<PAGE>
As filed with the Securities and Exchange Commission on June 27, 1996
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________
THE SPECTRANETICS CORPORATION
(Exact name of registrant on Form S-3 as specified in its charter)
DELAWARE The Spectranetics Corporation 84-0997049
(State or Other 96 Talamine Court (I.R.S. Employer
Jurisdiction Colorado Springs, Colorado 80907 Identification
of Incorporation) (719) 633-8333 Number)
(Address, including ZIP code, and telephone number, including
area code, of registrant's principal executive offices)
_______________
James P. McCluskey
Vice President, Finance and
Principal Financial and Accounting Officer
The Spectranetics Corporation
96 Talamine Court
Colorado Springs, Colorado 80907
(719) 633-8333
(Name, address, including ZIP code, and telephone
number, including area code, of agent for service)
_______________
COPIES TO:
Christopher L. Kaufman
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111-2562
(415) 391-0600
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
_______________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
_______________
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Proposed Maximum Amount of
Title of Each Class of Aggregate Offering Registration
Securities to be Registered Price(1)(2) Fee
- -------------------------------------------------------------------------------
Debt Securities........................
Preferred Stock, $.001 par value.......
Common Stock, $.001 par value (3)......
Equity Warrants........................
Debt Warrants..........................
Total................................
$50,000,000 $17,242
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee, which
is calculated in accordance with Rule 457(o).
(2) Not specified as to each class of securities to be registered hereunder
pursuant to General Instruction II(D) to Form S-3 under the Securities Act
of 1933.
(3) Each share of Common Stock includes one common share purchase Right under
the Rights Agreement dated as of May 6, 1996 between the Registrant and
Norwest Bank Minnesota, N.A., as Rights Agent.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 27, 1996
THE SPECTRANETICS CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
EQUITY WARRANTS
DEBT WARRANTS
The Spectranetics Corporation (the "Company"), directly or through
agents, dealers, or underwriters designated from time to time, may offer,
issue and sell, together or separately, up to $50,000,000 in the aggregate of
(a) secured or unsecured debt securities (the "Debt Securities") of the
Company, in one or more series, which may be either senior debt securities
(the "Senior Debt Securities"), senior subordinated debt securities (the
"Senior Subordinated Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities"), (b) shares of preferred stock of the
Company, par value $.001 per share (the "Preferred Stock"), in one or more
series, (c) shares of common stock of the Company, par value $.001 per share
(the "Common Stock"), (d) warrants to purchase Common Stock or Preferred
Stock (the "Equity Warrants") or (e) warrants to purchase Debt Securities
(the "Debt Warrants" and together with the Equity Warrants, the "Warrants"),
or any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing, each on terms to be determined at
the time of sale. The Debt Securities may be issued as exchangeable and/or
convertible Debt Securities exchangeable for or convertible into shares of
Common Stock or Preferred Stock. The Preferred Stock may also be
exchangeable for and/or convertible into shares of Common Stock or another
series of Preferred Stock. The Debt Securities, the Preferred Stock, the
Common Stock and the Warrants are collectively referred to herein as the
"Securities." When a particular series of Securities is offered, a
supplement to this Prospectus (each a "Prospectus Supplement") will be
delivered with this Prospectus. The Prospectus Supplement will set forth the
terms of the offering and sale of the offered Securities.
THE PURCHASE OF THE SECURITIES INVOLVES CERTAIN MATERIAL RISKS.
SEE "RISK FACTORS" COMMENCING ON PAGE 4.
Except as described more fully herein or as set forth in the Prospectus
Supplement relating to any offered Debt Securities, the Indenture will not
provide holders of Debt Securities protection in the event of a
highly-leveraged transaction, reorganization, restructuring, merger or
similar transaction involving the Company which could adversely affect
holders of Debt Securities. See "Description of Debt Securities --
Consolidation, Merger and Sale of Assets."
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol SPNC. On June 24, 1996, the last reported sale price of the
Common Stock as reported by Nasdaq was $5.125 per share. The Company has not
yet determined whether any of the Debt Securities, Preferred Stock or
Warrants offered hereby will be listed on any exchange or over-the-counter
market. If the Company decides to seek listing of any such Securities, the
Prospectus Supplement relating thereto will disclose such exchange or market.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A FEDERAL OFFENSE.
____________________
The Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. The
Company reserves the sole right to accept, and together with its agents, from
time to time, to reject in whole or in part any proposed purchase of
Securities to be made directly or through agents. See "Plan of
Distribution." If any such agents or underwriters are involved in the sale
of any Securities, the names of such agents or underwriters and any
applicable fees, commissions or discounts will be set forth in the applicable
Prospectus Supplement.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
The date of this Prospectus is ___________________, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES ACT OF 1934. SEE "PLAN OF DISTRIBUTION."
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, part of which has been
omitted in accordance with the rules and regulations of the Commission. For
further information about the Company and the Securities offered hereby,
reference is made to the Registration Statement, including the exhibits filed
as a part thereof and otherwise incorporated therein. Statements made in
this Prospectus as to the contents of any document referred to herein are not
necessarily complete, and in each instance reference is made to such document
for a more complete description, and each such statement is qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files periodic reports, proxy statements and other
information with the Commission. The Registration Statement, including the
exhibits thereto, as well as such reports and other information filed by the
Company with the Commission, can be inspected, without charge, and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington D.C., 20549; 7 World Trade Center, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Reports and other information concerning
the Company can also be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this
Prospectus: (1) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, (2) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and (3) all other documents subsequently
filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and before the termination of the offering,
which shall be deemed to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon request, a copy
of any documents incorporated into this Prospectus by reference (other than
exhibits incorporated by reference into such document). Requests for
documents should be submitted to The Spectranetics Corporation, 96 Talamine
Court, Colorado Springs, Colorado 80907, Attention: Secretary (telephone
(719) 633-8333). The information relating to the Company contained in this
Prospectus does not purport to be comprehensive and should be read together
with the information contained in the documents incorporated or deemed to be
incorporated by reference herein.
THE COMPANY
The Spectranetics Corporation (the "Company") was formed as a Colorado
corporation in 1984 and reincorporated as a Delaware corporation in 1986. On
June 10, 1994, the Company completed a merger with Advanced Interventional
Systems, Inc. ("LAIS") in which LAIS became a wholly-owned subsidiary of the
Company. As a result of the merger with LAIS, the Company also acquired
Polymicro Technologies, Inc. ("Polymicro"), a subsidiary of LAIS located in
Phoenix, Arizona, which manufactures drawn silica glass products. Effective
as of December 29, 1995, LAIS was merged into the Company; Polymicro remains
a subsidiary.
The Company develops, manufactures and markets a proprietary excimer
laser and proprietary disposable fiber optic delivery systems for the
treatment of cardiovascular disorders. Atherosclerosis, the primary cause of
heart attacks, is the partial or total blockage of arteries due to
accumulated plaque on the walls of arteries. Cardiovascular disease is the
leading cause of death in the United States, accounting for approximately one
million, or one-half, of all deaths annually. According to the American Heart
Association, 1,500,000 new cases of heart attacks or angina (chest pain due
to heart disease) are reported each year.
The Company's first prototype laser system was placed at the Texas Heart
Institute in Houston in 1987. The first clinical case as an adjunct to
bypass surgery was performed in 1988. The first Investigational Device
Exemption (IDE) for percutaneous coronary laser angioplasty was received in
May 1989. In February 1991 the Company submitted a premarket approval
application ("PMA") to the United States Food & Drug Administration ("FDA")
for its CVX-300-Registered Trademark- excimer laser system and its 1.4 and
1.7 millimeter diameter catheters. FDA's panel conducted its public review
in November 1991, which resulted in a unanimous recommendation for approval
of use of the CVX-300-Registered Trademark- and the Company's 1.4 and 1.7
millimeter diameter catheters. In April 1992, the Company received a letter
from the FDA indicating the approvability of its PMA submission. On February
19, 1993, FDA completed its review of the Company's PMA and issued an
approval for the Company CVX-300-Registered Trademark- excimer laser system
and the 1.4 and 1.7 millimeter diameter catheters for six different
indications for use in the treatment of coronary artery disease. With this
approval the Company was able to expand its marketing in the United States
beyond its investigational sites.
On October 18, 1993, the Extreme-Registered Trademark- laser catheter
received FDA approval. This over-the-wire high performance catheter was the
Company's first high performance metal rim tip catheter. The Company
received FDA approval in October 31, 1994 to market its VitesseTM C-II line
of excimer laser angioplasty catheters. This line of catheters incorporates
a concentric, fast-exchange design for ease of access in tortuous coronary
anatomy. The Company also received ISO 9001 certification from the TUV
Product Service GmbH (European equivalent to the FDA) which allowed the
Company to market its products in the European Community within compliance of
the EN 29 001/ISO 9001 and EN 46 001. In May 1995, the Company received FDA
approval to market its VitesseTM C-II and Extreme-Registered Trademark-
excimer laser angioplasty catheters for use with Dymer-Registered Trademark-
200+ systems, an excimer laser system manufactured by LAIS prior to its
merger with the Company. The approval of this "cross-coupler" device was
designed to expand the therapeutic range of the Dymer-Registered Trademark-
200+ systems to include the usage of all six excimer laser coronary
indications. While LAIS ceased manufacturing the Dymer-Registered Trademark-
200+ systems after its merger with the Company in 1994, the Company continues
to manufacture excimer laser catheters
3
<PAGE>
for use with the Dymer-Registered Trademark- 200+ systems still in service.
On July 31, 1995, the Company received FDA approval to market the VitesseTM
E-II excimer laser coronary angioplasty catheter. This catheter was designed
to treat lesions with eccentric characteristics within the six-indications
group.
The Company's principal executive offices are located at 96 Talamine
Court, Colorado Springs, Colorado 80907, and its telephone number is (719)
633-8333.
RISK FACTORS
The stockholders of the Company currently are, and will continue to be,
subject to the following risks.
CONTINUING LOSSES
The Company has incurred net losses since inception in June 1984, and
anticipates that net losses will continue in the foreseeable future. At
March 31, 1996, the Company had cumulative losses since inception of
approximately $64.3 million. There can be no assurance that the Company will
be able to achieve increased sales or profitability.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
Results of operations for the Company have varied and may continue to
fluctuate significantly from quarter to quarter and will depend upon numerous
factors, including timing of regulatory approvals, market acceptance of
products and new product introductions, implementation of health care
reforms, changes in product mix between laser units and catheters, ability to
manufacture products effectively and competition from other technologies.
LACK OF LIQUIDITY
The operating activities of the Company continue to consume net cash.
As of March 31, 1996, the Company had cash, cash equivalents and short term
investments of $6.5 million. Cash requirements (the net reduction in cash,
cash equivalents and short-term investments) for the Company for 1995 equaled
$1.1 million and $0.5 million in the first three months of 1996. Management
of the Company believes that elimination of duplicative expenses in
consolidation of the business and other cost reduction programs previously
implemented will provide the Company with sufficient cash liquidity through
1996. In order for cash flow from operating activities to be sufficient to
sustain the Combined Company's operations beyond 1996, the Company must
achieve increases in sales and reductions in expenses. There can be no
assurance that such increases in sales or reductions in expenses will occur
or that they will be sufficient to maintain adequate cash to continue
operations beyond 1996.
NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO OBTAIN ADDITIONAL FINANCING
The Company may require additional financing in the future. Such
financing, if required, may not be available on satisfactory terms, or at
all, if the Company is unable to obtain sufficient funding from other sources
on terms and prices acceptable to the Company, the Company's ability to make
capital expenditures, compete effectively and withstand the effects of
adverse market and economic conditions may be significantly impaired. If the
Company is able to obtain debt financing, there can be no assurance that the
Company will have sufficient cash flow from operating activities to meet its
debt service requirements. Therefore, the Company may be required to meet
its debt service requirements from other sources, such as the sale of
additional equity and debt securities and the sale of selected assets. To
the extent the Company finances its future operations through the issuance of
equity securities, existing stockholders may suffer dilution in net tangible
book value per share.
4
<PAGE>
LIMITED OPERATING HISTORY; LIMITED MANUFACTURING EXPERIENCE
The Company has a limited history of operations. The Company received
PMA from the FDA for its CVX-300-Registered Trademark- laser in 1993 and for
LAIS' Dymer-Registered Trademark- 200+ system in 1992. Accordingly the
Company does not have substantial experience in manufacturing, marketing or
selling its products in commercial quantities. The Company does not have
substantial experience manufacturing its products in the volumes that will be
necessary for them to achieve profitability. The Company may encounter
difficulties in scaling up production of laser units and catheters and hiring
and training additional qualified manufacturing personnel. The occurrence of
difficulties as the Company increases production volumes could lead to
quarterly fluctuations in operating results and have a material adverse
effect on its business, financial condition and results of operations.
UNCERTAIN MARKET ACCEPTANCE
Excimer laser angioplasty technology is a relatively new procedure which
competes with more established therapies, including balloon angioplasty and
bypass surgery, and other evolving technologies, such as atherectomy and
non-excimer laser technologies. The cost of the CVX-300-Registered
Trademark- laser system is significantly greater than the cost of therapeutic
capital equipment required with balloon angioplasty catheters. In addition,
because excimer laser procedures are often followed by balloon angioplasty,
the cost of the excimer laser angioplasty can be significantly greater than
balloon angioplasty alone. Market acceptance of the laser angioplasty system
also will depend, in part, on the Company's ability to establish within the
medical community the clinical efficacy of excimer laser angioplasty.
As a result of such factors, there can be no assurance that the
marketplace will be receptive to the Company's laser angioplasty systems or
that excimer laser angioplasty will be accepted over competing therapies.
Failure of its products to achieve market acceptance would have a material
adverse effect on the Company's businesses, financial condition and results
of operations.
UNCERTAINTY OF IMPACT OF HEALTH CARE REFORM
The federal government and certain states are investigating proposals to
overhaul the United States health care system. Some proposals include
provisions of universal access to health care, reforming the payment
methodology for health care goods and services by both the public (Medicare
and Medicaid) and private sectors, and methods to control or reduce public
and private spending on health care. In addition, other legislative and
industry groups are studying various health care issues. The ultimate timing
or effect such reforms may have on the Company cannot be predicted and no
assurance can be given that any such reforms will not have a material adverse
effect on the Company's revenues and earnings. Short-term cost containment
initiatives may vary substantially from long-term reforms and may impact the
Company differently.
LIMITATIONS ON THIRD-PARTY REIMBURSEMENT
The CVX-300-Registered Trademark- and Dymer-Registered Trademark- 200+
systems are generally purchased by hospitals, which then bill various
third-party payors, such as government programs and private insurance plans,
for the health care services provided to their parents. Unlike balloon
angioplasty and atherectomy, laser angioplasty requires the purchase of
expensive capital equipment. The FDA has required that the label for the
CVX-300-Registered Trademark- system indicate that adjunctive balloon
angioplasty was performed in the majority of the procedures submitted to the
FDA in the Company's application for PMA. This will require the purchase of
both a laser catheter and a balloon catheter. Payors may deny reimbursement
for procedures they believe to be duplicative. Payors may also deny
reimbursement if they determine that a device used in a procedure was
experimental, was used for a non-approved indication or was not used in
accordance with established payor protocols regarding cost effective
treatment methods. There can be no assurance that laser angioplasty using
the CVX-300-Registered Trademark- or the Dymer-Registered Trademark- 200+
systems will be considered cost effective by third-party payors, that
reimbursement will be available or, if available, that
5
<PAGE>
payors' reimbursement policies will not adversely affect the Company's
ability to sell its products on a profitable basis. There are increasing
pressures from many payor sources to control health care costs. In addition,
there are increasing pressures from public and private payors to limit
increases in reimbursement rates for medical devices. The market for the
Company's products and the levels of revenues and profitability could also be
adversely affected by changes in governmental and private third-party payors'
policies or by recent federal legislation that reduces reimbursements under
the capital cost pass-through system for the Medicare program.
COSTS AND UNCERTAINTY OF REGULATORY COMPLIANCE
The Company's products and manufacturing activities are subject to
vigorous regulation by the FDA and comparable state and foreign agencies.
The process of complying with these regulations can be costly and time
consuming. Failure to comply with applicable regulatory requirements can
result in, among other things, fines, suspensions of approvals, seizures or
recalls of products, operating restrictions and criminal prosecutions.
Furthermore, changes in existing regulations or adoption of new regulations
could prevent the Company from obtaining, or affect the timing of, future
regulatory approvals. There can be no assurance that the FDA will approve
the Company's current or future PMA supplements on a timely basis or at all.
The absence of such approvals could have a material adverse effect on the
Company's ability to generate future revenues.
INTENSE COMPETITION
Completion in the market for the treatment of cardiovascular disease is
intense and expected to increase. Currently, the Company competes with
manufacturers of balloon angioplasty devices, atherectomy devices, and other
laser angioplasty systems and pharmaceutical products. There can be no
assurance that the Company's current and future competitors will not develop
technologies and products that are more effective in treating cardiovascular
disease than the Company's current products or future products, and that the
Company's competitors, particularly large medical and pharmaceutical
companies, have substantially greater financial, manufacturing, marketing and
technical resources than the Company.
TECHNOLOGICAL CHANGE RESULTING IN PRODUCT OBSOLESCENCE
Market acceptance and sales of the Company's products also could be
adversely affected by technological changes. The health care industry is
characterized by rapid technological progress. New developments are expected
to continue at an accelerated pace in both industry and academia. Many
companies, some of which have substantially greater resources than the
Company, are engaged in research and development with respect to methods of
treatment and prevention of coronary artery disease. These include
pharmaceutical approaches as well as development of new or improved
angioplasty, atherectomy or other devices. The Company's products could be
rendered obsolete as a result of future innovations in the treatment of
coronary artery disease.
UNCERTAINTY RELATED TO PATENTS AND PROPRIETARY RIGHTS
The Company holds patents, has licenses to use patents and has patent
applications pending. There can be no assurance that any patents currently
applied for by the Company will be granted or that any patents held by the
Company will be valid or sufficiently broad to protect the Company's
technology or to provide them with any competitive advantage or will not be
challenged or circumvented by competitors. Termination of the licenses
granted to the Company would have a material adverse effect on their
business, financial condition and result of operations.
The Company is aware of other patents issued to and patent applications
filed by individuals, partnerships, companies, universities and research
institutions relating to laser and fiberoptic technologies, which, if valid
and enforceable, may be infringed by the Company. The Company has
6
<PAGE>
received notice from other parties regarding the existence of certain patents
involving the use of lasers in the body. Although the Company has not been
sued by these parties, there can be no assurance that the Company will not be
sued or that it would prevail in any such action. Should the Company
determine that it is necessary to obtain a license to such patents or
proprietary technology, there can be no assurance that any such license would
be available on favorable terms or at all, or that it would be able to
develop or otherwise obtain alternative technology.
It is the Company's policy to require its employees and consultants to
execute a confidentiality agreement upon the commencement of an employment or
consulting relationship with the Company. Each agreement provides that all
confidential information developed or made known to the individual during the
course of the relationship will be kept confidential and not disclosed to
third parties except in specified circumstances. In the case of employees,
the agreements provide that all inventions developed by the individual shall
be the exclusive property of the Company, other than inventions unrelated to
the Company's business and developed entirely on the employee's own time.
There can be no assurance that these agreements will provide meaningful
protection for the Company's trade secrets in the event of unauthorized use
or disclosure of such information.
Litigation concerning patents and proprietary rights could result in
substantial cost to and diversion of effort by the Company. Adverse findings
in any proceeding could subject the Company to significant liability to third
parties, require the Company to seek licenses from third parties and
adversely affect the ability of the Company to manufacture and sell its
products.
The Company also relies on trade secrets and unpatented know-how to
protect its proprietary technology, and the Company may be vulnerable to
competitors who attempt to copy its products or to gain access to its trade
secrets and know-how.
DEPENDENCE ON SUPPLIERS AND DISTRIBUTORS
The glass rods used by the Company in the fabrication of optical fibers
incorporated into catheters are currently available from a single source
which holds worldwide patent rights on this material. Any interruption in
the supply of such glass rods could have a material adverse effect on its
ability to manufacture catheters.
PRODUCT LIABILITY AND SUFFICIENCY OF INSURANCE COVERAGE
The manufacture and sale of the Company's products entail the risk of
product liability claims. A successful claim brought against the Company
could have a material adverse effect on the Company. The Company maintains
product liability insurance with coverage of $5.0 million per occurrence and
an annual aggregate maximum of $5.0 million. There can be no assurance that
the coverage limits of its insurance policies will be adequate or that such
insurance will be available in the future on acceptable terms, if at all.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon a limited number of key management and
technical personnel, and the future success of the Company will depend in
part upon its ability to attract and retain highly qualified personnel. The
Company will compete for such personnel with other companies, academic
institutions, government entities and other organizations. There can be no
assurance that the Company will be successful in hiring or retaining
qualified personnel. Loss of key personnel or inability to hire or retain
qualified personnel could have a material adverse effect on its business,
financial condition and results of operations.
7
<PAGE>
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS
Each of the following provisions may have anti-takeover effects and may
have a negative impact on the rights of the Company's stockholders and the
value of the Company's Common Stock:
PREFERRED STOCK ISSUANCE
Up to five million shares of the Company's preferred stock may be issued
in the future by the Company without further stockholder approval and upon
such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights of the
holders of the Company Common Stock will be subject to, and may be adversely
affect by, the rights of the holders of any preferred stock that may be
issued in the future. The issuance of preferred stock could have the effect
of making it more difficult for a third party to acquire, or of discouraging
a third party from acquiring, a majority of the outstanding voting stock of
the Company.
DELAWARE CORPORATION CODE SECTION 203
Section 203 of the Delaware General Corporation Law prohibits a publicly
held Delaware corporation from engaging in a business combination with an
interested stockholder for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless
certain conditions are met. Section 203 has a negative impact on the ability
of certain stockholders to effect business combinations with the Company.
INABILITY OF STOCKHOLDERS TO CALL SPECIAL MEETING
The Company's Certificate and Bylaws provide that special meetings of
stockholders may be called only by the Board of Directors or a committee of
the Board of Directors duly designated and authorized to call special
meetings in a resolution of the Board of Directors or as may otherwise be
specifically provided in the Company's Certificate. This provision may limit
the ability of the Company's stockholders to take actions not supported by
the Board of Directors.
AMENDMENT OR REPEAL OF BYLAWS
The Company's Bylaws may be adopted, amended or repealed by the Board of
Directors or by the affirmative vote of a majority of the outstanding shares
of the Company's Common Stock entitled to vote. The ability of the Board of
Directors to amend the Bylaws to increase the number of directors may make it
more difficult for the stockholders to change control of the Board of
Directors.
POTENTIAL VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. In addition, the market price of the shares of the
Company's Common Stock, similar to other health care companies, has been, and
is likely to continue to be, highly volatile. Factors such as fluctuations
in operating results, announcements of technological innovations or new
products by the Company or its competitors, governmental regulation,
developments with respect to patents or proprietary rights, public concern as
to the safety of products developed by the Company or others and general
market conditions may have a significant effect on the market price of the
Company's Common Stock.
LACK OF DIVIDENDS
The Company has not declared or paid any dividends with respect to the
Company's Common Stock. It is not anticipated that the Company will pay any
dividends in the foreseeable future. In addition, there may be restrictions
under state law on the ability of the Company to declare dividends.
8
<PAGE>
NEGATIVE IMPACT OF CERTAIN ROYALTY PAYMENTS
The Company is obligated under various licensing and royalty agreements
which require the Company to pay royalties based on a percentage of net sales
of certain products, subject to maximum amounts for certain agreements.
Under one agreement, the Company is required to pay a minimum royalty of
$20,500 per quarter in 1996, and quarterly amounts adjusted for changes in
the consumer price index thereafter through 2010. The agreements generally
expire at various dates concurrent with the expiration dates of the
respective patents. Royalty expense under these agreements amounted to
$481,000, $463,000 and $444,000 for the years ended December 31, 1995, 1994
and 1993, respectively.
USE OF PROCEEDS
The Company currently has no specific plans for the use of the net
proceeds from the sale of Securities offered hereby. However, the Company
currently anticipates that any such net proceeds would be used for general
corporate purposes, which may include but are not limited to working capital,
capital expenditures, repayment of indebtedness and acquisitions. When a
particular series of Securities is offered, the Prospectus Supplement
relating thereto will set forth the Company's intended use for the net
proceeds received from the sale of such Securities. Pending the application
of the net proceeds, the Company expects to invest such proceeds in
short-term, interest-bearing instruments or other investment-grade securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the unaudited consolidated ratios of
earnings to fixed charges and earnings to fixed charges and preferred stock
dividends for the Company for the periods indicated.
Quarter
Ended
March 31, Fiscal Year Ended December 31,
----------------------------------------------------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
Ratio of earnings to
fixed charges (1) - - - - - -
Ratio of earnings to
fixed charges and
preferred stock
dividend (1) - - - - - -
Dollar amount of
coverage deficiency $12,000 $65,000 $95,000 $157,000 $51,000 $42,000
_______________
(1) For all periods represented, the Company's earnings were negative.
For the purpose of calculating the ratio of earnings to fixed charges
and the ratio of earnings to fixed charges and preferred stock dividends,
earnings consist of income before income taxes and fixed charges (exclusive
of preferred stock dividends). For the purpose of calculating both ratios,
fixed charges include interest expense, capitalized interest and that portion
of rentals representative of an interest factor. The Company did not
distribute any preferred stock dividends during fiscal years 1991 to 1995 or
the three months ended March 31, 1996.
9
<PAGE>
GENERAL DESCRIPTION OF SECURITIES
The Company directly or through agents, dealers, or underwriters
designated from time to time, may offer, issue and sell, together or
separately, up to $50,000,000 in the aggregate of (a) secured or unsecured
debt securities (the "Debt Securities") of the Company, in one or more
series, which may be either senior debt securities (the "Senior Debt
Securities"), senior subordinated debt securities (the "Senior Subordinated
Debt Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (b) shares of preferred stock of the Company, par value $.001
per share (the "Preferred Stock"), in one or more series, (c) shares of
common stock of the Company, par value $.001 per share (the "Common Stock"),
(d) warrants to purchase Common Stock or Preferred Stock (the "Equity
Warrants") or (e) warrants to purchase Debt Securities (the "Debt Warrants"
and together with the Equity Warrants, the "Warrants"), or any combination of
the foregoing, either individually or as units consisting of one or more of
the foregoing, each on terms to be determined at the time of sale. The Debt
Securities may be issued as exchangeable and/or convertible Debt Securities
exchangeable for or convertible into shares of Common Stock or Preferred
Stock. The Preferred Stock may also be exchangeable for and/or convertible
into shares of Common Stock or another series of Preferred Stock. The Debt
Securities, the Preferred Stock, the Common Stock and the Warrants are
collectively referred to herein as the "Securities." When a particular
series of Securities is offered, a supplement to this Prospectus (each a
"Prospectus Supplement") will be delivered with this Prospectus. The
Prospectus Supplement will set forth the terms of the offering and sale of
the offered Securities.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general
provisions do not apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities.
Debt Securities may be issued from time to time in series under an
indenture, and one or more indentures supplemental thereto (collectively, the
"Indenture"), between the Company and a trustee to be identified in the
applicable Prospectus Supplement (the "Trustee"). The terms of the Debt
Securities will include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") as
in effect on the date of the Indenture. The Debt Securities will be subject
to all such terms, and potential investors of the Debt Securities are
referred to the Indenture and the TIA for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. As used under
this caption, unless the context otherwise requires, "Offered Debt
Securities" shall mean the Debt Securities offered by this Prospectus and the
accompanying Prospectus Supplement.
GENERAL
The Indenture will provide for the issuance of Debt Securities in series
and will not limit the principal amount of Debt Securities which may be
issued thereunder. In addition, except as may be provided in the Prospectus
Supplement relating to such Debt Securities, the Indenture will not limit the
amount of additional indebtedness the Company may incur.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Offered Debt Securities in
respect of which this Prospectus is being delivered: (1) the title of the
Offered Debt Securities; (2) whether the Offered Debt Securities are Senior
Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities or any
10
<PAGE>
combination thereof; (3) any limit upon the aggregate principal amount of the
Offered Debt Securities; (4) the date or dates on which the principal of the
Offered Debt Securities is payable; (5) the rate or rates at which the
Offered Debt Securities will bear interest, if any, or the manner in which
such rate or rates are determined; (6) the date or dates from which any such
interest will accrue, the interest payment dates on which any such interest
on the Offered Debt Securities will be payable and the record dates for the
determination of holders to whom interest is payable; (7) the place or places
where the principal of and any interest on the Offered Debt Securities will
be payable; (8) the obligation of the Company, if any, to redeem, purchase or
repay the Offered Debt Securities in whole or in part pursuant to any sinking
fund or analogous provisions or at the option of the holders and the price or
prices at which and the period and periods within which and the terms and
conditions upon which the Offered Debt Securities shall be redeemed,
purchased or repaid pursuant to such obligation; (9) the denominations in
which any Offered Debt Securities will be issuable, if other than
denominations of U.S. $1,000 and any integral multiple thereof; (10) if other
than the principal amount thereof, the portion of the principal amount of the
Offered Debt Securities of the series which will be payable upon declaration
of the acceleration of the maturity thereof; (11) any addition to or change
in the covenants which apply to the Offered Debt Securities; (12) any Events
of Default with respect to the Offered Debt Securities, if not otherwise set
forth under "Events of Default"; (13) whether the Offered Debt Securities
will be issued in whole or in part in global form; the terms and conditions,
if any, upon which such global Offered Debt Securities may be exchanged in
whole or in part for other individual securities, and the depositary for the
Offered Debt Securities; (14) the terms and conditions, if any, upon which
the Offered Debt Securities shall be exchanged for or converted into other
securities or property; (15) the nature and terms of the security for any
secured Offered Debt Securities; and (16) any other terms of the Offered Debt
Securities which terms shall not be inconsistent with the provisions of the
Indenture.
Debt Securities may be issued at a discount from their principal amount
("Original Issue Discount Securities"). Federal income tax considerations
and other special considerations applicable to any such Original Issue
Discount Securities will be described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable
to bearer securities will be described in the applicable Prospectus
Supplement.
Unless otherwise indicated in this Prospectus or a Prospectus
Supplement, the Debt Securities will not have the benefit of any covenants
that limit or restrict the Company's business or operations, the pledging of
the Company's assets or the incurrence of indebtedness by the Company.
STATUS OF DEBT SECURITIES
The Senior Debt Securities will be unsubordinated obligations of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
The obligations of the Company pursuant to Senior Subordinated Debt
Securities will be subordinate in right of payment, to the extent and in the
manner set forth in the Indenture, to all Senior Indebtedness of the Company.
Except to the extent set forth in the Prospectus Supplement, "Senior
Indebtedness" of the Company is defined to mean the principal of, and
premium, if any, and any interest (including interest accruing subsequent to
the commencement of any proceeding for the bankruptcy or reorganization of
the Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on (a) all indebtedness of the Company whether
heretofore or hereafter incurred (i) for borrowed money or (ii) in connection
with the acquisition by the Company or a subsidiary of assets other than in
the ordinary course of business, for the payment of which the Company is
liable directly or indirectly by guarantee, letter of credit, obligation to
purchase or acquire or otherwise, or the payment of which is secured by a
lien, charge or encumbrance on assets acquired by the Company, (b)
amendments, modifications, renewals, extensions and deferrals of any such
11
<PAGE>
indebtedness, and (c) any indebtedness issued in exchange for any such
indebtedness (clauses (a) through (c) hereof being collectively referred to
herein as "Debt"); provided, however, that the following will not constitute
Senior Indebtedness with respect to Senior Subordinated Debt Securities: (1)
any Debt as to which, in the instrument evidencing such Debt or pursuant to
which such Debt was issued, it is expressly provided that such Debt is
subordinate in right of payment to all Debt of the Company not expressly
subordinated to such Debt; (2) any Debt which by its terms refers explicitly
to the Senior Subordinated Debt Securities and states that such Debt shall
not be senior in right of payment; and (3) any Debt of the Company in respect
of the Senior Subordinated Debt Securities or any Subordinated Debt
Securities. The Company will not issue Debt which is subordinated in right
of payment to any other Debt of the Company and which is not expressly made
pari passu with, or subordinate and junior in right of payment to, the Senior
Subordinated Debt Securities.
The obligations of the Company pursuant to Subordinated Debt Securities
will be subordinate in right of payment to all Senior Indebtedness of the
Company and to any Senior Subordinated Debt Securities; provided, however,
that the following will not constitute Senior Indebtedness with respect to
Subordinated Debt Securities: (1) any Debt as to which, in the instrument
evidencing such Debt or pursuant to which such Debt was issued, it is
expressly provided that such Debt is subordinate in right of payment to all
Debt of the Company not expressly subordinated to such Debt; and (2) any Debt
of the Company in respect of Subordinated Debt Securities and any Debt which
by its terms refers explicitly to the Subordinated Debt Securities and states
that such Debt shall not be senior in right of payment.
No payment pursuant to the Senior Subordinated Debt Securities or the
Subordinated Debt Securities, as the case may be, may be made unless all
amounts of principal, premium, if any, and interest then due on all
applicable Senior Indebtedness of the Company shall have been paid in full or
if there shall have occurred and be continuing beyond any applicable grace
period a default in any payment with respect to any such Senior Indebtedness,
or if there shall have occurred any event of default with respect to any such
Senior Indebtedness permitting the holders thereof to accelerate the maturity
thereof, or if any judicial proceeding shall be pending with respect to any
such default. However, the Company may make payments pursuant to the Senior
Subordinated Debt Securities or the Subordinated Debt Securities, as the case
may be, if a default in payment or an event of default with respect to the
Senior Indebtedness permitting the holder thereof to accelerate the maturity
thereof has occurred and is continuing and judicial proceedings with respect
thereto have not been commenced within a certain number of days of such
default in payment or event of default. Upon any distribution of the assets
of the Company upon dissolution, winding-up, liquidation or reorganization,
the holders of Senior Indebtedness of the Company will be entitled to receive
payment in full of principal, premium, if any, and interest (including
interest accruing subsequent to the commencement of any proceeding for the
bankruptcy or reorganization of the Company under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect) before any payment is
made on the Senior Subordinated Debt Securities or Subordinated Debt
Securities, as applicable. By reason of such subordination, in the event of
insolvency of the Company, holders of Senior Indebtedness of the Company may
receive more, ratably, and holders of the Senior Subordinated Debt Securities
or Subordinated Debt Securities, as applicable, having a claim pursuant to
the Senior Subordinated Debt Securities or Subordinated Debt Securities, as
applicable, may receive less, ratably, than the other creditors of the
Company. Such subordination will not prevent the occurrence of any event of
default (an "Event of Default") in respect of the Senior Subordinated Debt
Securities or the Subordinated Debt Securities.
If the Company offers Debt Securities, the applicable Prospectus
Supplement will set forth the aggregate amount of outstanding indebtedness,
if any, as of the most recent practicable date that by the terms of such Debt
Securities would be senior to such Debt Securities. The applicable
Prospectus Supplement will also set forth any limitation on the issuance by
the Company of any additional senior indebtedness.
12
<PAGE>
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock or Preferred Stock will be set
forth in the Prospectus Supplement relating thereto.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement,
payment of principal, premium, if any, and any interest on the Debt
Securities will be payable, and the exchange of and the transfer of Debt
Securities will be registerable, at the office of the Trustee or at any other
office or agency maintained by the Company for such purpose subject to the
limitations of the Indenture. Unless otherwise indicated in the applicable
Prospectus Supplement, the Debt Securities will be issued in denominations of
U.S. $1,000 or integral multiples thereof. No service charge will be made
for any registration of transfer or exchange of the Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities (the "Global Securities") that will be deposited with a
depositary ("Depositary") or its nominee identified in the applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of
the aggregate principal amount of outstanding Debt Securities of the series
to be represented by such Global Security or Securities. Each Global
Security will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such other matters
as may be provided for pursuant to the applicable Indenture.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be transferred to, or registered or
exchanged for Debt Securities registered in the name of, any person other
than the Depositary for such Global Security or any nominee of such
Depositary, and no such transfer may be registered, unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as
such as required by the applicable Indenture, (ii) the Company executes and
delivers to the Trustee an order that such Global Security shall be so
transferable, registrable and exchangeable, and such transfers shall be
registrable, or (iii) there shall exist such circumstances, if any, as may be
described in the applicable Prospectus Supplement. All Debt Securities
issued in exchange for a Global Security or any portion thereof will be
registered in such names as the Depositary may direct.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance
of such Global Security and the deposit of such Global Security with or on
behalf of the Depositary for such Global Security, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security
to the accounts of institutions that have accounts with such Depositary or
its nominee ("participants"). The accounts to be credited will be designated
by the underwriters or agents of such Debt Securities or by the Company, if
such Debt Securities are offered and sold directly by the
13
<PAGE>
Company. Ownership of beneficial interests in such Global Security will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in such
Global Security will be shown on, and the transfer of that ownership interest
will be effected only through, records maintained by the Depositary or its
nominee for such Global Security. Ownership of beneficial interests in such
Global Security by Persons that hold through participants will be shown on,
and the transfer of that ownership interest within such participant will be
effected only through, records maintained by such participant. The laws of
some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. The foregoing
limitations and such laws may impair the ability to transfer beneficial
interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, owners of beneficial interests in such Global Security will not
be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities of such series in certified form
and will not be considered the holders thereof for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depositary and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the Indenture. If the Company requests any action of holders or an owner of
a beneficial interest in such Global Security desires to give any notice or
take any action a holder is entitled to give or take under the Indenture, the
Depositary will authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through
such participants to give such notice or take such action or would otherwise
act upon the instructions of beneficial owners owning through them.
Notwithstanding any other provisions to the contrary in the Indenture,
the rights of the beneficial owners of the Debt Securities to receive payment
of the principal and premium, if any, of and interest on such Debt
Securities, on or after the respective due dates expressed in such Debt
Securities, or to institute suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of the beneficial owners.
Principal of and any interest on a Global Security will be payable in
the manner described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any holders of outstanding Debt
Securities, may not consolidate with or merge into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its property or assets to any person unless (a) the Company is the surviving
corporation or the entity or the person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia; (b) the entity or
person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Debt Securities and the
Indenture; and (c) immediately prior to and after the transaction no Default
or Event of Default exists.
14
<PAGE>
Except as may be described in a Prospectus Supplement applicable to a
particular series of Debt Securities, there are no covenants or other
provisions in the Indenture providing for a put or increased interest or
otherwise that would afford holders of Debt Securities additional protection
in the event of a recapitalization transaction, a change of control of the
Company or a highly leveraged transaction.
COVENANTS OF THE COMPANY
The applicable Prospectus Supplement will describe any material
covenants in respect of a series of Offered Debt Securities. Other than the
covenants of the Company included in the Indenture as described above or as
described in the applicable Prospectus Supplement, the Indenture will not
provide holders of Debt Securities protection in the event of a
highly-leveraged transaction, reorganization, restructuring, merger or
similar transaction involving the Company which could adversely affect
holders of Debt Securities.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will constitute Events of Default under the Indenture with respect
to Debt Securities of any series: (a) failure to pay principal of any Debt
Security of that series when due and payable at maturity, upon redemption or
otherwise; (b) failure to pay any interest on any Debt Security of that
series when due, and the Default continues for 30 days; (c) an Event of
Default, as defined in the Debt Securities of that series, occurs and is
continuing, or the Company fails to comply with any of its other agreements
in the Debt Securities of that series or in the Indenture with respect to
that series and the Default continues for the period and after the notice
provided therein (and described below); and (d) certain events of bankruptcy,
insolvency or reorganization. A Default under clause (c) above is not an
Event of Default with respect to a particular series of Securities until the
Trustee or the holders of at least 25% in principal amount of the then
outstanding Securities of that series notify the Company of the Default and
the Company does not cure the Default within 30 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
If an Event of Default with respect to outstanding Debt Securities of
any series (other than an Event or Default relating to certain events of
bankruptcy, insolvency or reorganization) shall occur and be continuing,
either the Trustee or the holders of at least 25% in principal amount of the
outstanding Debt Securities of that series by notice, as provided in the
Indenture, may declare the unpaid principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such lesser
amount as may be specified in the terms of that series) of, and any accrued
and unpaid interest on, all Debt Securities of that series to be due and
payable immediately. However, at any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
holders of a majority in principal amount of the outstanding Debt Securities
of that series may, under certain circumstances, rescind and annul such
acceleration. For information as to waiver of defaults, see "Modification
and Waiver" below.
The Indenture will provide that, subject to the duty of the Trustee
during an Event of Default to act with the required standard of care, the
Trustee will be under no obligation to exercise any of its rights or powers
under the applicable Indenture at the request or direction of any of the
holders, unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions, including those
requiring security or indemnification of the Trustee, the holders of a
majority in principal amount of the outstanding Debt Securities of any series
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, with respect to the Debt Securities of
that series.
15
<PAGE>
The Company will be required to furnish to the Trustee under the
Indenture annually a statement as to the performance by the Company of its
obligations under that Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
Subject to certain exceptions, the Company and the Trustee may amend the
Indenture or the Debt Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Debt Securities of each
series affected by the amendment with each series voting as a separate class.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series may also waive compliance in a particular instance
by the Company with any provision of the Indenture with respect to the Debt
Securities of that series; provided, however, that without the consent of
each holder of Debt Securities affected, an amendment or waiver may not (i)
reduce the percentage of the principal amount of Debt Securities whose
holders must consent to an amendment or waiver; (ii) reduce the rate or
change the time for payment of interest on any Debt Security; (iii) reduce
the principal of or change the fixed maturity of any Debt Security, or alter
the redemption provisions which respect thereto; (iv) make any Debt Security
payable in money other than that stated in the Debt Security; (v) make any
change in the provisions concerning waivers of Default or Events of Default
by holders or the rights of holders to recover the principal of or interest
on any Debt Security; or (vi) waive a default in the payment of the principal
of, or interest on, any Debt Security, except as otherwise provided in the
Indenture. The Company and the Trustee may amend the Indenture or the Debt
Securities without notice to or the consent of any holder of a Debt Security:
(i) to cure any ambiguity, defect or inconsistency; (ii) to comply with the
Indenture's provisions with respect to successor corporations; (iii) to
comply with any requirements of the Commission in connection with the
qualification of the Indenture under the TIA; (iv) to provide for Debt
Securities in addition to or in place of certificated Debt Securities; (v) to
add to, change or eliminate any of the provisions of the Indenture in respect
of one of more series of Debt Securities, provided, however, that any such
addition, change or elimination (A) shall neither (1) apply to any Debt
Security of any series created prior to the execution of such amendment and
entitled to the benefit of such provision, nor (2) modify the rights of a
holder of any such Debt Security with respect to such provision, or (B) shall
become effective only when there is no outstanding Debt Security of any
series created prior to such amendment and entitled to the benefit of such
provision; (vi) to make any change that does not adversely affect in any
material respect the interest on any holder; or (vii) to establish additional
series of Debt Securities as permitted by the Indenture.
Subject to certain exceptions, the holders of a majority in principal
amount of the then outstanding Debt Securities of any series, by notice to
the Trustee, may waive an existing Default or Event of Default and its
consequences except a Default or Event of Default in the payment of the
principal of or interest on any Debt Security with respect to the Debt
Securities of that series.
TERMINATION OF THE COMPANY'S OBLIGATIONS UNDER THE DEBT SECURITIES AND THE
INDENTURE
Except as otherwise described below, the Company may terminate its
obligations under the Debt Securities and the Indenture with respect to the
Debt Securities if:
(a) all previously authenticated and delivered (other than destroyed,
lost or stolen Debt Securities which have been replaced or Debt Securities
which are paid or Debt Securities for whose payment money or securities has
theretofore been held in trust and thereafter repaid to the Company) have
been delivered to the Trustee for cancellation and the Company has paid all
sums payable by it under the Indenture; or
(b) (1) the Debt Securities mature within one year; and
16
<PAGE>
(2) the Company irrevocably deposits in trust with the Trustee
during such one-year period, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust funds
solely for the benefit of the holders of Debt Securities for that purpose,
money or U.S. Government Obligations, or a combination thereof, with the U.S.
Government Obligations maturing as to principal and interest in such amounts
and at such times as are sufficient, without consideration of any
reinvestment of such interest, to pay principal of and interest on the Debt
Securities to maturity and to pay all other sums payable by it under the
Indenture; or
(c) (1) the Company irrevocably deposits in trust with the Trustee
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds solely for the benefit of the
holders of Debt Securities for that purpose, money or U.S. Government
Obligations, or a combination thereof, with the U.S. Government Obligations
maturing as to principal and interest in such amounts and at such times as
are sufficient, without consideration of any reinvestment of such interest,
to pay principal of and interest on the Debt Securities to maturity;
(2) The Company shall have delivered to the Trustee (A) a ruling
directed to the Trustee received from the Internal Revenue Service to the
effect that the holders of the Debt Securities will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this clause (c) and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised, or (B) an
opinion of counsel to the same effect as the ruling described in subclause
(A) above accompanied by a ruling to that effect published by the Internal
Revenue Service, unless there has been a change in the applicable federal
income tax law since the date of the Indenture such that a ruling from the
Internal Revenue Service is no longer required;
(3) The Company has paid or caused to be paid all sums then
payable by the Company under the Indenture; and
(4) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided for in this clause (c) relating to termination of
obligations of the Company have been complied with.
The Company's obligations under sections of the Indenture relating to
the registrar and the paying agent, their obligations, the maintenance of a
list of holders, transfers of Debt Securities, replacement of securities,
payment (together with payment obligations under the Debt Securities),
compensation and indemnity of the Trustee, replacement of the Trustee and
repayment to the Company of excess money held by the Trustee or the paying
Agent, shall survive until the Debt Securities are no longer outstanding. If
the ruling from the Internal Revenue Service or opinion of counsel referred
to in clause (c)(2) above is based on or assumes that the Company's payment
obligations under the Indenture or its payment obligations under the Debt
Securities will continue (or is silent with respect thereto), then such
discharge shall constitute only a "covenant defeasance" and, consequently,
the Company shall remain liable for the payment of the Debt Securities.
However, if and when a ruling from the Internal Revenue Service or opinion of
counsel referred to in clause (c)(2) above is able to be provided
specifically without regard to, and not in reliance upon, the continuance of
the Company's payment obligations under the Indenture and its payment
obligations under the Debt Securities, then the Company's payment obligations
under the Indenture and the Debt Securities shall cease upon delivery to the
Trustee of such ruling or opinion of counsel and compliance with the other
conditions precedent provided for in clause (c) above relating to the
satisfaction and discharge of the Indenture. In such a case (a "legal
defeasance") holders would be able to look only to the trust fund for payment
of principal or interest on the Debt Securities.
17
<PAGE>
REGARDING THE TRUSTEES
The Trustee with respect to the first series of Debt Securities, if any,
will be identified in the Prospectus Supplement relating to such Debt
Securities. Other Trustees may be designated for any subsequent series of
Debt Securities. The Indenture and provisions of the TIA incorporated by
reference therein, contain certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim, as security or otherwise. The Trustee and its affiliates engage
in, and will be permitted to continue to engage in, other transactions with
the Company and its affiliates; PROVIDED, HOWEVER, that if it acquires any
conflicting interest (as defined), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding
Debt Securities of any series will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Trustee. The TIA and the Indenture provide that in case an Event of
Default shall occur (and be continuing), the Trustee will be required, in the
exercise of its rights and powers, to use the degree of care and skill of a
prudent man in the conduct of his own affairs. Subject to such 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 the Debt
Securities issued thereunder, unless they have offered to the Trustee
indemnity satisfactory to it.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in
such Prospectus Supplement. The description of certain provisions of the
Preferred Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Company's Articles of Incorporation, as amended (the
"Articles of Incorporation"), and the certificate of designation (a
"Certificate of Designation") relating to each series of the Preferred Stock
which will be filed with the Commission and incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock. As of March 31,
1996, the Company had no shares of Preferred Stock outstanding.
GENERAL
The Company has the authority to issue up to 5,000,000 shares of
preferred stock, $.001 par value per share ("preferred stock of the Company,"
which term, as used herein, includes the Preferred Stock offered hereby).
Under the Articles of Incorporation, the Board of Directors of the Company is
authorized without further stockholder action to designate and provide for
the issuance of such shares of preferred stock of the Company, in one or more
series, with such voting powers, full or limited, and with such designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated in
the resolution or resolutions providing for the issue of a series of such
stock adopted, at any time or from time to time, by the Board of Directors of
the Company (as used herein the term "Board of Directors of the Company"
includes any duly authorized committee thereof).
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be
issued;
18
<PAGE>
(iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion or exchange rights; (vii) whether depositary shares representing
shares of such Preferred Stock will be offered and, if so, the fraction of a
share of such Preferred Stock represented by each depositary share; and
(viii) any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable
and will have no preemptive rights. The rights of the holders of each series
of the Preferred Stock will be subordinate to those of the Company's general
creditors.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of funds of the Company legally available therefor, cash dividends on
such dates and at such rates as are set forth in, or as are determined by the
method described in, the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
books of the Company on such record dates, fixed by the Board of Directors of
the Company, as specified in the Prospectus Supplement relating to such
series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the
Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any series of Preferred Stock for which dividends
are noncumulative, then the right to receive a dividend in respect of the
dividend period ending on such dividend payment date will be lost, and the
Company will have no obligation to pay any dividend for such period, whether
or not dividends on such series are declared payable on any future dividend
payment dates. Dividends on the shares of each series of Preferred Stock for
which dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
Unless otherwise specified in the applicable Prospectus Supplement, so
long as the shares of any series of the Preferred Stock are outstanding,
unless (i) full dividends (including if such Preferred Stock is cumulative,
dividends for prior dividend periods) have been paid or declared and set
apart for payment on all outstanding shares of the Preferred Stock of such
series and all other classes and series of preferred stock of the Company
(other than Junior Stock, as defined below) and (ii) the Company is not in
default or in arrears with respect to the mandatory or optional redemption or
mandatory repurchase or other mandatory retirement of, or with respect to any
sinking or other analogous funds for, any shares of Preferred Stock of such
series or any shares of any other preferred stock of the Company of any class
or series (other than Junior Stock), the Company may not declare any
dividends on any shares of Common Stock of the Company or any other stock of
the Company ranking as to dividends or distributions of assets junior to such
series of Preferred Stock (the Common Stock and any such other stock being
herein referred to as "Junior Stock"), or make any payment on account of, or
set apart money for, the purchase, redemption or other retirement of, or for
a sinking or other analogous fund for, any shares of Junior Stock or make any
distribution in respect thereof, whether in cash or property or in
obligations of stock of the Company, other than in Junior Stock which is
neither convertible into, nor exchangeable or exercisable for, any securities
of the Company other than Junior Stock.
LIQUIDATION PREFERENCES
Unless otherwise specified in the applicable Prospectus Supplement, in
the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each series of the Preferred
Stock will be entitled to receive out of the assets of the Company
19
<PAGE>
available for distribution to stockholders, before any distribution of assets
is made to the holders of Common Stock or any other shares of stock of the
Company ranking junior as to such distribution to such series of the
Preferred Stock, the amount set forth in the Prospectus Supplement relating
to such series of the Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Preferred Stock of any series and any other shares of
preferred stock of the Company (including any other series of the Preferred
Stock) ranking as to any such distribution on a parity with such series of
the Preferred Stock are not paid in full, the holders of the Preferred Stock
of such series and of such other shares of preferred stock of the Company
will share ratably in any such distribution of assets of the Company in
proportion to the full respective preferential amounts to which they are
entitled. After payment to the holders of the Preferred Stock of each series
of the full preferential amounts of the liquidating distribution to which
they are entitled, unless otherwise provided in the applicable Prospectus
Supplement, the holders of each such series of the Preferred Stock will be
entitled to no further participation in any distribution of assets by the
Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time
to time in part, at the option of the Company, and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, in each case
upon terms, at the times and at the redemption prices set forth in the
Prospectus Supplement relating to such series. Shares of the Preferred Stock
redeemed by the Company will be restored to the status of authorized but
unissued shares of preferred stock of the Company.
In the event that fewer than all of the outstanding shares of a series
of the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be
determined by the Company or by any other method as may be determined by the
Company in its sole discretion to be equitable. From and after the
redemption date (unless default is made by the Company in providing for the
payment of the redemption price plus cumulated and unpaid dividends, if any)
dividends will cease to accumulate on the shares of the Preferred Stock
called for redemption and all rights of the holders thereof (except the right
to receive the redemption price plus accumulated and unpaid dividends, if
any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, so
long as any dividends on shares of any series of the Preferred Stock or any
other series of preferred stock of the Company ranking on a parity as to
dividends and distribution of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; PROVIDED, HOWEVER, that the foregoing will not prevent the purchase
or acquisition of share shares pursuant to a purchase or exchange offer made
on the same terms to holders of all such shares outstanding.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may
be exchanged for or converted into shares of Common Stock or another series
of Preferred Stock will be set forth in the Prospectus Supplement relating
thereto. Such terms may include provisions for conversion, either mandatory,
at the option of the holder, or at the option of the Company, in which case
the number of shares of Common Stock or the number of shares of another
series of Preferred Stock to be received by the holders of Preferred Stock
would be calculated as of a time and in the manner stated in the Prospectus
Supplement.
20
<PAGE>
VOTING RIGHTS
Except as indicated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, or except as required by applicable law, the
holders of the Preferred Stock will not be entitled to vote for any purpose.
DESCRIPTION OF COMMON STOCK
The Company has authority to issue up to 25,000,000 shares of Common
Stock, par value $.001 per share. As of May 3, 1996, there were 18,380,652
shares of Common Stock issued and outstanding. The holders of Common Stock
are entitled to one vote per share on all matters to be voted on by
shareholders, including the election of directors. Shareholders are not
entitled to cumulative voting rights, and, accordingly, the holders of a
majority of the shares voting for the election of directors can elect the
entire Board if they choose to do so and, in that event, the holders of the
remaining shares will not be able to elect any person to the Board of
Directors.
The holders of Common Stock are entitled to receive such dividends, if
any, as may be declared from time to time by the Board of Directors, in its
discretion, from funds legally available thereof and subject to prior
dividend rights of holders of any shares of preferred stock of the Company
which may be outstanding. Upon liquidation or dissolution of the Company
subject to prior liquidation rights of the holders of preferred stock of the
Company, the holders of Common Stock are entitled to receive on a pro rata
basis the remaining assets of the Company available for distribution.
Holders of Common Stock have no preemptive or other subscription rights, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such shares. Norwest Bank Minnesota, N.A., acts as transfer agent
and registrar for the Common Stock.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Debt Securities ("Debt
Warrants"), as well as Warrants to purchase Preferred Stock or Common Stock
("Equity Warrants") (together, the "Warrants"). Warrants may be issued
independently or together with any Securities and may be attached to or
separate from such Securities. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between the
Company and a bank or trust company, as warrant agent (the "Warrant Agent"),
all as shall be set forth in the Prospectus Supplement relating to Warrants
being offered pursuant thereto. As of May 3, 1996, the Company had no
Warrants outstanding.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt
Warrants and the debt warrant certificates representing such Debt Warrants
("Debt Warrant Certificates"), including the following: (1) the title of
such Debt Warrants; (2) the aggregate number of such Debt Warrants; (3) the
price or prices at which such Debt Warrants will be issued; (4) the
designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants, and the procedures and
conditions relating to the exercise of such Debt Warrants; (5) the
designation and terms of any related Debt Securities with which such Debt
Warrants are issued, and the number of such Debt Warrants issued with each
such Debt Security; (6) the date, if any, on and after which such Debt
Warrants and the related Debt Securities will be separately transferable; (7)
the principal amount of Debt Securities purchasable upon exercise of each
Debt Warrant; (8) the date on which the right to exercise such Debt Warrants
will commence, and the date on which such right will expire; (9) the maximum
or minimum number of such Debt Warrants which may be exercised at any time;
(10) a discussion of any material federal income
21
<PAGE>
tax considerations; and (11) any other terms of such Debt Warrants and terms,
procedures and limitations relating to the exercise of such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations, and Debt Warrants may be exercised
at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders
of the Debt Securities purchasable upon such exercise and will not be
entitled to payment of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
EQUITY WARRANTS
The applicable Prospectus Supplement will describe the following terms
of Equity Warrants offered thereby: (1) the title of such Equity Warrants;
(2) the Securities (i.e. Preferred Stock or Common Stock) for which such
Equity Warrants are exercisable; (3) the price or prices at which such Equity
Warrants will be issued; (4) if applicable, the designation and terms of the
Preferred Stock or Common Stock with which such Equity Warrants are issued,
and the number of such Equity Warrants issued with each such share of
Preferred Stock or Common Stock; (5) if applicable, the date on and after
which such Equity Warrants and the related Preferred Stock or Common Stock
will be separately transferable; (6) if applicable, a discussion of any
material federal income tax considerations; and (7) any other terms of such
Equity Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Equity Warrants.
Holders of Equity Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as stockholders of the Company.
The exercise price payable and the number of shares of Common Stock of
Preferred Stock purchasable upon the exercise of each Equity Warrant will be
subject to adjustment in certain events, including the issuance of a stock
dividend to holders of Common Stock or Preferred Stock or a stock split,
reverse stock split, combination, subdivision or reclassification of Common
Stock or Preferred Stock. In lieu of adjusting the number of shares of
Common Stock or Preferred Stock purchasable upon exercise of each Equity
Warrant, the Company may elect to adjust the number of Equity Warrants. No
adjustments in the number of shares purchasable upon exercise of the Equity
Warrants will be required until cumulative adjustments require an adjustment
of at least 1% thereof. The Company may, at its option, reduce the exercise
price at any time. No fractional shares will be issued upon exercise of
Equity Warrants, but the Company will pay the cash value of any fractional
shares otherwise issuable. Notwithstanding the foregoing, in case of any
consolidation, merger, or sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, the holder of each
outstanding Equity Warrant shall have the right to the kind and amount of
shares of stock and other securities and property (including cash) receivable
by a holder of the number of shares of Common Stock of Preferred Stock into
which such Equity Warrant was exercisable immediately prior thereto.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Warrants offered thereby. Warrants may be exercised at any
time up to the close of business on the expiration date set forth in the
Prospectus Supplement relating to the Warrants offered thereby. After the
close of business on the expiration date, unexercised Warrants will become
void.
22
<PAGE>
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward the
Securities purchasable upon such exercise. If less than all of the Warrants
represented by such warrant certificate are exercised, a new warrant
certificate will be issued for the remaining Warrants.
23
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for
public offering and sale in the United States or Canada by them or may sell
the Securities to investors directly or through agents. Any such underwriter
or agent involved in the offer and sale of Securities will be named in the
applicable Prospectus Supplement. The Company has reserved the right to sell
Securities directly to investors on its own behalf in those jurisdictions
where and in such manner as it is authorized to do so.
Underwriters may offer and sell Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices.
The Company also may, from time to time, authorize dealers, acting as the
Company's agents, to offer and sell Securities upon the terms and conditions
as are set forth in the applicable Prospectus Supplement. In connection with
the sale of Securities, underwriters may receive compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Securities for whom they may act
as agent. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and
agents participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act of 1933.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain
institutions to purchase the Securities from the Company at the public
offering price set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract
will be for an amount not less than the amounts stated in the applicable
Prospectus Supplement. Institutions with whom Contracts, when authorized, may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and
other institutions but will in all cases be subject to the approval of the
Company. Contracts will not be subject to any conditions except (i) the
purchase by the institution of the Securities covered by its Contract shall
not at the time of delivery be prohibited under the laws of any jurisdiction
in the United States to which such institution is subject, and (ii) if the
Securities are being sold to underwriters, the Company shall have sold to
such underwriters the total amount specified in the applicable Prospectus
Supplement. A commission indicated in the applicable Prospectus Supplement
will be paid to underwriters and agents soliciting purchases of Securities
pursuant to Contracts accepted by the Company.
The rules of the Commission generally prohibit underwriters and other
members of the selling group from making a market in the Company's Common
Stock during the "cooling off" period immediately preceding the commencement
of sales in the offering. The Commission has, however, adopted an exemption
from these rules that permits passive market making under certain conditions.
These rules permit an underwriter or other member of the selling group to
continue to make a market in the Company's Common Stock subject to the
conditions, among others, that its bid not exceed the highest bid by a market
maker not connected with the offering and that its net purchases on any one
trading day not exceed prescribed limits. Pursuant to these exemptions,
certain underwriters and other
24
<PAGE>
members of the selling group may engage in passive market making in the
Company's Common Stock during the cooling off period.
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will
be passed upon for the Company by Latham & Watkins, San Francisco,
California. Certain legal matters will be passed upon for any agents or
underwriters by counsel for such agents or underwriters identified in the
applicable Prospectus Supplement.
EXPERTS
The financial statements of The Spectranetics Corporation as of December
31, 1995 and 1994, and for each of the years in the three-year period ended
December 31, 1995 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
25
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN SO AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER TO SELL IS NOT AUTHORIZED, OR
IN WHICH THE PERSON IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
_______________________
TABLE OF CONTENTS
PAGE
Available Information............................................ 2
Information Incorporated by Reference............................ 2
The Company...................................................... 3
Risk Factors..................................................... 4
Use of Proceeds.................................................. 9
Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends..................... 9
General Description of Securities................................ 10
Description of Debt Securities................................... 10
Description of Preferred Stock................................... 18
Description of Common Stock...................................... 21
Description of Warrants.......................................... 21
Plan of Distribution............................................. 24
Legal Matters.................................................... 25
Experts.......................................................... 25
THE SPECTRANETICS
CORPORATION
$50,000,000
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
EQUITY WARRANTS
DEBT WARRANTS
____________________
PROSPECTUS
____________________
______________________, 1996
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Company in connection with the
distribution of the securities being registered are as set forth in the
following table:
Securities and Exchange Commission Fee....................... $17,242
Printing and Engraving Expenses.............................. *
Accounting Fees and Expenses................................. *
Legal Fees and Expenses...................................... *
Miscellaneous................................................ *
-------
Total.................................................... *
-------
-------
_____________
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that to the fullest
extent permitted by the Delaware General Corporation Law ("Delaware Law"), a
Director of the Company shall not be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a Director.
Under current Delaware Law, liability of a director may not be limited (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases and
(iv) for any transaction from which the director derives an improper personal
benefit. The effect of the provision of the Company's Certificate of
Incorporation is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care
as a director (including breaches resulting from negligent or grossly
negligent behavior) except in the situations described in clauses (i) through
(iv) above. This provision does not limit or eliminate the rights of the
Company or any stockholder to seek nonmonetary relief such as an injunction
or rescission in the event of a breach of a director's duty of care. In
addition, the Company's Certificate of Incorporation provides that the
Company shall indemnify its directors, officers, employees and agents against
losses incurred by any such person by reason of the fact that such person was
acting in such capacity.
In addition, the Company has entered into agreements (the
"Indemnification Agreements") with each of the directors of the Company
pursuant to which the Company has agreed to indemnify such director from
claims, liabilities, damages, expenses, losses, costs, penalties or amounts
paid in settlement incurred by such director and arising out of his capacity
as a director, employee and/or agent of the corporation of which he is a
director to the maximum extent provided by applicable law. In addition, such
director will be entitled to an advance of expenses to the maximum extent
authorized or permitted by law to meet the obligations indemnified against.
The Indemnification Agreements also obligate the Company to purchase and
maintain insurance for the benefit and on behalf of its directors insuring
against all liabilities that may be incurred by such director in or arising
out of his capacity as a director, employee and/or agent of the Company.
To the extent that the Board of Directors or the stockholders of the
Company may in the future wish to limit or repeal the ability of the Company
to indemnify directors, such repeal or limitation may not be effective as to
directors who are currently parties to the Indemnification Agreements,
because
II-1
<PAGE>
their rights to full protection are contractually assured by the
Indemnification Agreements. It is anticipated that similar contracts may be
entered into, from time to time, with future directors of the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS:
4(a) Form of Common Stock Certificate of the Company.(1)
4(b) Restated Standstill Agreement dated November 6, 1989 between LAIS
and Pfizer, Inc.(2)
4(c) Form of Indenture.
4(d) Form of Warrant Agreement for Debt Securities.(3)
4(e) Form of Warrant Agreement for Equity Securities.(3)
5(a) Opinion of Latham & Watkins.
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Latham & Watkins (included in Exhibit 5(a)).
____________________
(1) Incorporated by reference to exhibits previously filed by the Company with
its Amendment No. 2 to the Registration Statement, filed January 24, 1992
(File No. 33-44367).
(2) Incorporated by reference to exhibits previously filed by LAIS with its
Registration Statement on Form S-1 filed August 30, 1991 (File No. 33-
42457).
(3) To be filed by amendment or incorporated by reference in connection with
the offering of the Securities.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that the information required to be included in a
post-effective amendment by paragraphs (a)(1)(i) and (a)(1)(ii) above may be
contained in periodic reports filed by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 and (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(e) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Registration S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or
II-3
<PAGE>
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(j) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
Subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLORADO SPRINGS, STATE OF
COLORADO, ON THIS 27TH DAY OF JUNE, 1996.
THE SPECTRANETICS CORPORATION
By /s/ E. Wyatt Cannady
-------------------------------------
E. Wyatt Cannady, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Messrs. E. Wyatt Cannady and James P. McCluskey as his
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, or
any Registration Statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file
the same, with exhibits thereto and other documents in connection therewith
or in connection with the registration of the Common Stock under the
Securities Exchange Act of 1934, as amended, with the Securities and Exchange
Commission, granting unto each of such attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite
and necessary in connection with such matters and hereby ratifying and
confirming all that each of such attorneys-in-fact and agents or his
substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ E. Wyatt Cannady President and Chief Executive June 27, 1996
- ------------------------------- Officer, Director (Principal
E. Wyatt Cannady Executive Officer)
/s/ James P. McCluskey Vice President, Finance June 27, 1996
- ------------------------------- (Principal Financial
James P. McCluskey and Accounting Officer)
/s/ Emile J. Geisenheimer Director and Chairman of the June 27, 1996
- ------------------------------- Board of Directors
Emile J. Geisenheimer
/s/ Robert J. DePasqua Director June 24, 1996
- -------------------------------
Robert J. DePasqua
/s/ Kinney L. Johnson Director June 27, 1996
- -------------------------------
Kinney L. Johnson
Director , 1996
- -------------------------------
Cornelius C. Bond, Jr.
Director , 1996
- -------------------------------
Gary R. Bang
/s/ James A. Lent Director June 27, 1996
- -------------------------------
James A. Lent
II-5
<PAGE>
EXHIBIT INDEX
4(a) Form of Common Stock Certificate of the Company.(1)
4(b) Restated Standstill Agreement dated November 6, 1989 between LAIS and
Pfizer, Inc.(2)
4(c) Form of Indenture.
4(d) Form of Warrant Agreement for Debt Securities.(3)
4(e) Form of Warrant Agreement for Equity Securities.(3)
5(a) Opinion of Latham & Watkins.
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Latham & Watkins (included in Exhibit 5(a)).
____________________
(1) Incorporated by reference to exhibits previously filed by the Company with
its Amendment No. 2 to the Registration Statement, filed January 24, 1992
(File No. 33-44367).
(2) Incorporated by reference to exhibits previously filed by LAIS with its
Registration Statement on Form S-1 filed August 30, 1991 (File No. 33-
42457).
(3) To be filed by amendment or incorporated by reference in connection with
the offering of the Securities.
<PAGE>
The Spectranetics Corporation
as Issuer
and
[ ],
as Trustee
---------------
INDENTURE
dated as of ___________, 199__
---------------
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
----------- -----------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03; 10.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)(ii)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(d)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13; 9.03
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
N.A. means not applicable.
____________________________
*THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.
<PAGE>
PAGE
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . 1
Section 1.01. Certain Definitions.. . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions.. . . . . . . . . . . . . . . . . 4
Section 1.03. Incorporation by Reference of Trust Indenture Act . 4
Section 1.04. Rules of Construction.. . . . . . . . . . . . . . . 4
ARTICLE 2 THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. Unlimited In Amount, Issuable In Series, Form and
Dating. . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Execution and Authentication. . . . . . . . . . . . 7
Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . 7
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 7
Section 2.05. Securityholder Lists. . . . . . . . . . . . . . . . 8
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 8
Section 2.07. Replacement Securities. . . . . . . . . . . . . . . 9
Section 2.08. Outstanding Securities. . . . . . . . . . . . . . . 9
Section 2.09. Treasury Securities . . . . . . . . . . . . . . . . 10
Section 2.10. Temporary Securities. . . . . . . . . . . . . . . . 10
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . 10
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . 10
Section 2.13. Special Record Dates. . . . . . . . . . . . . . . . 11
ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . 11
Section 3.02. Selection of Securities to Be Redeemed. . . . . . . 12
Section 3.03. Notice of Redemption. . . . . . . . . . . . . . . . 12
Section 3.04. Effect of Notice of Redemption. . . . . . . . . . . 13
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . 13
Section 3.06. Securities Redeemed in Part . . . . . . . . . . . . 13
ARTICLE 4 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.01. Payment of Securities . . . . . . . . . . . . . . . 13
Section 4.02. Maintenance of Office or Agency.. . . . . . . . . . 14
Section 4.03. Commission Reports. . . . . . . . . . . . . . . . . 14
Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . 15
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . 15
Section 4.07. Corporate Existence . . . . . . . . . . . . . . . . 15
i
<PAGE>
PAGE
Section 4.08. Payments for Consent. . . . . . . . . . . . . . . . 16
Section 4.09. Limitation on Liens . . . . . . . . . . . . . . . . 16
Section 4.10. Limitation on Sale and Lease-Back . . . . . . . . . 17
ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.01. When Company May Merge, etc.. . . . . . . . . . . . 19
Section 5.02. Successor Corporation Substituted . . . . . . . . . 19
ARTICLE 6 DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . 20
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 20
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . 21
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . 21
Section 6.04. Waiver of Past Defaults.. . . . . . . . . . . . . . 22
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 22
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 22
Section 6.07. Rights of Holders to Receive Payment. . . . . . . . 23
Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . 23
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 23
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . 24
Section 6.11. Undertaking for Costs.. . . . . . . . . . . . . . . 24
ARTICLE 7 TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.01. Duties of Trustee.. . . . . . . . . . . . . . . . . 25
Section 7.02. Rights of Trustee.. . . . . . . . . . . . . . . . . 26
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . 26
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . 26
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . 27
Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . 27
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . 27
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . 28
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . 29
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . 29
Section 7.11. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . 30
Section 8.01. Termination of Company's Obligations. . . . . . . . 30
Section 8.02. Application of Trust Money. . . . . . . . . . . . . 31
Section 8.03. Repayment to Company. . . . . . . . . . . . . . . . 32
ARTICLE 9 SUPPLEMENTS, AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . 32
Section 9.01. Without Consent of Holders. . . . . . . . . . . . . 32
ii
<PAGE>
PAGE
Section 9.02. With Consent of Holders . . . . . . . . . . . . . . 33
Section 9.03. Revocation and Effect of Consents . . . . . . . . . 34
Section 9.04. Notation on or Exchange of Securities . . . . . . . 34
Section 9.05. Trustee to Sign Amendments, etc. . . . . . . . . . 34
ARTICLE 10 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.01. Indenture Subject to Trust Indenture Act. . . . . . 35
Section 10.02. Notices . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.03. Communication By Holders With Other Holders . . . . 36
Section 10.04. Certificate and Opinion as to Conditions Precedent. 36
Section 10.05. Statements Required in Certificate or Opinion . . . 36
Section 10.06. Rules by Trustee and Agents . . . . . . . . . . . . 36
Section 10.07. Legal Holidays. . . . . . . . . . . . . . . . . . . 37
Section 10.08. No Recourse Against Others. . . . . . . . . . . . . 37
Section 10.09. Counterparts. . . . . . . . . . . . . . . . . . . . 37
Section 10.10. Governing Law . . . . . . . . . . . . . . . . . . . 37
Section 10.11. Severability. . . . . . . . . . . . . . . . . . . . 37
Section 10.12. Effect of Headings, Table of Contents, etc. . . . . 37
Section 10.13. Successors and Assigns. . . . . . . . . . . . . . . 37
Section 10.14. No Interpretation of Other Agreements . . . . . . . 38
iii
<PAGE>
INDENTURE dated as of _____________, 199__ between The Spectranetics
Corporation, a Delaware corporation (the "Company"), and
____________________________, a ______________________, as Trustee (the
"Trustee").
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its debentures, notes or other
evidences of indebtedness to be issued in one or more series (the "Securities"),
as herein provided, up to such principal amount as may from time to time be
authorized in or pursuant to one or more resolutions of the Board of Directors
or by supplemental indenture.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of each series of the Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. CERTAIN DEFINITIONS.
"AFFILIATE" means any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company. For purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting stock, by agreement or
otherwise; PROVIDED, HOWEVER, that beneficial ownership of 20% or more of the
voting stock of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent, authenticating agent or
co-Registrar.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
authorized committee thereof.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification
(and delivered to the Trustee, if appropriate).
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" means the party named as such above until a successor replaces it
pursuant to this Indenture and thereafter means the successor.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time
to time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GLOBAL SECURITY" shall mean a Security issued to evidence all or a part of
any series of Securities that is executed by the Company and authenticated and
delivered by the Trustee to a depositary or pursuant to such depositary's
instructions, all in accordance with this Indenture and pursuant to an Officer's
Certificate, which shall be registered as to principal and interest in the name
of such depositary or its nominee.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Security is
registered in the register of Securities kept by the Registrar.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time.
"INTEREST," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after maturity, means interest payable
after maturity.
"OFFICER" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, any Vice-
President, the Treasurer, the Controller, the Secretary, any Assistant Treasurer
or any Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers, one of
whom must be the Chief Executive Officer, the President, the Chief Financial
Officer, the Treasurer or principal accounting officer of the Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides that an
amount less than its principal amount is due and payable upon acceleration after
an Event of Default.
"PERSON" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PRINCIPAL" of a Security means the principal amount due on the stated
maturity of the Security plus the premium, if any, on the Security.
2
<PAGE>
"SECURITIES" means the Securities authenticated and delivered under this
Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SUBSIDIARY" means any corporation, partnership or limited liability company
of which the Company, or the Company and one or more Subsidiaries, or any one or
more Subsidiaries, directly or indirectly own (i) in the case of a corporation,
voting securities entitling the holders thereof to elect a majority of the
directors, either at all times or so long as there is no default or contingency
which permits the holders of any other class of securities to vote for the
election of one or more directors, (ii) in the case of a partnership, at least a
majority of the general partnership interests and at least a majority of total
outstanding partnership interests or (iii) in the case of a limited liability
company, at least a majority of the membership interests.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time, and
as in effect on the date of execution of this Indenture.
"TRUSTEE" means the party named as such above until a successor becomes such
pursuant to this Indenture and thereafter means or includes each party who is
then a trustee hereunder, and if at any time there is more than one such party,
"Trustee" as used with respect to the Securities of any series means the Trustee
with respect to Securities of that series. If Trustees with respect to
different series of Securities are trustees under this Indenture, nothing herein
shall constitute the Trustees co-trustees of the same trust, and each Trustee
shall be the trustee of a trust separate and apart from any trust administered
by any other Trustee with respect to a different series of Securities.
"TRUST OFFICER" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
3
<PAGE>
SECTION 1.02. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
---- ------------------
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . 6.01
"Custodian". . . . . . . . . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . . . . . . . . . 6.01
"Legal Holiday". . . . . . . . . . . . . . . . . . . . 10.07
"Paying Agent" . . . . . . . . . . . . . . . . . . . . 2.03
"redemption price" . . . . . . . . . . . . . . . . . . 3.03
"Registrar". . . . . . . . . . . . . . . . . . . . . . 2.03
"U.S. Government Obligations". . . . . . . . . . . . . 8.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the Securities means the Company.
All other terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the plural include the
singular; and
(v) provisions apply to successive events and transactions.
4
<PAGE>
ARTICLE 2
THE SECURITIES
SECTION 2.01. UNLIMITED IN AMOUNT, ISSUABLE IN SERIES, FORM AND DATING.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited. The Securities may be issued in
one or more series. There shall be established in or pursuant to a Board
Resolution or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(a) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(b) any limit upon the aggregate principal amount of Securities of the
series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the series pursuant to
this Article 2);
(c) the date or dates on which the principal of the Securities of the
series is payable;
(d) the rate or rates at which the Securities of the series shall bear
interest, if any, or the manner in which such rate or rates shall be
determined, the date or dates from which such interest shall accrue, the
interest payment dates on which such interest shall be payable and the record
dates for the determination of Holders to whom interest is payable;
(e) the place or places where the principal of and any interest on
Securities of the series shall be payable, if other than as provided herein;
(f) the price or prices at which (if any), the period or periods within
which (if any) and the terms and conditions upon which (if other than as
provided herein) Securities of the series may be redeemed, in whole or in
part, at the option, or as an obligation, of the Company;
(g) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series, in whole or in part, pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the price or
prices at which and the period and periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased or
repaid pursuant to such obligation;
(h) if other than denominations of $1,000 and any multiple thereof, the
denominations in which Securities of the series shall be issuable;
5
<PAGE>
(i) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.02
hereof;
(j) any addition to or change in the covenants set forth in Article 4
which applies to Securities of the series;
(k) any Events of Default with respect to the Securities of a particular
series, if not set forth herein;
(l) the Trustee for the series of Securities;
(m) whether the Securities of the series shall be issued in whole or in
part in the form of a Global Security or Securities; the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in
whole or in part for other individual Securities, and the depositary for such
Global Security and Securities;
(n) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture, but which may modify or delete any
provision of this Indenture with respect to such series; PROVIDED, HOWEVER,
that no such term may modify or delete any provision hereof if imposed by the
TIA; AND PROVIDED, FURTHER, that any modification or deletion of the rights,
duties or immunities of the Trustee hereunder shall have been consented to in
writing by the Trustee).
All Securities of any series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to such
Board Resolution or in any such indenture supplemental hereto.
The principal of and any interest on the Securities shall be payable at the
office or agency of the Company designated in the form of Security for the
series (each such place herein called the "Place of Payment"); PROVIDED,
HOWEVER, that payment of interest may be made at the option of the Company by
check mailed to the address of the Person entitled thereto as such address shall
appear in the register of Securities referred to in Section 2.03 hereof.
Each Security shall be in one of the forms approved from time to time by or
pursuant to a Board Resolution, or established in one or more indentures
supplemental hereto. Prior to the delivery of a Security to the Trustee for
authentication in any form approved by or pursuant to a Board Resolution, the
Company shall deliver to the Trustee the Board Resolution by or pursuant to
which such form of Security has been approved, which Board Resolution shall have
attached thereto a true and correct copy of the form of Security which has been
approved by or pursuant thereto, or, if a Board Resolution authorizes a specific
officer or officers to approve a form of Security, a certificate of such officer
or officers approving the form of Security attached thereto.
6
<PAGE>
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Security shall be dated the date of its
authentication.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Securities for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that office at
the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue upon a written
order of the Company signed by two Officers.
The Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Securities of a
particular series may be presented for registration of transfer or for exchange
(the "Registrar") and an office or agency where Securities of that series may be
presented for payment (a "Paying Agent"). The Registrar for a particular series
of Securities shall keep a register of the Securities of that series and of
their transfer and exchange. The Company may appoint one or more co-Registrars
and one or more additional paying agents for each series of Securities. The
term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent, Registrar or co-Registrar without prior notice to any
Securityholder. The Company shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar or Paying Agent for any series of
Securities, the Trustee shall act as such. The Company or any of its Affiliates
may act as Paying Agent, Registrar or co-Registrar.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
Whenever the Company has one or more Paying Agents it will, prior to each due
date of the principal of or interest on, any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or
7
<PAGE>
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company shall require each Paying Agent other than the Trustee to agree in
writing that such Paying Agent will hold in trust for the benefit of the
Securityholders of the particular series for which it is acting, or the Trustee,
all money held by the Paying Agent for the payment of principal or interest on
the Securities of such series, and that such Paying Agent will notify the
Trustee of any Default by the Company or any other obligor of the series of
Securities in making any such payment and at any time during the continuance of
any such Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent. If the Company or an
Affiliate acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Securityholders of the particular series for which
it is acting all money held by it as Paying Agent. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon so
doing, the Paying Agent (if other than the Company or an Affiliate of the
Company) shall have no further liability for such money. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Securities.
SECTION 2.05. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders, separately by series, and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least seven Business Days before each interest payment date
and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders, separately by series, relating to such interest
payment date or request, as the case may be.
SECTION 2.06. TRANSFER AND EXCHANGE.
Where Securities are presented to the Registrar or a co-Registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Securities of like series of other authorized denominations, the Registrar
shall register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee shall authenticate Securities at the
Registrar's request.
No service charge shall be made for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith (other than
any such transfer tax or similar governmental charge payable upon exchanges
pursuant to Sections 2.10, 3.06 or 9.04).
The Company need not issue, and the Registrar or co-Registrar need not
register the transfer or exchange of, (i) any Security of a particular series
during a period beginning at
8
<PAGE>
the opening of business 15 days before the day of any selection of Securities
of that series for redemption under Section 3.02 and ending at the close of
business on the day of selection, or (ii) any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
of that series being redeemed in part.
SECTION 2.07. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security of like series if the Company's and the Trustee's requirements are met.
The Trustee or the Company may require an indemnity bond to be furnished which
is sufficient in the judgment of both to protect the Company, the Trustee, and
any Agent from any loss which any of them may suffer if a Security is replaced.
The Company may charge such Holder for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company and
shall be entitled to all the benefit of the Indenture equally and
proportionately with any and all other Securities of the same series.
SECTION 2.08. OUTSTANDING SECURITIES.
The Securities of any series outstanding at any time are all the Securities of
that series authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, and those described in this Section as not
outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
Except as set forth in Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate holds the Security.
For each series of Original Issue Discount Securities, the principal amount of
such Securities that shall be deemed to be outstanding and used to determine
whether the necessary Holders have given any request, demand, authorization,
direction, notice, consent or waiver shall be the principal amount of such
Securities that could be declared to be due and payable upon acceleration upon
an Event of Default as of the date of such determination. When requested by the
Trustee, the Company will advise the Trustee of such amount, showing its
computations in reasonable detail.
9
<PAGE>
SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities of any series have concurred in any direction, waiver or consent,
Securities owned by the Company or an Affiliate shall be considered as though
they are not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver or
consent, only Securities which the Trustee knows are so owned shall be so
considered.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities upon a written order of
the Company signed by two Officers of the Company. Temporary Securities shall
be substantially in the form of definitive Securities but may have variations
that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities.
Holders of temporary securities shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
such Securities (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all cancelled Securities shall be
delivered to the Company. The Company may not issue new Securities to replace
Securities that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to make a payment of interest on any series of
Securities, it shall pay such defaulted interest plus (to the extent lawful) any
interest payable on the defaulted interest, in any lawful manner. It may elect
to pay such defaulted interest, plus any such interest payable on it, to the
Persons who are Holders of such Securities on which the interest is due on a
subsequent special record date. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each such Security.
The Company shall fix any such record date and payment date for such payment.
At least 15 days before any such record date, the Company shall mail to
Securityholders affected thereby a notice that states the record date, payment
date, and amount of such interest to be paid.
10
<PAGE>
SECTION 2.13. SPECIAL RECORD DATES.
(a) The Company may, but shall not be obligated to, set a record date for the
purpose of determining the identity of Holders entitled to consent to any
supplement, amendment or waiver permitted by this Indenture. If a record date
is fixed, the Holders of Securities of that series outstanding on such record
date, and no other Holders, shall be entitled to consent to such supplement,
amendment or waiver or revoke any consent previously given, whether or not such
Holders remain Holders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Holders of the principal amount of Securities of that series required hereunder
for such amendment or waiver to be effective shall have also been given and not
revoked within such 90-day period.
(b) The Trustee may, but shall not be obligated to, fix any day as a record
date for the purpose of determining the Holders of any series of Securities
entitled to join in the giving or making of any notice of Default, any
declaration of acceleration, any request to institute proceedings or any other
similar direction. If a record date is fixed, the Holders of Securities of that
series outstanding on such record date, and no other Holders, shall be entitled
to join in such notice, declaration, request or direction, whether or not such
Holders remain Holders after such record date; PROVIDED, HOWEVER, that no such
action shall be effective hereunder unless taken on or prior to the date 90 days
after such record date.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities of any series pursuant to any
optional redemption provisions thereof, it shall notify the Trustee of the
redemption date and the principal amount of Securities of that series to be
redeemed.
The Company shall give each notice provided for in this Section in an
Officers' Certificate at least 45 days before the redemption date (unless a
shorter notice period shall be satisfactory to the Trustee), which notice shall
specify the provisions of such Security pursuant to which the Company elects to
redeem such Securities.
If the Company elects to reduce the principal amount of Securities of any
series to be redeemed pursuant to mandatory redemption provisions thereof, it
shall notify the Trustee of the amount of, and the basis for, any such
reduction. If the Company elects to credit against any such mandatory
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall deliver such Securities with such notice.
11
<PAGE>
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed, the Trustee
shall select the Securities of that series to be redeemed by a method that
complies with the requirements of any exchange on which the Securities of that
series are listed, or, if the Securities of that series are not listed on an
exchange, on a PRO RATA basis or by lot. The Trustee shall make the selection
not more than 75 days and not less than 30 days before the redemption date from
Securities of that series outstanding and not previously called for redemption.
Except as otherwise provided as to any particular series of Securities,
Securities and portions thereof that the Trustee selects shall be in amounts
equal to the minimum authorized denomination for Securities of the series to be
redeemed or any integral multiple thereof. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly in writing
of the Securities or portions of Securities to be called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Except as otherwise provided as to any particular series of Securities, at
least 30 days but not more than 60 days before a redemption date, the Company
shall mail a notice of redemption to each Holder whose Securities are to be
redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price fixed in accordance with the terms of the
Securities of the series to be redeemed, plus accrued interest, if any, to the
date fixed for redemption (the "redemption price");
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or Securities
in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in payment of the redemption
price, interest on Securities called for redemption ceases to accrue on and
after the redemption date;
(7) The paragraph of the series of Securities and/or Section of any
supplemental indenture pursuant to which such Securities called for redemption
are being redeemed; and
12
<PAGE>
(8) the CUSIP number, if any, of the Securities to be redeemed.
At the Company's request, the Trustee shall give the notice of redemption in
the Company's name and at its expense; PROVIDED, HOWEVER, that the Company shall
have delivered to the Trustee, at least 45 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice of the Holder of any Security shall not affect the validity of the
proceeding for the redemption of any other Security.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Securities called for redemption become due and payable on the redemption date
for the redemption price. Upon surrender to the Paying Agent, such Securities
will be paid at the Redemption Price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the Paying
Agent (or, if the Company or any Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of all
Securities called for redemption on that date other than Securities which have
previously been delivered by the Company to the Trustee for cancellation. The
Paying Agent shall return to the Company any money not required for that
purpose.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Security of like series equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company shall pay or cause to be paid the principal of and interest on the
Securities on the dates and in the manner provided in this Indenture and the
Securities. Principal and interest shall be considered paid on the date due if
the Paying Agent, if other than the Company or an Affiliate, holds as of 10:00
a.m. Eastern Time on that date
13
<PAGE>
immediately available funds designated for and sufficient to pay all
principal and interest then due.
To the extent lawful, the Company shall pay interest on overdue principal and
overdue installments of interest at the rate per annum borne by the applicable
series of Securities.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the City of San Francisco, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee or
Registrar) 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 shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or
agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the City of San
Francisco for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one
such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. COMMISSION REPORTS.
The Company shall deliver to the Trustee within 15 days after the required
filing date copies of the annual reports and of the information, documents, and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
provided, however the Company shall not be required to deliver to the Trustee
any materials for which the Company has sought and received confidential
treatment by the Commission. The Company will cause any quarterly and annual
reports which it mails to its stockholders to be mailed to the Holders of the
Securities. If the Company is not subject to the requirements of Section 13 or
15(d) of the Exchange Act, the Company shall continue to file with the Trustee
(in each case within 15 days after the time that such documents would have been
filed with the Commission) such reports, information and other documents as it
would file if it were subject to the requirements of Section 13 or 15(d) of the
Exchange Act (other than such confidential materials referenced above). The
Company also shall comply with the other provisions of TIA Section 314(a).
14
<PAGE>
SECTION 4.04. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company, an Officers' Certificate (one of the signers of
which shall be the principal accounting officer, principal financial officer or
principal executive officer) stating that in the course of the performance by
the signers of their duties as officers of the Company, they would normally have
knowledge of any failure by the Company to comply with all conditions, or
default by the Company with respect to any covenants, under this Indenture, and
further stating whether or not they have knowledge of any such failure or
default and, if so, specifying each such failure or default and the nature
thereof. For purposes of this Section, such compliance shall be determined
without regard to any period of grace or requirement of notice provided for in
this Indenture. The certificate need not comply with Section 10.04.
The first certificate delivered pursuant to this Section 4.03 shall be for the
fiscal year ending on _________, 199__.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay, prior
to delinquency, all material taxes, assessments, and governmental levies except
(i) as contested in good faith by appropriate proceedings and with respect to
which appropriate reserves have been taken in accordance with GAAP or (ii) where
the failure to effect such payment is not adverse in any material respect to the
Holders.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury 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 shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no
15
<PAGE>
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders.
SECTION 4.08. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of the Securities for or as an inducement to any
consent, waiver or amendment of any terms or provisions of this Indenture or of
the Securities or any series thereof unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities of such series that
so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.09 LIMITATION ON LIENS.
(a) The Company will not, and will not permit any Subsidiary to, create,
incur, assume or guarantee any indebtedness for money borrowed (hereinafter in
Sections 4.09 and 4.10 referred to as "Debt"), secured by a mortgage, security
interest, pledge, lien, charge or similar encumbrance (mortgages, security
interests, pledges, liens, charges and other encumbrances, hereinafter in
Sections 4.09 and 4.10 referred to as a "Mortgage") upon any manufacturing plant
or manufacturing facility which is (i) owned by the Company or any Subsidiary
and (ii) located within the continental United States of America, except any
such plant which, in the opinion of the Board of Directors, is not of material
importance to the total business conducted by the Company and the Subsidiaries
taken as a whole (the "Principal Property") or upon any shares of stock or
indebtedness of any Subsidiary (whether such Principal Property, shares of stock
or indebtedness are now owned or hereafter acquired) without in any such case
effectively providing concurrently with the issuance, assumption or guaranty of
any such Debt that the outstanding Securities (together with, if the Company
shall so determine, any other indebtedness of or guarantee by the Company or
such Subsidiary ranking equally with the outstanding Securities and then
existing or thereafter created) shall be secured equally and ratably with such
Debt; provided, however, that the foregoing restrictions shall not apply to Debt
secured by:
(i) Mortgages on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Subsidiary;
(ii) Mortgages on property existing at the time of acquisition of such
property by the Company or a Subsidiary, Mortgages to secure the payment of
all or any part of the purchase price of such property incurred prior to, at
the time of, or within 180 days after the acquisition of such property by the
Company or a Subsidiary, or Mortgages to secure any debt incurred prior to, at
the time of, or within 180 days after the completion of construction or
commencement of full operation of any property for the purpose of financing
all or any part of the cost to the Company or a Subsidiary of improvements to
such property;
(iii) Mortgages securing Debt of a Subsidiary owing to the Company or to
another Subsidiary;
16
<PAGE>
(iv) Mortgages existing at the date of this Indenture;
(v) Mortgages on property of a Person existing at the time such Person
is merged into or consolidated with the Company or a Subsidiary or at the time
of a sale, lease or other disposition of the properties of a Person as an
entirety or substantially as an entirety to the Company or a Subsidiary;
(vi) Mortgages on property of the Company or a Subsidiary in favor of
the United States of America or any State thereof, or any department, agency,
instrumentality or political subdivision thereof, to secure any payments,
including advance or progress payments, pursuant to any contract or statute or
to secure any indebtedness incurred or guaranteed for the purpose of financing
all or any part of the purchase price or the cost of construction of the
property subject to such Mortgages (including, but not limited to, Mortgages
incurred in connection with pollution control bonds, industrial revenue bonds
or similar financings); or
(vii) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to in
the foregoing clauses (i) to (vi), inclusive; provided, however, that such
extension, renewal or replacement shall be limited to all or part of the
property which secured the Mortgage so extended, renewed or replaced (plus
improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section 4.09, the
Company and any one or more Subsidiaries may issue, assume or guarantee Debt
secured by a Mortgage which would otherwise be subject to the foregoing
restrictions in an aggregate amount which, together with all other outstanding
Debt of the Company and its Subsidiaries which (if originally issued, assumed or
guaranteed at such time) would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clauses (i)
through (vii) above), does not at the time exceed the greater of $______________
or 10% of Consolidated Net Tangible Assets of the Company and its consolidated
Subsidiaries as shown on the most recent consolidated financial statements of
the Company and its consolidated Subsidiaries.
SECTION 4.10. LIMITATION ON SALE AND LEASE-BACK.
The Company will not, nor will it permit any Subsidiary to, enter into any
arrangement with any person or entity that provides for the leasing to the
Company or any Subsidiary of any Principal Property (except for leases for a
term of not more than three years and except for leases between the Company and
a Subsidiary or between Subsidiaries), which Principal Property has been or is
to be sold or transferred by the Company or such Subsidiary to such person,
unless (a) the Company or such Subsidiary would be entitled, pursuant to the
provisions of Section 4.09, to issue, assume or guarantee Debt secured by
Mortgage upon such Principal Property at least equal in the amount to the
Attributable Debt (as defined below) in respect of such arrangement without
equally and ratably securing the outstanding Securities; provided, however, that
from and after the date on which such arrangement becomes effective the
Attributable Debt in respect of such arrangement shall be
17
<PAGE>
deemed for all purposes under Sections 4.09 and 4.10 to be Debt subject to
the provisions of Section 4.09, or (b) the Company shall apply an amount in
cash equal to the greater of the net proceeds of such sale or the
Attributable Debt in respect of such an arrangement to the retirement (other
than any mandatory retirement or by way or payment at maturity) within 120
days of the effective date of any such arrangement, of Debt (except as
otherwise provided by the terms of any series of outstanding Securities) of
the Company of any Subsidiary (other than the Debt owed by the Company or any
Subsidiary to the Company or any Subsidiary) which by its terms matures at or
is extendible or renewable at the opinion of the obligor to a date more than
twelve months after the date of the creation of such Debt.
For the purposes of this Section 4.10, the term "Attributable Debt" means, at
the time of determination, the lesser of (a) the fair market value of such
property (as determined by the Board of Directors of the Company) or (b) the
present value (discounted at the rate implicit in the terms of the relevant
lease) of the obligation of the lessee for net rental payments during the
remaining term of the lease (including any period for which such lease has been
extended).
18
<PAGE>
ARTICLE 5
SUCCESSORS
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to any Person unless:
(1) the Company is the surviving corporation or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia;
(2) the entity or Person formed by or assuming any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes by supplemental indenture all the obligations of the Company
under the Securities and this Indenture; and
(3) immediately prior to and after the transaction no Default or Event
of Default exists.
The Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any transfer by the Company (other than
by lease) of all or substantially all of the assets of the Company in accordance
with Section 5.01, the successor corporation formed by such consolidation or
into which the Company is merged or to which such transfer 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
corporation had been named as the Company herein. In the event of any such
transfer, the predecessor Company shall be released and discharged from all
liabilities and obligations in respect of the Securities and the Indenture, and
the predecessor Company may be dissolved, wound up or liquidated at any time
thereafter.
19
<PAGE>
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs with respect to Securities of any particular
series if:
(1) the Company defaults in the payment of interest on any Security of
that series when the same becomes due and payable and the Default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security
of that series when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) an Event of Default, as defined in the Securities of that series,
occurs and is continuing, or the Company fails to comply with any of its other
agreements in the Securities of that series or in this Indenture with respect
to that series and the Default continues for the period and after the notice
specified below;
(4) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property;
(D) makes a general assignment for the benefit of its
creditors; or
(E) admits in writing its inability generally to pay its
debts as the same become due.
(5) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case;
(B) appoints a Custodian of the Company or for all or
substantially all of its property; or
(C) orders the liquidation of the Company;
20
<PAGE>
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under clause (3) above is not an Event of Default with respect to a
particular series of Securities until the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Securities of that series notify the
Company of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that
it be remedied and state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION.
If an Event of Default with respect to Securities of any series (other than an
Event of Default specified in clauses (4) and (5) of Section 6.01) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the then outstanding Securities of that series by notice
to the Company and the Trustee, may declare the unpaid principal (or, in the
case of Original Issue Discount Securities, such lesser amount as may be
provided for in such Securities) of and any accrued interest on all the
Securities of that series to be due and payable on the Securities of that
series. Upon such declaration the principal (or such lesser amount) and
interest shall be due and payable immediately. If an Event of Default specified
in clause (4) or (5) of Section 6.01 occurs, all of such amount shall become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. The Holders of a majority in principal amount of
the then outstanding Securities of that series by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default with
respect to that series have been cured or waived except nonpayment of principal
(or such lesser amount) or interest that has become due solely because of the
acceleration.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default with respect to Securities of any series occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Securities of that series or to enforce the
performance of any provision of the Securities of that series or this Indenture.
21
<PAGE>
The Trustee may maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Section 9.02, the Holders of a majority in principal amount of the
then outstanding Securities of any series by notice to the Trustee may waive an
existing Default or Event of Default with respect to that series and its
consequences except a Default or Event of Default in the payment of the
principal (including any mandatory sinking fund or like payment) of or interest
on any Security of that series.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy with respect to that series available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
is unduly prejudicial to the rights of another Holder of Securities of that
series, or that may involve the Trustee in personal liability. The Trustee may
take any other action which it deems proper which is not inconsistent with any
such direction.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of Securities of any series may not pursue a remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to that series;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities of that series make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Securities of that series do not give the
Trustee a direction inconsistent with the request.
22
<PAGE>
No Holder of any series of Securities may use this Indenture to prejudice the
rights of another Holder of Securities of that series or to obtain a preference
or priority over another Holder of Securities of that series.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal of and interest, if any, on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing with respect to Securities of any series, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal (or such portion of the principal as may be
specified as due upon acceleration at that time in the terms of that series of
Securities) and interest, if any, remaining unpaid on the Securities of that
series then outstanding, together with (to the extent lawful) interest on
overdue principal and interest, and such further amount as shall be sufficient
to cover the costs and, to the extent lawful, expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee under
Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor on the Securities), its creditors or its property and shall be
entitled to and empowered to collect and receive any money or other property
payable or deliverable on any such claims and to distribute the same, and any
custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing contained herein shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder 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 Securityholder
in any such proceeding.
23
<PAGE>
SECTION 6.10. PRIORITIES.
If the Trustee collects any money with respect to Securities of any series
pursuant to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07, including payment of all
compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and
expenses of collection;
Second: to Securityholders for amounts due and unpaid on the
Securities of such series for principal and interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the
Securities of such series for principal and interest,
respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to Holders
of Securities of any series pursuant to this Section. The Trustee shall notify
the Company in writing reasonably in advance of any such record date and payment
date.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defense made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in principal amount of the then
outstanding Securities.
24
<PAGE>
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default known to the
Trustee:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture or the TIA and the Trustee need
perform only those duties that are specifically set forth in this
Indenture or the TIA and no others, 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. However, the Trustee shall
examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a responsible officer of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise
25
<PAGE>
any right or power unless it receives security and indemnity satisfactory to
it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company. Absent written
instruction from the Company, the Trustee shall not be required to invest any
such money. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to TIA Section 315(a) through (d):
(a) The Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or powers,
unless the Trustee's conduct constitutes negligence.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice form the Company shall be sufficient if signed by
an Officer of the Company.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee is subject to TIA Sections 310(b)
and 311.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.
26
<PAGE>
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default with respect to the Securities of any
series occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to all Holders of Securities of that series a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any such Security, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of such
Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each November 15 beginning with November 15, 1995, the
Trustee with respect to any series of Securities shall mail to Holders of
Securities of that series as provided in TIA Section 313(c) a brief report
dated as of such November 15 that complies with TIA Section 313(a) (if such
report is required by TIA Section 313(a)). The Trustee shall also comply
with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the Commission and each stock
exchange on which any of the Securities are listed, as required by TIA
Section 313(d). The Company shall notify the Trustee when the Securities are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation as
shall be agreed upon in writing for its services hereunder. The Company shall
reimburse the Trustee upon written request for all reasonable out-of-pocket
expenses incurred by it. Such expenses shall include the reasonable
compensation and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for any loss or liability incurred by
it, without negligence or bad faith on its part, in connection with the
administration of this Indenture and its duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent.
To secure the Company's payment obligations in this Section, the Trustee shall
have a lien prior to the Securities on all money or property held or collected
by the Trustee in its capacity as Trustee, except money or property held in
trust to pay principal and interest on particular Securities. Such lien will
survive the satisfaction and discharge of this Indenture.
If the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(4) or (5) occurs, the expenses and the compensation
for the services will be intended to constitute expenses of administration under
any applicable Bankruptcy Law.
27
<PAGE>
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee with respect to one or more or all
series of Securities and appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.
The Trustee may resign with respect to one or more or all series of Securities
by so notifying the Company in writing. The Holders of a majority in principal
amount of the then outstanding Securities of any series may remove the Trustee
as to that series by so notifying the Trustee in writing and may appoint a
successor Trustee with the Company's consent. The Company may remove the
Trustee with respect to one or more or all series of Securities if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If, as to any series of Securities, the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee for that series. Within one year after the
successor Trustee with respect to any series takes office, the Holders of a
majority in principal amount of the then outstanding Securities of that series
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company. If a successor Trustee as to a particular series does not take
office within 60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in principal amount
of the then outstanding Securities of that series may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 with respect to any series,
any Holder of Securities of that series who satisfies the requirements of TIA
Section 310(b) may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee for that series.
A successor Trustee as to any series of Securities shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee (subject to the lien
provided for in Section 7.07), the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture as to that series.
The successor Trustee shall mail a notice of its succession to the Holders of
Securities of that series.
28
<PAGE>
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring trustee.
In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) shall contain such
provisions as shall be necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Securities
of that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture as shall be necessary or desirable to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee; PROVIDED, HOWEVER, that nothing herein or in such supplemental
Indenture shall constitute such Trustee co-trustees of the same trust and that
each such Trustee shall be trustee of a trust hereunder separate and apart from
any trust hereunder administered by any other such Trustee.
Upon the execution and delivery of such supplemental Indenture the resignation
or removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee as to any series of Securities consolidates, merges or converts
into, or transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee as to that series.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
Each series of Securities shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee as to any series of Securities
shall always have a combined capital and surplus of at least $100,000,000 as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA
Section 310(b).
29
<PAGE>
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
Except as otherwise provided in this Section, the Company may terminate its
obligations under the Securities of any series and this Indenture with respect
to that series, if:
(a) all Securities of that series previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
Securities of that series which are paid pursuant to Section 4.01 or
Securities of that series for whose payment money or securities has
theretofore been held in trust and thereafter repaid to the Company, as
provided in Section 8.03) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable by it hereunder with respect to such
series; or
(b) (1) the Securities of that series mature within one year or
all of them are to be called for redemption within one year after arrangements
satisfactory to the Trustee for giving the notice of redemption; and
(2) the Company irrevocably deposits in trust with the Trustee during
such one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely for the
benefit of the Holders of Securities of that series for that purpose, money or
U.S. Government Obligations, or a combination thereof, with the U.S.
Government Obligations maturing as to principal and interest in such amounts
and at such times as are sufficient, without consideration of any reinvestment
of such interest, to pay principal of and interest on the Securities of that
series to maturity or redemption, as the case may be, and to pay all other
sums payable by it hereunder; or
(c) (1) the Company irrevocably deposits in trust with the
Trustee under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the benefit
of the Holders of Securities of that series for that purpose, money or U.S.
Government Obligations, or a combination thereof, with the U.S. Government
Obligations maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of any reinvestment of such
interest, to pay principal of and interest on the Securities of that series to
maturity or redemption, as the case may be;
30
<PAGE>
(2) the Company shall have delivered to the Trustee either (A) a ruling
directed to the Trustee received from the Internal Revenue Service to the
effect that the Holders of the Securities of that series will not recognize
income, gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this clause (c) and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised, or
(B) an Opinion of Counsel to the same effect as the ruling described in
subclause (A) above accompanied by a ruling to that effect published by the
Internal Revenue Service, unless there has been a change in the applicable
federal income tax law since the date of this Indenture such that a ruling
from the Internal Revenue Service is no longer required;
(3) the Company has paid or caused to be paid all sums then payable by
the Company hereunder; and
(4) the Company has delivered to the Trustee for that series an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this clause (c) relating to termination
of obligations of the Company have been complied with.
The Company's obligations under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01
(together with its payment obligations under the Securities of that series),
7.07, 7.08, 8.03 and 8.04 shall survive until the Securities of that series are
no longer outstanding. Thereafter, and after any discharge pursuant to clause
(a) above, only the Company's obligations in Sections 7.07 and 8.03 shall
survive. If and when a ruling from the Internal Revenue Service or Opinion of
Counsel referred to in clause (c)(2) above is able to be provided specifically
without regard to, and not in reliance upon, the continuance of the Company's
obligations under Section 4.01 and its payment obligations under the Securities
of that series, then the Company's payment obligations under such Section 4.01
and the Securities of that series shall cease upon delivery to the Trustee of
such ruling or Opinion of Counsel and compliance with the other conditions
precedent provided for in clause (c) above relating to the satisfaction and
discharge of this Indenture.
After any such irrevocable deposit the Trustee upon request shall acknowledge
in writing the discharge of the Company's obligations under the Securities of
that series and under this Indenture except for those surviving obligations
specified above.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged. U.S. Government Obligations shall not be callable at the
issuer's option.
SECTION 8.02. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations deposited
with it pursuant to Section 8.01 with respect to Securities of any series. It
shall apply the deposited money and the money from U.S. Government Obligations
through the Paying
31
<PAGE>
Agent and in accordance with this Indenture to the payment of principal and
interest on the Securities of that series.
SECTION 8.03. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have become
due. After payment to the Company, Securityholders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person, PROVIDED, HOWEVER, that the
Trustee or such Paying Agent before being required to make such repayment may at
the expense of the Company mail to each such holder a notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing any unclaimed balance of such
money then remaining will be repaid to the Company.
ARTICLE 9
SUPPLEMENTS, AMENDMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee as to any series of Securities may supplement or
amend this Indenture or the Securities without notice to or the consent of any
Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5;
(3) to comply with any requirements of the Commission in connection with
the qualification of this Indenture under the TIA;
(4) to provide for uncertificated Securities in addition to or in place
of certificated Securities;
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, PROVIDED, HOWEVER,
that any such addition, change or elimination (A) shall neither (i) apply to
any Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the
rights of the Holder of any such Security with respect to such provision or
(B) shall become effective only when
32
<PAGE>
there is no outstanding Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of
such provision;
(6) to make any change that does not adversely affect in any material
respect the interests of the Securityholders of any series; or
(7) to establish additional series of Securities as permitted by Section
2.01.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07, the Company and the Trustee as to any series of
Securities may amend this Indenture or the Securities of that series with the
written consent of the Holders of a majority in principal amount of the then
outstanding Securities of each series affected by the amendment, with each such
series voting as a separate class. The Holders of a majority in principal
amount of the then outstanding Securities of any series may also waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to that series or the Securities of that series;
PROVIDED, HOWEVER, that without the consent of each Securityholder affected, an
amendment or waiver may not:
(1) reduce the percentage of the principal amount of Securities whose
Holders must consent to an amendment or waiver;
(2) reduce the rate of, or change the time for payment of interest on,
any Security;
(3) reduce the principal of or change the fixed maturity of any Security
or alter the redemption provisions with respect thereto;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this sentence); or
(6) waive a default in the payment of the principal of, or interest on,
any Security, except to the extent otherwise provided for in Section 6.02.
An amendment or waiver under this Section which waives, changes or eliminates
any covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of Securities,
or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for the consent of the Holders under this Section to
approve the particular form of any proposed amendment or waiver, but it shall be
sufficient if such consent approves the substance thereof.
33
<PAGE>
After an amendment or waiver under this Section becomes effective, the Company
shall mail to Holders of Securities of each series affected thereby a notice
briefly describing the amendment or waiver. The Company will mail supplemental
indentures to Holders upon request. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver.
SECTION 9.03. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to it by a Holder of
a Security is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security; PROVIDED, HOWEVER, that unless a record date shall have been
established pursuant to Section 2.13(a), any such Holder or subsequent Holder
may revoke the consent as to his Security or portion of a Security if the
Trustee receives the notice of revocation before the date on which the amendment
or waiver becomes effective. An amendment or waiver shall become effective on
receipt by the Trustee of consents from the Holders of the requisite percentage
principal amount of the outstanding Securities of any series, and thereafter
shall bind every Holder of Securities of that series.
SECTION 9.04. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment or waiver changes the terms of a Security: (a) the Trustee
may require the Holder of the Security to deliver it to the Trustee, the Trustee
may place an appropriate notation on the Security about the changed terms and
return it to the Holder and the Trustee may place an appropriate notation on any
Security thereafter authenticated; or (b) if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall receive an Opinion of Counsel stating that the execution of
any amendment or waiver proposed pursuant to this Article is authorized or
permitted by this Indenture. Subject to the preceding sentence, the Trustee
shall sign such amendment or waiver if the same does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. The Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise.
34
<PAGE>
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. INDENTURE SUBJECT TO TRUST INDENTURE ACT.
This Indenture is subject to the provisions of the TIA which are required to
be part of this Indenture, and shall, to the extent applicable, be governed by
such provisions.
SECTION 10.02. NOTICES.
Any notice or communication is duly given if in writing and delivered in
person or sent by first-class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
addressed as follows:
If to the Company:
The Spectranetics Corporation
96 Talamine Court
Colorado Springs, Colorado 80907
Attention:
If to the Trustee:
_______________________________
_______________________________
_______________________________
_______________________________
Attention: ____________________
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Securityholder shall be mailed by first-class
mail to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders. If the Company
mails a notice or communication to Securityholders, it shall mail a copy to the
Trustee at the same time.
If a notice or communication is mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.
35
<PAGE>
SECTION 10.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificate provided for
in Section 4.03) shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(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 Person, he or she has made
such examination or investigation as is necessary to enable him or her 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 or not, in the opinion of such Person,
such condition or covenant has been complied with; PROVIDED, HOWEVER, that
with respect to matters of fact an Opinion of Counsel may rely on an officer's
certificate or certificates of public officials.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee as to Securities of any series may make reasonable rules for
action by or at a meeting of Holders of Securities of that series. The
Registrar and any Paying Agent or Authenticating Agent may make reasonable rules
and set reasonable requirements for their functions.
36
<PAGE>
SECTION 10.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in San Francisco, California or Colorado Springs, Colorado, are not
required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 10.08. NO RECOURSE AGAINST OTHERS.
A past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
SECTION 10.09. COUNTERPARTS.
This Indenture may be executed by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 10.10. GOVERNING LAW.
The internal laws of the State of New York shall govern this Indenture and the
Securities, without regard to the conflict of laws provisions thereof.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. EFFECT OF HEADINGS, TABLE OF CONTENTS, ETC.
The Article and Section headings herein and the table of contents are for
convenience only and shall not affect the construction hereof.
SECTION 10.13. SUCCESSORS AND ASSIGNS.
All covenants and agreements of the Company in this Indenture and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in this Indenture shall bind its successor.
37
<PAGE>
SECTION 10.14. NO INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
38
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Indenture as of the
date first above written.
THE SPECTRANETICS CORPORATION
By
--------------------------------
Name:
Title:
[ ],
as Trustee
By
--------------------------------
Name:
Title:
S-1
<PAGE>
STATE OF COLORADO )
) ss.
CITY OF COLORADO SPRINGS )
On this _____ day of _____________, before me personally came
__________________, to me known, who being by me duly sworn, did depose and say
that he is _________________ of The Spectranetics Corporation, one of the
entities described in and which executed the above instrument; and that he
signed his name thereto by authority of the Board of Directors of such entity.
------------------------------
Notary Public
(Notarial Seal)
STATE OF )
) ss.
CITY OF )
On this _____ day of _____________, before me personally came
__________________, to me known, who being by me duly sworn, did depose and say
that he is Trust Officer of ________________________________ , one of the
entities described in and which executed the above instrument; and that
he signed his name thereto by authority of the Board of Directors of such
entity.
------------------------------
Notary Public
(Notarial Seal)
<PAGE>
[LETTERHEAD]
June 27, 1996
The Spectranetics Corporation
96 Talamine Court
Colorado Springs, Colorado 80907
Re: $50,000,000 Aggregate Offering Price of Securities
of The Spectranetics Corporation
Ladies and Gentlemen:
In connection with the registration of up to $50,000,000 aggregate
offering price of securities (as described herein) by The Spectranetics
Corporation, a Delaware corporation (the "Company"), under the Securities Act
of 1933, as amended, on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission (the "Commission") on June 27, 1996,
you have requested our opinion with respect to the matters set forth below.
The Company has provided us with a draft prospectus (the "Prospectus")
which is a part of the Registration Statement. The Prospectus provides that
it will be supplemented in the future by one or more supplements to the
Prospectus (each a "Prospectus Supplement"). The Registration Statement
provides for the registration by the Company of up to $50,000,000 aggregate
offering price of (a) secured or unsecured debt securities (the "Debt
Securities") of the Company, in one or more series, which may be either
senior debt securities, senior subordinated debt securities or subordinated
debt securities, (b) shares of preferred stock of the Company, par value
$.001 per share (the "Preferred Stock"), in one or more series, (c) shares of
common stock of the Company, par value $.001 per share (the "Common Stock"),
(d) warrants to purchase Common Stock or Preferred Stock (the "Equity
Warrants") or (e) warrants to purchase Debt Securities (the "Debt Warrants"
and together with the Equity Warrants, the "Warrants"), or any combination of
the foregoing, either individually or as units consisting of one or more of
the foregoing, each on terms to be determined at the time of sale. The Debt
Securities may be issued as exchangeable and/or convertible Debt Securities
exchangeable for or convertible into shares of Common Stock or Preferred
Stock. The Preferred Stock may also be exchangeable for and/or convertible
into shares of
<PAGE>
The Spectranetics Corporation
June 27, 1996
Page 2
Common Stock or another series of Preferred Stock. The Debt Securities, the
Preferred Stock, the Common Stock and the Warrants are collectively referred
to herein as the "Securities." The Debt Securities may be issued pursuant to
one or more indentures (collectively, the "Indentures"), in each case between
the Company and a trustee (each, a "Trustee"). The Warrants may be issued
pursuant to one or more warrant agreements (collectively, the "Warrant
Agreements"), in each case between the Company and a financial institution
identified therein as warrant agent (each, a "Warrant Agent"). When a
particular series of Securities is offered, a Prospectus Supplement will be
delivered with this Prospectus. The Prospectus Supplement will set forth the
terms of the offering and sale of the offered Securities.
In our capacity as counsel to the Company in connection with the
Registration Statement, we are generally familiar with the proceedings taken
and proposed to be taken by the Company in connection with the authorization
and issuance of the Securities. For purposes of this opinion, we have
assumed that such proceedings will be timely and properly completed, in
accordance with all requirements of applicable federal, Delaware and New York
laws, in the manner presently proposed.
We have made such legal and factual examinations and inquiries,
including an examination of originals and copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and
instruments of the Company as we have deemed necessary or appropriate for
purposes of this opinion. In our examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, and the conformity to authentic original documents of all
documents submitted to us as copies.
We have been furnished with, and with your consent have exclusively
relied upon, certificates of officers of the Company with respect to certain
factual matters. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transaction
only of the federal securities laws of the United States, the General
Corporation Law of the State of Delaware and with respect to opinions number 1
and 2 below, the internal laws of the State of New York, and we express no
opinion with respect to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction or, in the case of Delaware, any other laws, or
as to any matters of municipal law or the laws of any local agencies within any
state.
Subject to the foregoing and the other qualifications set forth
herein, it is our opinion that, as of the date hereof:
<PAGE>
The Spectranetics Corporation
June 27, 1996
Page 3
1. When (a) the Debt Securities have been duly established in
accordance with the terms of the applicable Indentures (including, without
limitation, the adoption by the Board of Directors of the Company of a
resolution duly authorizing the issuance and delivery of the Debt
Securities), duly authenticated by the Trustee and duly executed and
delivered on behalf of the Company against payment therefor in accordance
with the terms and provisions of the applicable Indenture and as contemplated
by the Registration Statement, the Prospectus and the related Prospectus
Supplement(s), and (b) when the Registration Statement and any required
post-effective amendment thereto and any and all Prospectus Supplement(s)
required by applicable laws have all become effective under the Securities
Act, and (c) assuming that the terms of the Debt Securities as executed and
delivered are as described in the Registration Statement, the Prospectus and
the related Prospectus Supplement(s), and (d) assuming that the Debt
Securities as executed and delivered do not violate any law applicable to the
Company or result in a default under or breach of any agreement or instrument
binding upon the Company, and (e) assuming that the Debt Securities as
executed and delivered comply with all requirements and restrictions, if any,
applicable to the Company, whether imposed by any court or governmental or
regulatory body having jurisdiction over the Company, and (f) assuming that
the Debt Securities are then issued and sold as contemplated in the
Registration Statement, the Prospectus and the related Prospectus
Supplement(s), the Debt Securities will constitute valid and legally binding
obligations of the Company.
2. When (a) the applicable Warrant Agreement has been duly executed
and delivered and the terms of the Warrants and of their issuance and sale have
been duly established in conformity with the applicable Warrant Agreement and
applicable law, and (b) when the Warrants have been duly executed and
countersigned by the Warrant Agent in accordance with the applicable Warrant
Agreement relating to such Warrants, and issued and sold in the form and in
the manner contemplated in the Registration Statement, the Prospectus and the
related Prospectus Supplement(s), and (c) when the Registration Statement and
any required post-effective amendment thereto and any and all Prospectus
Supplement(s) required by applicable laws have all become effective under the
Securities Act, and (d) assuming that the terms of the applicable Warrant
Agreement as executed and delivered are as described in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), and
<PAGE>
The Spectranetics Corporation
June 27, 1996
Page 4
(e) assuming that the applicable Warrant Agreement as executed and delivered
does not violate any law applicable to the Company or result in a default
under or breach of any agreement or instrument binding upon the Company, and
(f) assuming that the applicable Warrant Agreement as executed and delivered
complies with all requirements and restrictions, if any, applicable to the
Company, whether imposed by any court or governmental or regulatory body
having jurisdiction over the Company, the applicable Warrant Agreement
will constitute a valid and legally binding obligation of the Company.
3. The Company has the authority pursuant to its Certificate of
Incorporation to issue up to 5,000,000 shares of Preferred Stock. When a
series of Preferred Stock has been duly established in accordance with the
terms of the Certificate of Incorporation and applicable law, and upon
adoption by the Board of Directors of the Company of a resolution in form and
content as required by applicable law and upon issuance and delivery of and
payment for such shares in the manner contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s) and by
such resolution, such shares of such series of Preferred Stock (including any
Preferred Stock duly issued (i) upon the exchange or conversion of any shares
of Preferred Stock that are exchangeable or convertible into Preferred Stock,
(ii) upon the exercise of any Warrants exercisable for Preferred Stock or
(iii) upon the exchange or conversion of Debt Securities that are
exchangeable or convertible into Preferred Stock) will be validly issued,
fully paid and nonassessable.
4. The Company has the authority pursuant to its Certificate of
Incorporation to issue up to 25,000,000 shares of Common Stock. Upon
adoption by the Board of Directors of the Company of a resolution in form and
content as required by applicable law and upon issuance and delivery of and
payment for such shares in the manner contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s) and by
such resolution, such shares of Common Stock (including any Common Stock duly
issued (i) upon the exchange or conversion of any shares of Preferred Stock
that are exchangeable or convertible into Common Stock, (ii) upon the
exercise of any Warrants exercisable for Common Stock or (iii) upon the
exchange or conversion of Debt Securities that are exchangeable or
convertible into Common Stock) will be validly issued, fully paid and
nonassessable.
All of the opinions set forth above are subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the rights and remedies of creditors; (ii)
the effect of general principles of equity, including without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief,
regardless of whether enforcement is considered in a proceeding in equity or
at law, and the discretion of the court before which any proceeding therefor
may be brought; (iii) we express no opinion concerning the enforceability of
the waiver of rights or defenses contained in an Indenture; (iv) the
unenforceability under
<PAGE>
The Spectranetics Corporation
June 27, 1996
Page 5
certain circumstances under law or court decisions of provisions providing
for the indemnification of, or contribution to, a party with respect to a
liability where such indemnification or contribution is contrary to public
policy; and (v) we express no opinion with respect to whether acceleration
of Debt Securities may affect the collectibility of any portion of the stated
principal amount thereof which might be determined to constitute unearned
interest thereon.
To the extent that the obligations of the Company under the
Indentures may be dependent upon such matters, we assume for purposes of this
opinion that the Trustee for each Indenture is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; that the Trustee is duly qualified to engage in the activities
contemplated by the applicable Indenture; that the applicable Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes a
legally valid, binding and enforceable obligation of the Trustee, enforceable
against the Trustee in accordance with its terms; that the Trustee is in
compliance, generally and with respect to acting as Trustee under the
applicable Indenture, with all applicable laws and regulations; and that the
Trustee has the requisite organizational and legal power and authority to
perform its obligations under the applicable Indenture.
To the extent that the obligations of the Company under the
applicable Warrant Agreement may be dependent upon such matters, we assume
for purposes of this opinion that the Warrant Agent for each Warrant
Agreement is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Warrant Agent is duly
qualified to engage in the activities contemplated by the applicable Warrant
Agreement; that the applicable Warrant Agreement has been duly authorized,
executed and delivered by the Warrant Agent and constitutes a legally valid,
binding and enforceable obligation of the Warrant Agent, enforceable against
the Warrant Agent in accordance with its terms; that the Warrant Agent is in
compliance, generally and with respect to acting as Warrant Agent under the
applicable Warrant Agreement, with all applicable laws and regulations; and
that the Warrant Agent has the requisite organizational and legal power and
authority to perform its obligations under the applicable Warrant Agreement.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus included therein.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
The Spectranetics Corporation:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Denver, Colorado
June 24, 1996
