<PAGE>
As filed with the Securities and Exchange Commission on April 7, 1995
Registration No. 33-________________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________
LIPOSOME TECHNOLOGY, INC.
(Exact name of registrant on Form S-3 as specified in its charter)
DELAWARE 7391 94-3031934
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification Number)
Incorporation)
960 Hamilton Court
Menlo Park, California 94025-1440
(415) 323-9011
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
_______________
PETER V. LEIGH
Chief Financial Officer
Liposome Technology, Inc.
960 Hamilton Court
Menlo Park, California 94025-1140
(415) 323-9011
(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 From 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/
__________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Each Class of to be Offering Price Offering Registration
Securities to be Registered Registered Per Unit Price(1) Fee
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<S> <C> <C> <C> <C>
Debt Securities..........................
Preferred Stock, $0.01 par value.........
Common Stock, $0.001 par value...........
Warrants to Purchase Common Stock........
Total............................... (2) (2) $50,000,000 $17,242
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<FN>
(1) Estimated solely for purposes of calculating the registration fee, which is
calculated in accordance with Rule 457(o).
(2) Not applicable pursuant to General Instruction II(D) to Form S-3 under the
Securities Act of 1933.
</TABLE>
__________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<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.
SUBJECT TO COMPLETION, DATED APRIL 7, 1995
[LOGO] LIPOSOME TECHNOLOGY, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS TO PURCHASE COMMON STOCK
____________________
Liposome Technology, Inc. (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, 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 $0.01 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"), and (d) warrants to purchase Common
Stock (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, Preferred Stock or any other security. The
Preferred Stock may also be exchangeable for and/or convertible into shares of
Common Stock, Preferred Stock or any other security. The Debt Securities, the
Preferred Stock, the Common Stock and the Warranties 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 Company's Common Stock is traded over-the-counter on the Nasdaq
National Market under the symbol LTIZ. On April 5, 1995, the last reported sale
price of the Common Stock as reported by Nasdaq was $6.375 per share.
____________________
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 _____________, 1995.
<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
NASDAQ 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 Annual Report on Form 10-K for the year ended December 31, 1994; and
(2) 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.
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<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 Liposome Technology, Inc., 960 Hamilton Court, Menlo
Park, California 94025, Attention: Secretary (telephone (415) 323-9011). 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
Liposome Technology, Inc. ("LTI" or the "Company") is engaged in the
development, manufacture, marketing and sale of proprietary liposome and lipid-
based pharmaceutical products to treat life-threatening illnesses, including
cancer and infectious diseases. Liposome and lipid-based drug delivery offers
the potential to improve drug effectiveness and to reduce the side effects
associated with certain injectable drugs.
Liposomes are microscopic spheres formed of thin but durable lipid
membranes which regulate the passage of an entrapped drug into the bloodstream
over a period of time. The Company's current priority products use proprietary
Stealth[REGISTERED TRADEMARK] liposomes or a colloidal dispersion of lipids to
entrap therapeutic agents.
LTI's near-term product development strategy includes: (i) obtaining
approval from the U.S. Food and Drug Administration of New Drug Applications for
its key products, Amphocil-TM-(1) and DOX-SL[REGISTERED TRADEMARK](2), and of
Market Authorization Application dossiers from regulatory agencies in non-U.S.
markets; (ii) completing the full clinical development, registration and
expanded labeling of these products for a range of indications; (iii) exploring
additional applications for DOX-SL Technology; and (iv) creating advanced
technology for future products.
Stealth[REGISTERED TRADEMARK] and DOX-SL[REGISTERED TRADEMARK] are
registered trademarks of the Company and are used throughout this Prospectus to
describe, respectively, the Company's proprietary long-circulating liposomes and
Stealth liposome doxorubicin product. The Company has filed for registration of
the Amphocil-TM- tradename used throughout this Prospectus to describe the
Company's proprietary amphotericin B product.
The Company was founded in 1981 and was reincorporated in Delaware in 1987.
Its principal offices are located at 960 Hamilton Court, Menlo Park, California
94025, and its telephone number is (415) 323-9011.
RISK FACTORS
In addition to the other information in this Prospectus, prospective
purchasers of the Securities offered hereby should carefully consider the risk
factors set forth under the heading "Risk Factors" in "Management's Discussion
and Analysis of Financial Condition, Results of Operations and Risk Factors"
included in the Company's most recently incorporated Annual Report on Form 10-K
or Quarterly Report on Form 10-Q.
______________________________
(1) Also called Amphotec-TM- and ABCD[REGISTERED TRADEMARK].
(2) Also called S-Dox.
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USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of Securities offered hereby will be used for general corporate
purposes, which may include funding clinical, regulatory, marketing and sales
activities with respect to Amphocil and DOX-SL, and research and development of
new products.
Allocation of the net proceeds and the timing of expenditures will vary
depending on numerous factors, including the progress of the Company's research
and development efforts, the results of clinical trials, the timing of
regulatory approvals and the level of product sales. Pending their application,
the net proceeds will be invested in investment grade, short-term, interest-
bearing securities and deposit accounts.
Companies in the pharmaceutical and biotechnology industries generally
expend significant capital resources in product research and development and
commercialization. The Company believes that its existing cash balances and
interest income earned thereon together with revenues from sales will be
adequate to fund LTI's planned activities through the fourth quarter of 1995.
The Company will need additional financing to support the continuing development
and commercialization of its products, but no assurance can be given that
adequate financing will be available on satisfactory terms, if at all. Such
capital may be raised through the sale of the Securities offered hereby,
additional securities offerings, borrowing, product sales and other available
sources.
4
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DILUTION
The net tangible book value of the Company at December 31, 1994, was
approximately $10,629,000, or $0.56 per share of Common Stock. "Net tangible
book value" per share represents the amount of total tangible assets of the
Company reduced by the amount of its total liabilities and divided by the number
of shares of Common Stock outstanding. Assuming the Company issues an aggregate
of $50,000,000 of Common Stock at an assumed public offering price of $6.38 per
share (the last reported sale price of the Common Stock on the Nasdaq National
Market on April 5, 1995), with estimated net proceeds to the Company (after
assumed commissions and expenses) of $46,800,000, the pro forma net tangible
book value of the Company at December 31, 1994, would have been $57,429,000 or
$2.13 per share. This represents an immediate increase in net tangible book
value of $1.57 per share to existing stockholders and an immediate dilution of
$4.25 per share to new investors purchasing Common Stock in such offering, as
illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share of Common Stock(1)...... $6.38
Net tangible book value per share before this offering $0.56
Increase attributable to new investors................ 1.57
Pro forma net tangible book value per share of Common Stock after --------
this offering................................................. 2.13
--------
Dilution to new investors....................................... $4.25
--------
--------
______________________
<FN>
(1) The Company assumed an offering price of $6.38 per share based on the last
reported sale price of the Common Stock on the Nasdaq National Market on
April 5, 1995. The assumed offering price of the Common Stock at the time
any Common Stock is offered hereby may differ significantly from the
offering price assumed for purposes of this Prospectus.
</TABLE>
The above table does not give effect to the sale by the Company in March
1995 of 436,000 shares of Series A Convertible Reset Preferred Stock. See
"Description of Preferred Stock -- Outstanding Preferred Stock."
If the Securities offered hereby are Common Stock, the Prospectus
Supplement relating thereto will include a revised dilution table setting forth
any increase in net tangible book value to existing stockholders and any
dilution to new investors based on the proposed number of shares of Common Stock
to be offered and the assumed public offering price at the time of such
offering.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For the fiscal years ended December 31, 1990, 1991, 1992, 1993 and 1994,
earnings were insufficient to cover fixed charges by $7,471,000, $8,213,000,
$15,393,000, $19,654,000 and $29,185,000, respectively. There was no preferred
stock of the Company issued or outstanding during any of the years in the five
year period ended December 31, 1994. For these reasons, no ratios are provided.
5
<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, 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 $0.01 per share (the "Preferred Stock"), in one or more series, (c)
shares of common stock of the Company, par value $0.001 per share (the "Common
Stock"), and (d) warrants to purchase Common Stock (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,
Preferred Stock or any other security. The Preferred Stock may also be
exchangeable for and/or convertible into shares of Common Stock, Preferred Stock
or any other Security. The Debt Securities, the Preferred Stock, the Common
Stock and the Warranties 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. A copy of the proposed form of Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. 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.
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
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
6
<PAGE>
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 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
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<PAGE>
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 in respect of the Senior Subordinated Debt Securities or the
Subordinated Debt Securities.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock, Preferred Stock or any other
Security 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.
8
<PAGE>
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a 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 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. The
Company understands that under existing industry
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practices, 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 would 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.
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, there are no covenants or provisions in the
Indenture that may afford holders protection in the event of a highly leveraged
transaction or leveraged buyout involving the Company.
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 (d) certain
events of bankruptcy, insolvency or reorganization. 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
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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.
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.
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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
(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, of (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 (Section 7.07), replacement of the Trustee and
repayment to the Company of excess money held by the Trustee or the paying Agent
(Section 8.03), shall survive until the Debt Securities 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 of the Indenture shall
survive. 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
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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.
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 Restated Certificate of Incorporation (the "Certificate 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.
GENERAL
The Company has the authority to issue 4,000,000 shares of preferred stock,
$0.01 par value per share ("preferred stock of the Company," which term, as used
herein, includes the Preferred Stock offered hereby). As of the date hereof,
the Company has designated 600,000 shares of preferred stock of the Company as
Series A Convertible Reset Preferred Stock, of which 436,000 shares are issued
and outstanding as of March 31, 1995. See "-- Outstanding Preferred Stock."
Under the Certificate of Incorporation, the Board of Directors of the
Company is authorized without further stockholder action to designate and
provide for the issuance of up to 3,400,000 additional 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
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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; (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; and (vii) 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.
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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 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, or any other security 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, the shares of another series
of Preferred Stock or the
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amount of any other securities 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.
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.
OUTSTANDING PREFERRED STOCK
As of the date hereof, the Company has designated 600,000 shares of the
preferred stock of the Company as Series A Convertible Reset Preferred Stock.
In March 1995, the Company sold 436,000 shares of Series A Convertible Reset
Preferred Stock in a private placement.
The Series A Convertible Reset Preferred Stock is not entitled to receive a
dividend other than on an as converted into Common Stock basis, when, as and if
declared on the Common Stock by the Board of Directors out of funds legally
available therefor. In the event of any liquidation, dissolution or winding up
of the Company, the holders of the outstanding shares of Series A Convertible
Reset Preferred Stock are entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Company to the holders
of the Common Stock by reason of their ownership of such shares, an amount equal
to $25.00 per outstanding share of Series A Convertible Reset Preferred Stock
(subject to adjustment in the event of any stock dividend, stock split, stock
distribution or combination with respect to such shares), plus any accrued and
unpaid dividends. After payment of such amount, the holders of the Series A
Preferred Stock shall have no further rights to participate in any remaining
assets of the Company.
Holders of Series A Convertible Reset Preferred Stock are entitled to the
number of votes equal to the number of shares of Common Stock into which each
such share of Series A Convertible Reset Preferred Stock could then be converted
pursuant to the terms of the Certificate of Designation with respect to any and
all matters presented to the stockholders of the Company for their action and
consideration. Except as provided by law, holders of Series A Convertible Reset
Preferred Stock vote together with the holders of Common Stock as a single
class; provided, however, the consent of the holders of a majority of the
holders of the outstanding shares of Series A Convertible Reset Preferred Stock
shall be required for the Company to take any action that amends or repeals any
provision of the Company's charter if such action would materially and adversely
change the rights, preferences or privileges of the Series A Convertible Reset
Preferred Stock.
Each holder of Series A Convertible Reset Preferred Stock has the right, at
the holder's option, at any time beginning 60 days following the date of
issuance of such share, and prior to the close of business on any redemption
date with respect to such share, to convert each such share into the number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$25.00 by the conversion price per share in effect for the Series A Convertible
Reset Preferred Stock at the time of conversion (the "Conversion Price"). The
initial Conversion Price is $7.425 per share (the "Initial Conversion Price"),
subject to adjustment for stock splits, consolidations, reclassifications and
reorganizations. On March 25, 1996, the Conversion Price with respect to all
outstanding shares of Series A Convertible Reset Preferred Stock shall be reset
to an amount equal to the lesser of (i) the Initial Conversion Price or (ii) the
lowest average closing price of the Company's Common Stock on the Nasdaq
National Market for any 30 consecutive trading days in the preceding one-year
period; provided, however, in no event will the Conversion Price be reset below
$3.713. In addition, the Conversion Price shall be reset to an amount equal to
90% of the Conversion Price immediately upon the first occurrence, if any, after
March 31, 1996, of (A) the failure by the Company to timely make any material
required filing under the Securities Exchange Act of 1934, as amended, or (B)
delivery of a "qualified" report by the Company's independent public
accountants.
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The Series A Convertible Reset Preferred Stock shall automatically convert
to Common Stock at the Conversion Price then in effect, with the Series A
Convertible Preferred Stock being deemed to have a value of $25.00 per share, at
any time on or after 60 days from the date of issuance of the Series A
Convertible Reset Preferred Stock, on the fifth day following the day on which
the Company gives notice to the holders of record of the Series A Convertible
Reset Preferred Stock that both (i) the closing price of the Common Stock on the
Nasdaq National Market for 20 out of 30 consecutive trading days has been in
excess of 175% of the Conversion Price on the last day of any such period and
(ii) the Common Stock may immediately be resold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144(k) of
the Securities Act.
The Series A Convertible Reset Preferred Stock may be redeemed by the
Company, in whole or in part, for cash or may be converted into Common Stock at
the Conversion Price then in effect, in each case with the Series A Convertible
Reset Preferred Stock being deemed to have a value of $25.00 per share, (a) at
any time on or after two years from the date of issuance of the Series A
Convertible Reset Preferred Stock or (b) in the event of a merger of the
Company, a sale of all or substantially all of the Company's assets, or such
other transaction in which all or substantially all of the Company is
effectively sold.
All shares of Series A Convertible Reset Preferred Stock not previously
converted into Common Stock or redeemed or repurchased by the Company shall be
redeemed for cash or, at the Company's option, automatically converted into
Common Stock at the Conversion Price then in effect, in each case with the
Series A Convertible Reset Preferred Stock being deemed to have a value of
$25.00 per share, on March 31, 2000.
DESCRIPTION OF COMMON STOCK
The Company has authority to issue 35,000,000 shares of Common Stock, par
value $0.001 per share. As of March 29, 1995, there were approximately
19,143,800 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.
Chemical Trust Company of California acts as transfer agent and registrar
for the Common Stock.
17
<PAGE>
DESCRIPTION OF WARRANTS
Any Warrants offered pursuant to this Prospectus will be warrants to
purchase shares of Common Stock. The following summary contains a description
of certain general terms of the Warrants to which any Prospectus Supplement may
relate. Certain terms of any Warrant offered by any Prospectus Supplement will
be described in the Prospectus Supplement relating thereto. If so indicated in
the Prospectus Supplement, the terms of any Warrant may differ from the terms
set forth below. The description of certain provisions of the Warrants does not
purport to be complete and is subject to and qualified in its entirety by
reference to the provisions of the Warrant Agreement (the "Warrant Agreement")
relating to such Warrant, a form of which will be filed or incorporated by
reference, as the case may be, as an exhibit to the Registration Statement of
which this Prospectus is a part at or prior to the time of the issuance of such
Warrant.
GENERAL
The Warrants, evidenced by warrant certificates (the "Warrant
Certificates"), may be issued independently or together with any other
Securities offered by any Prospectus Supplement and may be attached to or
separate from such other Securities. If Warrants are offered, the related
Prospectus Supplement will describe the terms of the Warrants, including the
following: (1) the offering price, if any; (2) the number of shares of Common
Stock purchasable upon exercise of one Warrant and the initial price at which
such shares may be purchased upon exercise; (3) the date on which the right to
exercise the Warrants shall commence and the date on which such right shall
expire; (4) federal income tax consequences; (5) call provisions, if any;
(6) the antidilution provisions of the Warrants; and (7) any other terms of the
Warrants. The shares of Common Stock issuable upon exercise of the Warrants
will, when issued in accordance with the Warrant Agreement, be fully paid and
nonassessable.
EXERCISE OF WARRANTS
Warrants may be exercised by surrendering the Warrant Certificate signed by
the warrantholder, or its duly authorized agent, indicating the warrantholder's
election to exercise all or a portion of the Warrants evidenced by the
certificate. Surrendered Warrant Certificates shall be accompanied by payment
of the aggregate exercise price of the Warrants to be exercised, as set forth in
the related Prospectus Supplement, which payment may be made in the form of cash
or a check equal to the exercise price. Certificates evidencing duly exercised
Warrants will be delivered by the Company to the transfer agent for the Common
Stock. Upon receipt thereof, the transfer agent shall deliver or cause to be
delivered, to or upon the written order of the exercising warrantholder, a
certificate representing the number of shares of Common Stock purchased. If
fewer than all of the Warrants evidenced by any certificate are exercised, the
Company shall deliver to the exercising warrantholder a new Warrant certificate
representing the unexercised Warrants.
ANTIDILUTION PROVISIONS
The exercise price payable and the number of shares of Common Stock
purchasable upon the exercise of each Warrant will be subject to adjustment in
certain events, including the issuance of a stock dividend to holders of Common
Stock or a stock split, reverse stock split, combination, subdivision or
reclassification of Common Stock. In lieu of adjusting the number of shares of
Common Stock purchasable upon exercise of each Warrant, the Company may elect to
adjust the number of Warrants. No adjustments in the number of shares
purchasable upon exercise of the 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 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
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 into which such Warrant was exercisable immediately prior
thereto.
18
<PAGE>
NO RIGHTS AS STOCKHOLDERS
Holders of 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.
OUTSTANDING WARRANTS
As of March 31, 1995, the Company had issued and outstanding warrants to
purchase 1,230,000 shares of common stock at $4.25 per share, all of which
expire on March 28, 1997. In addition, in connection with the private placement
of the Company's Series A Convertible Reset Preferred Stock in March 1995, the
Company issued warrants to purchase 734,000 shares of common stock at $7.425 per
share, all of which expire approximately three years from the date of issuance.
19
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale 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
or underwriters also may offer and sell Securities in exchange for one or more
of its outstanding issues of the Securities or other securities. 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.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by one or
more firms ("remarketing firms"), acting as principals for their own accounts or
as agents for the Company. Any remarketing firm will be identified and the
terms of its agreement, if any, with the Company and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be entitled under
agreements which may be entered into with the Company to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act of 1933, and may be customers of, engage in transactions with
or perform services for the Company in the ordinary course of business.
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 Common is 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.
20
<PAGE>
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.
Christopher L. Kaufman, a partner of Latham & Watkins, beneficially owns less
than 1% of the Common Stock, 2,000 shares of the Company's Series A Convertible
Reset Preferred Stock and warrants to purchase up to 3,368 shares of Common
Stock at an exercise price of $7.425 per share. 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 Liposome Technology, Inc. appearing in Liposome
Technology, Inc.'s Annual Report (Form 10-K) for the year ended December 31,
1994, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
21
<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, [LOGO]
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 LIPOSOME TECHNOLOGY, INC.
SOLICITATION OF AN OFFER TO BUY BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER
TO SELL IS NOT AUTHORIZED, OR IN WHICH $50,000,000
THE PERSON IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. DEBT SECURITIES
NEITHER THE DELIVERY OF THIS PROSPECTUS COMMON STOCK
NOR ANY SALE HEREUNDER SHALL, UNDER ANY PREFERRED STOCK
CIRCUMSTANCES, CREATE ANY IMPLICATION WARRANTS TO PURCHASE COMMON STOCK
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........................... 3
Use of Proceeds........................ 4 --------------------
Dilution............................... 5 PROSPECTUS
Ratios of Earnings to Fixed Charges and --------------------
Earnings to Combined Fixed Charges and
Preferred Stock Dividends............ 5
General Description of Securities...... 6
Description of Debt Securities......... 6
Description of Preferred Stock.........13
Description of Common Stock............17
Description of Warrants................18
Plan of Distribution...................20
Legal Matters..........................21
Experts................................21
1995
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
<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:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee. . . . . . . . . . $ 17,242
*Nasdaq National Market Filing Fee . . . . . . . . . . . . 10,000
*Printing and Engraving Expenses . . . . . . . . . . . . . 50,000
*Accounting Fees and Expenses. . . . . . . . . . . . . . . 40,000
*Trustee Fees and Expenses . . . . . . . . . . . . . . . . 10,000
*Fees of Transfer Agent. . . . . . . . . . . . . . . . . . 10,000
*Blue Sky Fees and Expenses. . . . . . . . . . . . . . . 5,000
*Legal Fees and Expenses . . . . . . . . . . . . . . . . . 50,000
*Miscellaneous . . . . . . . . . . . . . . . . . . . . . 7,758
------------
*Total. . . . . . . . . . . . . . . . . . . . . . . . $200,000
------------
------------
__________________
<FN>
* Estimated.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has the power, pursuant to Section 145 of the Delaware General
Corporation Law, to limit the liability of its directors from certain breaches
of fiduciary duty and to indemnify its directors, officers and other persons for
certain acts.
Articles NINTH and TENTH of the Company's Restated Certificate of
Incorporation provide as follows:
"NINTH: A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit. If the Delaware
General Corporation Law is amended hereafter to authorize corporate action
further eliminating or limiting the personal liability of directors, then
the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or
modification.
II-1
<PAGE>
TENTH:
A. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("proceeding"), by reason of the
fact that he or she or a person of whom he or she is the legal
representative, is or was a director or officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended, (but, in the case of any such amendment, only to the extent that
such amendment permits the corporation to provide broader indemnification
rights than said Law permitted the corporation to provide prior to such
amendment) against all expenses, liability and loss including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; PROVIDED,
HOWEVER, that the corporation shall indemnify any such person seeking
indemnity in connection with an action, suit or proceeding (or part
thereof) initiated by such person only if such action, suit or proceeding
(or part thereof) was authorized by the board of directors of the
corporation. Such right shall be a contract right and shall include the
right to be paid by the corporation expenses incurred in defending any such
proceeding in advance of its final disposition; PROVIDED, HOWEVER, that the
payment of such expenses incurred by a director or officer of the
corporation in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such proceeding, shall
be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not
entitled to be indemnified under this Section or otherwise.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of Article TENTH is not paid in full by the
corporation within ninety (90) days after a written claim has been received
by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking, if any, has been tendered to this
corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
corporation to indemnify the claimant for the amount claimed, and the
burden of proving that such standards were met shall be on the claimant.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the corporation (including
its board of directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that claimant has not met
the applicable standard of conduct.
II-2
<PAGE>
C. NON-EXCLUSIVITY OF RIGHTS
The rights conferred on any person by Paragraphs A and B of Article TENTH
shall not be exclusive of any other right which such persons may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
D. INSURANCE
The corporation may maintain insurance, at its expense, to protect itself
and any such director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law."
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS:
4.1 Restated Certificate of Incorporation, filed as Exhibit 3.1 to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1988 and incorporated herein by reference.
4.2 Certificate of Designation for Series A Convertible Reset
Preferred Stock.
4.3 By-Laws, filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (File No. 33-13332) and incorporated herein
by reference.
4.4 Form of Indenture.
*5 Opinion of Latham & Watkins.
23.1 Consent of Ernst & Young LLP (see page II-7).
*23.2 Consent of Latham & Watkins (included in Exhibit 5).
24 Powers of Attorney.
_______________
*To be filed by amendment.
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)
II-3
<PAGE>
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the 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.
(4) That, for the purpose of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) That, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this Registration Statement at the time it was
declared effective.
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
shall be deemed to be the initial bona fide offering thereof, and
(7) 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.
(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
II-4
<PAGE>
in the prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or 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.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from a form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering hereof.
II-5
<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 MENLO PARK, STATE OF CALIFORNIA ON APRIL 6, 1995.
LIPOSOME TECHNOLOGY, INC.
By /s/ Nicolaos V. Arvanitidis
-------------------------------
Nicolaos V. Arvanitidis
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by each of the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Nicolaos V. Arvanitidis Chairman of the Board and April 6, 1995
- ------------------------------------ Chief Executive Officer
(Nicolaos V. Arvanitidis)
/s/ Peter V. Leigh Chief Financial Officer April 6, 1995
- ------------------------------------ (Principal Financial Officer)
(Peter V. Leigh)
/s/ Donald J. Stewart Treasurer and Controller April 6, 1995
- ------------------------------------ (Principal Accounting Officer)
(Donald J. Stewart)
* Director April 6, 1995
- ------------------------------------
(Robert G. Faris)
* Director April 6, 1995
- ------------------------------------
(Robert B. Shapiro)
* Director April 6, 1995
- ------------------------------------
(I. Craig Henderson)
* Director April 6, 1995
- ------------------------------------
(Richard C.E. Morgan)
* Director April 6, 1995
- ------------------------------------
(E. Donnall Thomas)
* By: /s/ Peter V. Leigh
---------------------------------
Peter V. Leigh, Attorney-In-Fact
</TABLE>
II-6
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Liposome Technology,
Inc. and to the incorporation by reference therein of our report dated February
10, 1995, except as to Note 7, as to which the date is March 30, 1995, with
respect to the financial statements of Liposome Technology, Inc. included in its
Annual Report (Form 10-K) for the year ended December 31, 1994, filed with the
Securities and Exchange Commission.
Ernst & Young LLP
Palo Alto, California
April 6, 1995
II-7
<PAGE>
EXHIBIT INDEX
4.1 Restated Certificate of Incorporation, filed as Exhibit 3.1 to
the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1988 and incorporated herein by reference.
4.2 Certificate of Designation for Series A Convertible Reset
Preferred Stock.
4.3 By-Laws, filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (File No. 33-13332) and incorporated herein
by reference.
4.4 Form of Indenture.
*5 Opinion of Latham & Watkins.
23.1 Consent of Ernst & Young LLP (See page II-7).
*23.2 Consent of Latham & Watkins (included in Exhibit 5).
24 Powers of Attorney.
__________________________________
*To be filed by amendment.
<PAGE>
CERTIFICATE OF DESIGNATION OF
RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A CONVERTIBLE RESET PREFERRED STOCK
OF LIPOSOME TECHNOLOGY, INC.
A DELAWARE CORPORATION
Pursuant to Section 151 of
the General Corporation Law of the State of Delaware
The undersigned Nicolaos V. Arvanitidis hereby certifies that:
(a) He is the duly elected and acting Chairman of the Board of Directors
and Chief Executive Officer of Liposome Technology, Inc., a Delaware corporation
(the "Corporation");
(b) Pursuant to the authority conferred upon the Board of Directors of the
Corporation by the Corporation's Restated Certificate of Incorporation (the
"Certificate"), the Board of Directors of the Corporation as of March 29, 1995
adopted the following resolution creating a series of preferred stock designated
as Series A Convertible Reset Preferred Stock:
WHEREAS, the Certificate provides for a class of shares known as
Preferred Stock, issuable from time to time in one or more series; and
WHEREAS, the Board of Directors of the Corporation is authorized by
the Certificate to determine the powers, preferences, rights, qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, to fix the number of shares constituting any such
series, and to determine the designation thereof, or any of them; and
WHEREAS, the Board of Directors of the Corporation desires, pursuant
to its authority as aforesaid, to determine and fix the powers, preferences,
rights, qualifications, limitations and restrictions relating to series of
Preferred Stock and the number of shares constituting, and the designation of,
each such series:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority vested
in the Board of Directors of the Corporation in accordance with the provisions
of the Certificate, a series of Preferred Stock is hereby created, and the Board
of Directors hereby fixes and determines the designation of, the number of
shares constituting, and the powers, preferences, rights, qualifications,
limitations and restrictions relating to, such series of Preferred Stock as
follows:
-1-
<PAGE>
1. DESIGNATION AND AMOUNT. The shares of such series of Preferred Stock
of the Corporation shall be designated Series A Convertible Reset Preferred
Stock and the number of shares constituting such series shall be 600,000.
2. DIVIDEND PROVISIONS.
Except as set forth in the next succeeding sentence, the holders of
the Series A Convertible Reset Preferred Stock shall not be entitled to receive
a dividend. Subject to the rights of holders of stock with a dividend
preference senior to that of the Series A Convertible Reset Preferred Stock (to
the extent such stock has been issued consistent with the provisions of
Section 6.2 hereof), the holders of the Series A Convertible Reset Preferred
Stock shall be entitled to receive dividends from the Corporation on an as
converted into Common Stock basis, when, as and if declared on the Common Stock
by the Board of Directors of the Corporation out of funds legally available
therefor.
3. LIQUIDATION PREFERENCE.
3.1 PREFERENCE. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
the outstanding shares of Series A Convertible Reset Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock by
reason of their ownership of such shares, an amount equal to $25.00 per
outstanding share of Series A Convertible Reset Preferred Stock (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares), plus any accrued but unpaid
dividends. After payment of such amount, the holders of the Series A
Convertible Reset Preferred Stock shall have no further rights to participate in
any remaining assets of the Corporation. Subject to the rights of holders of
stock with a liquidation preference senior to that of the Series A Convertible
Reset Preferred Stock, if there are insufficient assets to satisfy the
liquidation preference amount of the outstanding shares of Series A Convertible
Reset Preferred Stock and any other series of Preferred Stock entitled to
payments on liquidation on a pari passu basis with the Series A Convertible
Reset Preferred Stock, then all of the assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of the
outstanding shares of Series A Convertible Reset Preferred Stock and of any
other series of Preferred Stock entitled to payments on liquidation on a pari
passu basis with the Series A Convertible Reset Preferred Stock in proportion to
the aggregate liquidation preference of outstanding shares of Series A
Convertible Reset Preferred Stock and such other series of Preferred Stock then
held by them.
-2-
<PAGE>
3.2 TRANSACTIONS TREATED AS LIQUIDATION. For purposes of
Section 3.1, an acquisition, merger or other similar transaction or series of
transactions involving the Corporation will not be deemed a liquidation
(effective upon the closing of such transaction or series of transactions)
unless such transaction or series of transactions would result in the holders of
the Series A Convertible Reset Preferred Stock receiving securities (i) for
which no public trading market then exists and (ii) which may not then be resold
(A) pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (B) in a transaction exempt from the
registration requirements of the Securities Act.
4. CONVERSION. The holders of Series A Convertible Reset Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
4.1 RIGHT TO CONVERT. Each share of Series A Convertible Reset
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time beginning 60 days following the date of issuance of such share, and
prior to the close of business on any redemption date with respect to such
share, at which time the right to convert shall terminate, at the office of the
Corporation or any transfer agent for the Series A Convertible Reset Preferred
Stock. Each share of Series A Convertible Reset Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $25.00 by the conversion price per share in
effect for the Series A Convertible Reset Preferred Stock at the time of the
conversion (the "Conversion Price") (determined as hereinafter provided). The
Conversion Price at which shares of Common Stock shall be initially issuable
upon conversion of the shares of Series A Convertible Reset Preferred Stock (the
"Initial Conversion Price") shall be $7.425 per share. Such Initial Conversion
Price shall be adjusted as hereinafter provided.
4.2 MECHANICS OF CONVERSION. Before any holder of Series A
Convertible Reset Preferred Stock shall be entitled to convert the same into
shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Convertible Reset Preferred Stock, and shall
give written notice by mail, postage prepaid, to the Corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued; PROVIDED, HOWEVER, that in the event of a con-
version at the election of the Corporation pursuant to Section 5.1 or Section
5.2, the outstanding shares of Series A Convertible Reset Preferred Stock shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates representing
-3-
<PAGE>
such shares are surrendered to the Corporation or its transfer agent; and
PROVIDED FURTHER, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such automatic
conversion unless and until the certificates evidencing such shares of Series A
Convertible Reset Preferred Stock are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the Corpora-
tion from any loss incurred by it in connection with such certificates. The
Corporation shall, as soon as practicable after such delivery, or such agreement
and indemnification in the case of a lost certificate, issue and deliver at such
office to such holder of Series A Convertible Reset Preferred Stock, a certif-
icate or certificates for the number of shares of Common Stock to which the
holder shall be entitled as aforesaid, subject to Section 4.7 below. Such con-
version shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Convertible
Reset Preferred Stock to be converted, or in the case of an automatic conversion
on the date of such automatic conversion as set forth above, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. In the event fewer than all the
shares represented by any certificate are converted, a new certificate shall be
issued representing the shares that have not been converted.
4.3 RESET OF CONVERSION PRICE. On March 25, 1996, the Conversion
Price with respect to all outstanding shares of Series A Convertible Reset
Preferred Stock shall be reset to an amount equal to the lesser of (i) the
Initial Conversion Price or (ii) the lowest average Closing Price (as defined
below) of the Corporation's Common Stock for any 30 consecutive Trading Days (as
defined below) in the preceding one-year period; PROVIDED, HOWEVER, that in no
event shall the Conversion Price be reset to a Conversion Price less than
$3.713; and PROVIDED FURTHER, that the Conversion Price shall not be reset with
respect to any shares of Series A Convertible Reset Preferred Stock that have
been converted or redeemed prior to March 25, 1996.
In addition, upon the occurrence, if any, after March, 1996, of the
first "Material Adverse Event" (as defined below), the Conversion Price shall be
reset to an amount equal to 90% of the Conversion Price in effect on the date of
such first Material Adverse Event.
For the purposes of this resolution (i) "Trading Day" means a day on
which the principal national securities exchange on which the Common Stock is
listed is open for the transaction of
-4-
<PAGE>
business; (ii) the "Closing Price" of the Corporation's Common Stock shall be
the last reported sale price of the Common Stock on the Nasdaq National Market
and (iii) a "Material Adverse Event" shall mean (A) the failure by the
Corporation to make any material required filing under the Securities Exchange
Act of 1934 on a timely basis and (B) delivery of a "qualified" report by the
Corporation's independent public accountants.
4.4 ADJUSTMENTS OF CONVERSION PRICE. In the event that the
Corporation at any time or from time to time after the issuance of the Series A
Convertible Reset Preferred Stock shall declare or pay, without consideration,
any dividend on the Common Stock payable in Common Stock or in any right to
acquire Common Stock for no consideration, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock), or in the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Conversion Price in effect immediately prior to such event
shall, concurrently with the effectiveness of such event, be proportionately
decreased or increased, as appropriate. In the event that the Corporation shall
declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration, then the Corporation
shall be deemed to have made a dividend payable in Common Stock in an amount of
shares equal to the maximum number of shares issuable upon exercise of such
rights to acquire Common Stock.
4.5 ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION. If the
Common Stock issuable upon conversion of the Series A Convertible Reset
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 4.4 or a merger or other reorganization referred to in
Section 3.2 above), the Conversion Price then in effect shall, concurrently with
the effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series A Convertible Reset Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series A Convertible Reset Preferred Stock immediately before
that change.
4.6 NO IMPAIRMENT. The Corporation will not, by amendment of the
Certificate or through any reorganization,
-5-
<PAGE>
recapitalization, consolidation, merger, dissolution or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Series A Convertible
Reset Preferred Stock against impairment.
4.7 NO FRACTIONAL SHARES. No fractional shares shall be issued upon
conversion or redemption of the Series A Convertible Reset Preferred Stock and
the number of shares of any Common Stock to be issued shall be rounded down to
the nearest whole share. Whether or not fractional shares would be issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series A Convertible Reset Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
4.8 CERTIFICATE AS TO RESET AND ADJUSTMENTS. Upon the occurrence of
the reset of the Conversion Price and upon each adjustment or readjustment of
the Conversion Price of the Series A Convertible Reset Preferred Stock pursuant
to this Section 4, the Corporation, at its expense, shall promptly compute such
reset, adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of record of Series A Convertible Reset
Preferred Stock a certificate setting forth such reset, adjustment or
readjustment and showing in detail the facts upon which such reset, adjustment
or readjustment is based. The Corporation shall, upon the written request at
any time of any holder of Series A Convertible Reset Preferred Stock, but in no
event more than two times in any one-year period, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such reset,
adjustment and readjustment, (B) the Conversion Price at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series A
Convertible Reset Preferred Stock.
4.9 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of record of Series A Convertible Reset Preferred
Stock, at least 15 calendar days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such
-6-
<PAGE>
dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
4.10 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Series A Convertible Reset Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Convertible Reset Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all the then outstanding Series A
Convertible Reset Preferred Stock, in addition to such other remedies as shall
be available to the holder of such Series A Convertible Reset Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
5. REDEMPTION.
5.1 TERMS OF REDEMPTION AND CONVERSION AT THE ELECTION OF THE
CORPORATION.
5.1.1 STOCK TRADING AT PREMIUM. The Series A Convertible Reset
Preferred Stock shall automatically convert to Common Stock at the Conversion
Price then in effect, with the Series A Convertible Reset Preferred Stock being
deemed to have a value of $25.00 per share, at any time on or after 60 days from
the date of issuance of the Series A Convertible Reset Preferred Stock, on the
fifth day following the day on which the Corporation gives notice to the holders
of record of the Series A Convertible Reset Preferred Stock that (i) the Closing
Price of the Corporation's Common Stock for 20 out of 30 consecutive Trading
Days has been in excess of 175% of the Conversion Price on the last day of any
such consecutive Trading Day period and (ii) the Common Stock may immediately be
resold pursuant to an effective registration statement under the Securities Act
or pursuant to Rule 144(k) of the Securities Act.
5.1.2 IN THE EVENT OF MERGER OR AFTER TWO YEARS. The Corporation may
redeem the Series A Convertible Reset Preferred Stock, in whole or in part, for
cash or may, at its election, convert the Series A Convertible Reset Preferred
Stock, in whole or in part, to Common Stock at the Conversion Price then in
effect, in each case with the Series A Convertible Reset Preferred Stock being
deemed to have a value of $25.00 per share (a) at any time on or after two years
from the date of issuance of the Series A Convertible Reset Preferred Stock or
(b) in the event of a merger of the Corporation, a sale of all or substantially
all of the
-7-
<PAGE>
Corporation's assets, or such other transaction in which all or substantially
all of the Corporation is effectively sold; PROVIDED that, if the Series A
Convertible Reset Preferred Stock is converted to Common Stock, the Common Stock
may immediately be resold pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144(k) of the Securities Act.
5.2 MANDATORY REDEMPTION OR CONVERSION AFTER FIVE YEARS. All shares
of Series A Convertible Reset Preferred Stock which have not previously been
converted into Common Stock, redeemed by the Corporation or repurchased by the
Corporation shall be redeemed for cash or, at the Corporation's election,
automatically converted into Common Stock at the Conversion Price then in
effect, in each case with the Series A Convertible Reset Preferred Stock being
deemed to have a value of $25.00 per share, on March 31, 2000. On such date,
all rights with respect to the Series A Convertible Reset Preferred Stock will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Series A Convertible Reset
Preferred Stock has been converted or cash, as applicable. In the event that.
as a result of a merger, acquisition or other similar transaction, all of the
Corporation's Common Stock has been exchanged or purchased for cash, then the
Corporation shall not have the option to convert the Series A Convertible Reset
Preferred Stock to Common Stock under this Section 5.2.
5.3 REDEMPTION PROCEDURES. At least 30 days prior to any redemption
date or conversion into Common Stock at the election of the Corporation (in
either case, the "Redemption Date"), written notice shall be mailed, first
class, postage prepaid, to each holder of record of Series A Convertible Reset
Preferred Stock to be redeemed or converted into Common Stock, at such holder's
address last shown on the records of the Corporation, specifying whether the
Series A Convertible Reset Preferred Stock is to be redeemed or converted, the
number of shares to be redeemed or converted, the redemption date or conversion
date and, in the event of redemption, the date on which such holder's conversion
rights (pursuant to Section 4 hereof) as to such shares terminate and calling
upon such holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (such notice is hereinafter referred to as the "Redemption Notice").
On or prior to each Redemption Date, a holder of shares of Series A Convertible
Reset Preferred Stock to be redeemed or converted shall surrender his or its
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in such Redemption Notice, and thereupon, at
the election of the Corporation, either the redemption price of such shares
shall be payable or Common Stock shall be issued to the person whose name
appears on such certificate or certificates as the owner thereof
-8-
<PAGE>
and each surrendered certificate shall be canceled. In the event of a
conversion into Common Stock at the election of the holder or at the election of
the Corporation, the number of shares of Common Stock to be issued for each
share of Series A Convertible Reset Preferred Stock shall be determined by
dividing $25.00 by the average of the Closing Prices of the Common Stock over
the five consecutive Trading Days immediately preceding the date on which the
Redemption Notice is mailed. In the event fewer than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the Redemption Date, unless
there shall have been a default in payment of the redemption price or issuance
of Common Stock, all rights of the holders of the Series A Convertible Reset
Preferred Stock designated in the Redemption Notice for redemption or conversion
into Common Stock as holders of Series A Convertible Reset Preferred Stock of
the Corporation (except the right to receive the redemption price without
interest or Common Stock upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
6. VOTING RIGHTS.
6.1 GENERAL. Each holder of shares of Series A Convertible Reset
Preferred Stock shall be entitled to the number of votes equal to the number of
shares of Common Stock into which each such share of Series A Convertible Reset
Preferred Stock could then be converted pursuant to Section 4 hereof with
respect to any and all matters presented to the stockholders of the Corporation
for their action or consideration. Except as provided by law, or by the
provisions of Section 6.2 below, holders of Series A Convertible Reset Preferred
Stock shall vote together with the holders of Common Stock as a single class.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which
shares of Series A Convertible Reset Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
6.2 ADVERSE EFFECT ON SERIES A CONVERTIBLE PREFERRED STOCK. In
addition to any other rights provided by law, the consent of the holders of a
majority of the holders of the outstanding shares of Series A Convertible Reset
Preferred Stock shall be required for the Corporation to take any action that
amends or repeals any provision of the Corporation's charter if such action
would materially and adversely change the rights, preferences or privileges of
the Preferred Stock; PROVIDED that the foregoing does not create a right to vote
other than in accordance with Section 6.1 with respect to (i) any event that
would constitute a merger or other sale of the Corporation, liquidation,
-9-
<PAGE>
dissolution or winding up or with respect to any authorization of any class or
series of stock or (ii) any series of Preferred Stock with rights, privileges or
preferences senior to the Series A Convertible Reset Preferred Stock.
7. NO REISSUANCE OF SERIES A CONVERTIBLE RESET PREFERRED STOCK. In the
event any Series A Convertible Reset Preferred Stock shall be acquired by the
Corporation by reason of redemption, conversion, or otherwise, such shares shall
be canceled and shall not be reissued by the Corporation. The Certificate shall
be appropriately amended to effect the corresponding reduction in the
Corporation's authorized capital stock.
* * *
RESOLVED FURTHER, that the Chief Executive Officer, the President or
any Vice President, and the Secretary, the Chief Financial Officer, the
Treasurer, or any Assistant Secretary or Assistant Treasurer of this Corporation
are each authorized to execute, verify, and file a Certificate of Designation of
Rights, Preferences and Privileges of Series A Convertible Reset Preferred Stock
in accordance with Delaware law.
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate on
March 29, 1995.
/s/ Nicoloas V. Arvanitidis
---------------------------
Nicolaos V. Arvanitidis
Chairman of the Board of
Directors and Chief Executive
Officer
/s/ Sally A. Davenport
----------------------
Sally A. Davenport, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Certificate of Designation of Rights, Preferences and Privileges
of Series A Convertible Reset Preferred Stock and know the contents thereof, and
that the statements therein are true.
Executed at Menlo Park, California on March 29, 1995.
/s/ Nicolaos V. Arvanitidis
---------------------------------------------
Nicolaos V. Arvanitidis
Chairman of the Board of
Directors and Chief Executive
Officer
/s/ Sally A. Davenport
---------------------------------------------
Sally A. Davenport, Secretary
-11-
<PAGE>
LIPOSOME TECHNOLOGY, INC.,
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>
TABLE OF CONTENTS
PAGE
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............ 8
Section 2.05. Securityholder Lists........................... 8
Section 2.06. Transfer and Exchange........................... 9
Section 2.07. Replacement Securities......................... 9
Section 2.08. Outstanding Securities........................ 10
Section 2.09. Treasury Securities............................ 10
Section 2.10. Temporary Securities........................... 10
Section 2.11. Cancellation................................... 11
Section 2.12. Defaulted Interest............................. 11
Section 2.13. Special Record Dates........................... 11
ARTICLE 3 REDEMPTION................................................... 12
Section 3.01. Notices to Trustee............................. 12
Section 3.02. Selection of Securities to Be Redeemed......... 12
Section 3.03. Notice of Redemption........................... 13
Section 3.04. Effect of Notice of Redemption................. 14
Section 3.05. Deposit of Redemption Price.................... 14
Section 3.06. Securities Redeemed in Part.................... 14
ARTICLE 4 COVENANTS.................................................... 14
Section 4.01. Payment of Securities.......................... 14
Section 4.02. Maintenance of Office or Agency................ 15
Section 4.03. Commission Reports............................. 15
Section 4.04. Compliance Certificate......................... 16
Section 4.05. Taxes.......................................... 16
Section 4.06. Stay, Extension and Usury Laws................. 16
Section 4.07. Corporate Existence............................ 16
Section 4.08. Payments for Consent............................17
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PAGE
ARTICLE 5 SUCCESSORS....................................................17
Section 5.01. When Company May Merge, etc.....................17
Section 5.02. Successor Corporation Substituted.............. 18
ARTICLE 6 DEFAULTS AND REMEDIES........................................ 18
Section 6.01. Events of Default.............................. 18
Section 6.02. Acceleration................................... 19
Section 6.03. Other Remedies................................. 20
Section 6.04. Waiver of Past Defaults........................ 20
Section 6.05. Control by Majority............................ 20
Section 6.06. Limitation on Suits............................ 21
Section 6.07. Rights of Holders to Receive Payment........... 21
Section 6.08. Collection Suit by Trustee..................... 21
Section 6.09. Trustee May File Proofs of Claim............... 22
Section 6.10. Priorities..................................... 22
Section 6.11. Undertaking for Costs.......................... 23
ARTICLE 7 TRUSTEE...................................................... 24
Section 7.01. Duties of Trustee.............................. 24
Section 7.02. Rights of Trustee.............................. 25
Section 7.03. Individual Rights of Trustee................... 25
Section 7.04. Trustee's Disclaimer........................... 26
Section 7.05. Notice of Defaults............................. 26
Section 7.06. Reports by Trustee to Holders.................. 26
Section 7.07. Compensation and Indemnity..................... 26
Section 7.08. Replacement of Trustee......................... 27
Section 7.09. Successor Trustee by Merger, etc............... 29
Section 7.10. Eligibility; Disqualification.................. 29
Section 7.11. Preferential Collection of Claims Against
Company........................................ 29
ARTICLE 8 DISCHARGE OF INDENTURE....................................... 29
Section 8.01. Termination of Company's Obligations........... 29
Section 8.02. Application of Trust Money..................... 31
Section 8.03. Repayment to Company........................... 31
ARTICLE 9 SUPPLEMENTS, AMENDMENTS AND WAIVERS.......................... 32
Section 9.01. Without Consent of Holders..................... 32
Section 9.02. With Consent of Holders........................ 32
Section 9.03. Revocation and Effect of Consents.............. 33
Section 9.04. Notation on or Exchange of Securities.......... 34
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PAGE
Section 9.05. Trustee To Sign Amendments, etc................ 34
ARTICLE 10 MISCELLANEOUS................................................ 34
Section 10.01. Indenture Subject to Trust Indenture Act....... 34
Section 10.02. Notices........................................ 34
Section 10.03. Communication By Holders With Other Holders.... 35
Section 10.04. Certificate and Opinion as to Conditions
Precedent...................................... 35
Section 10.05. Statements Required in Certificate or Opinion.. 36
Section 10.06. Rules by Trustee and Agents.................... 36
Section 10.07. Legal Holidays................................. 36
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.......... 37
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INDENTURE dated as of _____________, 199__ between Liposome Technology,
Inc., 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 unsecured
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.
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"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.
"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.
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"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.
"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 or partnership 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, or (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.
"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.
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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;
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(iv) words in the singular include the plural, and in the plural include
the singular; and
(v) provisions apply to successive events and transactions.
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;
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(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;
(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) the terms and conditions, if any, upon which any Securities of
such series may or shall be converted into other Securities or property;
and
(o) 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
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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.
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
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"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
Subsidiaries 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 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,
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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 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.
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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.
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.
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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.
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
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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.
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.
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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
(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 Officer's 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.
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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 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.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, 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 Borough of Manhattan, the City of New York 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).
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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
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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 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.
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.
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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.
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;
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(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;
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.
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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.
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.
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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.
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
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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.
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.
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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.
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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.
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(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 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.
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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.
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 _________ beginning with ___________, 1994, the
Trustee with respect to any series of Securities shall mail to Holders of
Section Securities of that series as provided in TIA Section 313(c) a brief
report dated as of such ______ that complies with TIA Section 313(a) (if such
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
report is required by TIA Section on which any of the Securities are listed, as
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
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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.
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
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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.
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
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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
required by TIA Section 313(d). The requirements of TIA Section 310(a). The
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
Trustee as to any series of Securities shall of TIA Section 310(a)(1), (2) and
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
(5). The Trustee is subject to TIA Section 310(b). relationship listed in TIA
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
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(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;
(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.
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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 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.
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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 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,
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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.
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
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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.
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:
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If to the Company:
Liposome Technologies, Inc.
960 Hamilton Court
Menlo Park, California 94025-1140
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.
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:
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(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.
SECTION 10.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York or San Francisco, California, 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.
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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.
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.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Indenture as of
the date first above written.
LIPOSOME TECHNOLOGIES, INC.
By____________________________
Name:
Title:
[ ],
as Trustee
By____________________________
Name:
Title:
S-1
<PAGE>
STATE OF CALIFORNIA )
) ss.
CITY OF MENLO PARK )
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 Liposome Technologies, Inc., 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)
S-2
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Nicolaos V. Arvanitidis, Peter
V. Leigh, and Sally A. Davenport, and each of them, with full power of
substitution and full power to act without the other, his true and lawful
attorney-in-fact and agent to act for him in his name, place and stead, in any
and all capacities, to sign a Registration Statement on Form S-3 registering the
securities of Liposome Technology, Inc., and any or all amendments thereto, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully, to all intents
and purposes, as they or he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
/s/ Nicolaos V. Arvanitidis /s/ Robert G. Faris
- ----------------------------------- -----------------------------------
(Nicolaos V. Arvanitidis) (Robert G. Faris)
/s/ Robert B. Shapiro /s/ I. Craig Henderson
- ----------------------------------- -----------------------------------
(Robert B. Shapiro) (I. Craig Henderson)
/s/ Richard C.E. Morgan /s/ E. Donnall Thomas
- ----------------------------------- -----------------------------------
(Richard C.E. Morgan) (E. Donnall Thomas)
Date: April 6, 1995
