become effective immediately after the
opening of business on the day following the date fixed for such
determination. If, after any such date fixed for determination, any dividend
or distribution is not in fact paid, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors determines not to
pay such dividend or distribution, to the Conversion Rate that would have
been in effect if such determination date had not been fixed. 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 will 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 issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share (determined as provided in paragraph (8) of this Section
12.4) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or warrants (other than
any rights, options or warrants that by their terms will also be issued to
any Holder upon conversion of a Security into shares of Common Stock without
any action required by the Company or any other Person), the Conversion Rate
in effect at
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the opening of business on the day following the date fixed for such
determination shall be increased by dividing such Conversion Rate 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 that 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 increase
to become effective immediately after the opening of business on the day
following the date fixed for such determination. If, after any such date
fixed for determination, any such rights, options or warrants are not in fact
issued, or are not exercised prior to the expiration thereof, the Conversion
Rate shall be immediately readjusted, effective as of the date such rights,
options or warrants expire, or the date the Board of Directors determines not
to issue such rights, options or warrants, to the Conversion Rate that would
have been in effect if the unexercised rights, options or warrants had never
been granted or such determination date had not been fixed, as the case may
be. 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 will not issue any rights, options or warrants in respect of shares
of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall be combined into
a smaller number of shares of Common Stock, the Conversion Rate in effect at
the opening of business on the day following the day upon which such
subdivision or combination becomes effective shall be proportionately
reduced, such increase or reduction, 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) 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 or other property (including cash or assets or
securities, but excluding (i) any rights, options or warrants referred to in
paragraph (2) of this Section, (ii) any dividend or distribution paid
exclusively in cash, (iii) any dividend or distribution referred to in paragraph
(1) of this Section and (iv) any consideration distributed in any merger or
consolidation to which Section 12.11 applies), the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by dividing the
Conversion Rate in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 12.4)
of the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be
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such current market price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. If after any such date fixed for determination,
any such distribution is not in fact made, the Conversion Rate shall be
immediately readjusted, effective as of the date of the Board of Directors
determines not to make such distribution, to the Conversion Rate that would
have been in effect if such determination date had not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (4) of this
Section or cash distributed upon a merger or consolidation to which Section
12.11 applies) in an aggregate amount that, combined together with (I) the
aggregate amount of any other all-cash distributions to all holders of its
Common Stock made exclusively in cash within the 365-day period preceding the
date of payment of such distribution and in respect of which no adjustment
pursuant to this paragraph (5) has been made and (II) the aggregate of any
cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution)
of consideration payable in respect of any tender offer by the Company or any
of its Subsidiaries for all or any portion of the Common Stock concluded
within the 365-day period preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to paragraph (6) of this
Section 12.4 has been made, but not in excess of the Tender Premium in such
tender offer (the "combined cash and tender amount"), exceeds 10% of the
product of the current market price per share (determined as provided in
paragraph (8) of this Section 12.4) of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such case,
immediately after the close of business on such date for determination, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of
which shall be equal to the current market price per share (determined as
provided in paragraph (8) of this Section) of the Common Stock on the date
fixed for such determination less an amount equal to the quotient of (x) the
excess of such combined cash and tender amount over 10% of such aggregate
current market price divided by (y) the number of shares of Common Stock
outstanding on such date for determination and (ii) the denominator of which
shall be equal to the current market price per share (determined as provided
in paragraph (8) of this Section 12.4) of the Common Stock on such date fixed
for determination.
(6) In case a tender offer made by the Company or any Subsidiary
for all or any portion of the Common Stock (i) is at a price per share in
excess of the average of the Closing Prices Per Share for the twenty trading
days immediately preceding the date of the commencement of such tender offer
and (ii) shall expire and such tender offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance
(up to any maximum specified in the terms of the tender offer) of Purchased
Shares (as defined below)) of an aggregate consideration having a fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined together with
(I) the aggregate of the cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution), as of the expiration of such tender offer, of
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consideration payable in respect of any other tender offer by the Company or
any Subsidiary for all or any portion of the Common Stock expiring within the
365-day period preceding the expiration of such tender offer and in respect
of which no adjustment pursuant to this paragraph (6) has been made and (II)
the aggregate amount of any cash distributions to all holders of the Common
Stock within 365-day period preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to paragraph (5) of this Section
has been made exceeds 10% of the product of the current market price per
share of the Common Stock (determined as provided in paragraph (8) of this
Section 12.4) as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be amended) times the
number of shares of Common Stock outstanding (including any tendered shares)
as of the Expiration Time (such excess amount, the "excess combined tender
and cash amount"), then, and in each such case immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i) the numerator
of which shall be equal to (A) the product of (I) the current market price
per share of the Common Stock (determined as provided in paragraph (8) of
this Section 12.4) on the date of the Expiration Time multiplied by (II) the
number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time less (B) the lesser of (x) the Tender Premium or (y)
the excess combined tender and cash amount, and (ii) the denominator of which
shall be equal to the product of (A) the current market price per share of
the Common Stock (determined as provided in paragraph (8) of this Section
12.4) as of the Expiration Time multiplied by (B) the number of shares of
Common Stock outstanding (including any tendered shares) as of the Expiration
Time. The shares validly tendered and not withdrawn as of the Expiration Time
(up to any maximum specified in the terms of the tender offer) shall be
referred to as the "Purchased Shares".
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or merger
to which Section 12.11 applies) shall be deemed to involve (a) a distribution
of such securities other than Common Stock to all holders of Common Stock
(and the effective date of such reclassification shall be deemed to be "the
date fixed for the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination" within the meaning
of paragraph (4) of this Section), and (b) a subdivision or combination, as
the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(3) of this Section 12.4).
(8) For the purpose of any computation under paragraphs (2), (4),
(5) or (6) of this Section 12.4, the current market price per share of Common
Stock on any date shall be calculated by the Company and be the average of
the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first date on which
the
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Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one percent
in such rate; 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. All calculations under this
Article shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term, in addition to
those required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section
12.4, as it considers to be advisable in order to avoid or diminish any
income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for income
tax purposes. The Company shall have the power to resolve any ambiguity or
correct any error in this paragraph (10) and its actions in so doing shall,
absent manifest error, be final and conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
(12) To the extent permitted by applicable law, the Company from
time to time may increase the Conversion Rate by any amount for any period of
time if the period is at least twenty (20) days, the increase is irrevocable
during such period, and the Board of Directors shall have made a
determination that such increase would be in the best interests of the
Company, which determination shall be conclusive; provided, however, that no
such increase shall be taken into account for purposes of determining whether
the Closing Price Per Share of the Common Stock equals or exceeds 105% of the
Conversion Price in connection with an event which would otherwise be a
Change of Control pursuant to Section 14.4. Whenever the Conversion Rate is
increased pursuant to the preceding sentence, the Company shall give notice
of the increase to the Holders in the manner provided in Section 1.6 at least
fifteen (15) days prior to the date the increased Conversion Rate takes
effect, and such notice shall state the increased Conversion Rate and the
period during which it will be in effect.
SECTION 12.5 NOTICE OF ADJUSTMENTS OF CONVERSION RATE.
Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in
accordance with Section 12.4 and shall prepare a certificate signed by the
Chief Financial Officer of the Company setting
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forth the adjusted Conversion Rate and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall promptly be
filed with the Trustee and with each Conversion Agent; and
(2) upon each such adjustment, a notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted Conversion Rate shall
be required, and as soon as practicable after it is required, such notice
shall be provided by the Company to all Holders in accordance with
Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours, and shall not be deemed to have knowledge of any adjustment in the
Conversion Rate unless and until a Responsible Officer of the Trustee shall have
received such a certificate. Until a Responsible Officer of the Trustee receives
such a certificate, the Trustee and each Conversion Agent may assume without
inquiry that the last Conversion Rate of which the Trustee has knowledge of
remains in effect.
SECTION 12.6 NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than exclusively in
cash or (ii) exclusively in cash in an amount that would require any
adjustment pursuant to Section 12.4; or
(2) the Company shall authorize the granting to all or
substantially all of the holders of its Common Stock of rights, options or
warrants to subscribe for or purchase any shares of capital stock of any
class or of any other rights; or
(3) of any reclassification of the Common Stock, or of any
consolidation, merger or share exchange to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
conveyance, sale, transfer or lease of all or substantially all of the assets
of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
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, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (1) or (2) above) prior to the
applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined
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or (y) the date on which such reclassification, consolidation, merger,
conveyance, transfer, sale, lease, 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, conveyance, transfer, sale, lease,
dissolution, liquidation or winding up. Neither the failure to give such
notice or the notice referred to in the following paragraph nor any defect
therein shall affect the legality or validity of the proceedings described in
clauses (1) through (4) of this Section 12.6. If at the time the Trustee
shall not be the conversion agent, a copy of such notice shall also forthwith
be filed by the Company with the Trustee.
The Company shall cause to be filed at the Corporate Trust Office and
each office or agency maintained for the purpose of conversion of Securities
pursuant to Section 10.2, and shall cause to be provided to all Holders in
accordance with Section 1.6, notice of any tender offer by the Company or any
Subsidiary for all or any portion of the Common Stock at or about the time that
such notice of tender offer is provided to the public generally.
SECTION 12.7 COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
SECTION 12.8 TAXES ON CONVERSIONS.
Except as provided in the next sentence, the Company will pay any and
all taxes and duties 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 or duty that 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 duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.
SECTION 12.9 COVENANT AS TO COMMON STOCK.
The Company agrees that all shares of Common Stock that may be
delivered upon conversion of Securities, upon such delivery, will have been duly
authorized and validly issued and will be fully paid and nonassessable and,
except as provided in Section 12.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 12.10 CANCELLATION OF CONVERTED SECURITIES.
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All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
SECTION 12.11 PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 12.1, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not (A) a Person with which the
Company consolidated or merged with or into or which merged into or with the
Company or to which such conveyance, sale, transfer or lease was made, as the
case may be (a "Constituent Person"), or (B) an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section 12.11 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-electing
Shares). Such supplemental indenture shall provide for adjustments that, 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 12.11 shall similarly apply
to successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in Section 1.6 promptly upon
such execution.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but may
accept as conclusive evidence of the
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correctness of any such provisions, and shall be protected in relying upon,
an Opinion of Counsel with respect thereto, which the Company shall cause to
be furnished to the Trustee upon request.
SECTION 12.12 RIGHTS ISSUED IN RESPECT OF COMMON STOCK.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"):
(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
shall not be deemed distributed for purposes of Section 12.4(2) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under Section
12.4(2), (1) in the case of any such rights or warrants that shall all have been
redeemed or repurchased without exercise by any holders thereof, the Conversion
Rate shall be readjusted upon such final redemption or repurchase to give effect
to such distribution or Trigger Event, as the case may be, as though it were a
cash distribution, equal to the per share redemption or repurchase price
received by a holder of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of any such rights or warrants all of which shall have expired without
exercise by any holder thereof, the Conversion Price shall be readjusted as if
such issuance had not occurred.
SECTION 12.13 RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.
The Trustee, subject to the provisions of Section 6.1, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, herein
or in any supplemental indenture provided to be employed, in making the same, or
whether a supplemental indenture need be entered into. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
Common Stock, or of any other securities or property or cash, which may at any
time be issued or delivered upon the conversion of any Security; and it or they
do not make any representation with respect thereto. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
responsible for any failure of the Company to make or calculate any cash payment
or to issue, transfer or deliver any shares of Common Stock or share
certificates or other securities or property or cash upon the surrender of any
Security for the purpose of conversion;
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and the Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not be responsible for any failure of the Company to comply with
any of the covenants of the Company contained in this Article.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1 SECURITIES SUBORDINATE TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article IV), the indebtedness represented by the Securities and the payment of
the principal of, or premium, if any, or interest on, each and all of the
Securities (including, but not limited to, the Redemption Price with respect to
the Securities to be called for redemption in accordance with Article XI or the
Repurchase Price with respect to Securities submitted for repurchase in
accordance with Article XIV), are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Debt.
SECTION 13.2 NO PAYMENT IN CERTAIN CIRCUMSTANCES, PAYMENT OVER OF
PROCEEDS UPON DISSOLUTION, ETC.
No payment shall be made with respect to the principal of, or
premium, if any, or interest on the Securities (including, but not limited
to, the Redemption Price with respect to the Securities to be called for
redemption in accordance with Article XI or the Repurchase Price with respect
to Securities submitted for repurchase in accordance with Article XIV),
except payments and distributions made by the Trustee as permitted by Section
13.9, if a default in the payment of principal, premium, if any, or interest
(including a default under any repurchase or redemption obligation) or other
amounts with respect to any Senior Debt occurs and is continuing (or, in the
case of Senior Debt for which there is a period of grace, in the event of
such a default that continues beyond the period of grace, if any, specified
in the instrument or lease evidencing such Senior Debt) unless and until such
default shall have been cured or waived or shall have ceased to exist.
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The Company may and shall resume payments on and distributions in
respect of the Securities upon the date upon which the default is cured or
waived or ceases to exist.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt in
cash before the Holders of the Securities are entitled to receive any payment on
account of principal of (or premium, if any) or interest (including any
Liquidated Damages) on the Securities or on account of the purchase, redemption
or other acquisition of Securities, and to that end the holders of Senior Debt
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up or
event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, securities or other property, before all Senior Debt is paid in
full, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
For purposes of this Article only, the words "cash, securities or other
property" shall not be deemed to include shares of capital stock of the Company
as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which
shares of stock or securities are subordinated in right of payment to all then
outstanding
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Senior Debt to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. 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
VII 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 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 VII.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company, in the case of the Trustee, or the Trustee,
in the case of such Holder.
SECTION 13.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF SECURITIES.
In the event of the acceleration of the Securities because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
holder of Securities in respect of the principal of, premium, if any, or
interest on the Securities (including, but not limited to, the Redemption Price
with respect to the Securities called for redemption in accordance with
Article XI or the Repurchase Price with respect to the Securities submitted
for repurchase in accordance with Article XIV), except payments and
distributions made by the Trustee as permitted by Section 13.9, until all
Senior Debt has been paid in full in cash or other payment satisfactory to
the holders of Senior Debt or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Securities is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Debt of the acceleration.
SECTION 13.4 PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 13.2, or during the
circumstances referred to in the first paragraph of Section 13.2, or under the
conditions described in Section 13.3, from making payments at any time of
principal of (and premium, if any) or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 13.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
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Subject to the payment in full of all Senior Debt, the Holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Debt pursuant to the provisions of this
Article to the rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of (and premium, if any) and interest on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt 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, and no payments over
pursuant to the provisions of this Article to the holders of Senior Debt by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.
SECTION 13.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article 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 Debt on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (i) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; or
(ii) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Debt; or (iii) 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 of
the holders of Senior Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 13.7 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by its acceptance thereof authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee its attorney-in-fact for any and all such purposes.
SECTION 13.8 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Debt 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
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 Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the
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Holders of the Securities, without incurring responsibility to the Holders of
the Securities and without impairing or releasing the subordination provided
in this Article or the obligations hereunder of the Holders of the Securities
to the holders of Senior Debt, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Debt, or otherwise amend or supplement
in any manner Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
collection of Senior Debt; and (iv) exercise or refrain from exercising any
rights against the Company and any other Person.
SECTION 13.9 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a Representative or a holder of Senior Debt
(including, without limitation, a holder of Designated Senior Debt) 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 13.9 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security, then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within one Business Day prior to such date.
Notwithstanding anything in this Article XIII to the contrary, nothing
shall prevent any payment by the Trustee to the Holders of monies deposited with
it pursuant to Section 4.1, and any such payment shall not be subject to the
provisions of Section 13.2 or 13.3.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a Representative or a holder of Senior Debt (including, without
limitation, a holder of Designated Senior Debt) to establish that such notice
has been given by a Representative or a holder of Senior Debt (including,
without limitation, a holder of Designated Senior Debt). 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 Debt to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt 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, and if such evidence
is
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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 13.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt 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.
SECTION 13.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if it shall
in good faith mistakenly pay over or distribute to Holders of Securities or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article or otherwise.
SECTION 13.1 RELIANCE BY HOLDERS OF SENIOR DEBT ON SUBORDINATION
PROVISIONS.
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holders of Senior Debt unless
such holders shall have agreed in writing thereto.
SECTION 13.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 13.14 ARTICLE APPLICABLE TO PAYING AGENTS.
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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 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 in addition to or in place of the Trustee; provided,
however, that Section 13.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 13.15 CERTAIN CONVERSIONS AND REPURCHASES DEEMED PAYMENT.
For the purposes of this Article only, (i) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article XII
or upon the repurchase of Securities in accordance with Article XIV shall not be
deemed to constitute a payment or distribution on account of the principal of or
premium or interest on Securities or on account of the purchase or other
acquisition of Securities, and (ii) the payment, issuance or delivery of cash
(except in satisfaction of fractional shares pursuant to Section 12.3 or
14.3(7)), property or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on account of the principal
of such Security. For the purposes of this Section, the term "junior securities"
means (a) shares of any stock of any class of the Company and securities into
which the Securities are convertible pursuant to Article XII and (b) securities
of the Company which are subordinated in right of payment to all Senior Debt
that may be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article 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
Debt 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 XII or to exchange such Security for Common Stock in
accordance with Article XIV if the Company elects to satisfy the obligations
under Article XIV by the delivery of Common Stock.
ARTICLE XIV
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1 RIGHT TO REQUIRE REPURCHASE.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 14.2, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S. $1,000 or any integral multiple
of U.S. $1,000 in excess thereof (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 U.S. $1,000 or integral
multiples of U.S. $1,000 in excess thereof), on the date (the "Repurchase Date")
that is 45 days after the date of the Company Notice (as defined in Section
14.3) at a purchase price equal to 100% of the principal amount of the
Securities to be repurchased plus interest accrued to the Repurchase Date
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(the "Repurchase Price"); provided, however, that installments of interest on
Securities whose Stated Maturity is on or prior to the Repurchase Date shall
be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Record Date according to their
terms and the provisions of Section 3.7. Such right to require the repurchase
of the Securities shall not continue after a discharge of the Company from
its obligations with respect to the Securities in accordance with Article IV,
unless a Change in Control shall have occurred prior to such discharge. At
the option of the Company, the Repurchase Price may be paid in cash or,
subject to the fulfillment by the Company of the conditions set forth Section
14.2, by delivery of shares of Common Stock having a fair market value equal
to the Repurchase Price. Whenever in this Indenture (including Sections 2.2,
3.1, 5.1(1) and 5.8) 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 Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Indenture shall not be construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is not made; provided,
however, that for the purposes of Article XIII such reference shall be deemed
to include reference to the Repurchase Price only to the extent the
Repurchase Price is payable in cash.
SECTION 14.2 CONDITIONS TO THE COMPANY'S ELECTION TO PAY THE REPURCHASE
PRICE IN COMMON STOCK.
The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 14.1 if and only if the following conditions
shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have a fair market value as of the Repurchase Date of
not less than the Repurchase Price. For purposes of Section 14.1 and this
Section 14.2, the fair market value of shares of Common Stock shall be
determined by the Company and shall be equal to 95% of the average of the
Closing Prices Per Share of the Common Stock for the five consecutive Trading
Days immediately preceding the second Trading Day prior to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event
any shares of Common Stock to be issued upon repurchase of Securities
hereunder (i) require registration under any federal securities law before
such shares may be freely transferable without being subject to any transfer
restrictions under the Securities Act upon repurchase and if such
registration is not completed or does not become effective prior to the
Repurchase Date, and/or (ii) require registration with or approval of any
governmental authority under any state law or any other federal law before
such shares may be validly issued or delivered upon repurchase and if such
registration is not completed or does not become effective or such approval
is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the Repurchase Date; and
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(4) All shares of Common Stock that may be issued upon repurchase
of Securities will be issued out of the Company's authorized but unissued
Common Stock and, will upon issue, be duly and validly issued and fully paid
and non-assessable and free of any preemptive or similar rights.
If all of the conditions set forth in this Section 14.2 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
SECTION 14.3 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(1) Unless the Company shall have theretofore called for redemption
all of the Outstanding Securities, on or before the 30th day after the
occurrence of a Change in Control, the Company or, at the request and expense
of the Company on or before the 15th day after such occurrence, the Trustee,
shall give to all Holders of Securities, in the manner provided in Section
1.6, notice (the "Company Notice") of the occurrence of the Change of Control
and of the repurchase right set forth herein arising as a result thereof and
the Company shall issue a Press Release including the information required to
be included in such Company Notice hereunder. The Company shall also deliver
a copy of such Company Notice to the Trustee.
Each Company Notice shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be exercised,
(iii) the Repurchase Price, and whether the Repurchase Price
shall be paid by the Company in cash or by delivery of shares of Common
Stock,
(iv) a description of the procedure that a Holder must follow
to exercise a repurchase right, and the place or places where such Securities
are to be surrendered for payment of the Repurchase Price and accrued
interest (including Liquidated Damages, if any), if any to the Repurchase
Date,
(v) that on the Repurchase Date the Repurchase Price, and
accrued interest if any to the Repurchase Date, will become due and payable
upon each such Security designated by the Holder to be repurchased, and that
interest thereon shall cease to accrue on and after said date,
(vi) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Securities to be repurchased
will terminate and the place or places where such Securities may be
surrendered for conversion, and
(vii) the place or places that the Security certificate with
the Election of Holder to Require Repurchase as specified in Section 2.2
shall be delivered, and if the Security is a Restricted Securities
Certificate the place or places that the Surrender Certificate required by
Section 14.3(9) shall be delivered.
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<PAGE>
No failure of the Company to give the foregoing notices 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.
If any of the foregoing provisions or other provisions of this Article
XIV are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice
(i) irrevocable written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to repurchased in part,
the serial number thereof, the portion of the principal amount thereof to be
repurchased and the name of the Person in which the portion thereof to remain
Outstanding after such repurchase is to be registered) and a statement that
an election to exercise the repurchase right is being made thereby, and, in
the event that the Repurchase Price shall be paid in shares of Common Stock,
the name or names (with addresses) in which the certificate or certificates
for shares of Common Stock shall be issued, and (ii) the Securities with
respect to which the repurchase right is being exercised. Such written notice
shall be irrevocable, except that the right of the Holder to convert the
Securities with respect to which the repurchase right is being exercised
shall continue until the close of business on the Business Day immediately
preceding the Repurchase Date.
(3) 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 Trustee the Repurchase Price in cash or shares of Common Stock, as
provided above, for payment to the Holder on the Repurchase Date or, if
shares of Common Stock are to be paid, as promptly after the Repurchase Date
as practicable, together with accrued and unpaid interest to the Repurchase
Date payable with respect to the Securities as to which the repurchase right
has been exercised; provided, however, that installments of interest that
mature on or prior to the Repurchase Date shall be payable in cash to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such at the close of business on the relevant Regular Record Date.
(4) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date
at the rate of [ ]% per annum, and each Security shall remain convertible
into Common Stock until the principal of such Security (or portion thereof,
as the case may be) shall have been paid or duly provided for.
(5) Any Security that 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 make available for delivery to the Holder of
such Security without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized
89
<PAGE>
denomination in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.
(6) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately prior to
the close of business on the Repurchase Date and the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such repurchase shall be deemed to have become
on the Repurchase Date the holder or holders of record of the shares
represented thereby; provided, however, that any surrender for repurchase on
a date when the stock transfer books of the Company shall be closed shall
constitute the Person or Persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding
day on which such stock transfer books are open. No payment or adjustment
shall be made for dividends or distributions on any Common Stock issued upon
repurchase of any Security declared prior to the Repurchase Date.
(7) No fractions of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same
Holder and the Repurchase Price shall be payable in shares of Common Stock,
the number of full shares that shall be issuable upon such repurchase shall
be computed on the basis of the aggregate principal amount of the Securities
so repurchased. Instead of any fractional share of Common Stock that would
otherwise be issuable on the repurchase of any Security or Securities, the
Company will deliver to the applicable Holder its check for the current
market value of such fractional share. The current market value of a fraction
of a share is determined by multiplying the current market price of a full
share by the fraction, and rounding the result to the nearest cent. For
purposes of this Section, the current market price of a share of Common Stock
is the Closing Price Per Share of the Common Stock on the Trading Day
immediately preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the Holder
of Securities being repurchased for such certificates or for any tax or duty
in respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be
required to pay any tax or duty that may be payable in respect of (i) income
of the Holder or (ii) any transfer involved in the issuance or delivery of
certificates for shares of Common Stock in a name other than that of the
Holder of the Securities being repurchased, and no such issuance or delivery
shall be made unless and until the Person requesting such issuance or
delivery has paid to the Company the amount of any such tax or duty or has
established, to the satisfaction of the Company, that such tax or duty has
been paid.
(9) If shares of Common Stock to be delivered upon repurchase of a
Security are to be registered in a name other than that of the beneficial
owner of such Security, then such Holder must deliver to the Trustee a
Surrender Certificate, dated the date of surrender of such Restricted
Security and signed by such beneficial owner, as to compliance with the
restrictions on transfer applicable to such Restricted Security. Neither the
Trustee nor any Registrar or Transfer Agent or other agents shall be required
to register in a name other than that of the beneficial owner shares of
Common
90
<PAGE>
Stock issued upon repurchase of any such Restricted Security not so
accompanied by a properly completed Surrender Certificate.
(10) All Securities delivered for repurchase shall be delivered to
the Trustee to be canceled at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.9.
SECTION 14.4 CERTAIN DEFINITIONS.
For purposes of this Article XIV,
(1) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;
(2) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of the Securities, of:
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the
total voting power of all shares of capital stock of the Company entitled to
vote generally in the elections of directors, (except that such threshold
shall be 79.9% or more of the total voting power if the acquiring Person is
Novartis AG or any Person affiliated therewith), other than any such
acquisition by the Company, any subsidiary of the Company or any employee
benefit plan of the Company; or
(ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the
Company, or any conveyance, sale, transfer or lease of all or substantially
all of the assets of the Company to another Person (other than (a) any such
transaction (x) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of capital stock of the
Company and (y) pursuant to which the holders of 50% or more of the total
voting power of all shares of the Company's capital stock entitled to vote
generally in the election of directors immediately prior to such transaction
have the entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote generally
in the election of directors of the continuing or surviving corporation
immediately after such transaction, provided, however, that such threshold
shall be more than 20.1% of the total voting power if the acquiring person is
Novartis AG or any Person affiliated therewith; and (b) any merger which is
effected solely to change the jurisdiction of incorporation of the Company
and results in a reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of common stock); provided,
however, that a Change in Control shall not be deemed to have occurred if (I)
the Closing Price Per Share of the Common Stock for any five Trading Days
within the period of 10 consecutive Trading Days ending immediately after the
later of the Change in Control or the public announcement of the Change in
Control (in the case of a Change in Control under clause (i) above) or the
period of 10 consecutive Trading Days ending immediately before the Change in
Control (in the case of a Change
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in Control under clause (ii) above) shall, in the case of each of such five
Trading Days, equal or exceed 105% of the Conversion Price of the Securities
in effect on each of such five Trading Days or (II) all of the consideration
(excluding cash payments for fractional shares and cash payments made
pursuant to dissenters' appraisal rights) in a merger or consolidation
otherwise constituting a Change of Control under clause (i) and/or clause
(ii) above consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market (or will be so traded or
quoted immediately following such merger or consolidation) and as a result of
such merger or consolidation the notes become convertible into such common
stock.
(3) the term "Conversion Price" shall equal U.S.$1,000 divided by
the Conversion Rate (rounded to the nearest cent); and
(4) for purposes of Section 14.4(2)(i), 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, as in effect on the date of the
original execution of this Indenture.
SECTION 14.5 CONSOLIDATION, MERGER, ETC.
In the case of any merger, consolidation, conveyance, sale, transfer or
lease of all or substantially all of the assets of the Company to which Section
12.11 applies, in which the Common Stock of the Company is changed or exchanged
as a result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of the
Company or common stock of another Person that are, or upon issuance will be,
traded on a United States national securities exchange or approved for trading
on an established automated over-the-counter trading market in the United States
and such shares constitute at the time such change or exchange becomes effective
in excess of 50% of the aggregate fair market value of such shares of stock and
other securities, property and assets (including cash) (as determined by the
Company, which determination shall be conclusive and binding), then the Person
formed by such consolidation or resulting from such merger or combination or
which acquires the properties or assets (including cash) of the Company, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Indenture relating to the right of Holders to cause the Company to repurchase
the Securities following a Change in Control, including without limitation the
applicable provisions of this Article XIV and the definitions of the Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply in the event of
a subsequent Change in Control to the common stock and the issuer thereof if
different from the Company and Common Stock of the Company (in lieu of the
Company and the Common Stock of the Company).
ARTICLE XV
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE
SECTION 15.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
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The Company will furnish or cause to be furnished to the Trustee:
(1) semi annually, not more than 15 days after the Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities as of such Regular Record
Date, and
(2) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request,
a list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
provided, however, that no such list need be furnished so long as the Trustee is
acting as Security Registrar.
SECTION 15.2 PRESERVATION OF INFORMATION.
(1) 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 15.1 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list, if any, furnished to it
as provided in Section 15.1 upon receipt of a new list so furnished.
(2) After this Indenture has been qualified under the Trust
Indenture Act, 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.
(3) 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 15.3 RESERVED.
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SECTION 15.4 REPORTS BY TRUSTEE.
(1) After this Indenture has been qualified under the Trust
Indenture Act, the Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant
to the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(2) After this Indenture has been qualified under the Trust
Indenture Act, 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.
SECTION 15.5 REPORTS BY COMPANY.
After this Indenture has been qualified under the Trust Indenture Act,
the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the 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.
ARTICLE XVI
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 16.1 INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security and no recourse under or upon any obligation, covenant
or agreement of the Company in this Indenture or in any supplemental indenture
or in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer, or director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
waived and released as a condition of, and as a consideration for, the execution
of this Indenture and the issue of the Securities.
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.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
CHIRON CORPORATION
By:__________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT 5.1
April 17, 2000
Chiron Corporation
4560 Horton Street
Emeryville, CA 94608
Ladies and Gentlemen:
The following opinion is provided in connection with the offer by Chiron
Corporation ("Chiron" or the "Company") to issue up to $243,800,000 aggregate
principal amount of 4.50% Convertible Subordinated Notes due May 15, 2007 (the
"Exchange Notes") in exchange for up to $243,800,000 aggregate principal amount
of the Company's 1.9% Convertible Subordinated Notes due November 17, 2000.
As used herein, the term "Registration Statement" means the Registration
Statement on Form S-4 relating to the Exchange Notes (File No. 333-34212), as
amended by Amendment No. 1 to Registration Statement filed on April 17, 2000;
the term "Indenture" means the Indenture between the Company and State Street
Bank and Trust company of California N.A., as Trustee (the "Trustee") which has
been filed as an exhibit to the Registration Statement; and the term "Shares"
means the shares of Common Stock of the Company which are issuable upon the
conversion of the Exchange Notes in accordance with the provisions of the
Indenture.
I am the Senior Vice President, General Counsel and Secretary of Chiron. In
rendering this opinion, I have examined the Registration Statement, including
the exhibits thereto, and, among other things, originals, or copies identified
to my satisfaction as true copies, of such certificates, corporate records and
other documents as I deemed necessary or advisable for purposes of the delivery
of this opinion. As to matters of fact material to this opinion, I have relied,
when the accuracy of such factual matters was not independently verified by me,
upon statements of officers of the Company. I have assumed the genuiness of all
signatures and the authenticity of all documents submitted to me as originals
and the conformity to original documents of all documents submitted to me as
copies. I have assumed the due execution and delivery, pursuant to due
authorization, of the Indenture by the Trustee.
Based on the foregoing, I am of the opinion that:
(i) The execution, delivery and performance of the Indenture by the Company
has been duly authorized by all necessary corporate action on the part of the
Company;
(ii) When the Exchange Notes have been duly executed and authenticated in
accordance with the Indenture and issued and sold as contemplated in the
Registration Statement, the Exchange Notes will constitute valid and legally
binding obliga-tions of the Company enforceable in accordance with their terms;
and
(iii) The Shares, when duly issued upon conversion of the Exchange Notes in
accordance with the Indenture, will be validly issued, fully paid and
nonassessable.
The opinions set forth above are qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other laws relating to or
affecting the rights of creditors generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, including without limitation, concepts of
materiality reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance
<PAGE>
or injunctive relief and limitation of rights of acceleration, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
I am a member of the State Bar of California. I do not express herein any
opinion as to matters governed by any law other than the law of the State of
California, the corporate law of the State of Delaware and the federal law of
the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and the use of my name wherever it
appears in the Registration Statement. In giving such consent, I do not believe
that I am an "expert" within the meaning of such term used in the Act or the
rules and regulations of the Securities and Exchange Commission issued
thereunder with respect to any part of the Registration Statement, including
this opinion as an exhibit or otherwise.
Very truly yours,
/s/ William G. Green
William G. Green
Senior Vice President, General Counsel and Secretary
<PAGE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
DESCRIPTION 1995 1996 1997 1998 1999
- ----------- --------- -------- -------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FIXED CHARGES
1 Interest expensed and capitalized.............. $ 30.21 $30.74 $33.26 $ 24.67 $ 23.89
2 Amortized premiums, discounts and capitalized
expenses related to debt...................... 6.76 7.03 7.30 7.60 7.90
3 An estimate of the interest factor in rental
expense....................................... 9.33 10.87 8.73 7.43 8.20
-------- ------ ------ ------- -------
Total Fixed Charges......................... $ 46.30 $48.64 $49.29 $ 39.70 $ 39.99
-------- ------ ------ ------- -------
EARNINGS
1 Pre-tax income from continuing operations
before income (loss) from equity investees.... $(469.86) $45.61 $26.73 $ 94.52 $155.42
2 Fixed charges.................................. 46.30 48.64 49.29 39.70 39.99
-------- ------ ------ ------- -------
Total Earnings.............................. $(423.56) $94.25 $76.02 $134.22 $195.41
-------- ------ ------ ------- -------
RATIO OF EARNINGS TO FIXED CHARGES.......... $(377.26) 1.94X 1.54X 3.38X 4.89X
======== ====== ====== ======= =======
</TABLE>
<PAGE>
EXHIBIT 23.1
The Board of Directors
Chiron Corporation:
We consent to incorporation by reference herein of our report dated January 31,
2000 relating to the consolidated balance sheets of Chiron Corporation and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, comprehensive income, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999,
and the related schedule, which report appears in the December 31, 1999 Annual
Report on Form 10-K of Chiron Corporation.
/s/ KPMG LLP
San Francisco, California
April 17, 2000
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens: I.E.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF--
- ------------------------- ---------------------------
<C> <S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, the first individual on
the account(1)
3. Custodian account of a minor (Uniform Gift to The minor(2)
Minors Act)
4. a. The usual revocable savings trust account The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under state law
5. Sole proprietorship The owner(3)
<CAPTION>
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: EMPLOYER IDENTIFICATION NUMBER OF--
- ------------------------- -----------------------------------
6. A valid trust, estate, or pension trust The legal entity(4)
<C> <S> <C> <C>
7. Corporate The corporation
8. Association, club, religious, charitable, The organization
educational organization or other tax-exempt
organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in The public entity
the name of a public entity (such as a state or
local government, school district, or prison)
that receives agricultural program payments
</TABLE>
- ------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the tax identification number of the personal representative
or trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER:
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Even if the payee does not provide a TIN in the manner required, you are NOT
REQUIRED to backup withhold on any payments you make if the payee is:
1. An organization exempt from tax under section 501(a), any IRA, or a
custodial account under section 403(b)(7) if the account satisfies the
requirements of section 401(f)(2).
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
4. A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
5. An international organization or any of its agencies or
instrumentalities.
Other payees that MAY BE EXEMPT from backup withholding include:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
9. A futures commission merchant registered with the Commodity Futures
Trading Commission.
10. A real estate investment trust.
11. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
12. A common trust fund operated by a bank under section 584(a).
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of
Corporate Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 or described in section 4947.
INTEREST AND DIVIDEND PAYMENTS. All listed payees are exempt except the payee in
item 9.
BROKER TRANSACTIONS. All payees listed in items 1 through 13 are exempt. A
person registered under the Investment Advisors Act of 1940 who regularly acts
as a broker is also exempt.
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payments that are not subject to information reporting also are not subject to
backup withholding.
DIVIDENDS AND PATRONAGE DIVIDENDS that generally are exempt from backup
withholding include:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) distributions made by an ESOP.
INTEREST PAYMENTS that generally are exempt from backup withholding include:
- Payments of interest on obligations issued by individuals. However, if you
pay $600 or more of interest IN THE COURSE OF YOUR TRADE OR BUSINESS to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a TIN or has provided an
incorrect TIN.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.
FILE THE FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE
"EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS
ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your correct taxpayer identification number to a requester, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBER--If the requester discloses or
uses taxpayer identification numbers in violation of Federal law, the requester
may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
