<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1996
REGISTRATION NO. 333-[ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
NORTH AMERICAN VACCINE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CANADA NONE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
12103 INDIAN CREEK COURT
BELTSVILLE, MARYLAND 20705
(301) 470-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------
DANIEL J. ABDUN-NABI, ESQ.
GENERAL COUNSEL
NORTH AMERICAN VACCINE, INC.
12103 INDIAN CREEK COURT
BELTSVILLE, MARYLAND 20705
(301) 470-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF CORRESPONDENCE TO:
THOMAS F. COONEY, III, ESQ.
SIMON M. NADLER, ESQ.
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
SECOND FLOOR
WASHINGTON, D.C. 20036-1800
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(3) OFFERING PRICE(3) FEE(1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.50% Convertible Subordinated Notes....................... $86,250,000 100% $86,250,000 $29,739
- -----------------------------------------------------------------------------------------------------------------------
Common stock, no par value(3).............................. (2) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total...................................................... $86,250,000 100% $86,250,000 $29,739
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act.
(2) Such indeterminate number of shares of North American Vaccine, Inc. common
stock, no par value, as may be issuable upon conversion of the Convertible
Subordinated Notes registered hereunder, including such shares as may be
issuable pursuant to anti-dilution adjustments.
(3) Exclusive of accrued interest and distributions, if any.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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 AN 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 JULY 25, 1996
PROSPECTUS
U.S.$86,250,000
6.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 1, 2003
This Prospectus relates to the offering for resale of the 6.50% Convertible
Subordinated Notes (the "Notes") issued under an Indenture, dated May 7, 1996,
between North American Vaccine, Inc. (the "Company") and Marine Midland Bank, as
Trustee (the "Trustee"), and the shares of common stock, no par value ("Common
Shares"), of the Company issuable upon conversion of the Notes. The Notes were
issued and sold (the "Original Offering") on May 7, 1996 (the "Original Offering
Date") to the Underwriters (as defined and were simultaneously sold by the
Underwriters, in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), in the United States
to persons reasonably believed by the Underwriters to be qualified institutional
buyers as defined in Rule 144A under the Securities Act, to a limited number of
institutional investors that are accredited investors within the meaning of Rule
501(a) under the Securities Act and outside the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S under the
Securities Act.
The Notes and the Common Shares issuable upon conversion of the Notes (the
"Offered Securities") may be offered and sold from time to time by the holders
named herein or by their transferees, pledgees, donees or their successors
(collectively, the "Selling Holders") pursuant to this Prospectus. The Offered
Securities may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Plan of
Distribution" and "Selling Holders." If required, the names of any such agents
or underwriters involved in the sale of the Offered Securities and the
applicable agent's commission, dealer's purchase price or underwriter's
discount, if any, will be set forth in an accompanying supplement to this
Prospectus (the "Prospectus Supplement"). The Selling Holders will receive all
of the net proceeds from the sale of the Offered Securities and will pay all
underwriting discounts and selling commissions, if any, applicable to any such
sale. The Company is responsible for payment of all other expenses incident to
the offer and sale of the Offered Securities. The Selling Holders and any
broker-dealers, agents or underwriters that participate in the distribution of
the Offered Securities may be deemed to be "Underwriters" within the meaning of
the Securities Act, and any commission received by them and any profit on the
resale of the Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of indemnification arrangements.
The Notes will be convertible into Common Shares at any time on or after
August 6, 1996 and prior to the close of business on the maturity date, unless
previously redeemed or repurchased, at a conversion price of $24.858 per share
(equivalent to a conversion rate of 40.2293 shares per $1,000 principal amount
of Notes), subject to adjustment in certain events. On July 24, 1996, the last
reported sale price of the Common Shares, which are listed on the American Stock
Exchange ("AMEX") under the symbol "NVX," was $16 1/8 per share.
Interest on the Notes is payable on May 1 and November 1 of each year,
commencing on November 1, 1996. Principal and interest payments will be made
without any deduction for withholding taxes, except to the extent described
under "Description of Notes -- Payment of Additional Amounts". The Notes are
redeemable (a) in the event of certain developments involving withholding taxes
(as described under "Description of Notes -- Redemption -- Redemption for
Taxation Reasons"), at a redemption price of 100% of the principal amount of the
Notes to be redeemed, plus accrued interest to the redemption date, and (b) at
the option of the Company, on or after May 1, 1999, in whole or in part, at the
redemption prices set forth herein, plus accrued interest to the redemption
date. See "Description of Notes -- Redemption -- Optional Redemption." The Notes
are not entitled to any sinking fund. The Notes will mature on May 1, 2003.
In the event of a Change in Control (as defined), each holder of Notes
("Holder") may require the Company to repurchase its Notes, in whole or in part,
for cash or, at the Company's option, for Common Shares (valued at 95% of the
average closing prices for the five trading days immediately preceding the
second trading day prior to the repurchase date), at a repurchase price of 100%
of the principal amount of Notes to be repurchased, plus accrued interest to the
repurchase date.
The Notes are unsecured obligations subordinated in right of payment to all
existing and future Senior Indebtedness (as defined) of the Company and are
effectively subordinated in right of payment to all indebtedness and other
liabilities of the Company's subsidiaries. As of March 31, 1996, the Company had
no outstanding consolidated Senior Indebtedness. The Indenture will not restrict
the Company or its subsidiaries from incurring additional Senior Indebtedness or
other indebtedness. See "Description of Notes -- Subordination."
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 5.
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 COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the following
public reference facilities maintained by the Commission: Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Suite 1300, Seven World
Trade Center, New York, New York 10048; and The Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material may also
be obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
prescribed rates. In addition, reports, proxy statements and other information
concerning the Company may be inspected and copied at the offices of the
American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act with respect to the
Offered Securities. This Prospectus omits certain of the information contained
in the Registration Statement, and reference is hereby made to the Registration
Statement for further information with respect to the Company and the Offered
Securities. Although statements concerning and summaries of certain documents
are included herein, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
These documents may be inspected without charge at the office of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
may be obtained at fees and charges prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-10451) are
hereby incorporated by reference in this Prospectus: (i) the Company's Annual
Report on Form 10-K for the year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; and (iii)
the Company's Proxy Statement for its Annual Meeting of Shareholders, dated May
1, 1996.
All reports and any definitive proxy or information statements filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Offered Securities shall be deemed to be incorporated by
reference into this Prospectus and 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 herein by reference, or contained in this Prospectus, 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 or is 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.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all documents incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be directed to Daniel
J. Abdun-Nabi, Esq., General Counsel, North American Vaccine, Inc., 12103 Indian
Creek Court, Beltsville, Maryland 20705, (301) 470-6100.
2
<PAGE> 4
THE COMPANY
Introduction. The Company is engaged in the research, development and
production of vaccines for the prevention of infectious diseases in children and
adults. The Company's first product is a patented, novel monocomponent acellular
pertussis (whooping cough) vaccine that the Company believes will significantly
reduce the incidence of adverse reactions associated with current "whole-cell"
pertussis vaccines. The Company's acellular pertussis ("aP") vaccine has been
combined with diphtheria and tetanus toxoids for use in a combination
diphtheria-tetanus-acellular pertussis ("DTaP") vaccine for all primary and
booster pediatric doses. Regulatory approval to market this DTaP vaccine in
Sweden was granted in February 1996 and the Company filed an application with
the United States Food and Drug Administration ("FDA") in September 1995 seeking
approval to market its DTaP vaccine in the United States for all primary and
booster doses. In addition, the Company has 15 other vaccines in various stages
of development, including three combination vaccines using its DTaP vaccine as
an "anchor," as well as nine conjugate vaccines for the prevention of various
bacterial diseases in children and adults.
Vaccination against infectious disease is a primary component of pediatric,
and an increasingly important element of adult, health care programs throughout
the world. For example, in the United States, seven pediatric vaccines,
including vaccines for the prevention of diphtheria, tetanus, pertussis and
polio, are generally required by state immunization programs. According to
recent data from the United States Centers for Disease Control and Prevention
("CDC"), over 22 million doses of combination diphtheria, tetanus and pertussis
vaccines were sold in the United States during 1993. The Company believes that a
market of at least comparable size exists outside the United States. In the
adult market, vaccinations, particularly of older persons, could lower the
50,000 to 70,000 deaths annually in the United States from influenza, pneumonia
and hepatitis B infections. The United States Department of Health and Human
Services has estimated that the costs to society of these diseases and other
diseases for which vaccines currently exist exceed $10 billion each year. As a
result, health care providers, including managed care organizations, have
increasingly recognized that immunization of adults is a cost effective method
for preventing the incidence of disease and infection.
DTaP Vaccine. Vaccination against diphtheria, tetanus and pertussis is
mandated by most states for all children with primary doses administered at the
ages of two, four and six months and with booster doses administered at between
12 to 18 months of age and immediately prior to entering grade school. The
Company believes that DTaP vaccines will replace the "whole cell" DTP vaccines
currently marketed. The "whole cell" pertussis component of these DTP vaccines
is generally believed to be the leading cause of the adverse reactions
associated with the existing vaccines, which range from minor rashes to fevers
to convulsions and collapse. In the 1970s and 1980s, negative publicity
regarding the side effects of "whole cell" pertussis vaccines led to decreased
rates of acceptance for the vaccine in Japan and certain European countries, and
to the suspension of its use in Sweden in 1979. Unlike "whole-cell" and other
acellular pertussis vaccines, the Company's aP vaccine consists solely of
pertussis toxin that has been purified and chemically inactivated (a "toxoid").
Clinical studies have shown that the Company's toxoid induces immunity with
fewer serious adverse reactions than currently used "whole cell" pertussis
vaccines. The Company holds exclusive licenses under United States and foreign
patents on the aP toxoid and the method of its manufacture.
Combination Vaccines. The Company is developing combination vaccines by
combining the DTaP vaccine as an "anchor" with additional pediatric vaccines
that may be administered in a single injection. The Company believes that, in
many instances, these combination vaccines may replace stand-alone vaccines
because combination vaccines will reduce the number of required injections,
lower treatment costs and improve compliance with standard vaccination
schedules. The Company's first combination vaccine, DTaP-IPV, combines an
enhanced, inactivated polio vaccine ("IPV") with the Company's DTaP vaccine. An
application was filed in Denmark in October 1995 seeking regulatory approval to
market the DTaP-IPV vaccine for all primary and booster doses for
3
<PAGE> 5
infants and children. In the United States, the Advisory Committee on
Immunization Practices ("ACIP") is drafting a proposal to recommend the
utilization of IPV for one or more of the five doses administered in the
standard polio vaccination schedule. Upon issuance of such recommendation, the
Company intends to pursue regulatory approval in the United States for its
DTaP-IPV vaccine. The Company also is developing a DTaP-HIB vaccine that
combines the Company's DTaP vaccine with a vaccine against meningitis caused by
Haemophilus influenzae type b bacteria ("HIB"), as well as a DTaP-IPV-HIB
vaccine. Currently, there are no combination vaccines using a DTaP vaccine
licensed for marketing in the United States.
Conjugate Vaccines. The Company, using patented and proprietary
technologies, is developing several conjugate vaccines for prevention of
diseases in children and adults. Conjugate vaccines are formed by chemically
linking (i.e., conjugating) polysaccharides to a protein. This procedure has
been shown to enhance the immunogenic properties of the polysaccharides,
particularly in infants. Conjugate vaccines are useful in preventing several
serious diseases, including meningitis, pneumonia and strep throat. Vaccines are
not currently available for the prevention of several of these diseases. A Phase
I clinical trial has been conducted for a vaccine against group B streptococcal
infections utilizing patented technologies held by the Company. The Company has
received regulatory approval in the United Kingdom to commence a Phase I
clinical trial in adults for its meningococcal C conjugate vaccine.
Collaborations. To further develop and expand its technologies in
pediatric and adult vaccines, the Company has established several relationships,
including licenses and collaborations with pharmaceutical companies,
universities and government agencies. Some of these institutions have provided
funding for clinical trials and research, and conducted joint development
projects with the Company. For example, the Company has entered into agreements
with Pasteur-Merieux Serums et Vaccins, a wholly owned subsidiary of
Rhone-Poulenc, which operates in North America through its subsidiary Connaught
Laboratories ("Pasteur Merieux-Connaught"), to jointly develop the Company's new
conjugate vaccine against meningococcus B infection, for immunization of all
adults, adolescents and infants. Additionally, the Company is collaborating with
the National Institutes of Health in the development of its Group B
streptococcal and adult pertussis vaccines.
Business Strategies. The objective of the Company is to become a leading
manufacturer of state-of-the-art vaccines for the prevention of infectious
diseases in children and adults. In pursuing this objective, the Company focuses
on developing and securing patented and proprietary vaccine technologies. In
addition, the Company seeks to minimize the development time and costs for its
products by: (i) licensing technologies that, in preclinical studies or clinical
trials, have demonstrated prospects for becoming successful vaccine candidates;
(ii) collaborating with government and academic institutions to jointly develop
new vaccines and sponsor clinical trials; and (iii) pursuing collaborations with
pharmaceutical and vaccine manufacturers, where appropriate, to maximize the
value of the Company's products and technologies.
The Company intends to market its DTaP vaccine directly to United States
and certain foreign governments through established purchasing programs. In the
United States, federal and state governments currently purchase more than 50% of
pediatric vaccines. In addition, the Company intends to develop a focused sales
force to target large managed care organizations in the United States. The
Company will also seek distribution, joint venture and similar arrangements with
third parties to sell its products to the private health care market in the
United States and in areas of the world where local partners are critical to
market penetration. The Company also intends to focus on the development and
commercialization of vaccines for the prevention of diseases and infections in
adults, for which demand is anticipated to increase in light of the trend
towards managed care and the established cost-effectiveness of vaccines.
4
<PAGE> 6
RISK FACTORS
In addition to the other information included in this Prospectus, the
following risk factors should be carefully considered in evaluating an
investment in the Offered Securities. This Prospectus contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, which involve risks and uncertainties.
The Company's actual results may differ significantly from the results discussed
in the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in this section.
Dependence Upon Approval and Commercialization of DTaP Vaccine. The
Company has generated only limited revenue from the sale of its DTaP vaccine.
Prior to commercial introduction, the Company's DTaP vaccine must be approved by
the FDA for sales in the United States and by similar authorities for sales in
other countries. The DTaP vaccine was approved for sale in Sweden in February
1996 and is currently being considered for approval for sale in the United
States by the FDA. There can be no assurance as to when or whether the Company
will receive such approval, or that any such approval will not be subject to
additional testing requirements. The commercial introduction of the Company's
DTaP vaccine will require the Company to manufacture and produce large
quantities of vaccine in its manufacturing facility, which was modified for
increased production in 1995. The Company has limited experience manufacturing
commercial quantities of vaccines and operating its manufacturing facility.
Accordingly, there can be no assurance that the production process will not fail
or become subject to substantial disruptions. To successfully introduce and
commercialize its DTaP vaccine, the Company will be required to implement
successfully its sales and marketing strategy that will enable it to, among
other things, participate in established purchasing programs of the federal and
state governments, establish an identity and reputation for the Company and its
products, and create an awareness among pediatricians of the safety and efficacy
of the vaccine. There can be no assurance that the Company will successfully
implement its sales and marketing strategy. In attempting to do so, the Company
will encounter intense competition from other vaccine producers. There can be no
assurance that the Company will produce a commercially viable product, attain
sufficient market share, or distinguish its vaccine product from that of its
competitors. Additionally, successful commercialization of the DTaP vaccine
depends upon whether the ACIP and the American Academy of Pediatrics issue a
nationwide recommendation for preferred use of acellular pertussis vaccines in
infants and children. There can be no assurance such a recommendation will be
issued.
Currently, the Company's prospects for becoming profitable, and its ability
to pay principal and interest on the Notes when due, are substantially dependent
upon the successful commercialization of the DTaP vaccine, as well as the
successful development and commercialization of additional combination vaccines
in which the DTaP vaccine is used as an "anchor." There can be no assurance that
the Company will be able to successfully market its DTaP vaccine or other
related combination vaccines at levels sufficient to generate necessary profits.
To the extent that the Company is unable to generate commercial sales of its
DTaP vaccine, the Company will be required to use a portion of the proceeds from
the Notes to pay interest on the Notes. If the Company is unable to generate
sufficient cash flow from sales of its products to repay the Notes, the Company
will be required to refinance the Notes at maturity or upon redemption. There
can be no assurance that such financing will be available on commercially
reasonable terms.
Dependence on Suppliers. While the Company produces the pertussis
component of the DTaP vaccine, it has purchased, and intends to continue to
purchase, its requirements of the diphtheria and tetanus toxoids and enhanced
IPV from Statens Seruminstitut, an enterprise owned by the Danish government
("SSI"). There can be no assurances that SSI will be able to meet the Company's
requirements or that SSI will not experience difficulties in obtaining necessary
regulatory approvals or disruptions in its production of diphtheria and tetanus
toxoids and IPV.
Certain of the Company's production processes require raw materials from
sole sources or materials that are difficult for suppliers to produce and
certify for the Company's specifications. The
5
<PAGE> 7
Company also may experience temporary or permanent shortages of critical raw
materials necessary for continued production of its vaccines. Any shortage of
these materials could delay production efforts, adversely impact production
costs and yields, or necessitate the use of substitute materials, any of which
could have a significant adverse impact on the Company's operations. In
addition, the Company has contracted with third parties for the sterile fill,
labelling, and packaging of its vaccine products until the Company obtains its
own facilities to perform these operations. Failure of any such contractor to
meet the Company's requirements may involve costly delays and significant
expense, and would require additional regulatory approval as the Company seeks
alternative arrangements.
Changes in Government Purchasing Policies. Children in the United States
receive immunizations from public providers, such as local health departments,
as well as from private providers. Immunizations provided by public providers
are generally paid for through federal and state government funding under public
health programs. These programs are intended to reduce barriers to immunization
and to improve immunization rates by providing free vaccine to qualifying low-
income and uninsured infants and children. Government purchases historically
have been at prices substantially below those offered to the private sector and
presently account for more than 50% of the vaccine doses distributed in the
United States. There are a number of legislative initiatives being considered in
Congress that, if adopted, could significantly modify government vaccine
programs by, among other things, restricting the federal government's purchasing
authority or substantially reducing the funding available for government vaccine
purchases. The Company is unable to predict which legislative initiative, if
any, will ultimately be enacted or the effect any such initiative may ultimately
have on the Company's business or results of future operations. In addition,
proposals for health care reform may be considered in the future by federal and
state governments and some of these proposals, if adopted, may limit prices
charged by pharmaceutical and vaccine manufacturers for their product.
No Assurance of Effective Marketing. The Company has little experience in
marketing its products. The Company is in the process of implementing its
marketing and sales plans for its products; however, there can be no assurances
that the size and make-up of this organization or the Company's current
marketing and sales strategies will be sufficient for the successful
commercialization of its products. The factors affecting successful commercial
launch of the Company's vaccines in the United States include, among others:
establishing an identity and reputation for the Company and its products;
creating an awareness among pediatricians of the safety and efficacy of the
Company's vaccines; distinguishing the Company's products from those of its
competitors; whether the ACIP and the American Academy of Pediatrics issue a
nationwide recommendation for preferred use of acellular pertussis vaccines in
infants and children; and establishing effective distribution channels. Further,
SSI holds exclusive marketing and distribution rights to certain Company
products in Scandinavia, the Netherlands, the Baltic States, Iceland, Poland and
Russia ("SSI's Territory"). There can be no assurance that SSI will be able to
distribute and market those products successfully within its territory. There
also can be no assurance that the Company will be successful in negotiating and
executing marketing and/or distribution agreements with any other third parties
covering any products or that any other third party will be able to market the
Company's products successfully.
Uncertainties Related to Clinical Trials. Before obtaining regulatory
approval for the commercial sale of any products under development, the Company
must demonstrate through pre-clinical studies and clinical trials that these
products are safe and effective. The results from pre-clinical studies and early
clinical trials may not be predictive of results obtained in large-scale
clinical trials. There can be no assurance that large-scale clinical trials for
any of the Company's products will demonstrate safety and efficacy, be
sufficient to support application for regulatory approval, or lead to marketable
products. A number of companies in the biotechnology industry have suffered
significant setbacks in advanced clinical trials even after achieving promising
results in earlier trials.
6
<PAGE> 8
Need for Regulatory Approvals. The Company's vaccine products, product
development activities and manufacturing facilities and processes are subject to
extensive and rigorous regulation by the FDA and by comparable agencies in
foreign countries. The Company has not commercialized any products or received
product approval from the FDA, and only one approval has been received from a
regulatory authority outside of the United States. The Company's vaccine
products are subject to rigorous preclinical and clinical testing requirements,
and approval processes by the FDA and similar authorities in other countries.
Approval of the Company's products for commercial introduction in the U.S.
currently requires both a license for each product and a license for each
production facility. The process of obtaining licenses can be costly and time
consuming, and there can be no assurance that the licenses will be granted, or
that FDA review will not involve delays that would adversely affect the
Company's ability to market products. There also can be no assurance that any of
the products under development by the Company will demonstrate the safety or
efficacy profiles necessary for regulatory approval, or that the Company's
products under development or its production facility will receive the requisite
regulatory approvals and licenses in a timely fashion or at all. There also can
be no assurances that the FDA will not require the Company to conduct additional
testing to assess the safety and/or efficacy of the Company's vaccines. Even if
the necessary licenses are obtained from the FDA, there may be limitations on
product use and the FDA can withdraw approvals at any time upon the occurrence
of unforeseen problems. The FDA can also limit or prevent the manufacture or
distribution of the Company's products and require a recall of such products.
The FDA regulations depend heavily on administrative and scientific
interpretation and advisory committee determinations, and there can be no
assurance that future interpretations by the FDA or other regulatory bodies,
with possible prospective and retroactive effect, will not adversely affect the
Company. In addition, the FDA and various state agencies inspect the Company and
its facilities from time to time to determine whether the Company is in
compliance with regulations, including manufacturing, testing, recordkeeping,
quality control and labelling practices. A determination that the Company is in
material violation of such regulations could have a material adverse effect on
the Company.
Manufacturing and Scale-up. The production of vaccines is a highly
complex, biological process involving many steps, commencing from seed culture
through final production. The production process could fail at any point
resulting in the failure and continued inability to meet production
requirements. No assurance can be given that the Company will be successful in
establishing and maintaining the commercial production of its vaccines or that
it will be capable of producing a competitively priced product.
Patent Protection and Proprietary Information. The vaccine industry
traditionally has placed considerable importance on obtaining and maintaining
patent and trade secret protection for significant new technologies, products
and processes. The Company believes that such protection will be an important
factor in its success and may require the expenditure of substantial resources.
Many companies, universities and research institutions have applied for and/or
obtained patents for vaccine products and technologies that may be competitive
or inconsistent with those held by or licensed to the Company. No assurance can
be given as to the degree and range of protection any patents will afford the
Company, that additional patents will be issued to the Company, or as to the
extent to which the Company will be successful in avoiding any patents granted
to others. Further, there can be no assurance that others have not or will not
independently develop or otherwise properly gain access to technology or
information that is substantially similar to that which is unpatented yet
considered proprietary by the Company. The Company also may desire or be
required to obtain licenses from others in order to develop, produce and market
commercially viable products effectively. Failure to obtain those licenses could
have a significant adverse effect on the Company's ability to commercialize its
vaccine products. There can be no assurance that such licenses will be
obtainable on commercially reasonable terms, if at all, that the patents
underlying such licenses will be valid and enforceable or that the proprietary
nature of the unpatented technology underlying such licenses will remain
proprietary. There has been, and the Company believes that there may be in the
future, significant litigation in the industry regarding patent and
7
<PAGE> 9
other intellectual property rights. If the Company becomes involved in such
litigation, it could consume substantial resources.
Competition and Technological Change. Competition in the vaccine industry
is intense. Competitors of the Company both in the United States and
internationally include major pharmaceutical and chemical companies, specialized
biotechnology firms, universities and other research institutions. Many of these
competitors are actively developing competing vaccines. For example, there are
two DTaP vaccines licensed for use in the United States for booster doses, and
several competitors are currently seeking FDA regulatory approval for DTaP
vaccines for both primary and booster doses. In addition, several competitors'
DTaP vaccines have been licensed for sale outside of the United States. Many of
these competitors have substantially greater resources, more extensive
experience in conducting clinical testing and obtaining regulatory approvals for
their products, greater operating experience, larger research and development
and marketing staffs, and greater production capabilities than those of the
Company. In addition, the vaccine industry is subject to significant
technological change. There can be no assurance that the Company's competitors
will not succeed in designing around the Company's patents, developing
technologies and products that are as or more effective than any that have been
or are being developed by the Company, or developing technologies and products
that would render the Company's technology and products obsolete and
noncompetitive.
Product Liability; Limited Insurance. The testing and marketing of vaccine
products entail an inherent risk of product liability. Although the Company has
limited product liability insurance coverage, it may seek additional insurance
coverage as it commences commercialization of its products. There can be no
assurance that adequate additional insurance coverage will be available at
acceptable cost, if at all, or that a product liability claim would not
materially adversely affect the business or financial condition of the Company.
To the extent the Company is not covered by insurance, the Company faces
potential liability that could be substantial in the event of claims.
Lack of Profitability. The Company's accumulated deficit, as of March 31,
1996, was approximately $41.8, and the Company presently has limited revenues.
The Company expects to incur additional losses until such time as the Company
makes significant commercial sales of its DTaP product. The Company's ability to
achieve and maintain profitability is dependent upon its ability to develop
products that are effective and commercially viable, to continue to obtain
regulatory approvals for production and sale of its products, and to produce and
market its products successfully. There can be no assurance that the Company
will become profitable.
Absence of Trading Market for the Notes. The Notes were issued in May 1996
to a small number of institutional investors and non-U.S. persons. The
Registration Statement of which this Prospectus forms a part is filed pursuant
to the Registration Rights Agreement, which does not obligate the Company to
keep the Registration Statement effective after the third anniversary of the
date of the Original Offering or, if earlier, the date when all the Notes and
the Common Shares issuable on conversion thereof covered by the Registration
Statement have been sold pursuant to the Registration Statement. The Company
does not intend to apply for listing of the Notes on any securities exchange or
to seek approval for quotation through any automated quotation system.
Accordingly, there can be no assurance as to the development or liquidity of any
market for the Notes.
Availability of Capital. It is anticipated that the Company will continue
to expend significant amounts of capital to fund its operations and capital
expenditures. The Company plans to finance its cash requirements from: its
current funds, including the proceeds of the sale of the Notes in the Original
Offering; the sale of additional investment securities; revenues from product
sales and collaborative agreements; the exercise of expiring stock options; the
sale of debt and/or equity securities; mortgage financing; leases; and fees and
payments from license, collaboration and/or distribution agreements. There can
be no assurance that the Company will be able to satisfy its funding
requirements through these alternatives.
8
<PAGE> 10
Dependence on Attracting and Retaining Qualified Personnel. The Company's
success in developing marketable products and achieving a competitive position
will depend, in part, on its ability to attract and retain qualified personnel.
Competition for such personnel is intense, and no assurance can be given that
the Company will be able to continue to attract or retain such personnel. The
loss of key personnel could adversely affect the Company.
Dividends and Taxation. The Company has never paid cash dividends on its
Common Shares. The Company currently intends to retain earnings, if any, to
finance the growth and development of its business and does not anticipate
paying cash dividends in the foreseeable future. Moreover, any profits earned by
the U.S. subsidiary of the Company, American Vaccine Corporation ("American
Vaccine"), will not be distributable directly to the Company's shareholders.
Instead, American Vaccine must declare and pay a dividend to the Company, and
the Company in turn must declare a dividend to its shareholders. This will
subject each dividend to a withholding tax.
Impact of Becoming a Passive Foreign Investment Company. If more than a
certain percentage of the Company's assets or income become passive, the Company
will be classified for U.S. tax purposes as a passive foreign investment company
("PFIC"), and a U.S. taxpayer may be subject to an additional federal income tax
on receiving certain dividends from the Company or selling Common Shares. See
"Certain Income Tax Considerations."
Ranking; Subordination. The Notes are unsecured general obligations of the
Company and subordinated to the prior payment in full of all existing and future
Senior Indebtedness of the Company. The Notes are effectively subordinated in
right of payment to all indebtedness and other liabilities of the Company's
subsidiaries. See "Description of Notes -- Subordination." As of March 31, 1996,
the Company had no outstanding consolidated Senior Indebtedness. There are no
restrictions in the Indenture on the creation of additional Senior Indebtedness
(or any other indebtedness), including any indebtedness ranking senior to the
Notes but junior to other indebtedness of the Company or on the incurrence of
additional liabilities by subsidiaries of the Company.
No payment on account of principal of, premium, if any, Additional Amounts,
if any, or interest on, or redemption or repurchase of, the Notes may be made by
the Company if there is a default in the payment of principal, premium, if any,
or interest (including a default under any repurchase or redemption obligation)
or other amounts with respect to any Senior Indebtedness or if any other event
of default with respect to any Senior Indebtedness, permitting the holders
thereof to accelerate the maturity thereof, shall have occurred and shall not
have been cured or waived or shall not have ceased to exist after written notice
to the Company and the Trustee by any holder of Senior Indebtedness.
Upon any acceleration of the principal due on the Notes or payment or
distribution of assets of the Company to creditors upon any dissolution, winding
up, liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest or other amounts due on all Senior Indebtedness
must be paid in full before the Holders of the Notes are entitled to receive any
payment. By reason of such subordination, in the event of insolvency, creditors
of the Company who are holders of Senior Indebtedness may recover more, ratably,
than the Holders of the Notes, and such subordination may result in a reduction
or elimination of payments to the Holders of the Notes. See "Description of
Notes -- Subordination."
Voting Control by Principal Shareholders. The principal shareholders of
the Company, BioChem and Dr. Phillip Frost, either directly or through
affiliates, are parties to a Shareholders' Agreement requiring, among other
things, that the Common Shares covered by the agreement be voted together for
the election of directors. As of March 31, 1996, these principal shareholders
beneficially owned approximately 18,972,101 shares of the Company's outstanding
Common Shares, which represents approximately 54.8% of the Company's outstanding
Common Shares.
9
<PAGE> 11
Volatility of Stock Price. The market prices for securities of many
biotechnology and pharmaceutical companies, including the Company, have been
highly volatile. Many factors have historically had, and are expected to
continue to have, a significant impact on the Company's business and on the
market price of the Notes and the Common Shares into which the Notes are
convertible, including: announcements by the Company and others regarding the
results of regulatory approval filings, clinical trials or other testing;
technological innovations or new commercial products by the Company or its
competitors; government regulations; developments concerning proprietary rights;
public concern as to safety of vaccine and pharmaceutical products; and economic
or other external factors.
Shares Eligible for Future Sale. Sales of substantial amounts of Common
Shares in the public market following the sale of the Offered Securities by the
Selling Holders could have an adverse effect on the price of the Company's
Common Shares and the Notes. To the extent that either of the two principal
shareholder groups determines to sell a substantial number of their Common
Shares, such sales could significantly increase the volatility of the market
price of the Common Shares. In addition, one of the principal shareholders holds
certain registration rights concerning Common Shares that it owns. The Company's
officers and directors, and certain other investors, have agreed that, until
after July 30, 1996, they will not, subject to certain conditions, sell or
otherwise dispose of Common Shares or securities exchangeable or convertible
into Common Shares.
USE OF PROCEEDS
The Company will receive no proceeds from the sale, if any, by the Selling
Holders of the Notes and Common Shares.
DETERMINATION OF OFFERING PRICE
The Notes and Common Shares offered hereby, or which may be offered hereby,
will be offered at fixed prices, at prevailing market prices at the time of such
sale, at varying prices determined at the time of sale or at negotiated prices.
10
<PAGE> 12
DESCRIPTION OF NOTES
The Notes were issued under an Indenture, dated as of May 7, 1996 (the
"Indenture"), between the Company and Marine Midland Bank, as Trustee, copies of
which are available for inspection at the Corporate Trust Office of the Trustee
in the Borough of Manhattan, The City of New York, and at the offices of the
Paying Agent. Wherever particular defined terms of the Indenture (including the
Notes and the various forms thereof) are referred to, such defined terms are
incorporated herein by reference (the Notes and various terms relating to the
Notes being referred to in the Indenture as "Securities"). References in this
section to the "Company" are solely to North American Vaccine, Inc. and not its
subsidiaries. The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the detailed provisions of the Notes and the
Indenture, including the definitions therein of certain terms. References to
interest and any other amounts payable in respect of the Notes shall include any
Additional Amounts payable in respect thereof.
GENERAL
The Notes are unsecured subordinated obligations of the Company, are
limited to $86,250,000 aggregate principal amount, and mature on May 1, 2003.
The Notes bear interest at the rate of 6.50% per annum from May 7, 1996, payable
semiannually on May 1 and November 1 of each year, commencing on November 1,
1996. Interest payable per $1,000 principal amount of Notes for the period from
May 7, 1996 to November 1, 1996 will be $31.4167.
The Notes are convertible into Common Shares initially at the conversion
price of $24.858 per share, subject to adjustment upon the occurrence of certain
events described under "-- Conversion Rights," at any time after August 6, 1996,
and prior to the close of business on the maturity date, unless previously
redeemed or repurchased.
The Notes are redeemable (a) at the option of the Company, in the event of
certain developments involving United States and Canadian withholding taxes as
described below under "-- Redemption -- Redemption for Taxation Reasons," at a
redemption price of 100% of the principal amount of the Notes to be redeemed,
plus accrued interest to the redemption date and (b) at the option of the
Company, on or after May 1, 1999, in whole or in part, at the redemption prices
set forth below under "-- Redemption -- Optional Redemption," plus accrued
interest at the redemption date.
The Notes are unsecured obligations of the Company and are subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
below) of the Company and are effectively subordinated in right of payment to
all indebtedness and other liabilities of the Company's subsidiaries. Neither
the Notes nor the Indenture limits or restricts the amount of or the terms and
conditions of other indebtedness which may be incurred or issued by the Company
or its subsidiaries or contains any financial or similar covenants of, or
restrictions on, the Company.
FORM AND DENOMINATION
Except as provided below, Notes are represented by one or more global Notes
in definitive, fully registered form without interest coupons (collectively, the
"Global Notes") and have been deposited with the Trustee as custodian for The
Depository Trust Corporation ("DTC") and registered in the name of a nominee of
DTC.
Except in the circumstances described below under "-- Global Notes," owners
of beneficial interests in Global Notes will not be entitled to receive physical
delivery of certificated Notes. The Notes are not issuable in bearer form.
Notes initially purchased by Institutional Accredited Investors were issued
only in certificated form.
11
<PAGE> 13
The Notes will be issued only in fully registered form, without exception.
Notes are available in denominations of $1,000 and integral multiples thereof.
No service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other government charge payable in connection therewith.
The Company initially appointed the Trustee at its corporate trust office
as paying agent, transfer agent, registrar and conversion agent for the Notes.
In such capacities, the Trustee is responsible for, among other things, (i)
maintaining a record of the aggregate holdings of Notes represented by the
Global Notes and accepting Notes for exchange and registration of transfer, (ii)
ensuring that payments of principal, premium, if any, and interest in respect of
the Global Notes received by the Trustee from the Company are duly paid to DTC
or its nominees, (iii) transmitting to the Company any notices from Holders,
(iv) accepting conversion notices and related documents, and transmitting the
relevant items to the Company and (v) delivering certificates for Common Shares
issued in conversion of the Notes.
The Company will cause each transfer agent to act as a registrar and will
cause to be kept at the office of each transfer agent a register in which,
subject to such reasonable regulations as it may prescribe, the Company will
provide for the registration of the Notes and registration of transfers of the
Notes. The Company may vary or terminate the appointment of any paying agent,
transfer agent or conversion agent, or appoint additional or other such agents
or approve any change in the office through which any such agent acts, provided
that there shall at all times be a paying agent, a transfer agent and a
conversion agent in the Borough of Manhattan, The City of New York, New York.
The Company will cause notice of any resignation, termination or appointment of
the Trustee or any paying agent, transfer agent or conversion agent, and of any
change in the office through which any such agent will act, to be provided to
Holders of the Notes.
GLOBAL NOTES
The following description of the operations and procedures of DTC,
Euroclear and CEDEL are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. The
Company takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
Upon the issuance of the Global Notes, DTC credited, on its internal
system, the respective principal amount of the individual beneficial interests
represented by such Global Notes to the accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Notes are shown on, and the transfer of that ownership
is effected only through, records maintained by DTC or its nominee (with respect
to interests of participants) and the records of participants (with respect to
interests of persons other than participants).
AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF A GLOBAL NOTE,
DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE OWNER AND
HOLDER OF THE NOTES REPRESENTED BY SUCH GLOBAL NOTE FOR ALL PURPOSES UNDER THE
INDENTURE AND THE NOTES. Unless DTC notifies the Company that it is unwilling or
unable to continue as depository for a Global Note, or ceases to be a "Clearing
Agency" registered under the Exchange Act, or announces an intention permanently
to cease business or does in fact do so, or an Event of Default has occurred and
is continuing with respect to a Global Note, owners of beneficial interests in a
Global Note will not be entitled to have any portions of such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Global Notes in definitive form and will not be considered the
owners or Holders of the Global Note (or any Notes represented thereby) under
the Indenture or the Notes. In addition, no beneficial owner of an interest in a
Global Note will be able to transfer that interest except in accordance with
DTC's applicable procedures (in addition to those under the Indenture referred
to herein and, if applicable, those of Euroclear and CEDEL). In the event that
12
<PAGE> 14
owners of beneficial interests in a Global Note become entitled to receive Notes
in definitive form, such Notes will be issued only in registered form in
denominations of U.S.$1,000 and integral multiples thereof.
Investors may hold their interests in the Global Notes, through CEDEL or
Euroclear, if they are participants in such systems, or indirectly through
organizations which are participants in such systems. After the expiration of
the Restricted Period (but not earlier), investors may also hold such interests
through organizations other than CEDEL and Euroclear that are participants in
the DTC system. CEDEL and Euroclear will hold interests in the Global Notes, on
behalf of their participants through customers' securities accounts in their
respective names on the books of their respective depositaries, which, in turn,
will hold such interests in the Global Notes, in customer's securities accounts
in the depositaries' names on the books of DTC. Investors may hold their
interests in the Global Notes, directly through DTC, if they are participants in
such system, or indirectly through organizations (including Euroclear and CEDEL)
which are participants in such system. All interests in a Global Note, including
those held through Euroclear or CEDEL, may be subject to the procedures and
requirements of DTC. Those interests held through Euroclear and CEDEL may also
be subject to the procedures and requirements of such system.
Payments of the principal of, premium, if any, and interest on Global Notes
will be made to DTC or its nominee as the registered owner thereof. Neither the
Company, the Trustee nor any of their respective agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Subject to the following considerations, beneficial interests in the Global
Notes will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity in such interests will therefore settle in immediately
available funds. The Company expects that DTC or its nominee, upon receipt of
any payment of principal or interest in respect of a Global Note representing
any Notes held by DTC or its nominee, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Notes for such Notes as shown
on the records of DTC or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Notes held through
such participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
registered in "street name." Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Global Notes described above, cross-market transfers between DTC participants,
on the one hand, and Euroclear or CEDEL participants, on the other hand, will be
effected in DTC in accordance with DTC's rules on behalf of Euroclear or CEDEL,
as the case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or CEDEL, as the
case may be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such system.
Euroclear or CEDEL, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant Global Note in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and CEDEL participants may not deliver instructions
directly to the depositaries for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Note from a DTC participant
will be credited, and any such crediting will be reported to the relevant
Euroclear or CEDEL participant, during the securities
13
<PAGE> 15
settlement processing day (which must be a business day for Euroclear and CEDEL)
immediately following the DTC settlement date. Cash received on Euroclear or
CEDEL as a result of sales of interests in a Global Note by or through a
Euroclear or CEDEL participant to a DTC participant will be received with value
on the DTC settlement date but will be available in the relevant Euroclear or
CEDEL cash account only as of the business day for Euroclear or CEDEL following
the DTC settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account with DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default (as defined below) under the Notes, DTC reserves the
right to exchange the Global Notes for legended Notes in certificated form, and
to distribute such Notes to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "Clearing Agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical transfer and delivery of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is
available to other entitles such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly ("indirect participants").
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
in order to facilitate transfers of beneficial ownership interests in the Global
Notes among participants of DTC, Euroclear and CEDEL, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Trustee nor
any of their respective agents will have any responsibility for the performance
by DTC, Euroclear and CEDEL, their participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the records relating
to, or payments made on account of, beneficial ownership interests in Global
Notes.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the reasons set forth above under "-- Global Notes," or, in the case of a Global
Note held for an account of Euroclear or CEDEL, Euroclear or CEDEL (as the case
may be) is closed for business for 14 continuous days or announces an intention
to cease or permanently ceases business, the Company will issue certificates for
the Notes in definitive, fully registered, non-global form without interest
coupons in exchange for the Global Notes. In addition, upon request, the Company
will issue certificates for Notes in definitive, fully registered, non-global
form, without interest coupons, in exchange for beneficial interests of like
principal amount in any Global Note, but only upon at least 60 days' prior
written notice given to the Trustee in accordance with DTC's customary
procedures. Upon receipt of such notice from the Trustee, the Company will cause
the requested certificates to be prepared for delivery. In all cases,
certificates for Notes delivered in exchange for any Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by DTC.
The Holder of a Note in non-global form may transfer such Note, subject to
compliance with the provisions of such legend, by surrendering it at the office
or agency maintained by the Company for
14
<PAGE> 16
such purpose of the Borough of Manhattan, The City of New York, which initially
is the office of the Trustee.
Notwithstanding any statement herein, the Company and the Trustee reserve
the right to impose such transfer, certification, exchange or other
requirements, and to require such restrictive legends on certificates evidencing
Notes, as they may determine are necessary to ensure compliance with the
securities laws of the United States and the states therein and any other
applicable laws, to ensure that the registration statement or amendment covering
the Notes or the Common Shares is declared effective by the SEC or as DTC,
Euroclear or CEDEL may require.
CONVERSION RIGHTS
The Holder of any Note has the right, at the Holder's option, to convert
any portion of the principal amount of a Note that is an integral multiple of
$1,000 into Common Shares at any time after August 6, 1996 and prior to the
close of business on the maturity date, unless previously redeemed or
repurchased, at a conversion price of $24.858 per share (subject to adjustment
as described below). The right to convert a Note called for redemption or
delivered for repurchase will terminate at the close of business on the
Redemption Date for such Note or the Repurchase Date, as the case may be.
The right of conversion attaching to any Note may be exercised by the
Holder by delivering the Note at the specified office of a Conversion Agent (see
"-- Payment and Conversion"), accompanied by a duly signed and completed notice
of conversion. Alternatively, if such Note is represented by a Global Note,
conversion may be effected by order given to the Trustee in accordance with the
applicable procedures of DTC then in effect. The conversion date will be the
date on which the Note and the duly signed and completed notice of conversion
are so delivered. As promptly as practicable on or after the conversion date,
the Company will issue and deliver to the Trustee a certificate or certificates
for the number of full Common Shares issuable upon conversion, together with
payment in lieu of any fraction of a Common Share; such certificate will be sent
by the Trustee to the appropriate Conversion Agent for delivery to the Holder.
Such Common Shares issuable upon conversion of the Notes will be fully paid and
nonassessable and will rank pari passu with the other Common Shares of the
Company outstanding from time to time. Any Note surrendered for conversion
during the period after the close of business on any Regular Record Date to the
opening of business on the next succeeding Interest Payment Date (except Notes
called for redemption on a Redemption Date or to be repurchased on a Repurchase
Date during such period) must be accompanied by payment of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
Notes being surrendered for conversion. In the case of any Note which has been
converted after any Regular Record Date but before the next Interest Payment
Date, interest which is payable on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder of such Note on such Regular Record Date. Holders
that surrender Notes for conversion on a date that is not an Interest Payment
Date will not receive any interest for the period from the Interest Payment Date
next preceding the date of conversion to the date of conversion or for any later
period, even if the Notes are surrendered after a notice of redemption (except
for the payment of interest on Notes called for redemption on a Redemption Date
or to be repurchased on a Repurchase Date between a Regular Record Date and the
Interest Payment Date to which it relates). No other payment or adjustment for
interest, or for any dividends in respect of Common Shares, will be made upon
conversion. Holders of Common Shares issued upon conversion will not be entitled
to receive any dividends payable to holders of Common Shares as of any record
time before the close of business on the conversion date. No fractional shares
will be issued upon conversion but, in lieu thereof, an appropriate amount will
be paid in cash by the Company based on the Market Price (as defined) of Common
Shares at the close of business on the day of conversion.
A Holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Shares on
conversion but will be required to pay any tax
15
<PAGE> 17
or duty which may be payable in respect of any transfer involved in the issue or
delivery of the Common Shares in a name other than that of the Holder of the
Note. Certificates representing Common Shares will not be issued or delivered
unless all taxes and duties, if any, payable by the Holder have been paid.
The conversion price is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) paid in any class
of common shares of the Company, (b) the issuance of rights, options or warrants
to all holders of any class of common shares of the Company entitling them to
subscribe for or purchase any class of common shares of the Company at less than
the then current market price (determined as of the record date for stockholders
entitled to receive such rights, option or warrants) of such common shares, (c)
subdivisions, combinations and reclassification of any class of common shares,
(d) distributions to all holders of any class of common shares of evidences of
indebtedness of the Company, shares of capital shares, cash or assets (including
securities, but excluding those dividends, rights, options, warrants and
distributions referred to above, dividends and distributions paid exclusively in
cash and consolidations, amalgamations, arrangements and mergers to which the
next succeeding paragraph applies), (e) distributions consisting exclusively of
cash (excluding any cash portion of distributions referred to in (d) above, or
cash distributed upon a consolidation, amalgamation, arrangement or merger to
which the next succeeding paragraph applies) to all holders of any class of
common shares in an aggregate amount that, combined together with (i) other such
all-cash distributions made within the preceding 12 months in respect of which
no adjustment has been made and (ii) any cash and the fair market value of other
consideration payable in respect of any tender offer (of the type described in
(f) below) by the Company or any of its subsidiaries for any class of common
shares of the Company concluded within the preceding 12 months in respect of
which no adjustment has been made, exceeds 12.5% of the Company's market
capitalization (for this purpose being the product of the current market price
per share of the applicable common shares on the record date for such
distribution times the number of shares of all classes of common shares
outstanding) on such date, and (f) payments to holders of any class of common
shares of the Company in respect of a tender or exchange offer (other than an
odd-lot offer) by the Company or any subsidiary of the Company for common shares
at a price in excess of 110% of the current market price per share of such
common shares on the trading day next succeeding the last date tenders or
exchanges may be made pursuant to such tender or exchange offer. The Company
reserves the right to make such reductions in the conversion price in addition
to those required in the foregoing provisions as it considers to be advisable in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the recipients. No adjustment of
the conversion price will be required to be made until the cumulative
adjustments amount to 1.0% or more of the conversion price.
In case of any consolidation, amalgamation, arrangement or merger of the
Company with or into another Person or any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of the Common Shares), or in case of any
sale or transfer of all or substantially all of the assets of the Company, each
Note then outstanding will, without the consent of the Holder of any Note,
become convertible only into the kind and the amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of Common Shares into which such Note was convertible
immediately prior thereto (assuming such holder of Common Shares failed to
exercise any rights of election and that such Note was then convertible) but
subject to all requirements necessary to ensure that the Notes are not subject
to Canadian withholding tax as a result thereof.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for U.S.
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends on Common Shares or
rights to subscribe for Common Shares) and, pursuant to the anti-dilution
16
<PAGE> 18
provisions of the Indenture, the number of shares into which Notes are
convertible is increased, such increase may be deemed for U.S. federal income
tax purposes to be the payment of a taxable dividend to Holders of Notes. See
"Certain Income Tax Considerations -- U.S. Federal Income Tax
Considerations -- U.S. Holders -- Adjustment of Conversion Price."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, and the
redemption or repurchase of, the Notes is subordinated in right of payment to
the extent set forth in the Indenture to the prior payment in full of the
principal of, premium, if any, interest and other amounts in respect of all
Senior Indebtedness of the Company. The Company had no Senior Indebtedness at
March 31, 1996. Senior Indebtedness includes: (i) the principal, premium, if
any, interest and other amounts in respect of (A) indebtedness of such obligor
for money borrowed and (B) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by such obligor, (ii) all capital
lease obligations of such obligor, (iii) all obligations of such obligor issued
or assumed as the deferred purchase price of property, all conditional sale
obligations of such obligor and all obligations of such obligor under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement on any letter of credit, bankers acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for any such
indebtedness or other obligation that is by its terms subordinated to or pari
passu with the Notes. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
No payment on account of principal of, premium, if any, or interest on, or
redemption or repurchase of, the Notes may be made by the Company if there is a
default in the payment of principal, premium, if any, or interest (including a
default under any repurchase or redemption obligation) or other amounts with
respect to any Senior Indebtedness or if any other event of default with respect
to any Senior Indebtedness, permitting the holders thereof to accelerate the
maturity thereof, shall have occurred and shall not have been cured or waived or
shall not have ceased to exist after written notice to the Company and the
Trustee by any holder of Senior Indebtedness. Upon any acceleration of the
principal due on the Notes or payment or distribution of assets of the Company
to creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest or other amounts
due on all Senior Indebtedness must be paid in full before the Holders of the
Notes are entitled to receive any payment. By reason of such subordination, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Holders of the Notes, and such
subordination may result in a reduction or elimination of payments to the
Holders of the Notes.
In addition, the Notes are structurally subordinated to all indebtedness
and other liabilities (including trade payables and lease obligations) of the
Company's subsidiaries, as any right of the Company to receive any assets of its
subsidiaries upon their liquidation or reorganization (and the consequent right
of the Holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company itself is recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company. As of March
31, 1996, there was no outstanding indebtedness of subsidiaries of the Company
(excluding intercompany indebtedness).
17
<PAGE> 19
The Indenture does not limit the Company's ability to incur Senior
Indebtedness or any other indebtedness.
REDEMPTION
Optional Redemption
Subject to the discussion under "-- Redemption for Taxation Reasons" below,
the Notes may not be redeemed at the option of the Company prior to May 1, 1999.
The Notes may be redeemed, in whole or in part, at the option of the Company on
or after May 1, 1999, at the redemption prices specified below, upon not less
than 30 nor more than 60 days' prior notice as provided under "-- Notices"
below.
The redemption prices (expressed as a percentage of principal amount) are
as follows for the 12-month period beginning on May 1 of the following years:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------ ----------
<S> <C>
1999............................................. 103.714
2000............................................. 102.786
2001............................................. 101.857
2002............................................. 100.929
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount, in
each case together with accrued interest to the date of redemption.
Redemption for Taxation Reasons
If the Company has or will become obligated to pay Additional Amounts (as
described below under "-- Payment of Additional Amounts") as a result of any
change in, or amendment to, the laws (including any regulations or rulings
promulgated thereunder) of the United States or Canada or any political
subdivision or taxing authority thereof or therein affecting taxation, or any
change in, or amendment to, the application or official interpretation of such
laws, regulations or rulings (any such change or amendment being herein referred
to as a "Tax Law Change"), and such obligation cannot be avoided by the Company
taking reasonable measures available to it, the "Tax Affected Notes" (as defined
in the following sentence) may be redeemed, at the option of the Company, in
whole but not in part. With respect to any Tax Law Change, a Tax Affected Note
means any Note upon which the Company has become obligated to pay Additional
Amounts. Such redemption shall be upon not less than 30 nor more than 60 days'
prior notice as provided under "-- Notices" below, at a redemption price equal
to 100% of the principal amount of the Notes, plus accrued interest to the
redemption date and any Additional Amounts then payable; provided, however, that
(1) no such notice of redemption shall be given earlier than 90 days prior to
the earliest date on which the Company would be obligated to pay any such
Additional Amounts were a payment in respect of the Notes then due and (2) at
the time such notice of redemption is given, the obligation to pay such
Additional Amounts remains in effect. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
(a) a certificate stating that the Company is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions precedent to
the right of the Company so to redeem have occurred and (b) an opinion of
independent counsel of recognized standing, to the effect that the Company has
or will become obligated to pay such Additional Amounts as a result of a Tax Law
Change.
PAYMENT AND CONVERSION
The principal of Notes is payable in U.S. dollars, against surrender
thereof at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York, or, subject to any applicable laws and
regulations, at the office of any Paying Agent, by dollar check drawn on, or by
transfer to a dollar account (such transfer to be made only to Holders of an
aggregate principal
18
<PAGE> 20
amount of Registered Notes in excess of $2,000,000) maintained by the Holder
with, a bank in New York City. Payment of any installment of interest on Notes
will be made to the Person in whose name such Notes (or any predecessor Note) is
registered at the close of business on the April 15 or October 15 (whether or
not a Business Day) immediately preceding the relevant Interest Payment Date (a
"Regular Record Date"). Payments of such interest will be made by a dollar check
drawn on a bank in New York City mailed to the Holder at such Holder's
registered address or, upon application by the Holder thereof to the Trustee not
later than the applicable Regular Record Date, by transfer to a dollar account
(such transfer to be made only to Holders of an aggregate principal amount of
Registered Notes in excess of $2,000,000) maintained by the Holder with a bank
in New York City. No transfer to a dollar account will be made unless the
trustee has received written wire instructions not less than 15 days prior to
the relevant payment date.
Any payment on the Notes due on any day which is not a Business Day need
not be made on such day, but may be made on the succeeding Business Day with the
same force and effect as if made on such due date, and no interest shall accrue
on such payment for the period from and after such date. "Business Day," when
used with respect to any place of payment, place or conversion or any other
place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in such place of
payment, place of conversion or other place, as the case may be, are authorized
or obligated by law or executive order to close; provided, however, that a day
on which banking institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close shall not be a
Business Day for certain purposes.
Notes may be surrendered for conversion at the Corporate Trust Office of
the Trustee in the Borough of Manhattan, The City of New York. Notes surrendered
for conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under
"-- Conversion Rights."
The Company has initially appointed the Trustee as Paying Agent and
Conversion Agent. The Company may at any time terminate the appointment of any
Paying Agent or Conversion Agent and appoint additional or other Paying Agents
and Conversion Agents, provided that until the Notes have been delivered to the
Trustee for cancellation, or moneys sufficient to pay the principal of, premium,
if any, and interest on the Notes have been made available for payment and
either paid or returned to the Company as provided in the Indenture, it will
maintain an office or agency in the Borough of Manhattan, The City of New York
for surrender of Notes for conversion (but only in the circumstances described
in the second sentence of the immediately preceding paragraph). Notice of any
such termination or appointment and of any change in the office through which
any Paying Agent or Conversion Agent will act will be given in accordance with
"-- Notices" below.
Interest payable on Notes on any redemption date or repurchase date that is
an Interest Payment Date will be paid to the Holders of record as of the
immediately preceding Regular Record Date.
All moneys deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of principal of, premium, if any, or
interest on any Notes which remain unclaimed at the end of two years after such
payment has become due and payable will be repaid to the Company, and the Holder
of such Note will thereafter look only to the Company for payment thereof.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to the Holder of any Note who is a non-resident of
Canada (within the meaning of the Income Tax Act (Canada)) such additional
amounts ("Canadian Additional Amounts") as may be necessary in order that every
net payment of the principal of, premium, if any, and interest on such Note
(including payment on redemption or repurchase), after deduction or withholding
for or on account of any present or future tax, assessment or governmental
charge imposed upon or as a result of such payment by the Government of Canada
or of any province or
19
<PAGE> 21
territory thereof or by any authority or agency thereof or therein ("Taxing
Jurisdiction") ("Canadian Taxes"), will not be less than the amount provided for
in such Note to be then due and payable; provided, that no Canadian Additional
Amounts will be payable with respect to a payment or credit made to a Holder of,
or on behalf of an owner of a beneficial interest in, any Note (collectively, a
"Canadian Excluded Holder") (i) with whom the Company does not deal at arm's
length (within the meaning of the Income Tax Act (Canada)) at the time of making
such payment or credit, or (ii) which is subject to Canadian Taxes by reason of
its being connected with Canada or any province or territory thereof (including,
without limitation, by reason of such person being a resident or being deemed to
be a resident of Canada (within the meaning of the Income Tax Act (Canada)) or
carrying on business or being deemed to carry on business (within the meaning of
such Act) in Canada whether in or through a permanent establishment or fixed
base in Canada or otherwise) otherwise than by the mere holding of the Note or
the receipt of payments or credits thereunder or (iii) which could obtain an
exemption from, or reduction in, the applicable Canadian Tax by satisfying
reporting or certification requirements imposed by the relevant Taxing
Jurisdiction and which fails to do so.
The Company will also pay to the Holder of any Note who is a United States
Alien (as defined below) such additional amounts ("U.S. Additional Amounts," and
together with the Canadian Additional Amounts, "Additional Amounts") as may be
necessary in order that every net payment of the principal of, premium, if any,
and interest on such Note, after deduction or withholding for or on account of
any present or future tax, assessment or governmental charge imposed upon or as
a result of such payment by the United States or any political subdivision or
taxing authority thereof or therein ("U.S. Taxes," and together with Canadian
Taxes, "Taxes"), will not be less than the amount provided for in such Note to
be then due and payable; provided, however, that the foregoing obligation to pay
U.S. Additional Amounts will not apply with respect to:
(a) any U.S. Tax that would not have been so imposed but for (i) the
existence of any present or former connection between such Holder (or
between a fiduciary, settlor, beneficiary, member, shareholder of or
possessor of a power over such Holder, if such Holder is an estate, a
trust, a partnership or a corporation) and the United States or any
political subdivision or taxing authority thereof or therein, including,
without limitation, such Holder (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been a citizen or
resident of the United States or treated as a resident thereof, or being or
having been engaged in a trade or business or present therein, or having or
having had a permanent establishment therein, or (ii) such Holder's present
or former status as a personal holding company, a foreign personal holding
company with respect to the United States, or a foreign private foundation
or foreign tax exempt entity for U.S. tax purposes, or a corporation which
accumulates earnings to avoid U.S. federal income tax;
(b) any U.S. Tax that would not have been so imposed but for the
presentation by the Holder of such Note for payment on a date more than 15
days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs later;
(c) any U.S. Tax that is an estate, inheritance, gift, sales,
transfer, personal property or similar tax, assessment or governmental
charge;
(d) any U.S. Tax that would not have been imposed but for the failure
to comply with any certification, identification or other reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the Holder or beneficial owner of such Note, if
compliance is required by statute or by regulation of the United States as
a precondition to relief or exemption from such tax, assessment or other
governmental charge;
(e) any U.S. Tax that is payable otherwise than by deduction or
withholding from payments of principal of, premium, if any, or interest on
such Note;
20
<PAGE> 22
(f) any U.S. Tax imposed on a Holder that actually or constructively
owns 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote or that is a controlled foreign corporation
related to the Company through stock ownership;
(g) any U.S. Tax required to be withheld by any Paying Agent from any
payment of the principal of, premium, if any, or interest on any Note, if
such payment can be made without such withholding by any other Paying Agent
in Western Europe;
(h) any U.S. Tax imposed on a Holder that is a partnership or a
fiduciary or other than the sole beneficial owner of such payment, but only
to the extent that any beneficial owner or member of the partnership or
beneficiary or settlor with respect to the fiduciary would not have been
entitled to the payment of U.S. Additional Amounts had the beneficial
owner, member, beneficiary or settlor directly been the Holder of such
Note; or
(i) any combination of items (a), (b), (c), (d), (e), (f), (g) and
(h).
(The Holder of any Note with respect to which any of the listed U.S. Taxes
becomes payable is referred to herein as a "U.S. Excluded Holder," and U.S.
Excluded Holders, together with Canadian Excluded Holders, are referred to
herein as "Excluded Holders.")
The Company will make any deduction or withholding, and remit the full
amount deducted or withheld to the relevant authority, in accordance with
applicable law. The Company will furnish the Holders of the Notes, within 30
days after the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by the Company. The
Company will indemnify and hold harmless each Holder of the Notes (other than an
Excluded Holder) and upon written request reimburse such Holder for the amount
of (i) any Taxes levied or imposed and paid by such Holder, or owner of a
beneficial interest in the Note(s) held by such Holder, as a result of payments
made with respect to the Notes, (ii) any liability (including penalties,
interest and expenses) arising from or with respect to Taxes, and (iii) any
Taxes imposed with respect to payment of Additional Amounts or any reimbursement
pursuant to this sentence.
Notwithstanding the foregoing, the Company shall not be obligated to pay
Additional Amounts in respect of payments becoming due on the Notes more than 15
days after the redemption date for a redemption described under
"-- Redemption -- Redemption for Taxation Reasons," except to the extent that
the Company's obligations to pay such Additional Amounts does not arise from the
Tax Law Change that resulted in such redemption. For purposes of this
Prospectus, a "United States Alien" is any person who, for U.S. federal income
tax purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for U.S. federal income tax
purposes, a foreign corporation, a nonresident alien individual or a nonresident
alien fiduciary of a foreign estate or trust.
At least 30 days prior to each date on which any payment under or with
respect to the Notes is due and payable, if the Company will be obligated to pay
Additional Amounts with respect to such payments, the Company will deliver to
the Trustee an Officers' Certificate stating the fact that such Additional
Amounts will be payable, the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
Holders or owners of a beneficial interest in the Notes, as the case may be, on
the payment date.
CHANGE IN CONTROL
The occurrence of a Change in Control will constitute an Event of Default,
provided that if the Company offers to purchase (and, to the extent such offer
is accepted, purchases) all or any part (in integral multiples of $1,000) of
each Holder's Notes pursuant to an offer as described below (a "Change in
Control Offer") at a purchase price equal to 100% of the principal amount
thereof, plus, accrued and unpaid interest, if any, to the Change in Control
Payment Date (the "Repurchase
21
<PAGE> 23
Price"), from and after the Company offering to purchase (and, to the extent
such offer is accepted, purchasing) such Event of Default shall be cured.
The Company may, at its option, in lieu of paying the Repurchase Price in
cash, pay the Repurchase Price in Common Shares valued at 95% of the average of
the reported last sale price of the Common Shares (the "Market Price") for the
five trading days immediately preceding the second trading day preceding the
Repurchase Date; provided that payment may not be made in Common Shares unless
such shares are listed on a U.S. national securities exchange or traded on the
Nasdaq Stock Market at the time of payment.
Within 15 days following an Event of Default caused by a Change in Control
which the Company desires to cure, the Company will mail a notice to each Holder
of Notes stating: (a) that a Change in Control has occurred and that such Holder
has the right to require the Company to purchase all or a portion of such
Holder's Notes at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Change in Control
Payment Date (as defined below); (b) whether the Company is exercising its
option, in lieu of paying the Repurchase Price in cash, to pay the Repurchase
Price in Common Shares as provided in the preceding paragraph; (c) the
circumstances and relevant facts regarding such Change in Control (including
information with respect to income, cash flow and capitalization after giving
effect to such Change in Control); (d) the purchase date specified by the
Company (which shall be not earlier than 30 days or later than 60 days from the
date of such notice, if mailed) (the "Change in Control Payment Date"); and (e)
the instructions determined by the Company consistent with the Indenture that a
Holder of Notes must follow in order to have its Notes purchased. Holders of
Notes will have the right to have their Notes purchased by the Company if such
Notes are tendered for purchase at any time beginning on the date such notice is
mailed and ending at the close of business on the fifth business day prior to
the applicable Change in Control Payment Date.
As used herein, a "Change in Control" means (i) an event or series of
events by which any Person or other entity or Group of Persons shall, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases, merger, consolidation or otherwise have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
50% or more of the total voting power of all shares of capital stock of the
Company entitled to vote generally in the election of directors; (ii) any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company; or (iii) any direct or
indirect, sale, lease, exchange or other transfer of all or substantially all of
the assets of the Company to any Person or Group of Persons; provided, however,
that a Change in Control shall not be deemed to have occurred if either (a) the
closing price per share of the Common Shares for any five trading days within
the period of 10 consecutive trading days ending immediately after the later of
the Change in Control or the public announcement of the Change in Control (in
the case of a Change in Control under clause (i) above) or the period of ten
consecutive trading days ending immediately before the Change in Control (in the
case of a Change in Control under clause (ii) or (iii) above) shall equal or
exceed 105% of the Conversion Price of the Notes in effect on each such trading
day, or (b) all of the consideration (excluding cash payments for fractional
shares) in a transaction or transactions constituting the Change in Control
described in clause (ii) above consists of shares of common stock traded on a
national securities exchange or quoted on the Nasdaq Stock Market and as a
result of such transaction or transactions the Notes become convertible solely
into such common stock.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.
22
<PAGE> 24
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders.
CONSOLIDATIONS, AMALGAMATIONS, MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate, amalgamate, enter into an arrangement or
merge with or into any Person or permit any other Person to consolidate,
amalgamate, enter into an arrangement or merge into the Company, or transfer,
sell, convey or lease or otherwise dispose of all or substantially all of its
assets (whether in one transaction or a series of related transactions) to, any
Person, if such transaction or series of transactions, in the aggregate, would
result in a sale, assignment, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or of the Company
and its Subsidiaries on a consolidated basis to any other Person, unless (a) the
Company shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation, amalgamation or merger, or to which the sale,
lease, transfer or conveyance shall have been made, is a corporation organized
and existing under the laws of (i) the United States, any State thereof or the
District of Columbia or (ii) the federal laws of Canada or any province thereof,
(b) the successor or transferee (if other than the Company) assumes, by
supplemental indenture, all of the obligations of the Company under the Notes
and the Indenture and assumes all of the Company's obligations under the
Purchase Agreement and the Registration Rights Agreement, (c) immediately prior
to and after giving effect to such transaction, no Event of Default or Default
shall have occurred and be continuing and (d) the interest, principal, premium,
if any, and other amounts paid or credited in respect of the Notes will not be
subject to Canadian withholding tax as a result of such consolidation,
amalgamation, arrangement or merger, sale, assignment, transfer, lease or other
disposition and the Company shall have delivered to the Trustee an Opinion of
Counsel of Canadian counsel to that effect.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to pay
principal of or premium, if any, on any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (b)
failure to pay any interest on any Note or coupon when due, continuing for 30
days, whether or not such payment is prohibited by the subordination provision
of the Indenture; (c) failure to observe or perform any covenant, condition or
agreement to be observed or performed pursuant to the "Additional Amounts,"
"Amalgamations, Mergers and Sales of Assets by the Company" and "Change in
Control" covenants; (d) failure to perform any other covenant of the Company in
the Indenture, continuing for 60 days after written notice to the Company by the
Trustee or Holders of at least 25% of the aggregate principal amount of the
Notes outstanding; (e) a default by the Company or any Subsidiary (i) in the
payment of any principal of or interest on any Indebtedness, the principal
amount of which, individually or in the aggregate, exceeds U.S.$10,000,000, when
due after giving effect to any applicable grace periods (whether such
Indebtedness exists on the date of issuance of the Notes or is thereafter
created) or (ii) on any Indebtedness, the principal amount of which,
individually or in the aggregate, exceeds U.S.$10,000,000, which default or
defaults in the case of this clause (ii) shall have resulted in such
Indebtedness becoming due and payable prior to the date on which it would
otherwise have become due and payable; (f) failure by the Company or any of its
Subsidiaries to pay final judgments or orders aggregating in excess of
U.S.$10,000,000, and either (i) the commencement by any creditor of any
enforcement proceeding upon any such judgment or orders or (ii) such judgment or
order remaining unstayed for 45 days; (g) certain events of bankruptcy,
insolvency or reorganization of the Company or any of its Subsidiaries; and (h)
the occurrence of a Change in Control; provided, that such an Event of Default
will be cured after a Change in Control Offer is made and all Notes properly
tendered for purchase pursuant to such Change in Control Offer are accepted for
payment and such payment provided in the Change of Control Offer is made.
23
<PAGE> 25
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
is under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the outstanding Notes ("Outstanding Notes") will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee.
If an Event of Default shall occur and be continuing, either the Trustee or
the Holders of at least 25% in principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration, if all Events of
Default, other than the nonpayment of accelerated principal, have been cured or
waived as provided in the Indenture. For information as to waiver of defaults,
see "-- Meetings, Modification and Waiver."
No Holder of any Note has any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement of payment of the principal of, premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture.
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provision for convening meetings of the Holders of
Notes to consider matters affecting their interests.
Modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, either (i) with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes at the time Outstanding or (ii) by the adoption of a resolution, at a
meeting of Holders of the Notes at which a quorum is present, by the Holders of
at least 66 2/3% in aggregate principal amount of the Notes represented at such
meeting. However, no such modification or amendment may, without the consent of
the Holder of each Outstanding Note affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of interest on, any Note, (b)
reduce the principal amount of, or the premium, if any, or interest on, any
Note, (c) reduce the amount payable upon a redemption or mandatory repurchase,
(d) modify the provisions with respect to the repurchase rights of the Holders
in a manner adverse to the Holders, (e) change the obligation of the Company to
pay Additional Amounts described above in a manner adverse to the Holders, (f)
change the place or currency of payment of principal of, premium, if any, or
interest on, any Note, (g) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note, (h) modify the
obligation of the Company to maintain an office or agency in New York City, (i)
adversely affect the right to convert Notes, (j) modify the subordination
provisions in a manner adverse to the Holders of the Notes, (k) reduce the
above-stated percentage of Outstanding Notes necessary to modify or amend the
Indenture, (l) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance
24
<PAGE> 26
with certain provisions of the Indenture or for waiver of certain defaults, (m)
reduce the percentage in aggregate principal amount of Outstanding Notes
required for the adoption of a resolution or the quorum required at any meeting
of Holders of Notes at which a resolution is adopted or (n) modify the
obligation of the Company to deliver information required under Rule 144A to
permit resales of Notes and Common Shares issuable upon conversion thereof in
the event the Company ceases to be subject to certain reporting requirements
under the United States securities laws. The quorum at any meeting called to
adopt a resolution will be persons holding or representing a majority in
aggregate principal amount of the Notes at the time Outstanding and, at any
reconvened meeting adjourned for lack of a quorum, 25% of such aggregate
principal amount.
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture by written consent. The Holders of a majority in aggregate
principal amount of the outstanding Notes also may waive any past default under
the Indenture, except a default in the payment of principal, premium, if any, or
interest, by written consent.
TRANSFER AND EXCHANGE
The Company has initially appointed the Trustee as security registrar and
transfer agent, acting through its Corporate Trust Offices in New York City. The
Company reserves the right to vary or terminate the appointment of the security
registrar or of any transfer agent or to appoint additional or other transfer
agents or to approve any change in the office through which any security
registrar or any transfer agent acts.
In the event of a redemption of less than all of the Notes for any of the
reasons set forth above under "-- Redemption," the Company will not be required
(a) to register the transfer or exchange of Restricted Notes for a period of 15
days immediately preceding the date notice is given identifying the serial
numbers of the Notes called for such redemption or (b) to register the transfer
of or exchange any Note, or portion thereof, called for redemption.
NOTICES
Notices to Holders of Notes will be given by mail to the addresses of such
Holders as they appear in the Security Register. Such notices will be deemed to
have been given on the date of such mailing.
Notice of a redemption of Notes will be given at least once not less than
30 nor more than 60 days prior to the Redemption Date (which notice shall be
published in accordance with the procedures described above) and will specify
the Redemption Date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the Holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Note before a replacement Note
will be issued.
PAYMENT OF STAMP AND OTHER TAXES
The Company will pay all stamp and other duties, if any, which may be
imposed by Canada, the United States or the United Kingdom or any political
subdivision thereof or taxing authority thereof or therein with respect to the
resale of the Notes. Except as described under "-- Payment of Additional
Amounts," the Company will not be required to make any payment with respect to
any other tax, assessment or governmental charge imposed by any government or
any political subdivision thereof or taxing authority thereof or therein.
25
<PAGE> 27
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York, United States of America. The Company
will submit to the jurisdiction of any federal or state court in New York City,
Borough of Manhattan, for purpose of all legal actions and proceedings
instituted in connection with the Notes and the Indenture. The Company has
appointed CT Corporation, New York, New York as its authorized agent upon which
process may be served in any such action.
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
CERTAIN INCOME TAX CONSIDERATIONS
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of the material U.S. federal
income tax considerations relevant to the acquisition, ownership, disposition
and conversion of the Notes by purchasers of Notes from Selling Holders. This
summary is based on provisions of the U.S. Internal Revenue Code of 1986, as
amended ("Code"), existing and proposed U.S. Treasury regulations promulgated
thereunder and administrative and judicial interpretations thereof, all as in
effect as of the date of this Prospectus and all of which are subject to change
(possibly with retroactive effect) and to differing interpretations. This
summary deals only with purchasers who directly or beneficially hold the Notes
(and Common Shares received upon conversion of the Notes) as capital assets.
Furthermore, this summary does not discuss all aspects of U.S. federal income
taxation that may be applicable to purchasers in light of their particular
circumstances or to purchasers subject to special treatment under U.S. federal
income tax law (including, for example, life insurance companies, dealers in
securities, financial institutions, tax-exempt organizations, persons having a
functional currency other than the U.S. dollar and owners of 10% or more of the
voting shares of the Company). No advance tax ruling has been sought or obtained
from the Internal Revenue Service regarding the tax consequences of the sale of
Notes or Common Shares issuable upon conversion thereof by Selling Holders or
purchasers of Notes therefrom or any of the matters described below. Prospective
purchasers of Notes should consult their own tax advisors with regard to the
application of the U.S. federal income tax law to their particular situations,
as well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is, for U.S. federal income tax purposes, (i) an individual citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) certain
former citizens of the United States whose income and gain on the Notes will be
subject to U.S. taxation. As used herein, the term "U.S. Alien Holder" means a
beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Stated interest payable on the Notes generally will
be included in the gross income of a U.S. Holder as ordinary interest income at
the time accrued or received, in accordance with such U.S. Holder's method of
accounting for U.S. federal income tax purposes. The Company anticipates that a
portion of such interest will be treated as income from U.S. sources
26
<PAGE> 28
and that the balance will constitute foreign source "passive income" (or, in the
case of certain holders, "financial services income") for U.S. foreign tax
credit purposes.
Disposition of the Notes. A U.S. Holder's initial tax basis in a Note
generally will equal the cost of the Note. Upon the sale, exchange or retirement
of a Note, a U.S. Holder generally will recognize capital gain or loss equal to
the difference between the amount realized on the sale, exchange or retirement
and such holder's adjusted tax basis in the Note (with certain exceptions to
capital gain characterization for Notes acquired at a market discount). Such
capital gain or loss will be long-term capital gain or loss if the Note was held
for more than one year at the time of the sale, exchange or retirement. The
deduction of capital losses is subject to limitations for U.S. federal income
tax purposes.
Conversion into Common Shares. In general, no gain or loss will be
recognized for U.S. federal income tax purposes upon a conversion of Notes into
Common Shares. However, cash paid in lieu of a fractional Common Share will
result in taxable gain (or loss) to the extent that the amount of such cash
exceeds (or is exceeded by) the portion of the adjusted tax basis of the Note
allocable to such fractional share. The initial tax basis of Common Shares
received on conversion of the Notes will equal the adjusted tax basis of the
converted Notes on the date of conversion, reduced by the portion of such
adjusted tax basis allocated to any fractional Common Share considered to be
exchanged for cash. The holding period for Common Shares received on conversion
will include the period during which the converted Notes were held.
Adjustment of Conversion Price. The conversion ratio of the Notes is
subject to adjustment under certain circumstances. Section 305 of the Code, and
the U.S. Treasury regulations issued thereunder, may treat U.S. Holders of the
Notes as having received a constructive distribution, resulting in ordinary
income to the extent of the Company's current and accumulated earnings and
profits (as determined for U.S. federal income tax purposes) ("E&P"), if, and to
the extent that, certain adjustments of the conversion ratio increase the
proportionate interest of a U.S. Holder of the Notes in the fully diluted share
ownership of the Company, whether or not such U.S. Holder exercises the
conversion privilege. Moreover, if there is not a full adjustment of the
conversion ratio of the Notes to reflect a stock dividend or other event that
increases the proportionate interest of holders of outstanding Common Shares in
the assets or E&P of the Company, then such increase in the proportionate
interest of holders of the Common Shares generally will be treated as a taxable
distribution to such holders with respect to their Common Shares to the extent
of the Company's E&P.
Distributions on Common Shares. The amount of a distribution on the Common
Shares will be measured by the amount of cash, and the fair market value of any
property, distributed. For U.S. federal income tax purposes, the gross amount of
a distribution with respect to Common Shares will include the amount of any
Canadian federal income tax withheld. In general, distributions paid by the
Company with respect to the Common Shares will be taxed to a U.S. Holder as
ordinary income to the extent that such distributions do not exceed the
Company's E&P. The amount of a distribution which exceeds the Company's E&P will
be treated first as a non-taxable return of capital to the extent of the U.S.
Holder's tax basis in the Common Shares and thereafter as taxable capital gain.
Corporate holders generally will not be allowed a deduction for dividends
received in respect of distributions on Common Shares. The Company anticipates
that a portion of such distributions will be treated as income from U.S. sources
and that the balance will constitute foreign source "passive income" (or, in the
case of certain holders, "financial services income") for U.S. foreign tax
credit purposes.
Dividends paid by the Company in Canadian dollars will be included in the
income of U.S. Holders in a U.S. dollar amount based upon the exchange rate
between U.S. and Canadian dollars in effect on the date of receipt. A U.S.
Holder will have tax basis in such Canadian dollars for U.S. federal income tax
purposes equal to their U.S. dollar value on the date of receipt. Any subsequent
27
<PAGE> 29
gain or loss in respect of such Canadian dollars arising from exchange rate
fluctuations will be ordinary income or loss.
Foreign Tax Credit. Subject to the limitations set forth in the Code, as
modified by the United States-Canada income tax treaty, U.S. Holders may elect
to claim a foreign tax credit against their U.S. federal income tax liability
for Canadian income tax withheld from dividends received in respect of Common
Shares. The rules relating to the determination of the foreign tax credit are
complex, and prospective purchasers should consult their own tax advisors to
determine whether and to what extent they would be entitled to such credit. U.S.
Holders that do not elect to claim a foreign tax credit may instead claim a
deduction for Canadian income tax withheld.
Disposition of Common Shares. Upon the sale or other disposition of Common
Shares, a U.S. Holder generally will recognize capital gain or loss equal to the
difference between the amount realized on the sale and such holder's tax basis
in the Common Shares. Gain or loss upon the disposition of the Common Shares
will be long-term if, at the time of the disposition, the Common Shares have
been held for more than one year. In the case of Common Shares acquired upon
conversion of a Note, the holding period for such Common Shares will include the
period during which the converted Note was held. The deduction of capital losses
is subject to limitations for U.S. federal income tax purposes.
Controlled Foreign Corporation Status. U.S. Holders owning (directly,
indirectly or by attribution) stock representing 10% or more of the total voting
power of a "controlled foreign corporation" ("CFC") are required to include in
gross income their pro rata shares of certain items of income derived by the CFC
(including, in certain circumstances, income invested in U.S. property or
passive assets) whether or not such amounts actually are distributed, and such
holders also are subject to special rules with respect to gain realized upon the
disposition of CFC stock and the foreign tax credit. A foreign corporation is a
CFC if more than 50% of its stock (by vote or value) is owned (directly,
indirectly or by attribution) by U.S. Holders who each own (directly, indirectly
or by attribution) 10% or more of the total combined voting power of its shares.
To the best of the Company's knowledge, it presently is not a CFC.
Passive Foreign Investment Company Status. Special U.S. federal income tax
rules apply to U.S. persons owning shares of a PFIC. A foreign corporation will
be considered a PFIC for any taxable year in which 75% or more of its gross
income consists of certain types of passive income or 50% or more of the average
value of its assets are considered "passive assets" (generally assets that
generate passive income). Based upon an analysis of its financial position, the
Company believes that it presently is not a PFIC for U.S. federal income tax
purposes. If the Company were a CFC, however, it is possible that the Company
could also be treated as a PFIC due to special rules for the determination of
PFIC status in the case of CFCs. While the Company intends to continue to manage
its business so as to avoid PFIC status, to the extent consistent with its other
business goals, no assurances can be made that the business plans of the Company
will not change in a manner that affects its PFIC determination. If the Company
were classified as a PFIC, a U.S. Holder could be subject to increased tax
liability (possibly including an interest charge) upon the sale or other
disposition of Common Shares or upon the receipt of certain "excess
distributions," unless such U.S. Holder elected to be taxed currently on its pro
rata portion of the Company's income (including capital gains), whether or not
such income was distributed in the form of dividends or otherwise. In the event
that the Company becomes aware that it may be a PFIC for any taxable year, it
will promptly notify the Holders of such determination.
Backup Withholding. A U.S. Holder may be subject to backup withholding at
a rate of 31% with respect to payments of principal, premium and interest on the
Notes and distributions on Common Shares and also with respect to the proceeds
from a disposition of Notes and Common Shares. In general, backup withholding
will apply only if a U.S. Holder fails to comply with certain identification
procedures or fails to properly report payments of interest and dividends.
Backup withholding will not apply with respect to payments made to certain
exempt recipients, such as corporations and
28
<PAGE> 30
tax-exempt organizations. Backup withholding is not an additional tax and may be
claimed as a credit against the U.S. federal income tax liability of a U.S.
Holder, provided that the required information is furnished to the Internal
Revenue Service.
U.S. ALIEN HOLDERS
Under present U.S. federal income and estate tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal of and interest on the Notes by the Company
or any paying agent to a beneficial owner of a Note that is a U.S. Alien
Holder will not be subject to U.S. federal withholding tax, provided that,
in the case of interest, (i) such holder does not own, actually or
constructively, 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) such holder is not,
for U.S. federal income tax purposes, a CFC related, directly or
indirectly, to the Company through stock ownership, (iii) such holder is
not a bank receiving interest described in Section 881(c)(3)(A) of the
Code, and (iv) the certification requirements under Section 871(h) or
Section 881(c) of the Code and Treasury regulations thereunder (summarized
below) are met;
(b) a U.S. Alien Holder of a Note will not be subject to U.S. federal
income tax on gain realized on the sale, exchange or other disposition of
such Note, unless (i) such holder is an individual who is present in the
United States for 183 days or more in the taxable year of sale, exchange or
other disposition, and certain conditions are met, or (ii) such gain is
effectively connected with the conduct by such holder of a trade or
business within the United States; and
(c) a Note held by an individual who is not a citizen or resident of
the United States at the time of his death will not be subject to U.S.
federal estate tax as a result of such individual's death, provided that,
at the time of such individual's death, the individual does not own,
actually or constructively, 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote and payments with
respect to such Note would not have been effectively connected with the
conduct by such individual of a trade or business within the United States.
Sections 871(h) and 881(c) of the Code and Treasury regulations thereunder
require that, in order to obtain the exemption from withholding tax described in
paragraph (a) above, either (i) the beneficial owner of a Note must certify,
under penalties of perjury, to the Company or paying agent, as the case may be,
that such owner is a U.S. Alien Holder and must provide such owner's name and
address, and U.S. taxpayer identification number, if any, or (ii) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and holds a Note on behalf of the beneficial owner thereof must
certify, under penalties of perjury, to the Company or paying agent, as the case
may be, that such certificate has been received from the beneficial owner by it
or by a Financial Institution between it and the beneficial owner and must
furnish the payor with a copy thereof. A certificate described in this paragraph
is effective only with respect to payments of interest made to the certifying
U.S. Alien Holder after issuance of the certificate in the calendar year of its
issuance and the two immediately succeeding calendar years. Under temporary
Treasury regulations, such requirement will be fulfilled if the beneficial owner
of a Note certifies on Internal Revenue Service Form W-8, under penalties of
perjury, to the effect that it is a U.S. Alien Holder and provides its name and
address, and any Financial Institution holding a Note on behalf of the
beneficial owner files a statement with the withholding agent to the effect that
it has received such a statement from the beneficial owner (and furnishes the
withholding agent with a copy thereof).
If a U.S. Alien Holder of a Note is engaged in a trade or business within
the United States, and if interest on the Note, or gain realized on the sale,
exchange or other disposition of the Note, is effectively connected with the
conduct of such trade or business, the U.S. Alien Holder, although exempt from
U.S. withholding tax, will generally be subject to regular U.S. income tax on
such
29
<PAGE> 31
interest or gain in the same manner as if it were a U.S. Holder. In lieu of the
certificate described in the preceding paragraph, such a holder will be required
to provide to the Company a properly executed Internal Revenue Service Form 4224
in order to claim an exemption from withholding tax. In addition, if such U.S.
Alien Holder is a foreign corporation, it may be subject to a "branch profits"
tax equal to 30% (or such lower rate provided by an applicable treaty) of its
effectively connected E&P for the taxable year, subject to certain adjustments.
For purposes of the branch profits tax, interest on and any gain recognized on
the sale, exchange or other disposition of a Note will be included in the E&P of
such U.S. Alien Holder if such interest or gain is effectively connected with
the conduct by the U.S. Alien Holder of a trade or business within the United
States.
Dividends paid (or deemed paid) on Common Shares held by a U.S. Alien
Holder generally will not be subject to withholding of U.S. federal income tax
to the extent such dividends are paid out of E&P for a taxable year for which
the Company is subject to the branch profits tax and generally will not be
subject to U.S. federal income tax unless the dividends are effectively
connected with the conduct by the U.S. Alien Holder of a trade or business
within the United States. A U.S. Alien Holder will not be subject to U.S.
federal income tax on gain realized on the sale, exchange or redemption of
Common Shares (including the receipt of cash in lieu of fractional shares upon
conversion of a Note into Common Shares), unless (i) such U.S. Alien Holder is
an individual who is present in the United States for 183 days or more in the
taxable year of such sale, exchange or redemption, and certain conditions are
met, or (ii) such gain is effectively connected with the conduct by such holder
of a trade or business within the United States. Except with respect to such a
receipt of cash in lieu of fractional shares, no U.S. federal income tax will be
imposed upon the conversion of a Note into Common Shares.
In the case of a U.S. Alien Holder, under current Treasury regulations,
backup withholding (as described above under "-- Backup Withholding") will not
apply to payments made by the Company or any paying agent thereof on a Note or
distributions on Common Shares if such holder has provided the required
certification under penalties of perjury that it is not a U.S. Holder (as
defined above) or has otherwise established an exemption, provided in each case
that the Company or such paying agent, as the case may be, does not have actual
knowledge that the payee is a U.S. Holder.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax
considerations of acquiring, holding and disposing of the Notes and any Common
Shares issued upon conversion of the Notes in accordance with their terms
generally applicable under the Income Tax Act (Canada) (the "Tax Act") to a
purchaser of Notes from a Selling Holder who, for the purposes of the Tax Act
and at all relevant times, is not, and is not deemed to be, resident in Canada,
deals at arm's length with the Company, is not affiliated with the Company
within the meaning of proposed amendments to the Tax Act released by the
Department of Finance on June 20, 1996, holds the Notes and Common Shares as
capital property, does not hold or use and is not deemed or determined to hold
or use the Notes and Common Shares in connection with the carrying on of a
business in Canada and is not otherwise required by or for the purposes of the
laws of Canada to include an amount in respect of any such securities in
computing income from carrying on a business in Canada and, in the case of a
person that carries on an insurance business in Canada, establishes that the
Notes and Common Shares are not effectively connected with such insurance
business carried on in Canada. This summary does not apply to purchasers of
Notes who are financial institutions within the meaning of Section 142.2 of the
Tax Act.
This summary is based on the current provisions of the Tax Act and the
Regulations thereunder (the "Tax Regulations") in force as of the date hereof,
Company counsel's understanding of the current administrative and assessing
policies of Revenue Canada, Customs, Excise & Taxation ("Revenue Canada"), and
all specific proposals (the "Tax Proposals") to amend the Tax Act and Tax
Regulations announced by the Minister of Finance (Canada) (the "Finance
Minister") prior to the date hereof and on the assumption that the Common Shares
will at all relevant times be listed on
30
<PAGE> 32
a prescribed stock exchange for purposes of the Tax Act (which currently
includes the American Stock Exchange). This description is not exhaustive of all
possible Canadian federal income tax consequences and, except for the Tax
Proposals, does not take into account or anticipate any changes in law, whether
by legislative, governmental or judicial action, and does not take into account
provincial or foreign tax consequences which may differ significantly from those
discussed herein. With respect to the Tax Proposals, no assurances can be given
that the Tax Proposals will be enacted in the form proposed or at all.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IT IS NOT INTENDED TO BE, NOR
SHOULD IT BE CONSTRUCTED TO BE, LEGAL OR TAX ADVICE TO ANY HOLDER OF THE NOTES
AND NO REPRESENTATION WITH RESPECT TO CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
TO ANY HOLDER OF NOTES IS MADE HEREIN. ACCORDINGLY, PROSPECTIVE PURCHASERS OF
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR
CIRCUMSTANCES.
FOREIGN CURRENCY TRANSLATION ISSUES
Generally all amounts relevant to the computation of income under the Tax
Act which are payable, paid, receivable, received or expressed in a foreign
currency must be translated into Canadian dollars using an appropriate exchange
rate. A holder's cost and proceeds of disposition of a Note or Common Share must
be translated into Canadian dollars at the date of acquisition and at the date
of disposition, respectively. Interest on Notes will generally be translated
into Canadian dollars at the date on which such interest is paid or credited.
Dividends paid on Common Shares will generally be translated into Canadian
dollars at the date on which such dividends are paid.
INTEREST ON NOTES
No Canadian withholding tax will be payable on interest, or any portion of
any early redemption bonus or premium deemed to be interest, paid or credited by
the Company to a Holder of Notes.
DIVIDENDS ON COMMON SHARES
Canadian withholding tax at a rate of 25% (subject to reduction under the
provisions of any relevant tax treaty) will be payable on dividends paid or
credited to a Holder of Common Shares. Under the Canada-United States Income Tax
Convention, 1980 (the "Convention"), the withholding tax rate applicable in
respect of a beneficial owner of dividends that is a resident of the United
States for purposes of the Convention, is generally reduced to 15% or, if the
Holder is a corporation that beneficially owns at least 10% of the voting shares
of the Company, to 6% for dividends paid or credited in 1996 and to 5% for
dividends paid or credited thereafter.
CAPITAL GAINS AND LOSSES
Upon a disposition or deemed disposition of Notes (including on a
redemption) or Common Shares, a capital gain (or loss) will generally be
realized by a Holder to the extent that the proceeds of disposition, less
reasonable costs of disposition, exceed (or are exceeded by) the adjusted cost
base of the Notes or Common Shares, as the case may be, to such Holder thereof.
Interest accrued on a Note, and any portion of any early redemption bonus or
premium deemed to be interest, paid to a Holder of a Note will be excluded from
a Holder's proceeds of disposition of the Note. Three quarters of any capital
gain (a "taxable capital gain") is included in computing income for purposes of
the Tax Act and three quarters of any capital loss is deductible only against
taxable capital gain in accordance with detailed provisions of the Tax Act in
that regard.
Capital gain or loss realized by a Holder on the disposition of the Notes
or Common Shares will not be subject to Canadian tax or deductible for Canadian
tax purposes as the case may be unless the Notes or Common Shares are taxable
Canadian property (as defined in the Tax Act). Notes and Common Shares will
generally not be taxable Canadian property to a Holder unless such Holder and/or
persons with whom such Holder did not deal at arm's length, at any time within
the five year
31
<PAGE> 33
period preceding the disposition, owned or had an option to acquire 25% or more
of the issued shares of any class or series of shares of the Company. For this
purpose, Revenue Canada takes the position that a Holder and persons with whom
such Holder does not deal at arm's length within the meaning of the Tax Act will
be considered to own any Common Shares which such Holder or such person is
entitled to acquire on conversion of a Note or otherwise. Even if the Notes or
Common Shares are taxable Canadian property, any capital gain realized on their
disposition may be exempt from Canadian tax by reason of the provisions of a
relevant tax treaty.
CONVERSION OF NOTES
The conversion of the principal amount of the Notes to Common Shares at the
option of a Holder will be deemed not to be a disposition of the Notes and
accordingly will not give rise to any capital gain or capital loss. The cost
amount to a Holder of Common Shares received on the conversion will, subject to
the averaging rules, be deemed to be equal to the Holder's adjusted cost base of
the Notes immediately before the conversion. A Holder of Notes who receives cash
not exceeding $200, in lieu of a fractional share, will have the option of
recognizing the capital gain or capital loss arising on the disposition of the
fractional share in computing the Holder's income for the taxation year in which
the conversion occurs, or alternatively, of reducing the adjusted cost base of
the Common Shares received at the time of the conversion by the amount of cash
received by the Holder.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NOTES SHOULD CONSULT ITS OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY U.S., CANADIAN, STATE, LOCAL OR OTHER INCOME
TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is a Canadian corporation subject to the Canada Business
Corporations Act ("CBCA"). The rights of shareholders in the Company are as
provided under the CBCA, other applicable law and the Company's Articles of
Incorporation and Bylaws. The Company's authorized capital stock consists of an
unlimited number of shares of Common Shares, no par value, and an unlimited
number of Preferred Shares issuable in series. At April 30, 1996, 30,546,495
shares of Common Shares were outstanding and 2,000,000 Series A Preferred Stock
were outstanding.
COMMON SHARES
Each holder of Common Shares is entitled to one vote for each share held of
record on each matter submitted to a vote of shareholders. Cumulative voting in
the election of directors is not permitted. As a result, the holders of more
than 50% of the outstanding shares have the power to elect all directors. The
quorum required at a shareholders' meeting for consideration of any matter is
ten percent or more of the shares entitled to vote on that matter, represented
in person or by proxy. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
matter is required for shareholder approval.
Subject to the rights of any holders of Preferred Shares, the holders of
Common Shares are entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor and, in the event of
a liquidation, dissolution or winding up of the Company, to share ratably in all
assets remaining after the payment of liabilities. There are no preemptive or
other subscription rights, conversion rights, or redemption or sinking fund
provisions with respect to
32
<PAGE> 34
Common Shares. All of the Common Shares outstanding, and those issued upon
conversion of the Notes in accordance with the terms of the Notes will be, as of
the date therefore will be legally issued, fully paid and non-assessable.
PREFERRED SHARES
The Board of Directors has the authority to issue an unlimited number of
Preferred Shares in one or more series. The broad discretion granted to the
Board of Directors to establish the terms and conditions with respect to the
Preferred Shares may result in an anti-takeover effect. The only series of
Preferred Shares consists of 2,000,000 shares and has been designated as the
Series A Preferred Shares. Each Series A Preferred Share is convertible, at the
option of the holder thereof, into two Common Shares at any time.
A holder of Series A Preferred Shares will be entitled to receive dividends
out of any funds legally available therefor, payable in an amount per share
equal to the amount such holder would have received if such Series A Preferred
Shares had been converted into Common Shares on the record date. Dividends will
only be paid when declared by the Board of Directors. The holders of Series A
Preferred Shares will not accrue any rights by reason of the Board's failure to
declare dividends.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holder of each Series A Preferred
Share will be entitled to receive a preferential amount of Can. $2.50 per share,
plus the amount of any declared but as yet unpaid dividends to the date fixed
for payment of such amount, before any amounts are paid to the holders of Common
Shares. After the payment or the setting apart for payment to the holders of
Series A Preferred Shares of the preferential amounts payable to them as
described above, the holders of Series A Preferred Shares and the holders of
Common Shares will be entitled to receive, ratably share for share without
distinction as to class or series, all of the remaining assets of the Company.
The Series A Preferred Shares are non-voting, except as otherwise required by
law.
SELLING HOLDERS
The Notes were originally issued by the Company and sold by Goldman Sachs
International and UBS Securities LLC (the "Underwriters"), in transactions
exempt from the registration requirements of the Securities Act, to persons
reasonably believed by such Underwriters to be "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act), to a limited number of
institutional investors that are accredited investors within the meaning of Rule
501(a) of the Securities Act, or outside the United States to non-U.S. persons
in offshore transactions in reliance on Regulation S under the Securities Act.
The Selling Holders may from time to time offer and sell pursuant to this
Prospectus any or all of the Notes and Common Shares issued upon conversion of
the Notes. The term Selling Holder includes the holders listed below and the
beneficial owners of the Notes and their transferees, pledgees, donees or other
successors.
The following table sets forth information with respect to the Selling
Holders and the respective aggregate principal amount of Notes beneficially
owned by each Selling Holder that may be offered pursuant to this Prospectus.
Such information has been obtained from the Selling Holders and the Trustee.
[ ] maintains ongoing business relationships with and in connection
therewith provides investment banking and investment advisory services for which
it receives customary fees.
33
<PAGE> 35
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
AMOUNT OF NOTES
-------------------
<S> <C>
1. *..................................................................... *
2. *..................................................................... *
3. *..................................................................... *
4. *..................................................................... *
5. *..................................................................... *
6. *..................................................................... *
7. Any other holder of Offered Securities or future transferee from any
such holder............................................................ *
Total.................................................................... *
-----
</TABLE>
- ---------------
* To be provided by amendment.
None of the Selling Holders has, or within the past three years has had,
any position, office or other material relationship with the Company or its
affiliates. Because the Selling Holders may, pursuant to this Prospectus, offer
all or some portion of the Notes or the Common Shares issuable upon conversion
of the Notes, no estimate can be given as to the principal amount of the Notes
or the number of Common Shares issuable upon conversion of the Notes that will
be held by the Selling Holders upon termination of any such sales. In addition,
the Selling Holders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Notes, since the date on which they
provided the information regarding their holdings of Notes, in transactions
exempt from the registration requirements of the Securities Act.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers directly
by the Selling Holders. Alternatively, the Selling Holders may from time to time
offer the Offered Securities to or through underwriters, broker/dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing of options. At the time a particular offering of the Offered
Securities is made, a Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount and type of Offered Securities being
offered and the terms of the offering, including the name or names of any
underwriters, broker/dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Offered Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
34
<PAGE> 36
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Offered Securities will be paid by the Company, including
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company will be indemnified by the
Selling Holders severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
LEGAL OPINIONS
The validity of the Common Shares issuable upon conversion of the Notes and
certain Canadian income taxation matters have been passed upon for the Company
by Blake, Cassels & Graydon, Toronto, Ontario, and the validity of the Notes has
been passed upon for the Company by Kirkpatrick & Lockhart LLP, Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements incorporated by reference in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as of December 31, 1995 and 1994, and for the three years ended
December 31, 1995, upon the authority of said firm as experts in giving said
reports.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
The enforcement by purchasers of civil liabilities under the federal
securities laws of the United States may be adversely affected by the fact that
the Company is a Canadian corporation, many of its directors and one of its
principal shareholders are residents of Canada, and a portion of the Company's
assets and all or a substantial portion of the assets of such other persons are
located outside the United States. As a result, it may be difficult for
purchasers to effect service of process within the United States upon such
persons or to realize against them in the United States upon judgements of
courts of the United States predicated upon civil liabilities under securities
laws of the United States. Blake, Cassels & Graydon, Canadian counsel for the
Company, has advised it that there is doubt as to the enforceability in Canada
against the Company or its directors or shareholders who are not residents of
the United States in original actions or in actions for enforcement of judgments
of United States courts of liabilities predicated upon federal securities laws
of the United States.
In addition, it may be more difficult under Canadian law than under United
States law for a shareholder to maintain a class action or derivative law suit;
moreover, compensation of attorneys on a contingency fee basis currently is
prohibited in Ontario and limited in certain other provinces in Canada.
35
<PAGE> 37
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF ITS AGENTS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 10
Determination of Offering Price....... 10
Description of Notes.................. 11
Certain Income Tax Considerations..... 26
Description of Capital Stock.......... 32
Selling Holders....................... 33
Plan of Distribution.................. 34
Legal Opinions........................ 35
Independent Public Accountants........ 35
Enforceability of Civil Liabilities
Against Foreign Persons............. 35
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$86,250,000
NORTH AMERICAN
VACCINE, INC.
6.50% CONVERTIBLE SUBORDINATED
NOTES DUE MAY 1, 2003
------------------
PROSPECTUS
------------------
DATED , 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the offering contemplated by this Registration Statement:
<TABLE>
<S> <C>
SEC Registration Fee..................................... $ 30,000
American Stock Exchange Listing Fee...................... 18,000
Blue Sky Fees and Expenses............................... *
Printing and Engraving Costs............................. 70,000
Accounting Fees and Expenses............................. 106,000
Legal Fees and Expenses.................................. 216,000
Transfer Agent and Registrar's Fees...................... 17,000
Miscellaneous............................................ 43,000
---------
Total..................................... $ *
=========
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Bylaws of the Company provide that officers and directors shall be
indemnified against expenses and liabilities incurred by such directors and
officers in respect of their duties as directors and officers of the Company, to
the extent permitted by the Canada Business Corporations Act.
Section 124 of the Canada Business Corporations Act provides that, except
in respect of an action by or on behalf of the corporation or body corporate to
procure a judgment in its favour, a corporation may indemnify a director or
officer of the corporation, a former director or officer of the corporation, or
a person who acts or acted at the corporation's request as a director or officer
of a body corporate of which the corporation is or was a shareholder or creditor
(the "Indemnitee"), and his heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of such corporation or body
corporate, if
(i) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(ii) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
A corporation may also, with the approval of a court, indemnify an
Indemnitee in respect of an action by or on behalf of the corporation or body
corporate to procure a judgment in its favour, to which he is made a party by
reason of being or having been a director or an officer of the corporation or
body corporate, against all costs, charges and expenses reasonably incurred by
him in connection with such action if he fulfills the conditions set out in (i)
and (ii) above.
An Indemnitee is entitled to indemnity from the corporation in respect of
all costs, charges and expenses reasonably incurred by him in connection with
the defense of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a director or officer
of the corporation or body corporate, if the person seeking indemnity was
substantially successful on the merits in his defence of the action or
proceeding, and fulfills the conditions set out in paragraphs (i) and (ii)
above.
An Indemnitee (provided such person meets the conditions set out in
paragraphs (i) and (ii) above) may apply to a court for an order approving an
indemnity under the Canada Business Corporations Act and the court may so order
and make any further order it thinks fit. Any applicant
II-1
<PAGE> 39
to a court shall give the Director under the Canada Business Corporations Act
notice of the application and the Director is entitled to appear and be heard in
person or by counsel. On such an application, the court may also order notice be
given to any interested person and such person is entitled to appear and be
heard in person or by counsel.
The Company has entered into Indemnity Agreements with certain directors
and officers of the Company (each a "Person") pursuant to which the Company is
obligated to maintain directors and officers insurance and to indemnify each
Person to the extent permitted by applicable law. The Indemnity Agreements also
establish procedures to be followed by a Person for claims for indemnification
under the Company's by-laws, including the advancement by the Company of all
costs and expenses incurred by a Person in connection with the defense of any
claim or any action brought by the Person to establish or enforce a right to
indemnification under the Indemnity Agreement.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- --------------------------------------------------------------------------------------
<C> <S>
4.1 Articles of Incorporation of the Company, as amended(1)(3)
4.2 Restated Bylaws of the Company(2)
4.3 Indenture dated as of May 7, 1996 between the Company and Marine Midland Bank, as
Trustee, relating to the Company's 6.50% Convertible Subordinated Notes due May 1,
2003
4.4 Specimen Certificates for the Company Common Shares(1)
4.6 Registration Rights Agreement dated as of May 7, 1996 between the Company and Goldman,
Sachs & Co. and UBS Securities LLC, as initial purchasers
5.1 Opinion Regarding Legality*
12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Independent Public Accountants
23.2 Consent of Counsel -- Blake, Cassels & Graydon (included in Exhibit 5.1)*
23.3 Consent of Counsel -- Kirkpatrick & Lockhart LLP (included in Exhibit 5.1)*
24.1 Power of Attorney (included on signature page)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee
99.1 Amended and Restated Agreement dated June 20, 1994 among the Company, BioChem, IVAX
Corporation, D&N Holding Company, Frost-Nevada, Limited Partnership and Phillip Frost,
M.D.(4)
99.2 Form of Indemnity Agreement between the Company and certain Indemnitees, with schedule
of Indemnitees(4)
99.3 List of Persons Who Have Executed Indemnity Agreements with the Company
</TABLE>
- ---------------
* To be provided by amendment.
(1) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form S-4 Registration Statement (File No. 33-31512)
filed with the Securities and Exchange Commission and declared effective on
January 24, 1990.
(2) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form 10-Q Quarterly Report for the Quarter Ended
June 30, 1990.
(3) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form 10-K Annual Report for the Year Ended December
31, 1991.
(4) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Amendment No. 2 to Form S-3 Registration Statement
(File No. 33-78002) filed with the Securities and Exchange Commission and
withdrawn from registration on November 23, 1994, as modified by Exhibit
99.3 hereto.
II-2
<PAGE> 40
ITEM 17. UNDERTAKINGS
(1) 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 at the time shall be deemed to be
the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement: (a) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (b) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement, and (c) 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.
(4) 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.
(5) The undersigned registrant hereby undertakes 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.
II-3
<PAGE> 41
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, 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 BELTSVILLE, STATE OF MARYLAND ON THIS 25TH DAY OF
JULY, 1996.
NORTH AMERICAN VACCINE, INC.
By: /s/ Sharon Mates
-----------------------------------
Sharon Mates, Ph.D.
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Sharon Mates or Neil W. Flanzraich his/her true
and lawful attorney-in-fact and agent, for him/her, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all interests and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his/her substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS FORM S-3 REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ---------------------------------- --------------
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ Sharon Mates President July 25, 1996
- -----------------------------------------
Sharon Mates, Ph.D.
PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:
/s/ Lawrence J. Hineline Vice President--Finance July 25, 1996
- ------------------------------------------
Lawrence J. Hineline
A MAJORITY OF THE BOARD OF DIRECTORS:
/s/ Francesco Bellini Director July 25, 1996
- ------------------------------------------
Francesco Bellini, Ph.D.
/s/ Alain Cousineau Director July 25, 1996
- ------------------------------------------
Alain Cousineau
/s/ Jonathan Deitcher Director July 25, 1996
- ------------------------------------------
Jonathan Deitcher
</TABLE>
II-4
<PAGE> 42
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ---------------------------------- --------------
<S> <C> <C>
/s/ Denis Dionne Director June 18, 1996
- ------------------------------------------
Denis Dionne
/s/ Neil W. Flanzraich Director July 25, 1996
- ------------------------------------------
Neil W. Flanzraich
/s/ Phillip Frost Director July 25, 1996
- ------------------------------------------
Phillip Frost, M.D.
/s/ Rondi R. Grey Director June 18, 1996
- ------------------------------------------
Rondi R. Grey
/s/ Lyle Kasprick Director July 25, 1996
- ------------------------------------------
Lyle Kasprick
/s/ Francois Legault Director June 18, 1996
- ------------------------------------------
Francois Legault
/s/ Sharon Mates Director July 25, 1996
- ------------------------------------------
Sharon Mates, Ph.D.
/s/ Richard C. Pfenniger, Jr. Director July 25, 1996
- ------------------------------------------
Richard C. Pfenniger, Jr.
</TABLE>
II-5
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. ITEM PAGE NO.
- ----------- ------------------------------------------------------------------------ --------
<C> <S> <C>
4.1 Articles of Incorporation of the Company, as amended(1)(3)..............
4.2 Restated Bylaws of the Company(2).......................................
4.3 Indenture dated as of May 7, 1996 between the Company and Marine Midland
Bank, as Trustee, relating to the Company's 6.50% Convertible
Subordinated Notes due May 1, 2003......................................
4.4 Specimen Certificates for the Company Common Shares(1)..................
4.6 Registration Rights Agreement dated as of May 7, 1996 between the
Company and Goldman, Sachs & Co. and UBS Securities LLC, as initial
purchasers..............................................................
5.1 Opinion Regarding Legality*.............................................
12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges...
23.1 Consent of Independent Public Accountants...............................
23.2 Consent of Counsel -- Blake, Cassels & Graydon (included in Exhibit
5.1)*...................................................................
23.3 Consent of Counsel -- Kirkpatrick & Lockhart LLP (included in Exhibit
5.1)*...................................................................
24.1 Power of Attorney (included on signature page)..........................
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee..........
99.1 Amended and Restated Agreement dated June 20, 1994 among the Company,
BioChem, IVAX Corporation, D&N Holding Company, Frost-Nevada, Limited
Partnership and Phillip Frost, M.D.(4)..................................
99.2 Form of Indemnity Agreement between the Company and certain Indemnitees,
with schedule of Indemnitees(4).........................................
99.3 List of Persons Who Have Executed Indemnity Agreements with the
Company.................................................................
</TABLE>
- ---------------
* To be provided by amendment.
(1) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form S-4 Registration Statement (File No. 33-31512)
filed with the Securities and Exchange Commission and declared effective on
January 24, 1990.
(2) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form 10-Q Quarterly Report for the Quarter Ended
June 30, 1990.
(3) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Form 10-K Annual Report for the Year Ended December
31, 1991.
(4) This exhibit is incorporated herein by this reference to the corresponding
exhibit in the Company's Amendment No. 2 to Form S-3 Registration Statement
(File No. 33-78002) filed with the Securities and Exchange Commission and
withdrawn from registration on November 23, 1994, as modified by Exhibit
99.3 hereto.
<PAGE> 1
EXHIBIT 4.3
NORTH AMERICAN VACCINE, INC.
ISSUER
TO
MARINE MIDLAND BANK
TRUSTEE
===============
INDENTURE
Dated as of May 7, 1996
===============
U.S.$86,250,000
6.50% Convertible Subordinated Notes
Due May 1, 2003
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . 10
SECTION 1.3. Form of Documents Delivered to the Trustee . . . . . . . . . . . . . . . 11
SECTION 1.4. Acts of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.5. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . 13
SECTION 1.6. Notice to Holders of Securities; Waiver . . . . . . . . . . . . . . . . . 14
SECTION 1.7. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . 14
SECTION 1.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.9. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 1.13. Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . 15
SECTION 1.14. Conversion of Currency . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.15. Currency Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.16. Interest Act (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.17. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . 18
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- i -
<PAGE> 3
ARTICLE TWO
SECURITY FORMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.2. Forms of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.3. Form of Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.4. Legend on Restricted Securities . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.5 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . 42
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.2. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.3. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . 43
SECTION 3.4. Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3.5. Registration, Registration of Transfer and Exchange;
Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities . . . . . . . . . . . . . 52
SECTION 3.7. Payment of Interest, Interest Rights Preserved . . . . . . . . . . . . . 53
SECTION 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.12. Notification of Withholding . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- ii -
<PAGE> 4
ARTICLE FOUR
SATISFACTION AND DISCHARGE
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 56
SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . 60
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 5.4. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 61
SECTION 5.5. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 5.6. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . 63
SECTION 5.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . 64
SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 64
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.12. Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.13. Waiver of Past Defaul . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- iii -
<PAGE> 5
ARTICLE SIX
THE TRUSTEE
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.1. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . 66
SECTION 6.2. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.3. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.4. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.5. May Hold Securities, Act as Trustee Under Other
Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.6. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.7. Compensation and Reimbursemen . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.8. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . 70
SECTION 6.9. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . 71
SECTION 6.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . 72
SECTION 6.11. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.12. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.13 Trust Indenture Legislation . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE SEVEN
AMALGAMATION, CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Amalgamate, Consolidate, Etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.2. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- iv -
<PAGE> 6
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 8.1. Supplemental Indentures Without Consent of Holders of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.2. Supplemental Indentures with Consent of Holders of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.3. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . 78
SECTION 8.4. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.5. Reference in Securities to Supplemental Indentures . . . . . . . . . . . 79
SECTION 8.6. Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 79
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . 79
SECTION 9.2. Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . 79
SECTION 9.3. Persons Entitled to Vote at Meetings . . . . . . . . . . . . . . . . . . 80
SECTION 9.4. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 9.5. Determination of Voting Rights; Conduct and Adjournmet
of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 9.6. Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . 82
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . 82
SECTION 10.2. Maintenance of Offices or Agencies . . . . . . . . . . . . . . . . . . . 83
SECTION 10.3. Money for Security Payments To Be Held in Trust . . . . . . . . . . . . 83
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- v -
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.4. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.5. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.6. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.7. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . 86
SECTION 10.8. Registration and Listing . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.9. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . 86
SECTION 10.10. Delivery of Certain Informatio . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.11. Reporting Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.12. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.13. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11. 1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 11.2. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 11.3. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . 89
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . 90
SECTION 11.5. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 11.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 11.7. Securities Payable on Redemption Dat . . . . . . . . . . . . . . . . . . 92
SECTION 11.8. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . 92
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- vi -
<PAGE> 8
ARTICLE TWELVE
CONVERSION OF SECURITIES
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 12.1. Conversion Privilege and Conversion Price . . . . . . . . . . . . . . . 92
SECTION 12.2. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.3. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 12.4. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 95
SECTION 12.5. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . 99
SECTION 12.6. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . 100
SECTION 12.7. Company to Reserve Common Shares . . . . . . . . . . . . . . . . . . . 101
SECTION 12.8. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 12.9. Covenant as to Common Shares . . . . . . . . . . . . . . . . . . . . . 101
SECTION 12.10. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . 101
SECTION 12.11. Provision in Case of Amalgamation, Consolidation,
Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 12.12. Responsibility of Trustee for Conversion Provision . . . . . . . . . . 103
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . 104
SECTION 13.2. No Payments in Certain Circumstances; Payment Over
of Proceeds Upon Dissolution, Etc . . . . . . . . . . . . . . . . . . . 104
SECTION 13.3. Notice to Trustee of Specified Events; Reliance on
Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . . 106
SECTION 13.4. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . 107
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- vii -
<PAGE> 9
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition . . . . . . . . . . . 107
SECTION 13.6. Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.7. Trustee Not Fiduciary for Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.8. Rights of Trustee as Holder of Senior Indebtedness;
Preservation Of Trustee's Rights . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.9. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . 109
SECTION 13.10. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . 109
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc . . . . . . . . . . 110
SECTION 14.3. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 114
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
SECTION 15.2. Preservation of Information . . . . . . . . . . . . . . . . . . . . . . 115
</TABLE>
This Table of Contents shall not, for any purpose, be deemed to be a part of
the Indenture.
- --------------------------------------------------------------------------------
- viii -
<PAGE> 10
INDENTURE, dated as of May 7, 1996, between NORTH AMERICAN VACCINE,
INC., a corporation duly organized and existing under the laws of Canada,
having its principal office at 12103 Indian Creek Court, Beltsville, Maryland
(herein called the "Company"), and MARINE MIDLAND BANK, a New York banking
corporation and trust company, as Trustee hereunder (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 6.50%
Convertible Subordinated Notes due May 1, 2003 (herein called the "Securities")
of substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the issuance of the Common Shares of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of Common Shares issuable upon such conversion, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States, and, except as otherwise
herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
<PAGE> 11
(3) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 1.4.
"Additional Amounts" has the meaning specified in Section 2.2.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" has the meaning in Section 3.5(c).
"Authenticating Agent" means any Person authorized pursuant to Section
6.12 to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the
Company or any committee of that board empowered to act for it with respect to
this Indenture.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, shall
have been delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place
of Conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion or other place, as
the case may be, are authorized or obligated by law or executive order to
close; provided, however, that a day on which banking institutions in New York,
New York are authorized or obligated by law or executive order to close shall
not be a Business Day for purposes of Section 13.5; provided, further, that a
day on which banking institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close shall not be a
Business Day for purposes of Sections 10.1, 10.3 or 11.6.
"Canadian Additional Amounts" has the meaning specified in Section
2.2.
"Canadian Excluded Holder" has the meaning specified in Section 2.2.
- 2 -
<PAGE> 12
"Canadian Taxes" has the meaning specified in Section 2.2.
"Cedel" has the meaning specified in Section 2.1.
"Change in Control" has the meaning specified in Section 14.3.
"Closing Price Per Share" means, with respect to a class of Common
Stock of the Company, for any day, the reported last sales price regular way
per share of such class or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case (i) on Nasdaq or, if such class of Common Stock is not quoted on
Nasdaq, on the principal (as determined by the Company's Board of Directors)
United States national securities exchange on which such class of Common Stock
is quoted, listed or admitted to trading or (ii) if not quoted on Nasdaq or
listed or admitted to trading on any United States national securities
exchange, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose or (iii) if not so
available in either manner set forth in (i) or (ii), as otherwise determined in
good faith by the Board of Directors.
"Commission" means the United States Securities and Exchange
Commission.
"Common Shares" means the Common Shares, with no par value, of the
Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 12.11, shares issuable upon conversion of
Securities shall include only Common Shares or shares of any class or classes
of Common Stock resulting from any classification or reclassification thereof;
provided, however, that if at any time as a result of such classification or
reclassification there shall be more than one such resulting class, the shares
so issuable upon conversion of Securities shall include shares of all such
classes, and the number of shares of each such class then so issuable shall be
in the same proportion which the total number of shares of such class resulting
from all such reclassification bears to the total number of shares of all such
classes resulting from all such reclassification.
"Common Stock" means the Company's Common Shares, with no par value,
together with any other class of capital stock of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, any Vice
Chairman of the Board, its Chief Executive Officer, its President or any Senior
Vice President, and by its Corporate Controller,
- 3 -
<PAGE> 13
Treasurer, an Assistant Treasurer, its Secretary or any Assistant Secretary,
and delivered to the Trustee.
"Constituent Person" has the meaning specified in Section 12.11.
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Twelve. The Company has
initially appointed the Trustee as its Conversion Agent in the Borough of
Manhattan, The City of New York, and Midland Bank plc as its Conversion Agent
in London, England.
"Conversion Price" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 140 Broadway,
12th Floor, New York, New York 10005.
"Corporation" means a corporation, company, including, without
limitation, a limited liability company, association, joint-stock company or
business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Definitive Security" means any Security (other than a Global
Security).
"Definitive Restricted Security" has the meaning specified in Section
2.1.
"Depositary" means, with respect to any Securities issued in whole or
in part in the form of one or more Global Securities, the clearing agency that
is registered under the Exchange Act and designated to act as Depositary for
such Securities, as contemplated by Section 3.4, or any successor clearing
agency registered under the Exchange Act as contemplated by Section 3.4.
"Determination Notice" has the meaning specified in Section 2.2(a).
"Distribution Date" has the meaning specified in Section 12.4(4).
"Dollar" or "U.S.$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"Euroclear" has the meaning specified in Section 2.1.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended from time at time.
- 4 -
<PAGE> 14
"Exchange Date" means the date 40 days after the latest of the
commencement of the offering of the Securities, the original issue date of the
Securities or the issue date with respect to any additional Securities issued
to cover over-allotments.
"Excluded Holder" has the meaning specified in Section 2.2.
"Global Security" means any of the Restricted Global Security, the
Regulation S Global Security and the Unrestricted Global Security and
registered in the Security Register in the name of a Depositary or a nominee
thereof.
"Holder", when used with respect to any Security, means the Person in
whose name the Security is registered in the Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined under Rule 501(a)(1), (2), (3) or (7) of the
Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, exercise of the repurchase right set forth
in Article Fourteen or otherwise.
"Nasdaq" means the Nasdaq National Market System.
"Non-electing Share" has the meaning specified in Section 12.11.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President or any Senior Vice President and by the Corporate Controller, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company and who shall be reasonably
acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
- 5 -
<PAGE> 15
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for the payment or redemption of which money
in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities, provided that if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.6
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee actually knows to be
so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obliger.
"Paying Agents" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed
the Trustee as its Paying Agent in the Borough of Manhattan, The City of New
York and Midland Bank plc, located at Mariner House, Pepys Street, London EC3N
4DA, England as its Paying Agent in London, England.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any agency
or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
"Place of Payment" has the meaning specified in Section 3.1.
- 6 -
<PAGE> 16
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Record Date" means any Regular Record Date or Special Record Date.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Date" has the meaning specified in Section 12.4(4).
"Registration Rights Agreement" has the meaning specified in Section
10.12.
"Regular Record Date" for interest payable in respect of any Security
on any Interest Payment Date means the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (including
any successor regulation thereto), as it may be deemed from time to time.
"Regulation S Global Security" has the meaning specified in Section
2.1.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee including without
limitation any vice president, assistant vice president, assistant treasurer,
assistant secretary, corporate trust officer, assistant corporate trust officer
or other employee of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge and familiarity with the particular
subject.
"Restricted Global Security" has the meaning specified in Section 2.1.
"Restricted Period" has the meaning specified in Section 2.1.
"Restricted Security" has the meaning specified in Section 2.4.
- 7 -
<PAGE> 17
"Rule 144" means Rule 144 under the Securities Act (including any
successor rule thereto), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (including any
successor rule thereto), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.10.
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time.
"Security" means any Security (including any Global Security) issued
in substantially the form set forth in Section 2.2 and registered in the
Security Register.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Indebtedness" has the meaning specified in Section 13.1.
"Shelf Registration Statement" has the meaning specified in Section
10.12.
"Significant Subsidiary" means any Subsidiary that would be a
significant subsidiary as defined under the Regulation S-X under the Securities
Act and Exchange Act.
"Special Interest" has the meaning specified in Section 2.2.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Company pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries.
"Tax Affected Security" means any Security that, on or before the 30th
day after the date on which the Company publishes a notice of redemption
pursuant to the third paragraph of the reverse of the Security in Section 2.2
hereof, is delivered to the Trustee together with a written statement from or
on behalf of the beneficial owner of such Security to the effect that such
- 8 -
<PAGE> 18
beneficial owner has or will become entitled to receive Additional Amounts as a
result of such Tax Law Change.
"Tax Law Change" means any change in, or amendment to, the laws
(including any regulations or rulings promulgated thereunder) of the United
States or Canada or any political subdivision or taxing authority thereof or
therein affecting taxation, or any change in, or amendment to, the application
or official interpretation of such laws, regulations or rulings.
"Taxes" has the meaning specified in Section 2.2.
"Trading Days" of a class of Common Stock means (i) if such class of
Common Stock is listed on any United States national securities exchange, days
on which such national securities exchange is open for business; (ii) if such
class of Common Stock is quoted on a system of automated dissemination of
quotations of securities prices, days on which trades may be effected through
such system; or (iii) if such class of Common Stock is not listed for trading
on any United States national securities exchange or quoted on any system of
automated dissemination of quotation of securities prices, days on which such
class of Common Stock is traded regular way in the over-the-counter market and
for which a closing bid and a closing asked price for such class of Common
Stock are available.
"Transfer Agent" has the meaning specified in Section 2.2. The
Company has initially appointed the Trustee as its Transfer Agent in the
Borough of Manhattan, The City of New York and Midland Bank plc as its Transfer
Agent in London, England.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction (its "possessions" including Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands).
"U.S. Additional Amounts" has the meaning specified in Section 2.2.
"U.S. Excluded Holder" has the meaning in Section 2.2.
"U.S. Taxes" has the meaning specified in Section 2.2.
- 9 -
<PAGE> 19
"United States person" has the meaning specified in Section 2.2.
"Unrestricted Global Security" means a Global Security which is not a
Restricted Security.
"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".
"Voting Power" of any Person means the aggregate number of votes of
all classes of Capital Stock of such Person which ordinarily has voting power
for the election of the Board of Directors or their equivalents of such Person.
"Voting Stock" means stock or other similar interests in the
corporation which ordinarily has or have voting power for the election of
directors, or persons performing similar functions, whether at all times or
only so long as no senior class of stock or other interests has or have such
voting power by reason of any contingency.
"Western Europe" means Austria, Belgium, Denmark, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland and the United Kingdom.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee or the
Paying Agent in London to take any action under any provision of this Indenture
or as required by indenture legislation, the Company shall furnish to the
Trustee or the Paying Agent in London, as the case may be, an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished, and except in connection with the initial authentication of the
Securities.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in Section 10.9) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
- 10 -
<PAGE> 20
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in
person or by an agent or proxy duly appointed in writing by such Holders or (2)
the record of Holders of Securities voting in favor thereof, either in person
or by proxies duly appointed in writing, at any meeting of Holders of
Securities duly called and held in accordance with the provisions of Article
Nine. Such action shall become effective when such instrument or instruments or
record is delivered to the Trustee and, where it is hereby expressly required,
to the Company. The Trustee shall promptly deliver to the Company copies of
all such instruments and records delivered to the Trustee. Such instrument or
instruments and record (and the action embodied therein and evidenced thereby)
are herein sometimes referred
- 11 -
<PAGE> 21
to as the "Act" of the Holders of Securities signing such instrument or
instruments and so voting at such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent or proxy, or of the
holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Company if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 9.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The principal amount and serial number of any Security held by any
Person, and the date of his holding the same, shall be proved by the Security
Register.
(d) The Paying Agent in London may in any instance require further
proof with respect to any of the matters referred to in this Section 1.4.
(e) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee or the Paying Agent in London deems sufficient;
and the Trustee or the Paying Agent in London may in any instance require
further proof with respect to any of the matters referred to in this Section
1.4.
(f) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(g) The provisions of this Section 1.4 are subject to the provisions
of Section 9.5.
SECTION 1.5. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders of Securities or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee or the Paying Agent in London by any Holder of
Securities or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee and received at its Corporate Trust Office,
- 12 -
<PAGE> 22
Attention: Corporate Trust Services--North American Vaccine, Inc., or
to or with the Paying Agent in London and received at Mariner House
Pepys Street, London EC3N 4DA, England, Attention: Midland Securities
Services, or
(2) the Company by the Trustee or by any Holder of Securities
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing, mailed, first-class postage
prepaid, or telecopied and confirmed by mail, first-class postage
prepaid, or delivered by hand or overnight courier, addressed to the
Company at 12103 Indian Creek Court, Beltsville, Maryland, 20705,
Attention: Daniel J. Abdun-Nabi, or at any other address previously
furnished in writing to the Trustee by the Company.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders of Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Security affected by such
event, at the address of such Holder as it appears in the Security Register,
not earlier than the earliest date and not later than the latest date
prescribed for the giving of such notice. Such notice shall be deemed to have
been given when such notice is mailed.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Security shall affect the sufficiency
of such notice with respect to other Holders of Securities. In case by reason
of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification to
Holders of Securities as shall be made with the approval of the Trustee, which
approval shall not be unreasonably withheld, shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
- 13 -
<PAGE> 23
SECTION 1.8. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.9. Separability Clause.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.10. Benefits of Indenture.
Except as provided in the next sentence, nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Thirteen are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness.
SECTION 1.11. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF
AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
Holder of a Security has a right to convert his Security shall not be a
Business Day at a Place of Payment or Place of Conversion, as the case may be,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal and premium, if any, or delivery
for conversion of such Security need not be made at such Place of Payment or
Place of Conversion, as the case may be, on or by such day, but may be made on
or by the next succeeding Business Day at such Place of Payment or Place of
Conversion, as the case may be, with the same force and effect as if made on
the Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated
Maturity or by such last day for conversion; provided, however, that in the
case that payment is made on such succeeding Business Day, no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last day for
conversion, as the case may be.
SECTION 1.13. Consent to Jurisdiction and Service of Process.
- 14 -
<PAGE> 24
The Company agrees that any legal suit, action or proceeding brought
by any party to enforce any rights under or with respect to this Indenture or
the Securities may be instituted in any state or federal court in the City of
New York, State of New York, and waives to the fullest extent permitted by law
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding and irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding. The
Company hereby irrevocably designates and appoints CT Corporation System ("CT")
as the Company's authorized agent to receive and forward on its behalf service
of any and all process which may be served in any such suit, action or
proceeding in any such court and agrees that service of process upon CT (or any
successor) at its office at 1633 Broadway, New York, New York 10019 (or such
other address in the Borough of Manhattan, the City of New York, as the Company
may designate by written notice to the Trustee) and written notice of said
service to the Company mailed or delivered to The CT Corporation System, 1633
Broadway, New York, New York 10019 shall be deemed in every respect effective
service of process upon the Company in any such suit, action or proceeding and
shall be taken and held to be valid personal service upon the Company. Said
designation and appointment shall be irrevocable. Nothing in this Section 1.13
shall affect the right of any party hereto or any Holder to serve process in
any manner permitted by law or limit the right of any party hereto to bring
proceedings against the Company in the courts of any jurisdiction or
jurisdictions. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment
of CT in full force and effect so long as this Indenture or any of the
Securities shall be outstanding. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, the Company hereby irrevocably waives such immunity in respect
of its obligations under this Indenture and the Securities, to the extent
permitted by law.
SECTION 1.14. Conversion of Currency.
(a) The Company covenants and agrees that the following provisions
shall apply to conversion of currency in the case of the Securities and this
Indenture:
(i) If for the purpose of obtaining judgment in, or enforcing
the judgment of, any court in any country, it becomes necessary to
convert into any other currency (the "judgment currency") an amount
due in United States dollars, then the conversion shall be made at the
rate of exchange prevailing on the Business Day before the date on
which the judgment is given or the order of enforcement is made, as
the case may be (unless a court shall otherwise determine).
(ii) If there is a change in the rate of exchange prevailing
between the Business Day before the day on which the judgment is given
or an order of enforcement is made, as the case may be (or such other
date as a court shall determine), and the date of receipt of the
amount due, to the extent permitted by applicable law, the Company
will pay
- 15 -
<PAGE> 25
additional (or, as the case may be, such lesser) amount, if any, as
may be necessary so that the amount paid in the judgment currency when
converted at the rate of exchange prevailing on the date of receipt
will produce the amount in United States dollars originally due.
(b) In the event of the winding-up of the Company at any time while
any amount or damages owing under the Securities and this Indenture, or any
judgment or order rendered in respect thereof, shall remain outstanding, the
Company shall indemnify and hold the Holders and the Trustee harmless against
any deficiency arising or resulting from any variation in rates of exchange
between (1) the date as of which the equivalent of the amount in United States
dollars due or contingently due under the Securities and this Indenture (other
than under this subsection (b)) is calculated for the purposes of such
winding-up and (2) the final date for the filing of proofs of claim in such
winding-up. For the purposes of this subsection (b), the final date for the
filing of proofs of claim in the winding up of the Company shall be the date
fixed by the liquidator or otherwise in accordance with the relevant provisions
of applicable law as being the latest practicable date as at which liabilities
of the Company may be ascertained for such winding-up prior to payment by the
liquidator or otherwise in respect thereto.
(c) The obligations contained in subsections (a)(ii) and (b) of this
Section 1.14 shall constitute separate and independent obligations of the
Company from its other obligations under the Securities and this Indenture,
shall give rise to separate and independent causes of action against the
Company, shall apply irrespective of any waiver or extension granted by any
Holder or the Trustee or either of them from time to time and shall continue in
full force and effect notwithstanding any judgment or order or the filing of
any proof of claim in the winding-up of the Company for a liquidated sum in
respect of amounts due hereunder (other than under subsection (b) above) or
under any such judgment or order. Any such deficiency as aforesaid shall be
deemed to constitute a loss suffered by the Holders or the Trustee, as the case
may be, and no proof or evidence of any actual loss shall be required by the
Company or the liquidator or otherwise or any of them. In the case of
subsection (b) above, the amount of such deficiency shall not be deemed to be
reduced by any variation in rates of exchange occurring between the said final
date and the date of any liquidating distribution.
(d) The term "rate(s) of exchange" shall mean the rate, quoted at noon
for transactions in excess of U.S. $1,000,000, at which the Holder or the
Trustee, as the case may be, is able or would have been able on the relevant
date to purchase at United States dollars with the judgment currency other than
United States dollars referred to in subsections (a) and (b) above and includes
any premiums and costs of exchange payable.
SECTION 1.15. Currency Equivalent.
Except as provided in Section 1.14, for purposes of the
construction of the terms of this Indenture or of the Securities, in the event
that any amount is stated herein in the currency of one nation (the "First
Currency"), as of any date such amount shall also be deemed to represent the
amount in the currency of any other relevant nation (the "Other Currency")
- 16 -
<PAGE> 26
which is required to purchase such amount in the First Currency at the spot
buying rate for the purchase of the First Currency with the Other Currency used
by The Toronto-Dominion Bank at its main branch in Toronto as of approximately
12:00 noon (Toronto time) on the date of determination.
SECTION 1.16. Interest Act (Canada).
For purposes of the Interest Act (Canada), where in this Indenture and
the Securities, a rate of interest is to be calculated on the basis of a year
of 360 days, the yearly rate of interest to which the 360 day rate is
equivalent is such rate multiplied by the number of days in the year for which
such calculation is made and divided by 360.
SECTION 1.17. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be. Until such time as this Indenture shall be qualified under the
Trust Indenture Act, this Indenture, the Company and the Trustee shall be
deemed for all purposes hereof to be subject to and governed by the Trust
Indenture Act to the same extent as would be the case if this Indenture were so
qualified on the date hereof.
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange, or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof.
The Trustee's certificates of authentication shall be in substantially
the form set forth in Section 2.5.
- 17 -
<PAGE> 27
Conversion notices shall be in substantially the form set forth in the
Annexes to the Indenture.
Securities that are Restricted Securities shall bear the legend
required by Section 2.4.
The Securities shall be issued in the form of one or more Global
Securities and Definitive Securities in certificated form in accordance with
Section 3.4. The Depositary for such Global Securities shall initially be The
Depository Trust Company ("DTC").
A Global Security may be printed, lithographed, typewritten,
mimeographed or otherwise produced, as determined by the officers of the
Company executing such Security, as evidenced by their execution thereof. The
Definitive Securities shall be printed, lithographed, typewritten,
mimeographed, or engraved or otherwise produced in any other manner permitted
by the rules of any securities exchange on which the Securities may be listed,
all as determined by the officers executing such Securities, as evidenced by
their execution thereof. The format and spacing of the text of a Security may
be varied to facilitate such production.
Securities offered and sold in their initial distribution in reliance
on Regulation S shall be initially issued in the form of one or more Global
Securities in definitive, fully registered form substantially in the form of
the Regulation S Global Security set forth in Section 2.2, with such applicable
legends as are provided for in Section 2.2, except as otherwise permitted
herein. Such Global Securities shall be registered in the name of a nominee of
DTC and deposited with the Trustee, at its New York office, as custodian for
the Depositary, duly executed by the Company and authenticated by the Trustee
as hereinafter provided, for credit to the respective accounts at the
Depositary of the depositories for Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear"), and Cedel
Bank, societe anonyme ("CEDEL"). Until such time as the Restricted Period shall
have terminated, such Global Securities shall be referred to herein as the
"Regulation S Global Security." After such time as the Restricted Period shall
have terminated, such Global Security shall be referred to herein as the
"Unrestricted Global Security." The aggregate principal amount of the
Regulation S Global Security or the Unrestricted Global Security may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, in connection with a corresponding
decrease or increase in the aggregate principal amount of the Restricted Global
Security, as hereinafter provided. As used herein, the term "Restricted
Period" means the period of 40 consecutive days beginning on and including the
first day after the later of (i) the day that Goldman, Sachs & Co., advises the
Company and the Trustee of the day on which the Securities are first offered to
persons other than distributors (as defined in Regulation S) in reliance on
Regulation S and (ii) the latest date of original issue of any Security. The
Regulation S Global Security, the Unrestricted Global Security and all other
Securities that are not Restricted Securities shall collectively he referred to
herein as the "Unrestricted Securities."
Securities offered and sold in their initial distribution in reliance
on Rule 144A shall be issued in the form of one or more Global Securities
(collectively, the "Restricted Global
- 18 -
<PAGE> 28
Security") in definitive, fully registered form substantially in the form of
the Restricted Global Security set forth in Section 2.2, with such applicable
legends as are provided for in Section 2.2, except as otherwise permitted
herein. Such Restricted Global Security shall be registered in the name of the
Depositary or its nominee and deposited with the Trustee, at its New York
office, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Restricted Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary in connection with a corresponding decrease or increase in the
aggregate principal amount of the Regulation S Global Security or the
Unrestricted Global Security as hereinafter provided.
Securities offered and sold in their initial distribution in reliance
on transaction exempt from registration under the Securities Act to an
institutional investor that is an "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Institutional
Accredited Investor") shall be issued in definitive, fully registered form each
a "Definitive Restricted Security", substantially in the form of the Definitive
Restricted Security set forth in Section 2.2 with such applicable legends as
are provided for in Section 2.2, except as otherwise permitted herein.
- 19 -
<PAGE> 29
SECTION 2.2. Forms of Securities.
Forms of Securities:
[FORM OF FACE]
THE FOLLOWING LEGEND (THE "RULE 144A LEGEND") SHALL APPEAR ON THE FACE OF EACH
DEFINITIVE RESTRICTED SECURITY OR OTHER RESTRICTED SECURITY OTHER THAN ANY
GLOBAL SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY COMMON
SHARES ISSUABLE UPON ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THIS
SECURITY MAY ONLY BE SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE
AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF NORTH AMERICAN
VACCINE, INC. (THE "COMPANY") THAT (A) THIS SECURITY AND ANY COMMON SHARES
ISSUABLE UPON ITS CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (III) IN THE CASE OF ANY PURCHASER OTHER THAN A PURCHASER WHO
HAS OTHERWISE AGREED WITH THE COMPANY TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF, (IV) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED
STATES, AND THAT (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY OR SUCH
- 20 -
<PAGE> 30
COMMON SHARES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A)
ABOVE.
THIS SECURITY, ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION AND ANY
RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF
THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY
AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED GLOBAL
SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR)
WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
SUCH SECURITIES AND ANY COMMON SHARES ISSUABLE UPON THEIR CONVERSION MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. SUCH SECURITIES MAY ONLY BE SOLD IN
ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT
THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF ANY BENEFICIAL
INTEREST IN THE SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF SUCH
BENEFICIAL INTEREST IN THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY
HOLDING THE GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE
RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY
SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF NORTH AMERICAN VACCINE, INC. (THE
"COMPANY") THAT (A) ANY BENEFICIAL INTEREST IN THE SECURITIES OR ANY COMMON
SHARES ISSUABLE UPON THEIR CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN
OFFSHORE
- 21 -
<PAGE> 31
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (III) IN THE CASE OF ANY BENEFICIAL OWNER OTHER THAN A
BENEFICIAL OWNER WHO HAS OTHERWISE AGREED WITH THE COMPANY, TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501 (A) UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
THEREOF, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE l44 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES, AND THAT (B) THE BENEFICIAL OWNER WILL, AND
EACH SUBSEQUENT BENEFICIAL OWNER OF THE SECURITIES OR ANY COMMON SHARES
ISSUABLE UPON THEIR CONVERSION IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES AND SUCH COMMON SHARES FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.
THIS SECURITY, ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION AND ANY
RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF
THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY AND ANY SUCH SHARES, REPRESENTING THE INTERESTS HELD BY EACH
BENEFICIAL OWNER HEREOF AND THEREOF, SHALL BE DEEMED BY THE ACCEPTANCE OF THIS
SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.
THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IN
- 22 -
<PAGE> 32
EXCHANGE FOR THIS SECURITY IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS
GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH REGULATION S GLOBAL
SECURITY AND UNRESTRICTED GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS
PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON UNLESS SUCH
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS
USED ABOVE HAVE THE MEANINGS GIVEN THEM IN REGULATION S UNDER
THE SECURITIES ACT.
- 23 -
<PAGE> 33
NORTH AMERICAN VACCINE, INC.
6.50% CONVERTIBLE SUBORDINATED NOTE
DUE MAY 1, 2003
No.__________U.S.$__________
[IF A REGULATION S GLOBAL SECURITY OR AN UNRESTRICTED GLOBAL SECURITY CUSIP No.
U65777AA9 ]
[IF A RESTRICTED GLOBAL SECURITY-CUSIP NO. 657201AA7 ]
[IF A DEFINITIVE RESTRICTED SECURITY-CUSIP NO. 657201AB5 ]
[ISIN No. US657201AA77 ]
NORTH AMERICAN VACCINE, INC., a corporation duly organized and
existing under the laws of Canada (herein called the "Company", which term
includes any successor Person under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to ____________________, or
registered assigns, the principal sum of ____________________ United States
Dollars [(which amount may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian of the Depositary,
in accordance with the rules and procedures of the Depositary; provided,
however, that such amount may not exceed U.S. $86,250,000 )]* on May 1, 2003
and to pay interest thereon, from May 7, 1996, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly
provided for, semi-annually in arrears on May 1 and November 1 in each year
(each, an "Interest Payment Date"), commencing November 1, 1996, at the rate of
6.50% per annum (together with any Additional Amounts and Special Interest the
Company may be required to pay), until the principal hereof is due, and at the
rate of 6.50% per annum on any overdue principal and premium, if any, and, to
the extent permitted by law, on any overdue interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the April 15 or
October 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for ("Defaulted
Interest") will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Company, notice whereof shall be given to Holders of Securities not
less than 10 days prior to such Special Record Date, or be paid at any
- -------------------------
* This language shall appear on each Global Security.
- 24 -
<PAGE> 34
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture. Payments of principal shall be made upon the surrender of this
Security at the option of the Holder at the Corporate Trust Office of the
Trustee, or at such other office or agency of the Company as may be designated
by it for such purpose in the Borough of Manhattan, The City of New York, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts or at such
other offices or agencies as the Company may designate, by United States Dollar
check drawn on, or transfer to a United States Dollar account (such a transfer
to be made only to a Holder of an aggregate principal amount of Securities in
excess of U.S. $2,000,000, and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the payee with a bank in the Borough of
Manhattan, The City of New York. Payment of interest on this Security may be
made by United States Dollar check drawn on a bank in the Borough of Manhattan,
The City of New York mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register, or, upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than the relevant Record Date, by transfer to a United
States Dollar account (such a transfer to be made only to a Holder of an
aggregate principal amount of Securities in excess of U.S. $2,000,000 and only
if such Holder shall have furnished wire instructions in writing to the Trustee
no later than 15 days prior to the relevant payment date) maintained by the
payee with a bank in the Borough of Manhattan, The City of New York.
The Company will pay to the Holder of this Security who is a
non-resident of Canada (within the meaning of the Income Tax Act (Canada)) such
additional amounts ("Canadian Additional Amounts") as may be necessary in order
that every net payment of the principal of, premium, if any, and interest on
this Security (including payment on redemption or repurchase), after deduction
or withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the
Government of Canada or of any province or territory thereof or by any
authority or agency thereof or therein ("Taxing Jurisdiction") ("Canadian
Taxes"), will not be less than the amount provided for in this Security to be
then due and payable; provided, that no Canadian Additional Amounts will be
payable with respect to a payment or credit made to a Holder of, or on behalf
of an owner of a beneficial interest in, this Security (collectively, a
"Canadian Excluded Holder") (i) with whom the Company does not deal at arms'
length (within the meaning of the Income Tax Act (Canada)) at the time of
making such payment or credit, or (ii) which is subject to Canadian Taxes by
reason of its being connected with Canada or any province or territory thereof
(including, without limitation, by reason of such person being a resident or
being deemed to be a resident of Canada (within the meaning of the Income Tax
Act (Canada)) or carrying on business or being deemed to carry on business
(within the meaning of such act) in Canada whether in or through a permanent
establishment or fixed base in Canada or otherwise) otherwise than by the mere
holding of this Security or the receipt of payments or credits thereunder or
(iii) which could obtain an exemption from, or reduction in, the applicable
Canadian Tax by satisfying
- 25 -
<PAGE> 35
reporting or certification requirements imposed by the relevant Taxing
Jurisdiction and which fails to do so.
The Company will also pay to the Holder of this Security who is a
United States Alien (as defined below) such additional amounts ("U.S.
Additional Amounts," and together with the Canadian Additional Amounts,
"Additional Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and interest on this Security, after
deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States or any political subdivision or taxing authority thereof
or therein ("U.S. Taxes," and together with Canadian Taxes, "Taxes"), will not
be less than the amount provided for in this Security to be then due and
payable; provided, however, that the foregoing obligation to pay U.S.
Additional Amounts will not apply with respect to:
(a) any U.S. Tax that would not have been so imposed
but for (i) the existence of any present or former connection between
such Holder (or between a fiduciary, settlor, beneficiary, member,
shareholder of or possessor of a power over such Holder, if such
Holder is an estate, a trust, a partnership or a corporation) and the
United States or any political subdivision or taxing authority thereof
or therein, including, without limitation, such Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident of the United States or
treated as a resident thereof, or being or having been engaged in a
trade or business or present therein, or having or having had a
permanent establishment therein, or (ii) such Holder's present or
former status as a personal holding company, a foreign personal
holding company with respect to the United States, or a foreign
private foundation or foreign tax exempt entity for U.S. tax purposes,
or a corporation which accumulates earnings to avoid U.S. federal
Income tax;
(b) any U.S. Tax that would not have been so imposed but
for the presentation by the Holder of this Security for payment on a
date more than 15 days after the date on which such payment became due
and payable or the date on which payment thereof is duly provided for,
whichever occurs later;
(c) any U.S. Tax that is an estate, inheritance, gift,
sales, transfer, personal property or similar tax, assessment or
governmental charge;
(d) any U.S. Tax that would not have been imposed but for
the failure to comply with any certification, identification or other
reporting requirements concerning the nationality, residence, identity
or connection with the United States of the Holder or beneficial owner
of this Security, if compliance is required by statute or by
regulation of the United States as a precondition to relief or
exemption from such U.S. Tax;
(e) any U.S. Tax that is payable otherwise than by
deduction or withholding from payment of principal of, premium, if
any, or interest on this Security;
- 26 -
<PAGE> 36
(f) any U.S. Tax imposed on a Holder that actually or
constructively owns 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote or that is a
controlled foreign corporation related to the Company through stock
ownership;
(g) any U.S. Tax required to be withheld by any Paying
Agent from any payment of the principal of, premium, if any, or
interest on any Security, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(h) any U.S. Tax imposed on a Holder that is a partnership
or a fiduciary or other than the sole beneficial owner of such
payment, but only to the extent that any beneficial owner or member of
the partnership or beneficiary or settlor with respect to the
fiduciary would not have been entitled to the payment of U.S.
Additional Amounts had the beneficial owner, member, beneficiary or
settlor directly been the Holder of this Security; or
(i) any combination of items (a), (b), (c), (d), (e), (f),
(g) and (h).
(The Holder of this Security with respect to which any of the listed U.S. Taxes
becomes payable is referred to herein as a "U.S. Excluded Holder," and U.S.
Excluded Holders, together with Canadian Excluded Holders, as "Excluded
Holders.")
The Company will make any deduction or withholding, and remit the full
amount deducted or withheld to the relevant authority, in accordance with
applicable law. The Company will furnish the Holders of the Securities, within
30 days after the date the payment of any Taxes is due pursuant to applicable
law, certified copies of tax receipts evidencing such payment by the Company.
The Company will indemnify and hold harmless each Holder of, or owner of a
beneficial interest in, the Securities (other than an Excluded Holder) and upon
written request reimburse such Holder, or owner of a beneficial interest, for
the amount of (i) any Taxes levied or imposed and paid by such Holder, or owner
of a beneficial interest, as a result of payments made with respect to the
Securities, (ii) any liability (including penalties, interest and expenses)
arising from or with respect to Taxes, and (iii) any Taxes imposed with respect
to payment of Additional Amounts or any reimbursement pursuant to this
sentence.
Notwithstanding the foregoing, the Company shall not be obligated to
pay Additional Amounts in respect of payments becoming due on the Securities
more than 15 days after the redemption date for a redemption described under
"Redemption for Taxation Reasons," except to the extent that the Company's
obligations to pay such Additional Amounts does not arise from the Tax Law
Change that resulted in such redemption. For purposes of this Security, a
"United States Alien" is any person who, for U.S. federal income tax
- 27 -
<PAGE> 37
purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for U.S. federal income tax
purposes, a foreign corporation, a nonresident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
At least 30 days prior to each date on which any payment under or with
respect to the Securities is due and payable, if the Company will be obligated
to pay Additional Amounts with respect to such payments, the Company will
deliver to the Trustee an Officers' Certificate stating the fact that such
Additional Amounts will be payable, the amounts so payable and will set forth
such other information necessary to enable the Trustee to pay such Additional
Amounts to Holders or owners of a beneficial interest in the Securities, as the
case may be, on the payment date.
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any
governmental charge imposed by any government or any political subdivision or
taxing authority thereof or therein. Whenever in this Security there is a
reference, in any context, to the payment of the principal of, premium, if any,
or interest on, or in respect of, any Security such mention shall be deemed to
include mention of the payment of Additional Amounts payable as described in
the second preceding paragraph to the extent that, in such context, Additional
Amounts are, were or would be payable in respect of such Security and express
mention of the payment of Additional Amounts (if applicable) in any provisions
of this Security shall not be construed as excluding Additional Amounts in
those provisions of this Security where such express mention is not made.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
- 28 -
<PAGE> 38
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
Dated:
NORTH AMERICAN VACCINE, INC.
[Corporate Seal] By:
---------------------
Name:
Title:
Attest:
- ---------------------------
Name:
Title:
- 29 -
<PAGE> 39
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "6.50% Convertible Subordinated Notes due May 1,
2003" (herein called the "Securities"), limited in aggregate principal amount
to U.S. $86,250,000, issued and to be issued under an Indenture, dated as of
May 7, 1996 (herein called the "Indenture"), between the Company and Marine
Midland Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities are issuable only in fully
registered form, without coupons, in the denomination of U.S. $1,000 and
integral multiples of U.S. $1,000 in excess thereof. In the case of Securities
initially sold to Institutional Accredited Investors, the Securities will be
issued in minimum denominations of $250,000 and integral multiples of $1,000 in
excess thereof, but on subsequent transfers made in accordance with applicable
transfer restrictions, will be available in denominations of $1,000 and
integral multiples thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender of the Security or
Securities to be exchanged, at the Corporate Trust Office of the Trustee or at
such other office or agency of the Company as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York or at such other
offices or agencies as the Company may designate (each a "Transfer Agent").
The Transfer Agent will then forward such surrendered Securities (together with
any payment surrendered therewith) to the Trustee who in turn will issue the
new Securities.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company at any time on or after May
1, 1999, in whole or in part, upon not less than 30 nor more than 60 days'
notice to the Holders prior to the Redemption Date at the following Redemption
Prices (expressed as percentages of the principal amount) for the twelve-month
period beginning on May 1 of the following years:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 103.714 %
2000 102.786 %
2001 101.857 %
2002 100.929 %
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date.
- 30 -
<PAGE> 40
Securities are also redeemable, in whole but not in part, under the
circumstances described in the next succeeding paragraph, at a Redemption Price
equal to 100% of the principal amount thereof plus interest accrued to the
Redemption Date and any Additional Amount: provided, however, that interest
installments on Securities whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
If as a result of a Tax Law Change, the Company has or will become
obligated to pay to the Holder of any Security Additional Amounts, as described
in the second and third paragraphs of the face of this Security, and such
obligation cannot be avoided by the Company taking reasonable measures
available to it, then the Company may, at its option, redeem the Tax Affected
Securities as a whole, but not in part, upon not less than 30 nor more than 60
days' notice to the Holders prior to the Redemption Date, at a Redemption Price
equal to 100% of the principal amount plus interest accrued to the Redemption
Date, and any Additional Amounts then payable; provided, that (i) no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Company would be obligated to pay any such Additional Amounts
were a payment in respect of the Tax Affected Securities then due and (ii) at
the time such notice of redemption is given, such obligation to pay such
Additional Amounts remains in effect. Prior to the publication of any notice
of redemption pursuant to this paragraph, the Company shall deliver to the
Trustee (a) an Officers' Certificate stating that the Company is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Company so to redeem have occurred and
(b) an Opinion of Counsel selected by the Company to the effect that the
Company has or will become obligated to pay such Additional Amounts as a result
of such Tax Law Change. The Company's right to redeem the Tax Affected
Securities shall continue as long as the Company is obligated to pay such
Additional Amounts, notwithstanding that the Company shall have made payments
of Additional Amounts specified in such second paragraph.
In the event of a redemption of the Securities, the Company will not
be required (a) to register the transfer or exchange of Securities for a period
of 15 days immediately preceding the date notice is given identifying the
serial numbers of the Securities called for such redemption, or (b) to register
the transfer or exchange of any Security, or portion thereof, called for
redemption.
Notice to the Holders will be given at least twice not less than 30
nor more than 60 days prior to the Redemption Date as provided in the
Indenture.
In any case where the due date for the payment of the principal of,
premium, if any, or interest, including Additional Amounts and Special
Interest, on any Security or the last day on which a Holder of a Security has a
right to convert his Security shall be, at any Place of Payment or Place of
Conversion, as the case may be, a day on which banking institutions at such
Place of Payment or Place of Conversion are authorized or obligated by law or
executive order to close, then payment of principal, premium, if any, or
interest, including Additional Amounts
- 31 -
<PAGE> 41
and Special Interest, or delivery for conversion of such Security need not be
made on or by such date at such place but may be made on or by the next
succeeding day at such place which is not a day on which banking institutions
are authorized or obligated by law or executive order to close, with the same
force and effect as if made on the date for such payment or the date fixed for
redemption or repurchase, or by such last day for conversion, and no interest
shall accrue on the amount so payable for the period after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled at his option, at any time after 90
days following the latest of the commencement of the offering of the
Securities, the original issue date of the Securities and the issue date with
respect to any additional Securities issued to cover over-allotments, and on or
before the close of business on May 1, 2003, or in case this Security or a
portion hereof is called for redemption or the Holder hereof has exercised his
right to require the Company to repurchase this Security or such portion
hereof, then in respect of this Security until and including, but (unless the
Company defaults in making the payment due upon redemption or repurchase, as
the case may be) not after, the close of business on the Redemption Date or the
Repurchase Date, as the case may be, to convert this Security (or any portion
of the principal amount hereof that is an integral multiple of U.S. $1,000)
into fully paid and nonassessable Common Shares of the Company at an initial
Conversion Price of U.S. $24.858 for each Common Share (or at the current
adjusted Conversion Price if an adjustment has been made as provided in the
Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank and, in case such surrender shall be made during the period
from the close of business of any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
("Interest Period") (except Securities called for redemption on a Redemption
Date or to be repurchased on a Repurchase Date during, in each case, such
Interest Period), also accompanied by payment in New York Clearing House or
other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted, and also the conversion notice hereon duly executed, to
the Company at the Corporate Trust Office of the Trustee, or at such other
office or agency of the Company, subject to any laws or regulations applicable
thereto and subject to the right of the Company to terminate the appointment of
any Conversion Agent (as defined below) as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York, or at such other
offices or agencies as the Company may designate (each a "Conversion Agent").
Subject to the aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest, no cash payment or adjustment is to
be made on conversion, if the date of conversion is not an Interest Payment
Date, for interest accrued hereon from the Interest Payment Date next preceding
the date of conversion, or for dividends on the Common Shares issued on
conversion hereof. The Company shall thereafter deliver to the Holder the
fixed number of Common Shares (together with any cash adjustment, as provided
in the Indenture) into which this Security is convertible and such delivery
will be deemed to satisfy the Company's obligation to pay the principal amount
of this Security. No fractions of shares or
- 32 -
<PAGE> 42
scrip representing fractions of shares will be issued on conversion, but
instead of any fractional interest (calculated to the nearest 1/100th of a
share) the Company shall pay a cash adjustment as provided in the Indenture.
The Conversion Price is subject to adjustment as provided in the Indenture.
In addition, the Indenture provides that in case of certain amalgamations,
consolidations or mergers to which the Company is a party or the transfer of
all or substantially all of the property and assets of the Company, the
Indenture shall be amended, without the consent of any Holders of Securities,
so that this Security, if then Outstanding, will be convertible thereafter,
during the period this Security shall be convertible as specified above, only
into the kind and amount of securities, cash and other property receivable upon
such amalgamation, consolidation, merger or transfer by a holder of the number
of Common Shares of the Company into which this Security could have been
converted immediately prior to such amalgamation, consolidation, merger, sale
or transfer, but subject to all requirements necessary to ensure that the
Securities will not be subject to Canadian withholding tax as a result thereof,
and assuming such holder of Common Shares is not a Person with which the
Company consolidated or into which the Company merged or which merged into the
Company or to which such sale or transfer was made, as the case may be, or an
Affiliate thereof and, failed to exercise any rights of election as to the kind
or amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer and further assuming, if such
consolidation, amalgamation, arrangement, merger, conveyance, transfer, sale or
lease occurs prior to the later of 60 days following the latest of (i) May 7,
1996 and (ii) the latest date of original issue of any Security, that the
Security was convertible at the time of such occurrence at the Conversion Price
specified above as adjusted from the issue date of such Security to such time
as provided in the Indenture, subject to any requirements necessary to ensure
that the Securities will be and will remain exempt from Canadian withholding
tax including, without limitation, the requirement in effect on the date hereof
that a Holder of Securities shall not be entitled to receive shares, other
securities or property, other than securities that are "prescribed securities"
as defined in Regulation 6208 to the Income Tax Act (Canada), in the event that
any such amalgamation, consolidation, merger or transfer occurs in or prior to
five years after the date of original issue of the Securities. Notwithstanding
any provision to the contrary if such amalgamation, consolidation, merger, or
transfer occurs on or prior to 5 years from the date which is the latest date
of original issuance of a Security issued hereunder, a holder of a Security
shall not be entitled in any circumstances to convert such Security into any
securities, cash or other property (the "Substituted Properties") unless such
Substituted Properties are "prescribed securities" with respect to the Security
for purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada). No
adjustment in the Conversion Price will be made until such adjustment would
require an increase or decrease of at least one percent of such price, provided
that any adjustment that would otherwise be made will be carried forward and
taken into account in the computation of any subsequent adjustment.
Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act or exempt
from such requirements pursuant to Rule 12g3-2(b) under the Exchange Act, upon
the request of a Holder of a Restricted Security or the holder of Common Shares
issued upon conversion thereof, the Company will promptly furnish or cause to
be furnished Rule 144A Information (as defined below) to such Holder of
- 33 -
<PAGE> 43
Restricted Securities or such holder of Common Shares issued upon conversion of
Restricted Securities, or to a prospective purchaser of any such security
designated by any such Holder or holder, as the case may be, to the extent
required to permit compliance by such Holder or holder with Rule 144A under the
Securities Act in connection with the resale of any such security. "Rule 144A
Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto).
The Holder of this Security and the Common Shares of the Company
issuable upon conversion thereof is entitled to the benefits of a Registration
Rights Agreement, dated as of May 1, 1996, between the Company and Goldman,
Sachs & Co. and UBS Securities LLC (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Company has agreed for the
benefit of the Holders from time to time of the Securities and the Common
Shares issuable upon conversion thereof that it will, at its expense, (a)
within 90 days after the date of issuance of the Securities, file a shelf
registration statement (the "Shelf Registration Statement") with the Commission
with respect to resales of the Securities and the Common Shares issuable upon
conversion thereof, (b) within 180 days after the date of issuance of the
Securities, use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission and (c) use its reasonable
best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act, as amended, until the third anniversary of
the date of the effectiveness of the Shelf Registration Statement or such other
date as is provided in the Registration Rights Agreement.
If (i) on or prior to 90 days following the date of original issuance
of the Securities, a Shelf Registration Statement has not been filed with the
Commission, or (ii) on or prior to the 180th day following the date of original
issuance of the Securities, such Shelf Registration Statement is not declared
effective (each, a "Registration Default"), special interest ("Special
Interest") will accrue on this Security from and including the day following
such Registration Default to but excluding the day on which such Registration
Default has been cured. Special Interest will be paid semi-annually in
arrears, with the first semi annual payment due on the first interest payment
date in respect of the Securities following the date on which such Special
Interest begin to accrue, and will accrue at a rate per annum equal to an
additional onequarter of one percent (0.25%) of the principal amount of the
Securities to and including the 90th day following such Registration Default
and at a rate per annum equal to one-half of one percent (0.50%) thereof from
and after the 91st day following such Registration Default. In the event that
the Shelf Registration Statement ceases to be effective prior to the third
anniversary of the initial effective date of the Shelf Registration Statement
or such other date as is provided in the Registration Rights Agreement for a
period in excess of 60 days, whether or not consecutive, during any 12-month
period, then the interest rate borne by the Securities shall increase by an
additional one-half of one percent (0.50%) per annum on the 61st day of the
applicable 12-month period such Shelf Registration Statement ceases to be
effective to but excluding the day on which the Shelf Registration Statement
again becomes effective.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security such mention shall
- 34 -
<PAGE> 44
be deemed to include mention of the payment of Special Interest payable as
described in the preceding paragraph to the extent that, in such context,
Special Interest is, was or would be payable in respect of such Security and
express mention of the payment of Special Interest (if applicable) in any
provisions of this Security shall not be construed as excluding Special
Interest in those provisions of this Security where such express mention is not
made.
The Holder of this Security, by its acceptance thereof, agrees to be
bound by the terms of the Registration Rights Agreement relating to the
Securities and the Common Shares issuable upon conversion thereof.
If a Change in Control occurs, the Holder of this Security shall have
the right, in accordance with the provisions of the Indenture, to require the
Company to repurchase this Security (or any portion of the principal amount
hereof that is an integral multiple of $1,000) for cash at a Repurchase Price
equal to 100% of the principal amount thereof plus interest accrued to the
Repurchase Date. At the option of the Company, the Repurchase Price may be
paid in cash or, as provided in the Indenture, by delivery of Common Shares
having a fair market value equal to the Repurchase Price; provided that payment
may not be made in Common Shares unless at the time of payment such stock is
listed on a national securities exchange or quoted on Nasdaq. For purposes of
this paragraph, the fair market value of Common Shares shall be determined by
the Company and shall be equal to 95% of the average of the Closing Prices Per
Share for the five consecutive Trading Days immediately preceding the second
Trading Day immediately preceding the Repurchase Date. Whenever in this
Security there is a reference, in any context, to the principal of any Security
as of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Security shall not be
construed as excluding the Repurchase Price in those provisions of this
Security when such express mention is not made.
[The following paragraph shall appear in each Security that is not a
Global Security:
In the event of redemption, repurchase or conversion of this Security
in part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]
[The following paragraph shall appear in each Global Security:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal
in accordance with the rules and procedures of the Depositary.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all
- 35 -
<PAGE> 45
Senior Indebtedness of the Company, and this Security is issued subject to such
provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default, other than an Event of Default arising by
reason of a Change of Control, shall occur and be continuing, the principal of
all the Securities, together with accrued interest to the date of declaration,
may be declared due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and overdue interest, all of the Company's
obligations in respect of the payment of the principal of and interest on the
Securities shall terminate; provided, that in the event of an Event of Default
arising by reason of a Change of Control such Event of Default will be cured
after a Change of Control offer is made and all Securities properly tendered
for purchase pursuant to such Change of Control offer are accepted for payment
and such payment is made.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding, or (b) by the adoption of a resolution, at a meeting of Holders of
the Outstanding Securities at which a quorum is present, by the Holders of
66-2/3% in principal amount of the Outstanding Securities represented and
entitled to vote at such meeting. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security or such other
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default, the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a
majority in principal amount of the Securities Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder
of this Security for the enforcement of any payment of principal
- 36 -
<PAGE> 46
hereof, premium, if any, or interest hereon (including any Additional Amounts
and Special Interest) on or after the respective due dates expressed herein or
for the enforcement of the right to convert this Security as provided in the
Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on (including Additional Amounts and Special Interest, as described
herein) this Security at the times, places and rate, and in the coin, currency,
or in the securities herein prescribed or to convert this Security as provided
in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of Securities is registrable on the Security
Register upon surrender of a Security for registration of transfer (a) at the
Corporate Trust Office of the Trustee or at such other office or agency of the
Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, or (b) subject to any laws or regulations
applicable thereto and to the right of the Company to terminate the appointment
of any Transfer Agent, at the offices of the Transfer Agents described herein
or at such other offices or agencies as the Company may designate, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees by
the Registrar. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to recover any tax or other governmental charge payable in connection
therewith.
Prior to due presentation of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered, as the owner thereof for
all purposes, whether or not such Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
- 37 -
<PAGE> 47
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay
it or ________________________ an amount in cash or, at the Company's election,
Common Shares valued as set forth in the Indenture, equal to 100% of the
principal amount hereof, plus interest accrued to the Repurchase Date, as
provided in the Indenture.
3. a. Principal amount to be repurchased (must be U.S. $1,000 and
integral multiples thereof):
b. Certificate Number(s): __________________________
and CUSIP Number(s): ____________________________
4. a. Remaining principal amount following such repurchase:
_______________________
b. Name of the Person in which the remaining principal amount is to
be registered:_____________________________________
5. If payment of the Repurchase Price is to be made by the Company in
Common Shares, name(s) and addresses in which the certificate(s)
for Common Shares shall be issued:
------------------------------------------------------------
(name)
------------------------------------------------------------
------------------------------------------------------------
Dated:
---------------------
---------------------------
Signature
---------------------------
Signature Guaranteed
- 38 -
<PAGE> 48
Principal amount to be repurchased: ______________
Remaining principal amount following such repurchase: _____________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
- 39 -
<PAGE> 49
[GLOBAL SECURITIES]
SCHEDULE OF EXCHANGES
<TABLE>
<CAPTION>
Principal Amount Remaining Principal
Exchanged to or from Amount of this Global
Regulation S Global Securities, Security Following Notation Made
Date Unrestricted Global Securities, Such Exchange (after on Behalf of
Made or Definitive Securities increase or decrease) Security Registrar
---- ------------------------------- --------------------- ------------------
<S> <C> <C> <C>
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------ ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
- --------- ------------ ------------- ----------
</TABLE>
- 40 -
<PAGE> 50
SECTION 2.3. Form of Conversion Notice.
The Forms of Conversion Notice are attached as Annexes A-1 and A-2
hereto.
SECTION 2.4. Legend on Restricted Securities.
During the period prior to the time the Securities may be resold without
registration pursuant to Rule 144(k) under the Securities Act (the expiration
of which time the Company shall certify in an Officers' Certificate and an
Opinion of Counsel), any Security originally issued otherwise than in reliance
on Regulation S, including any Security issued in exchange therefor or in lieu
thereof, shall be referred to herein as a "Restricted Security" and shall be
subject to the restrictions on transfer provided in the legends set forth on
the face of the form of Restricted Security other than any Global Security in
Section 2.2 or the form of Restricted Global Security in Section 2.2, as
appropriate; provided, however, that the term "Restricted Security" shall not
include any Securities as to which restrictions have been terminated in
accordance with Section 3.5. All Restricted Securities shall bear the
applicable legends set forth on the face of the form of Security in Section
2.2. Except as provided in Section 3.5, the Trustee shall not issue any
unlegended Security until it has received an Officers' Certificate and Opinion
of Counsel from the Company directing it to do so.
SECTION 2.5 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: MARINE MIDLAND BANK,
as Trustee
By
-----------------------
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to U.S. $86,250,000, except for
Securities authenticated and delivered in exchange for, or in lieu of, other
Securities pursuant to this Indenture.
The Securities shall be known and designated as the "6.50% Convertible
Subordinated Notes due May 1, 2003" of the Company. Their Stated Maturity
shall be May 1, 2003 and they shall bear interest on their principal amount
from May 7, 1996, payable semi-annually in arrears
- 41 -
<PAGE> 51
on May 1 and November 1 in each year, commencing November 1, 1996, at the rate
of 6.50% per annum (together with any Additional Amounts and Special Interest
the Company may be required to pay) until the principal thereof is due and at
the rate of 6.50% per annum on any overdue principal and, to the extent
permitted by law, on any overdue interest; provided, however, that payments
shall only be made on Business Days as provided in Section 1.12.
The principal of, premium, if any, and interest on the Securities shall
be payable as provided in the forms of Securities set forth in Sections 2.2
(any city in which any Paying Agent is located being herein called a "Place of
Payment").
The Securities shall be redeemable at the option of the Company at any
time on or after 60 days following the latest of the commencement of the
offering of the Securities, the original issue date of the Securities and the
issue date with respect to any additional Securities issued to cover
over-allotments, in whole or in part, and at the Company's option or otherwise
in the event of certain developments, including developments with respect to
changes in Taxes, as provided in Article Eleven and in the forms of Securities
set forth in Section 2.2.
The Securities shall be convertible as provided in Article Twelve (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article Thirteen.
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in Article Fourteen.
SECTION 3.2. Denominations.
The Securities shall be issuable as registered Securities in the
denomination of U.S. $1,000 and integral multiples of U.S. $1,000 in excess
thereof. In the case of Securities initially sold to Institutional Accredited
Investors, the Securities will be issued in minimum denominations of U.S.
$250,000 and integral multiples of U.S. $1,000 in excess thereof, but on
subsequent transfers, will be available in denominations of U.S. $1,000 and
integral multiples thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, one of its Vice Chairmen of the Board, its Chief Executive
Officer, its President or one of its Senior Vice Presidents, under a facsimile
of its corporate seal reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such
- 42 -
<PAGE> 52
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee or to its order for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee or an
Authenticating Agent in accordance with such Company Order shall authenticate
and make available for delivery such Securities as in this Indenture provided
and not otherwise. In connection with any Company Order for authentication, an
Officers' Certificate and Opinion of Counsel pursuant to Section 1.2 shall not
be required.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.
SECTION 3.4. Global Securities.
The Securities shall be issued initially in the form of a Restricted
Global Security or a Regulation S Global Security (or, if the initial
purchasers are Institutional Accredited Investors, Definitive Restricted
Securities). The Depositary or its nominee shall be the Holder of the Global
Securities, and owners of beneficial interests in the Securities represented by
the Global Securities shall hold such interests pursuant to the procedures and
practices of the Depositary. Any such owner's beneficial ownership of any such
Securities will be shown only on, and the transfer of such ownership interest
shall be effected only through, records maintained by the Depositary or its
nominee. Transfer of interests in the Global Securities shall be subject to
the provisions of Section 3.5. Investors may hold their interests in the
Regulation S Global Security through CEDEL or Euroclear, if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. After the expiration of the Restricted Period
(but not earlier), investors may also hold such interests through organizations
other than CEDEL and Euroclear that are participants in the Depositary's
system. CEDEL and Euroclear will hold interests in the Regulation S Global
Security on behalf of their participants through customers' securities accounts
in their respective names on the books of their respective depositaries, which,
in turn, will hold such interests in the Regulation S Global Security in
customer's securities accounts in the depositaries' names on the books of the
Depositary. All interests in a Global Security, including those held through
Euroclear or CEDEL, may be subject to the procedures and requirements of DTC.
Those interests held through Euroclear and CEDEL will be subject to the
procedures and requirements of such system.
- 43 -
<PAGE> 53
Unless the Depository notifies the Company that it is unwilling or unable
to continue as depository for a Global Security or ceases to be a "Clearing
Agency" registered under the Exchange Act or announces an intention permanently
to cease business or does in fact do so, and a successor Depositary is not
appointed by the Company within 90 days of such notice, or in the case of a
Global Security held for an account of Euroclear or CEDEL, Euroclear or CEDEL
(as the case may be) is closed for business for 14 continuous days or announces
an intention to cease, or permanently ceases, business, owners of beneficial
interests in a Global Security will not be entitled to have any portions of
such Global Security registered in their names, will not receive or be entitled
to receive physical delivery of Securities in definitive form and will not be
considered the owners or holders of the Global Security. Any Global Security
exchanged upon the occurrence of an event described in the preceding sentence
shall be so exchanged in whole and not in part. Any Security issued in
exchange for a Global Security or any portion thereof shall be a Global
Security, provided that any such Security so issued that is registered in the
name of a Person other than the Depositary or a nominee thereat shall not be a
Global Security. In addition, upon request, the Company will issue
certificates for Securities in definitive, fully registered, non-global form in
exchange for beneficial interests of like principal amount in any Global Note,
but only upon at least 60 days' prior written notice given to the Trustee in
accordance with the Depositary's customary procedures.
Securities issued in exchange for a Global Security or any portion
thereof pursuant to the preceding paragraph above shall be issued in
definitive, fully registered form shall have an aggregate principal amount
equal to that of such Global Security or portion thereof to be so exchanged,
shall be registered in such names and be in such authorized denominations as
the Depositary shall designate and shall bear any legends required hereunder.
Any Global Security to be exchanged in whole shall be surrendered by the
Depositary to the Trustee, as Security Registrar. With regard to any Global
Security to be exchanged in part, either such Global Security shall be so
surrendered for exchange or, if the Trustee is acting as custodian for the
Depositary or its nominee with respect to such Global Security, the principal
amount thereof shall be reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate adjustment made on the records of
the Trustee. Upon any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon the
order of the Depositary or an authorized representative thereof. In the event
of the occurrence of any of the events specified in the preceding paragraph,
the Company will promptly make available to the Trustee a reasonable supply of
certificated Securities in definitive form.
Except as otherwise set forth in the Indenture or a Global Security,
owners of beneficial interests in the Securities evidenced by a Global Security
will not be entitled to any rights under the Indenture with respect to such
Global Security, and the Depositary or its nominee may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner
and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any such agent from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or its nominee or
impair, as between the Depositary or its nominee and such owners of beneficial
interests, the
- 44 -
<PAGE> 54
operation of customary practices governing the exercise of the rights of the
Depositary or its nominee as Holder of any Security.
Initially, any and all Global Securities issued hereunder shall be issued
to the Depositary, registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Trustee, as custodian for Cede & Co.
SECTION 3.5. Registration, Registration of Transfer and Exchange; Restrictions
on Transfer.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 10.2 being
herein sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 10.2 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture (including Section 2.4).
At the option of the Holder, and subject to the other provisions of this
Section 3.5, Securities may be exchanged for other Securities of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this Section 3.5, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive. Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and subject to the other provisions of this Section 3.5, entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or
- 45 -
<PAGE> 55
exchange of Securities, other than exchanges pursuant to Section 11.8, 12.2 or
14.2(e) (other than where the Common Shares are to be issued or delivered in a
name other than that of the Holder of the Security) not involving any transfer
and other than any stamp and other duties, if any, which may be imposed in
connection with any such transfer or exchange by Canada, the United States or
the United Kingdom or any political subdivision thereof or therein, which shall
be paid by the Company.
In the event of a redemption of the Securities in part, neither the
Company nor the Securities Registrar will be required to register the transfer
of or exchange any Security, or portion thereof, called for redemption.
(b) Beneficial ownership of every Security shall be subject to the
restrictions on transfer provided in the legends required to be set forth on
the face of each Security pursuant to Section 2.4, unless such restrictions on
transfer shall be waived by the written consent of the Company, or terminated
in accordance with this Section 3.5(b) or Section 3.5(c). The Holder of each
Security, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer.
The restrictions imposed by this Section 3.5 and Section 2.4 upon the
transferability of any particular Security shall cease and terminate upon
delivery by the Company to the Trustee of an Officers' Certificate and Opinion
of Counsel stating that such Security has been sold pursuant to an effective
registration statement under the Securities Act or transferred in compliance
with Rule 144 under the Securities Act (or any successor provision thereto).
Any Restricted Security as to which the Company has delivered to the Trustee an
Officers' Certificate and Opinion of Counsel that such restrictions on transfer
shall have expired in accordance with their terms or shall have terminated may,
upon surrender of such Restricted Security for exchange to the Security
Registrar or any Transfer Agent in accordance with the provisions of this
Section 3.5 be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive legends required by
Section 2.4. The Company shall inform the Trustee in writing of the effective
date of any registration statement registering the Securities under the
Securities Act. The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the aforementioned
registration statement.
As used in the preceding two paragraphs of this Section 3.5, the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Restricted Security.
(c) Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, transfers and
exchanges of interests therein of the kinds described in Clauses (2), (3), (4),
(5) and (6) below and exchanges of interests in Global Securities or of other
Securities as described in Clause (7) below, shall be made only in accordance
with this Section 3.5(c), and all transfers of an interest in the Regulation S
Global Security shall comply with Section 3.5(c)(8) below. Transfers and
exchanges subject to this Section 3.5 shall also be subject to the other
provisions of this Indenture that are not inconsistent with this Section 3.5.
- 46 -
<PAGE> 56
(1) A Global Security may not be transferred, in whole or in
part, to any Person other than the Depositary or a nominee thereof, and
no such transfer to any such other Person may be registered; provided
that this Clause (1) shall not prohibit any transfer of a Security that
is issued in exchange for a Global Security but is not itself a Global
Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security has
been registered in the name of such Person. Nothing in this Section
3.5(c)(1) shall prohibit or render ineffective any transfer of a
beneficial interest in a Global Security effected in accordance with the
other provisions of this Section 3.5(c).
(2) Restricted GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY.
If the holder of a beneficial interest in the Restricted Global Security
wishes at any time to transfer such interest to a Person who wishes to
take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security, such transfer may be effected, subject to
the rules and procedures of the Depositary, Euroclear and CEDEL, in each
case to the extent applicable (the "Applicable Procedures"), only in
accordance with the provisions of this Section 3.5(c)(2). Upon receipt
by the Trustee, as Security Registrar, at its office in The City of New
York of (A) a written order given by the Depositary or its authorized
representative directing the Trustee to credit or cause to be credited to
a specified Agent Member's account a beneficial interest in the
Regulation S Global Security in a principal amount equal to that of the
beneficial interest in the Restricted Global Security to be so
transferred, (B) a written order given by the Depositary or its
authorized representative containing information regarding the account of
the Agent Member (and the Euroclear or CEDEL account, as the case may be)
to be credited with, and the account of the Agent Member to be debited
for, such beneficial interest and (C) a certificate in substantially the
form set forth in Annex B-1 given by the holder of such beneficial
interest, the Trustee, as Security Registrar, shall instruct the
Depositary to reduce the principal amount of the Restricted Global
Security, and to increase the principal amount of the Regulation S Global
Security, by the principal amount of the beneficial interest in the
Restricted Global Security to be so transferred, and to credit or cause
to be credited to the account of the Person specified in such
instructions (which shall be the Agent Member for Euroclear or CEDEL or
both, as the case may be) a beneficial interest in the Regulation S
Global Security having a principal amount equal to the amount by which
the principal amount of the Restricted Global Security was reduced upon
such transfer.
(3) RESTRICTED SECURITY TO UNRESTRICTED GLOBAL SECURITY AFTER
THREE YEARS. If the holder of a beneficial interest in a Restricted
Security wishes at any time after three years from the latest of May 7,
1996 or the date of original issue of any Security or the resale of any
Security by an affiliate of the Company to (i) transfer such interest to
a Person who wishes to take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Security or (ii) exchange such
interest for a beneficial interest in an Unrestricted Global Security,
such transfer may be effected, subject to the Applicable Procedures, only
in accordance with this Section 3.5(c)(3). Upon receipt by the Trustee,
as Security Registrar, at its office in The City of New York of (A) in
the case of a transfer or
- 47 -
<PAGE> 57
exchange of an interest in the Restricted Global Security, an order given
by the Depositary or its authorized representative directing the Trustee
to credit or cause to be credited to a specified Agent Member's account a
beneficial interest in the Unrestricted Global Security in a principal
amount equal to that of the beneficial interest in the Restricted Global
Security to be so transferred, (B) in the case of a transfer or exchange
of an interest in the Restricted Global Security, an order given by the
Depositary or its authorized representative containing information
regarding the account of the Agent Member (and, if applicable, the
Euroclear or CEDEL account, as the case may be) to be credited with, and
the account of the Agent Member to be debited for, such beneficial
interest and (C) a certificate in substantially the form set forth in
Annex C-2 given by the holder of such beneficial interest, the Trustee,
as Security Registrar, shall (x) in the case of a transfer or exchange of
an interest in the Restricted Global Security, instruct the Depositary to
reduce the principal amount of the Restricted Global Security, and to
increase the principal amount of the Unrestricted Global Security, by the
principal amount of the beneficial interest in the Restricted Global
Security to be so transferred, and to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
interest in the Unrestricted Global Security having a principal amount
equal to the amount by which the principal amount of the Restricted
Global Security was reduced upon such transfer, or (y) in the case of
transfer or exchange of a Definitive Restricted Security, cancel such
Definitive Restricted Security and increase the principal amount of the
Unrestricted Global Security accordingly.
(4) REGULATION S GLOBAL SECURITY OR UNRESTRICTED GLOBAL SECURITY
TO RESTRICTED GLOBAL SECURITY. If the holder of a beneficial interest in
the Regulation S Global Security or the Unrestricted Global Security
wishes at any time to transfer such interest to a Person who wishes to
take delivery thereof in the form of a beneficial interest in the
Restricted Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this Section 3.4(c)(4).
Upon receipt by the Trustee, as Security Registrar, at its office in The
City of New York of (A) a written order given by the Depositary or its
authorized representative directing the Trustee to credit or cause to be
credited to a specified Agent Member's account a beneficial interest in
the Restricted Global Security in a principal amount equal to that of the
beneficial interest in the Regulation S Global Security or the
Unrestricted Global Security to be so transferred, (B) a written order
given by the Depositary or its authorized representative containing
information regarding the account of the Agent Member to be credited
with, and the account of the Agent Member (and, if applicable, the
Euroclear or CEDEL account, as the case may be) to be debited for, such
beneficial interest and (C) with respect to a transfer of a beneficial
interest in the Regulation S Global Security (but not the Unrestricted
Global Security), a certificate in substantially the form set forth in
Annex B-3 given by the holder of such beneficial interest, the Trustee,
as Security Registrar, shall instruct the Depositary to reduce the
principal amount of the Regulation S Global Security or Unrestricted
Global Security, as the case may be, and to increase the principal amount
of the Restricted Global Security, by the principal amount of the
beneficial interest in the Regulation S Global Security or Unrestricted
Global Security to
- 48 -
<PAGE> 58
be so transferred, and to credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the
Restricted Global Security having a principal amount equal to the amount
by which the principal amount of the Regulation S Global Security or
Unrestricted Global Security, as the case may be, was reduced upon such
transfer.
(5) EXCHANGES OF RESTRICTED GLOBAL SECURITY FOR UNRESTRICTED
GLOBAL SECURITY. If the holder of a beneficial interest in the
Restricted Global Security wishes at any time to exchange such interest
for a beneficial interest in the Unrestricted Global Security, such
exchange may be effected, subject to the Applicable Procedures, only in
accordance with the provisions of this Section 3.5(c)(5). Upon receipt
by the Trustee, as Security Registrar, at its office in The City of New
York of (A) a written order given by the Depositary or its authorized
representative directing the Trustee to credit or cause to be credited to
a specified Agent Member's account a beneficial interest in the
Unrestricted Global Security in a principal amount equal to that of the
beneficial interest in the Restricted Global Security to be so exchanged,
(B) a written order given by the Depositary or its authorized
representative containing information regarding the account of the Agent
Member (and the Euroclear or CEDEL account, as the case may be) to be
credited with, and the account of the Agent Member to be debited for,
such beneficial interest and (C) a certificate in substantially the form
set forth in Annex C-1, given by the holder of such beneficial interest,
the Trustee, as Security Registrar, shall instruct the Depositary to
reduce the principal amount of the Restricted Global Security, and to
increase the principal amount of the Unrestricted Global Security by the
principal amount of the beneficial interest in the Restricted Global
Security to be so exchanged, and to credit or cause to be credited to the
account of the Person specified in such instructions a beneficial
interest in the Unrestricted Global Security having a principal amount
equal to the amount by which the principal amount of the Restricted
Global Security was reduced upon such exchange.
(6) EXCHANGES OF DEFINITIVE RESTRICTED SECURITIES (ISSUED IN THE
INITIAL DISTRIBUTION TO INSTITUTIONAL ACCREDITED INVESTORS) FOR
RESTRICTED GLOBAL SECURITY, REGULATION S GLOBAL OR UNRESTRICTED GLOBAL
SECURITY. If the holder of a Definitive Restricted Security wishes at any
time to exchange such interest for a beneficial interest in the
Restricted Global Security, Regulation S Global Security, or the
Unrestricted Global Security, such exchange may be effected, subject to
the Applicable Procedures, only in accordance with the provisions of this
Section 3.5(c)(6). Upon receipt by the Trustee, as Security Registrar,
at its office in The City of New York of (A) such Restricted Securities
as provided in Section 3.5(a) and written instructions satisfactory to
the Trustee directing the Trustee to credit or cause to be credited to a
specified Agent Member's account a beneficial interest in the Restricted
Global Security, Regulation S Global Security or the Unrestricted Global
Security, as the case may be, in a principal amount equal to that of the
beneficial interest in the Definitive Restricted Security to be so
exchanged, (B) a written order given by the Depositary or its authorized
representative containing information regarding the account of the Agent
Member (and the Euroclear or CEDEL
- 49 -
<PAGE> 59
account, as the case may be) to be credited with, and the account of the
Agent Member to be debited for, such beneficial interest and (C) a
certificate in substantially the form set forth in Annex B-2, given by
the holder of such Definitive Restricted Security interest, the Trustee,
as Security Registrar, shall cancel such Definitive Restricted Security
(and issue a new Definitive Restricted Security in respect of any
untransferred portion thereof) and instruct the Depositary to increase
the principal amount of the Restricted Global Security, Regulation S
Global Security or the Unrestricted Global Security, as the case may be,
by the principal amount of the beneficial interest in the Definitive
Restricted Security to be so exchanged, and to credit or cause to be
credited to the account of the Person specified in such instructions
(which shall be the Agent Member for Euroclear or CEDEL or both, as the
case may be, if an interest in the Regulation S Global Security is being
credited) a beneficial interest in the Regulation S Global Security or
the Unrestricted Global Security or the Restricted Global Security, as
the case may be, having a principal amount equal to the amount by which
the principal amount of the Definitive Restricted Security was exchanged.
(7) OTHER EXCHANGES. In the event that a Global Security or any
portion thereof is exchanged for Securities other than Global Securities,
such other Securities may in turn be exchanged (on transfer or otherwise)
for Securities that are not Global Securities or for beneficial interests
in a Global Security (if any is then outstanding) only in accordance with
such procedures, which shall be substantially consistent with the
provisions of Clauses (1) through (6) above and (8) below (including the
certification requirements intended to insure that transfers and
exchanges of beneficial interests in a Global Security comply with Rule
144A, Rule 144 or Regulation S, as the case may be) and any Applicable
Procedures, as may be from time to time adopted by the Company and the
Trustee.
(8) INTERESTS IN REGULATION S GLOBAL SECURITY TO BE HELD THROUGH
EUROCLEAR OR CEDEL. Until the termination of the Restricted Period,
interests in the Regulation S Global Security may be held only through
Agent Members acting for and on behalf of Euroclear and CEDEL, provided
that this Clause (8) shall not prohibit any transfer in accordance with
Section 3.5(c)(4) hereof.
(d) Neither the Trustee, the Paying Agent in London nor any of
their agents shall (1) have any duty to monitor compliance with or with respect
to any Canadian, U.S. federal or state or other securities or tax laws or (2)
have any duty to obtain documentation on any transfers or exchanges other than
as specifically required hereunder.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities.
If any mutilated Security is surrendered to the Trustee or to a Transfer
Agent outside the United States, the Company shall execute, the Trustee or an
Authenticating Agent shall authenticate and the Trustee or Transfer Agent shall
deliver in exchange therefor a new Security of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
- 50 -
<PAGE> 60
If there be delivered to the Company and either to the Trustee or to a
Transfer Agent outside the United States:
(1) evidence to their satisfaction of the destruction, loss or
theft of any Security, and
(2) such security or indemnity as may be satisfactory to the
Company and the Trustee and such Transfer Agent to save each of them and
any agent of either of them harmless,
then, in the absence of actual notice to the Company, the Trustee or the
Transfer Agent that such Security has been acquired by a bona fide purchaser,
the Company shall execute, the Trustee or an Authenticating Agent shall
authenticate and the Trustee or Transfer Agent shall deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may instead, of issuing a new Security, pay
such Security upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 3.6, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
Canada, the United States or the United Kingdom or any political subdivision
thereof or therein, which shall be paid by the Company) and any other expenses
(including the fees and expenses of the Trustee, the Paying Agent in London and
the Transfer Agent) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall evidence the original
contractual obligation of the Company, whether or not the mutilated, destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and such
new Security shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest, Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one
- 51 -
<PAGE> 61
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security, the date of the proposed payment
and the Special Record Date, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this Clause provided. The Special Record Date for the payment of
such Defaulted Interest shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities at such Holder's address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
- 52 -
<PAGE> 62
In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
(subject to Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 3.9. The Trustee shall destroy all
canceled Securities in accordance with applicable law and its customary
practices in effect from time to time.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 3.11. CUSIP and ISIN Numbers.
The Company in issuing Securities shall use "CUSIP" numbers (if then
generally in use) in addition to serial numbers and "ISIN" numbers (if
generally in use); if so, the Trustee shall use such "CUSIP" and "ISIN" numbers
in addition to serial numbers in notices of redemption and repurchase as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such CUSIP and ISIN numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and
- 53 -
<PAGE> 63
any such redemption or repurchase shall not be affected by any defect in or
omission of such CUSIP or ISIN numbers.
SECTION 3.12. Notification of Withholding.
The Company shall notify the Trustee in writing of the necessity, if any,
to withhold any amounts from payments to Holders (and the amount of any such
withholding) arising from the delivery by a Holder of any certificate.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer
or exchange, or replacement of Securities herein expressly provided for and any
right to receive Additional Amounts and Special Interest as provided in the
forms of Securities set forth in Section 2.2 and the Company's obligations to
the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the
Company, shall execute proper instruments in form and substance satisfactory to
the Trustee acknowledging satisfaction and discharge of this Indenture, when
(l) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6, and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
or the Paying Agent in London or its agent for cancellation (other than
Securities referred to in clauses (i) and (ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of by the
Trustee in the name, and at the expense, of the Company, and the
Company, in the case of clause (i) or (ii)
- 54 -
<PAGE> 64
above, has deposited or caused to be deposited with the Trustee as
trust funds (immediately available to the Holders in the case of
clause (i)) in trust for the purpose an amount sufficient to pay
and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal, premium, if any, and interest (including any applicable
Additional Amounts and Special Interest) to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case
may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12, the obligation of
the Company to pay Additional Amounts and, if money shall have been deposited
with the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations
of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive. Funds held in trust pursuant to this Section 4.1 are not subject to
the provisions of Article Thirteen.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the Persons entitled
thereto, of the principal, premium, if any, and interest for whose payment such
money has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to Section 4.1 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon Company Request.
- 55 -
<PAGE> 65
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
occasioned by the provisions of Article Thirteen or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest (including any
Additional Amounts or Special Interest) upon any Security when it becomes
due and payable, and continuance of such default for a period of 30 days;
or
(2) default in the payment of the principal of or premium, if any,
on any Security whether at its Maturity upon redemption, repurchase, or
otherwise; or
(3) failure to observe or perform any covenant, condition or
agreement on the part of the Company to be observed or performed pursuant
to Sections 7.1 and 10.4 and Article Fourteen hereof; or
(4) default in the performance, or breach, of any other covenant
or warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance or breach of which is specifically
dealt with elsewhere in this Section), and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) default by the Company or any Subsidiary (i) in the payment of
any principal of or interest on any Indebtedness, the principal amount of
which, individually or in the aggregate, exceeds U.S. $10,000,000, when
due after giving effect to any applicable grace periods (whether such
Indebtedness exists as of the Issue Date or is thereafter created) or
(ii) on any Indebtedness, the principal amount of which, individually or
in the aggregate, exceeds U.S. $10,000,000, which default or defaults in
the case of clause (ii) shall have resulted in such Indebtedness becoming
due and payable prior to the date on which it would otherwise have become
due and payable; or
(6) failure by the Company or any of its Subsidiaries to pay a
final judgment or final judgments or a final order or final orders
entered by a court or courts of competent jurisdiction, which judgments
or orders in the aggregate exceed U.S. $10,000,000, and
- 56 -
<PAGE> 66
either (i) the commencement by any creditor of any enforcement proceeding
upon any such judgment or order or (ii) such judgment or order remaining
unstayed for 45 days; or
(7) (A) a court of competent jurisdiction shall enter a decree or
order for relief in respect of the Company, or any of its Significant
Subsidiaries in any involuntary case under any Bankruptcy Law or any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, which decree or order is not stayed; or any other similar
relief shall be granted under any applicable federal or state law; (B) a
decree or order of a court of competent jurisdiction for the appointment
of a receiver, liquidator, sequestrator, trustee, Custodian or other
officer having similar powers over the Company or any of its Significant
Subsidiaries, or over all of or a substantial part of its or their
respective properties, shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other Custodian of the
Company or any of its Significant Subsidiaries for all or a substantial
part of its or their respective properties; or the issuance of a warrant
of attachment, execution or similar process against any substantial part
of the property of the Company or any of its Significant Subsidiaries and
the continuance of any such events in subpart (B) for 45 days unless
stayed or discharged; or
(8) the Company or any of its Significant Subsidiaries (A) shall
have an order for relief entered with respect to it or commences a
voluntary case under any Bankruptcy Law or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; (B) shall
consent to the entry of an order for relief in an involuntary case, or to
the conversion to an involuntary case, under any such law; (C) shall
consent to the appointment of or taking possession by a receiver, trustee
or other Custodian for all or a substantial part of its property; (D)
shall have made a general assignment for the benefit of creditors of a
substantial part of its or their assets; (E) shall admit in writing of
its inability to pay its debts as such debts become due; or (F) the Board
of Directors of the Company (or any committee thereof) adopts any
resolution which has not been rescinded or otherwise authorizes or
approves any of the foregoing; or
(9) any order, judgment or decree shall be entered against the
Company decreeing the dissolution or liquidation of the Company and such
order, judgment or decree shall remain undischarged or unstayed for a
period in excess of 30 days; or
(10) the occurrence of a Change of Control; provided, that such
Event of Default will be cured after a Change of Control Offer is made
and all Securities properly tendered for purchase pursuant to such Change
of Control Offer are accepted for payment and such payment provided in
the Change of Control Offer is made, as described in Article Fourteen.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors or the Bankruptcy Act (Canada),
the Companies Creditor Arrangement Act (Canada) or any other Canadian federal
or provincial law or the law of any
- 57 -
<PAGE> 67
other jurisdiction relating to the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default, other than an Event of Default set out in
subsection 5.1 (10), occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
and all accrued interest thereon shall become immediately due and payable.
At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article Five provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of and premium, if any, on any
Securities which have become due otherwise than by
such declaration of acceleration and any interest
thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at a rate of
6.50% per annum, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of, and any interest on, Securities which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13.
No rescission or annulment referred to above shall affect any subsequent
default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
- 58 -
<PAGE> 68
(1) default is made in the payment of any interest (including any
Additional Amounts and Special Interest) on any Security when it becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or premium,
if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Amounts and
Special Interest) and interest on any overdue principal and premium, if any,
and on any overdue interest (including any Additional Amounts and Special
Interest), at a rate of 6.50% per annum, to the extent permissible by
applicable law, and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default, other than an Event of Default set out in
subsection 5.1(10), occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of
Securities by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the
Securities and take such other actions, including participating as a
member, voting or otherwise, of any official committee of
- 59 -
<PAGE> 69
creditors appointed in such matter, and to file such other papers or
documents, in each of the foregoing cases, as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders of Securities
allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder of a Security in any
such proceeding; provided, however, that the Trustee may, on behalf of such
Holders, vote for the election of a trustee in bankruptcy or similar official.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 5.6. Application of Money Collected.
Subject to Article Thirteen, any money collected by the Trustee pursuant
to this Article Five shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium, if any, or interest, upon presentation of the
Securities, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7;
- 60 -
<PAGE> 70
SECOND: To the payment of the amounts then due and unpaid for
principal, premium, if any, or interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal, premium, if any, and
interest, respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 5.7. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, premium, if any, and (subject to Section 3.7)
interest on such Security (or, in the case of
- 61 -
<PAGE> 71
redemption or repurchase, on the Redemption Date or Repurchase Date, as the
case may be), and to convert such Security in accordance with Article Twelve,
and to institute suit for the enforcement of any such payment and right to
convert, and such rights shall not be impaired without the consent of such
Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
such Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
any acquiescence therein. Every right and remedy given by this Article Five or
by law to the Trustee or to the Holders of Securities may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or
(subject to the limitations contained in this Indenture) by the Holders of
Securities, as the case may be.
SECTION 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
- 62 -
<PAGE> 72
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders, either (a) through the written consent of not less than a
majority in aggregate principal amount of the Outstanding Securities, or (b) by
the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of at least 66-2/3% in
principal amount of the Outstanding Securities represented at such meeting, may
on behalf of the Holders of all the Securities waive any past default hereunder
and its consequences, except a default (1) in the payment of the principal of,
premium, if any, or interest on any Security, or (2) in respect of a covenant
or provision hereof which under Article Eight cannot be modified or amended
without the consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by
any Holder of any Security for the enforcement of the payment of the principal
of, premium, if any, or interest on any Security on or after the respective
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption or repurchase, on or after the Redemption Date or Repurchase Date,
as the case may be) or for the enforcement of the right to convert any Security
in accordance with Article Twelve.
SECTION 5.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent
- 63 -
<PAGE> 73
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture, but not to verify the contents thereof.
(b) In case an Event of Default has occurred and is continuing of which a
responsible officer of the Trustee has actual knowledge, 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.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect
of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority
- 64 -
<PAGE> 74
in principal amount of the Outstanding Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder as to which
the Trustee has received written notice, the Trustee shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice of such default,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interest of
the Holders; and provided, further, that in the case of any default of the
character specified in Section 5.1(10), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
- 65 -
<PAGE> 75
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(8) the permissive right of the Trustee to take or refrain from
taking any actions enumerated in this Indenture shall not be construed as
a duty and the Trustee shall not be answerable in such actions other than
for its own negligence or willful misconduct; and
(9) the Trustee shall not be liable for any action taken, suffered
or omitted to be taken by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by the Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the Trustee's
certificates of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture, of the Securities or of the Common Shares issuable upon the
- 66 -
<PAGE> 76
conversion of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures.
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other
agent.
The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as
the Company and the Trustee shall from time to time agree in writing for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee (and its directors, officers,
employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the costs, expenses and
reasonable attorneys' fees of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
- 67 -
<PAGE> 77
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(5) or Section 5.1(6), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof, or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least U.S. $50,000,000, subject to supervision or examination by federal
or state authority, in good standing and having an established place of
business in the Borough of Manhattan, The City of New York. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article and a successor shall be appointed pursuant to
Section 6.9.
SECTION 6.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
- 68 -
<PAGE> 78
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of this Section and Section 6.10.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.10, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders of Securities and accepted appointment in the manner required by this
Section and Section 6.10, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 1.6. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 6.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on the request of the Company
or
- 69 -
<PAGE> 79
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 6.12. Authenticating Agents.
The Trustee may, with the consent of the Company, appoint an additional
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.
Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof, the
District of Columbia, or England and Wales, authorized under such laws to act
as Authenticating Agent and subject to supervision or examination by government
or other fiscal authority. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section 6.12 such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section 6.12.
- 70 -
<PAGE> 80
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.12.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: MARINE MIDLAND BANK
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By
----------------------
Authorized Signatory
SECTION 6.13. Trust Indenture Legislation.
In this Indenture, the expression "indenture legislation" means the
provisions, if any, of the Canada Business Corporations Act, as amended or
re-enacted, and any other statute of Canada, and of any regulations under such
statute, relating to trust indentures and to the rights, duties and obligations
of trustees under trust indentures and of corporations issuing debt
- 71 -
<PAGE> 81
obligations under trust indentures, to the extent that such provisions are at
the time in force and applicable to this Indenture or the Company. The Company
and the Trustee agree that each will at all times in relation to this Indenture
and in relation to any action to be taken hereunder observe and comply with and
be entitled to the benefits of indenture legislation. If and to the extent
that, any provision of this Indenture limits, qualifies or conflicts with any
mandatory requirement of indenture legislation, such mandatory requirement
shall prevail.
ARTICLE SEVEN
AMALGAMATION, CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Amalgamate, Consolidate, Etc., Only on Certain Terms.
The Company may not consolidate, amalgamate, enter into an arrangement or
merge with or into any Person or permit any other Person to consolidate,
amalgamate, enter into an arrangement or merge with or into the Company
(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 transaction or a series of related transactions to
any Person, if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, transfer, lease or other disposition of all
or substantially all of the properties and assets of the Company or of the
Company and its Subsidiaries on a consolidated basis to any other Person,
unless, at the time and giving effect thereto:
(1) the Company is the surviving corporation or the Person formed
by or surviving any such consolidation, amalgamation, arrangement or
merger (if other than the Company), or to which such sale, transfer,
lease, conveyance or other disposition shall have been made, is a
corporation organized and existing under the laws of (i) the United
States, any state thereof or the District of Columbia or (ii) the federal
laws of Canada or any province thereof;
(2) the Person formed by or surviving any such consolidation,
amalgamation, arrangement or merger (if other than the Company), or the
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made, assumes by supplemental indenture
in a form and substance satisfactory to the Trustee all the obligations
of the Company under the Securities and this Indenture and such Person
assumes the obligations of the Company under the Registration Rights
Agreement;
(3) immediately prior to and after giving effect to such
transaction, no default hereunder or Event of Default shall have occurred
and be continuing;
(4) the interest, principal, premium, if any, and other amounts
paid or credited in respect of the Securities will not be subject to
Canadian Taxes as a result of such consolidation, amalgamation,
arrangement, merger, sale assignment, transfer, lease,
- 72 -
<PAGE> 82
conveyance or other disposition, and the Company shall have delivered to
the Trustee an Opinion of Canadian Counsel to that effect.
The Company shall deliver to the Trustee and each Holder 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, each in
form and substance satisfactory to the Trustee.
SECTION 7.2. Successor Substituted.
Upon any amalgamation or consolidation of the Company with, or merger of
the Company into, any other Person or any conveyance, transfer or lease of all
or substantially all the properties and assets of the Company in accordance
with Section 7.1, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities.
Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants and obligations
of the Company herein and in the Securities as permitted by this
Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities, or to surrender any right or power herein
conferred upon the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective, or
- 73 -
<PAGE> 83
to make any other provisions with respect to matters or questions arising
under this Indenture as the Company and the Trustee may deem necessary or
desirable, provided, such action pursuant to this clause (5) shall not
adversely affect the interests of the Holders of Securities; or
(6) to make any changes or modifications to this Indenture
necessary in connection with the registration of any Securities under the
Securities Act as contemplated by Section 10.12, provided, such action
pursuant to this clause (6) shall not adversely affect the interests of
the Holders of Securities; or
(7) to comply with the requirements of the Trust Indenture Act or
the rules and regulations of the Commission thereunder in order to affect
or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by this Indenture or otherwise.
Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt
by the Trustee of the documents described in Section 8.3 hereof, the Trustee
shall join with the Company in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations which may be therein contained.
SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities.
With either (a) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in principal amount of the
Outstanding Securities represented at such meeting, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of Securities
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent or affirmative vote of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
or the rate of interest payable thereon or any premium payable upon
redemption or mandatory repurchase thereof, or change the obligation of
the Company to pay Additional Amounts, or change the coin, currency or
security in which any Security or the interest or any premium thereon or
any other amount in respect thereof is payable, or impair the right to
institute suit for the enforcement of any payment in respect of any
Security on or after the Stated Maturity thereof (or, in the case of
redemption or any repurchase, on or after the Redemption Date or
Repurchase Date, as the case may be) or, except as permitted by Section
12.11, adversely affect the right to convert any Security as provided in
Article Twelve, or
- 74 -
<PAGE> 84
modify the provisions of this Indenture with respect to the subordination
of the Securities in a manner adverse to the Holders of Securities, or
(2) reduce the requirements of Section 9.4 for quorum or voting,
or reduce the percentage in principal amount of the Outstanding
Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York, or
(4) modify any of the provisions of this Section or Section 5.13
or 10.13, except to increase any percentage contained herein or therein
or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; or
(5) modify the provisions of Article Fourteen in a manner adverse
to the Holders; or
(6) modify any of the provisions of Section 10.10, 10.11 or 10.12.
It shall not be necessary for any Act of Holders of Securities under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 8.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Sections 6.1 and 6.3) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
such supplemental indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 8.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder appertaining thereto shall be bound thereby.
- 75 -
<PAGE> 85
SECTION 8.5. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Company and the Trustee, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
SECTION 8.6. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or
any defect therein, shall not in any way impair or affect the validity of any
such supplemental indenture.
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, or in the City of
London, England, as the Trustee shall determine. Notice of every meeting of
Holders of Securities, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 1.6, not less than 21 nor more than
180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 25% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 9.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
- 76 -
<PAGE> 86
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the
Holders of Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or in the City of London, England,for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in paragraph (a)
of this Section.
SECTION 9.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a Person
shall be (a) a Holder of one or more Outstanding Securities, or (b) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one
or more Outstanding Securities by such Holder or Holders. The only Persons who
shall be entitled to be present or to speak at any meeting of Holders shall be
the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of Holders of Securities, be dissolved. In
any other cases the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Notice
of the reconvening of any adjourned meeting shall be given as provided in
Section 9.2(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the principal amount of the Outstanding Securities which shall
constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned for
a lack of a quorum, the Persons entitled to vote 25% in principal amount of the
Outstanding Securities at the time shall constitute a quorum for the taking of
any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 8.2) shall be effectively passed and decided
if passed or decided by the Persons entitled to vote not less than 66-2/3% in
principal amount of Outstanding Securities represented and entitled to vote at
such meeting.
- 77 -
<PAGE> 87
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities, whether or not present or represented at the
meeting. The Trustee shall, in the name and at the expense of the Company,
notify all the Holders of Securities of any such resolutions or decisions
pursuant to Section 1.6.
SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting
of Holders of Securities in regard to proof of the holding of Securities and of
the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities and
the appointment of any proxy shall be proved in the manners specified therefor
in Section 1.4.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustees) of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 9.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy shall be entitled
to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to Section
9.2 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in principal amount of the Outstanding Securities
represented at the meeting, and the meeting may be held as so adjourned without
further notice.
SECTION 9.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy
and the principal amounts at Stated Maturity and serial numbers of the
Outstanding Securities held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for
- 78 -
<PAGE> 88
or against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting
of Holders of Securities shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
Persons having knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was given as provided in Section 9.2 and,
if applicable, Section 9.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest on the Securities in accordance
with the terms of the Securities and this Indenture. The Company will deposit
or cause to be deposited with the Trustee, one Business Day prior to the Stated
Maturity of any Security or one Business Day prior to the due date for any
installment of interest, all payments so due, which payments shall be in
immediately available funds on the date of such Stated Maturity or due date, as
the case may be.
SECTION 10.2. Maintenance of Offices or Agencies.
The Company hereby appoints (a) the Corporate Trust Office of the Trustee
as its agent in the Borough of Manhattan, The City of New York, where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange, where Securities may be
surrendered for conversion, and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served, and (b)
(i) the office of Midland Bank plc, Mariner House, Pepys Street, London EC3N
4DA, England, as its agents outside of the United States where, subject to any
applicable laws or regulations, Securities may be surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange,
and where Securities may be surrendered for conversion.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all
of such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to
the
- 79 -
<PAGE> 89
provisions of Section 10.3, the Company will maintain (1) in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, 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, and (2) subject to any laws or regulations applicable thereto,
in London, an office or agency where Securities may be presented and
surrendered for payment and where Securities may be presented for registration
of transfer or exchange or conversion.
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, presentations and surrenders may be made and notices and demands may
be served on the Corporate Trust Office of the Trustee.
SECTION 10.3. Money for Security Payments To Be Held in Trust.
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and the Company will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, one
Business Day prior to each due date of the principal of, premium, if any, or
interest on any Securities, deposit with the Trustee a sum sufficient to pay
the principal, premium, if any, or interest so becoming due, such sum to be
held for the benefit of the Persons entitled to such principal, premium, if
any, or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held by such Paying Agent.
- 80 -
<PAGE> 90
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security thereto shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease.
SECTION 10.4. Additional Amounts.
The Company will pay to the Holder of any Security Additional Amounts as
provided in the form of Security set forth in Section 2.2. Whenever in this
Indenture there is mentioned, in any context, the payment of the principal of,
premium, if any, or interest on, or in respect of, any Security, such mention
shall be deemed to include mention of the payment of Additional Amounts
provided for in this Section to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof pursuant to the
provisions of this Section and express mention of the payment of Additional
Amounts in any provisions hereof shall not be construed as excluding Additional
Amounts in those provisions hereof where such express mention is not made.
At least 10 days prior to the first Interest Payment Date or an earlier
Redemption Date or Repurchase Date (and at least 10 days prior to each date of
payment of principal, premium, if any, or interest thereafter if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate), the Company will furnish the Trustee and the Company's
Paying Agents in London, England, and in the Borough of Manhattan, The City of
New York, if other than the Trustee, with an Officers' Certificate instructing
the Trustee and such Paying Agents whether such payment of principal of,
premium, if any, or interest on the Securities shall be made to Holders of
Securities without withholding for or on account of any tax, assessment or
other governmental charge described in the second paragraph of the face of the
forms of Securities set forth in Section 2.2. If any such withholding shall be
required, then such Officers' Certificate shall specify by country the amount,
if any, required to be withheld on such payments to such Holders of Securities
and the Company will pay to the Trustee or the Paying Agent in London the
Additional Amounts required by this Section to be paid in the event of any such
withholding. The Company covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
arising out of or in
- 81 -
<PAGE> 91
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section, except to the extent
such loss, liability or expense is attributable to the Trustee's negligence or
bad faith.
SECTION 10.5. Existence.
Subject to Article Seven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 10.6. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 10.7. Payment of Taxes and Other Claims.
The Company will pay or discharge, or cause to be paid or discharged,
before the same may become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, (2) all
claims for labor, materials and supplies which, if unpaid, might by law become
a lien or charge upon the property of the Company or any Subsidiary, and (3)
all stamps and other duties, if any, which may be imposed by Canada, the United
States or the United Kingdom or any political subdivision thereof or therein in
connection with the issuance, transfer, exchange or conversion of any
Securities or with respect to this Indenture; provided, however, that, in the
case of clauses (1) and (2), the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 10.8. Listing.
The Company will use its reasonable best efforts to cause the Common
Shares required to be issued and delivered upon conversion of Securities, prior
to such issuance or delivery, to
- 82 -
<PAGE> 92
be quoted on the American Stock Exchange or, if the Common Shares are not then
listed on the American Stock Exchange, cause to be listed the Common Shares on
a United States national securities exchange on which Common Shares are listed
or to be quoted on the Nasdaq National Market at the time of such delivery.
SECTION 10.9. Statement by Officers as to Default.
The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company an Officers' Certificate stating that in the
course of performance by the signers of their duties as such officers of the
Company they would normally obtain knowledge of whether any default exists in
the performance and observance of any of the terms, provisions and conditions
of this Indenture and whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture. Such Officers' Certificate
shall further state, as to each such officer signing such Officers'
Certificate, to the best of the knowledge of such officer, as of the date of
such Officers' Certificate, (a) whether any such default exists, (b) whether
the Company during the preceding fiscal year kept, observed, performed and
fulfilled each and every covenant and obligation of the Company under this
Indenture and (c) whether there was any default in the performance and
observance of any of the terms, provisions, or conditions of this Indenture
during such preceding fiscal year. If the officers signing the Officers'
Certificate know of such a default, whether then existing or occurring during
such preceding fiscal year, the Officers' Certificate shall describe such
default and its status with particularity. The Company shall also promptly
notify the Trustee if the Company's fiscal year is changed so that the end
thereof is on any date other than the then current fiscal year end date.
The Company will deliver to the Trustee, forthwith upon becoming aware of
any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to
take with respect thereto.
Any notice required to be given under this Section 10.9 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 10.10. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act or exempt from such requirements pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the request of a Holder of a Restricted Security or the
holder of Common Shares issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder of Common Shares
issued upon conversion of Restricted Securities, or to a prospective purchaser
of any such security designated by any such Holder or holder, as the case may
be, to the extent required to permit compliance by such Holder or holder with
Rule 144A under the Securities Act (or any successor provision thereto) in
connection with the resale of any such security;
- 83 -
<PAGE> 93
provided, however, that the Company shall not be required to furnish such
information in connection with any request made on or after the date which is
three years from the later of (i) the date such a security (or any such
predecessor security) was last acquired from the Company or (ii) the date such
a security (or any such predecessor security) was last acquired from an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act (or any successor provision thereto). "Rule 144A Information" shall be
such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
SECTION 10.11. Reporting Issuer.
The Company will continue to be a "reporting issuer" for purposes of Rule
903 under the Securities Act until the Restricted Period has expired.
SECTION 10.12. Registration Rights.
The holders of the Securities and the Common Shares issuable upon
conversion thereof are entitled to the benefits of a Registration Rights
Agreement, dated as of May 1, 1996, between the Company and Goldman, Sachs &
Co. and UBS Securities LLC (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company has agreed for the benefit of
the holders from time to time of the Securities and the Common Shares issuable
upon conversion thereof that it will, at its expense, (i) within 90 days after
the date of issuance of the Securities, file a shelf registration statement
(the "Shelf Registration Statement") with the Commission with respect to
resales of the Securities and the Common Shares issuable upon conversion
thereof, (ii) within 180 days after the date of issuance of the Securities, use
its reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission and (iii) use its reasonable best efforts
to maintain such Shelf Registration Statement continuously effective under the
Securities Act until the third annual anniversary of the date of the
effectiveness of the Shelf Registration Statement or such other date as is
provided in the Registration Rights Agreement.
If (i) on or prior to 90 days following the date of original issuance of
the Securities, a Shelf Registration Statement has not been filed with the
Commission, or (ii) on or prior to the 180th day following the date of issuance
of the Securities, such Shelf Registration Statement is not declared effective
(each, a "Registration Default"), additional interest ("Special Interest")
will accrue on the Securities from and including the day following such
Registration Default to but excluding the day on which such Registration
Default has been cured. Special Interest will be paid semi-annually in
arrears, with the first semi-annually payment due on the first Interest Payment
Date in respect of the Securities following the date on which such Special
Interest begins to accrue, and will accrue at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the principal amount of the
Securities to and including the 90th day following such Registration Default
and at a rate per annum equal to one-half of one percent (0.50%) thereof from
and after the 91st day following such Registration Default. In the event that
the Shelf Registration Statement ceases to be effective prior to the third
annual anniversary of the initial effective date of the Shelf Registration
Statement or such other date as is provided in the
- 84 -
<PAGE> 94
Registration Rights Agreement for a period in excess of 60 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by the
Securities shall increase by an additional one-half of one percent (0.50%) per
annum on the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective to but excluding the day on which the Shelf
Registration Statement again becomes effective.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Special Interest provided for in this Section to the extent that, in such
context, Special Interest is, was or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment
of Special Interest (if applicable) in any provisions hereof shall not be
construed as excluding Special Interest in those provisions hereof where such
express mention is not made.
In the event of any amendment to or modification of, the Registration
Rights Agreement, the Company shall promptly provide the Trustee with a copy of
such amendment or modification.
SECTION 10.13. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or conditions set forth in Sections 10.5 to 10.7, inclusive (other
than a covenant or condition which under Article Eight cannot be modified or
amended without the consent of the Holder of each Outstanding Security
affected), if before the time for such compliance the Holders shall, through
the written consent of, or the adoption of a resolution at a meeting of Holders
of the Outstanding Securities at which a quorum is present by, not less than a
majority in principal amount of the Outstanding Securities, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee or any Paying or Conversion Agent in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption.
The Securities may be redeemed in accordance with the provisions of the
forms of Securities set forth in Section 2.2.
SECTION 11.2. Applicability of Article.
- 85 -
<PAGE> 95
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article Eleven.
SECTION 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the
Company of any of the Securities, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Company which is subject to a condition specified in the forms of Securities
set forth in Section 2.2, the Company shall furnish the Trustee with an
Officers' Certificate stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have occurred.
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (other than pursuant
to the third paragraph on the reverse of the form of Security in Section 2.2),
the particular Securities to be redeemed shall be selected by the Trustee
within two Business Days after it receives the notice described in 11.3, from
the Outstanding Securities not previously called for redemption, on a pro rata
basis or by such method as the Trustee may deem appropriate. Partial
redemption must be in an amount not less than U.S.$1,000,000 principal amount
of Securities.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed may be
treated by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security Registrar
in writing of the securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.5. Notice of Redemption.
- 86 -
<PAGE> 96
Notice of redemption shall be given in the manner provided in Section 1.6
to the Holders of Securities to be redeemed not less than 30 nor more than 60
days prior to the Redemption Date, and such notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities are to be redeemed,
the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities which will be outstanding after
such partial redemption,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to
be redeemed, and that interest thereon shall cease to accrue on and after
said date,
(5) the Conversion Price, the date on which the right to convert
the Securities to be redeemed will terminate and the places where such
Securities may be surrendered for conversion, and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest, if
any.
In case of a partial redemption, the first notice given shall specify the
last date on which exchanges or transfers of Securities may be made pursuant to
Section 3.5 and shall specify the serial and CUSIP numbers (if any), ISIN
number (if any) and the portions thereof called for redemption.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name
of and at the expense of the Company.
SECTION 11.6. Deposit of Redemption Price.
Not less than one Business Day prior to any Redemption Date, the Company
shall deposit with the Trustee or with the Paying Agent in London if so
directed by the Trustee (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.3) an amount of money
(which shall be in immediately available funds on such Redemption Date)
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that
- 87 -
<PAGE> 97
date other than any Securities called for redemption on that date which have
been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security, if a Security, or any Predecessor Security to receive interest
as provided in the last paragraph of Section 3.7) be paid to the Company on
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice, maturing after the
Redemption Date, such Security shall be paid by the Company at the Redemption
Price together with accrued and unpaid interest to the Redemption Date;
provided, however, that installments of interest on Securities whose Stated
Maturity is on or, prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
on the relevant Record Date according to their terms and the provisions of
Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal amount of, premium, if any, and, to the
extent permitted by applicable law, accrued interest on such Security shall,
until paid, bear interest from the Redemption Date at a rate of 6.50% per annum
and such Security shall remain convertible into Common Shares until the
principal of such Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.
SECTION 11.8. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the Security
so surrendered.
- 88 -
<PAGE> 98
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security may be converted into fully paid
and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Shares of the Company at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence on the latest of the commencement of the Sale
of the Securities, the original issue date of the Securities and the issue date
with respect to any additional Securities issued to cover overallotments and
expire at the close of business on May 1, 2003, subject, in the case of the
conversion of any Global Security, to any applicable book-entry procedures of
the Depositary therefor. In case a Security or portion thereof is called for
redemption or is delivered for repurchase, such conversion right in respect of
the Security or portion so called shall expire at the close of business on the
Redemption Date or the Repurchase Date (as defined in Article Fourteen), as the
case may be, unless the Company defaults in making the payment due upon
redemption or repurchase, as the case may be.
The price at which shares of Common Shares shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially
U.S.$24.858 per Common Share. The Conversion Price shall be adjusted in
certain instances as provided in this Article Twelve.
SECTION 12.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security, duly endorsed or assigned to the
Company or in blank (in the case of any Definitive Security), at any office or
agency of the Company maintained for that purpose pursuant to Section 10.2,
accompanied by a duly signed conversion notice substantially in the form set
forth in Annex A-1 or A-2 stating that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted. Each Security surrendered for
conversion (in whole or in part) during the period from the close of business
on any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date (except Securities called for redemption on a Redemption
Date or to be repurchased on a Repurchase Date during, in each case, such
period) shall be accompanied by payment in New York Clearing House funds or
other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of such Security
(or part thereof, as the case may be) being surrendered for conversion. The
interest so payable on such Interest Payment Date in respect of such Security
(or portion thereof, as the case may be) surrendered for conversion shall be
paid to the Holder of such Security as of such Regular Record Date. Interest
payable in respect of any Security surrendered for conversion on or after an
Interest Payment Date shall be paid to the Holder of such Security as of the
next preceding Regular Record Date, notwithstanding the exercise of the
- 89 -
<PAGE> 99
right of conversion. Except as provided in this paragraph and subject to the
last paragraph of Section 3.7, no cash payment or adjustment shall be made upon
any conversion on account of, if the date of conversion is not an Interest
Payment Date, any interest accrued from the Interest Payment Date next
preceding the conversion date, in respect of any Security (or part thereof, as
the case may be) surrendered for conversion, or on account of any dividends on
the Common Shares issued upon conversion. The Company's delivery to the Holder
of the number of Common Shares (and cash in lieu of fractions thereof, as
provided in this Indenture) into which a Security is convertible will be deemed
to satisfy the Company's obligation to pay the principal amount of the
Security.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Shares issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Shares at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holders, a
certificate or certificates for the number of full Common Shares issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 12.3.
All Common Shares delivered upon such conversion of Restricted Securities
shall bear restrictive legends substantially in the form of the legends
required to be set forth on the Restricted Securities pursuant to Section 2.4
and shall be subject to the restrictions on transfer provided in such legends.
Neither the Trustee nor any agent maintained for the purpose of such conversion
shall have any responsibility for the inclusion or content of any such
restrictive legends on such Common Shares; provided, however, that the Trustee
or any agent maintained for the purpose of such conversion shall have provided,
to the Company or to the Company's transfer agent for such Common Shares, prior
to or concurrently with a request to the Company to deliver such Common Shares,
written notice that the Securities delivered for conversion are Restricted
Securities.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in an aggregate principal amount equal
to the unconverted portion of the principal amount of such Security. A
Security may be converted in part, but only if the principal amount of such
Security to be converted is any integral multiple of U.S.$1,000.
SECTION 12.3. Fractions of Shares.
No fractional Common Shares shall be issued upon conversion of any
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
- 90 -
<PAGE> 100
surrendered. Instead of any fractional share which would otherwise be issuable
upon conversion of any Securities (or specified portions thereof), the Company
shall calculate and pay a cash adjustment in respect of such fraction
(calculated to the nearest 1/100th of a share) in an amount equal to the same
fraction of the current market price per share of Common Shares (calculated in
accordance with Section 12.4(8) below) at the close of business on the day of
conversion.
SECTION 12.4. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustments from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph (1), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
pay any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of any class of Common Stock entitling them to subscribe for or
purchase shares of any class of Common Stock at a price per share less than the
current market price per share (determined as provided in paragraph (8) of this
Section) of such class of Common Stock on the date fixed for the determination
of shareholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock
so offered for subscription or purchase would purchase at such current market
price and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (2), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company will not issue any
rights, options or warrants in respect of shares of Common Stock held in the
treasury of the Company.
- 91 -
<PAGE> 101
(3) In case outstanding shares of any class of Common Stock shall be
subdivided into a greater number of shares of such class of Common Stock, and,
conversely, in case outstanding shares of any class of Common Stock shall each
be combined into a smaller number of shares of such class of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be adjusted by the
Company so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price adjustment contemplated by this subparagraph (3) by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination and the
denominator shall be the number of shares of Common Stock outstanding
immediately after giving effect to such subdivision or combination, such
adjustment to become effective immediately after the opening of business on the
day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of any
class of capital stock, cash or other assets or property (including securities,
but excluding (i) any rights, options or warrants referred to in paragraph (2)
of this Section, (ii) any dividend or distribution paid exclusively in cash,
(iii) any dividend or distribution referred to in paragraph (1) of this Section
and (iv) any amalgamation, consolidation or merger to which Section 12.11
applies), the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which (i)
the numerator shall be the current market price per share (determined as
provided in paragraph (8) of this Section) of the Common Shares on the third
Trading Day prior to the date fixed for such determination (the "Reference
Date") less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) on the Reference Date of the portion of the
assets, shares or evidences of indebtedness so distributed applicable to one
Common Share and the denominator shall be the current market price per Common
Share on the Reference Date, such adjustment to become effective immediately
prior to the opening of business on the day following the Reference Date. If
the Board of Directors determines the fair market value of any distribution for
purposes of this subparagraph (4) by reference to the actual or when issued
trading market for any securities comprising such distribution, it must in
doing so consider the prices in such market over the same period used in
computing 12.5% of the average of the current market prices per share of Common
Share pursuant to this subparagraph (4). For purposes of this subparagraph
(4), any dividend or distribution that includes Common Shares or rights or
warrants to subscribe for or purchase shares of Common Shares shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such shares of Common Shares
or such rights or warrants (making any Conversion Price reduction required by
this subparagraph (4)) immediately followed by (2) a dividend or distribution
of Common Shares or such rights or warrants (making any further Conversion
Price reduction required by subparagraph (1) or (2)), except (x) the Reference
Date of such dividend or distribution as defined in this subparagraph (4) shall
be substituted in place of the phrases (a) "the date fixed
- 92 -
<PAGE> 102
for the determination of stockholders entitled to receive such dividend or
other distribution" and (b) "the date fixed for such determination" within the
meaning of subparagraphs (1) and (2), respectively, of this Section 12.4 and
(y) any shares of Common Shares included in such dividend or distribution shall
not be deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of subparagraph (1) of this Section 12.4.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of any class of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 12.11 applies or as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (I) the aggregate amount of any
other cash distributions to all holders of any class of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to this paragraph
(5) has been made and (II) the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender offer by the Company or any of its subsidiaries for all
or any portion of any class of the Common Stock concluded within the 12 months
preceding the date of payment of such distribution and in respect of which no
adjustment pursuant to paragraph (6) of this Section has been made, exceeds
12.5% of the product of the current market price per Common Share on the date
for the determination of holders of Common Shares entitled to receive such
distribution times the number of shares of all classes of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date for determination, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section) of the Common Shares on the date fixed for such determination less an
amount equal to the quotient of (x) the excess of such combined amount over
such 12.5% and (y) the number of shares of all classes of Common Stock
outstanding on such date for determination and (ii) the denominator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section) of the Common Shares on such date for
determination.
(6) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary for all or any portion of any class of
Common Stock shall expire and such tender or exchange offer shall involve the
payment by the Company or such Subsidiary of consideration per share of such
class of Common Stock having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds 110% of the current market price per
share (determined as provided in paragraph (8) of this Section) of such class
of Common Stock as of the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness
- 93 -
<PAGE> 103
of the Conversion Price reduction contemplated by this subparagraph (6) by a
fraction of which the numerator shall be the sum of the products of the number
of shares of each class of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the respective current
market price per share (determined as provided in paragraph (8) of this
Section) of each such class of Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "'Purchased Shares") and (y) the
sum of the products of the number of shares of each class of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
respective current market price per share (determined as provided in paragraph
(8) of this Section) of each such class of Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time.
(7) The reclassification of any class of Common Stock into securities
including other than Common Stock (other than any reclassification upon a
amalgamation, consolidation or merger to which Section 12.11 applies) shall be
deemed to involve (a) a distribution of such securities other than Common Stock
to all holders of Common Stock (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of stockholders
entitled to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (4) of this Section), and (b) a
subdivision or combination, as the case may be, of the number of shares of such
class of Common Stock outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the day
upon which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which
such subdivision or combination becomes effective" within the meaning of
paragraph (3) of this Section).
(8) For the purpose of any computation under paragraphs (2), (4), (5) or
(6) of this Section 12.4, the current market price per share of a class of
Common Stock on any date shall be calculated by the Company and be deemed to be
the average of the daily Closing Prices Per Share of such class for the five
consecutive Trading Days selected by the Company commencing not more than 10
Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "'ex' date", when used with respect to any issuance or distribution, means
the first date on which such class of Common Stock trades regular way in the
applicable securities market or on the applicable securities exchange without
the right to receive such issuance or distribution
(9) No adjustment in the Conversion Price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase
- 94 -
<PAGE> 104
or decrease of at least one percent in such price; provided, however, that any
adjustments which by reason of this paragraph (9) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(10) The Company may make such reductions in the Conversion Price, for
the remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 12.4, as
it considers to be advisable in order to avoid or diminish any income tax to
any holders of Common Shares resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes.
SECTION 12.5. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by
the Treasurer of the Company setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall promptly be filed with the Trustee and
with each Conversion Agent; and
(2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be
required, and as soon as practicable after it is required, such notice
shall be provided by the Company to all Holders in accordance with
Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 12.6. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on any class of its Common Stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that would
require any adjustment pursuant to Section 12.4; or
(b) the Company shall authorize the granting to the holders of any
class of its Common Stock of rights, options or warrants to subscribe for
or purchase any shares of capital stock of any class or of any other
rights; or
- 95 -
<PAGE> 105
(c) of any reclassification of any class of Common Stock of the
Company (other than a subdivision or combination of its outstanding
shares of Common Stock), or of any amalgamation, consolidation or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or transfer of
all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer
for all or a portion of any class of the Company's outstanding shares of
Common Stock (or shall amend any such tender offer);
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, share exchange, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or winding up. If
at the time the Trustee shall not be the conversion agent, a copy of such
notice and any notice referred to in the following paragraph shall also
forthwith be filed by the Company with the Trustee.
SECTION 12.7. Company to Reserve Common Shares.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Shares, for the
purpose of effecting the conversion of Securities, the full number of Common
Shares then issuable upon the conversion of all Outstanding Securities.
SECTION 12.8. Taxes on Conversions.
The Company will pay any and all transfer taxes and duties that may be
payable in respect of the issue or delivery of Common Shares on conversion of
Securities pursuant hereto. The Company shall not, however, be required to pay
any tax or duty which may be payable in respect of any transfer involved in the
issue and delivery of Common Shares in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or
- 96 -
<PAGE> 106
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax or duty, or has established to
the satisfaction of the Company that such tax or duty has been paid. Such
taxes payable shall not include any income, capital taxes payable by a Holder
by reason of such conversion in any jurisdiction, with which such Holder has a
connection other than by reason of acquiring or converting the Securities.
SECTION 12.9. Covenant as to Common Shares.
The Company agrees that all Common Shares which may be delivered upon
conversion of Securities, upon such delivery, will have been duly authorized
and validly issued and will be fully paid and nonassessable and, except as
provided in Section 12.8, the Company will pay all taxes, liens and charges
with respect to the issue thereof. Such taxes payable shall not include any
income, capital taxes payable by a Holder by reason of such conversion in any
jurisdiction, with which such Holder has a connection other than by reason of
acquiring or converting the Securities.
SECTION 12.10. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the Trustee
or the Paying Agent in London or its agent to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in
Section 3.9.
SECTION 12.11. Provision in Case of Amalgamation, Consolidation, Merger or
Sale of Assets.
(1) Subject to the provisions of subsection 12.11(2), in case of any
amalgamation or consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding Common Shares of the Company) or any
sale or transfer of all or substantially all of the assets of the Company, the
Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Security
then Outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 12.1, to convert such
Security only into the kind and amount of securities, cash and other property
receivable upon such amalgamation, consolidation, merger, sale or transfer by a
holder of the number of Common Shares of the Company into which such Security
might have been converted immediately prior to such amalgamation,
consolidation, merger, sale or transfer, and assuming such holder of Common
Shares of the Company (i) is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be ("Constituent Person"), or
an Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each
Common Share of the
- 97 -
<PAGE> 107
Company held immediately prior to such consolidation, merger, sale or transfer
by others than a Constituent Person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised ("Non-electing
Share"), then for the purpose of this Section 12.11 the kind and amount of
securities, cash and other property receivable upon such amalgamation,
consolidation, merger, sale or transfer by the holders of each Non-electing
Share shall be deemed to be the kind and amount so receivable per share by a
plurality of the Non-electing Shares), and further assuming, if such
consolidation, amalgamation, arrangement, merger, conveyance, transfer, sale or
lease occurs prior to the later of 60 days following the latest of (i) May 7,
1996 and (ii) the latest date of original issue of any Security, that the
Security was convertible at the time of such occurrence at the Conversion Price
specified in Section 12.1 as adjusted from the issue date of such Security to
such time as provided in this Article Twelve subject to any requirements
necessary to ensure that the Securities will be and will remain exempt from
Canadian withholding tax including, without limitation, the requirement in
effect on the date hereof that a Holder of Securities shall not be entitled to
receive shares, other securities or property, other than securities that are
"prescribed securities" as defined in Regulation 6208 to the Income Tax Act
(Canada), in the event that any such amalgamation, consolidation, merger or
transfer occurs in or prior to five years after the date of original issue of
the Securities. Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions of this Section
12.11 shall similarly apply to successive consolidations, mergers, sales or
transfers. Notice of the execution of such a supplemental indenture shall be
given by the Company to the Holder of each Security as provided in Section 1.6
promptly upon such execution.
(2) Notwithstanding any provisions of this Article Twelve to the
contrary, if any amalgamation, consolidation, merger, sale or transfer should
occur on or prior to five years from the date of issue of the last Security to
be issued hereunder, a holder of a Security shall not be entitled in any
circumstances to convert such Security into any securities, cash or other
property (the "Substituted Properties") unless such Substituted Properties are
"prescribed securities" with respect to such Security for purposes of clause
212(1)(b)(vii)(E) of the Income Tax Act (Canada).
Neither the Trustee, any Paying Agent nor any Conversion Agent shall be
under any responsibility to determine correctness of any provisions contained
in any such supplemental indenture relating either to the kind or amount of
shares of stock or other securities or property or cash receivable by Holders
of Securities upon the conversion of their Securities after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, an Opinion of Counsel
with respect thereto, which the Company shall cause to be furnished to the
Trustee upon request.
- 98 -
<PAGE> 108
SECTION 12.12 Responsibility of Trustee for Conversion Provisions
The Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder
of Securities to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed herein or
in any supplemental indenture provided to be employed, in making the same, or
whether a supplemental indenture need be entered into. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of
any Common Stock, or of any other securities or property or cash, which may at
any time be issued or delivered upon the conversion of any Security; and it or
they do not make any representation with respect thereto. Neither the Trustee,
subject to the provisions of Section 6.1, and any Conversion Agent shall be
responsible for any failure of the Company to make or calculate any cash
payment or to issue, transfer or deliver any shares of Common Stock or share
certificates or other securities or property or cash upon the surrender of any
Security for the purpose of conversion; and the Trustee, subject to the
provisions of Section 6.1, and any Conversion Agent shall not be responsible
for any failure of the Company to comply with any of the covenants of the
Company contained in this Article.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinated to Senior Indebtedness.
All Securities issued under this Indenture shall be issued subject to the
following provisions and each Holder of any Security whether upon original
issue or upon transfer or assignment thereof accepts and agrees to be bound by
such provisions.
All Securities issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness. "Senior Indebtedness" means
(i) the principal, premium, if any, and interest in respect of (A) indebtedness
of the Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by the Company, (ii) all
capital lease obligations of the Company, (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of the Company for the
reimbursement on any letter of credit, bankers acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons for the payment
of which the Company is responsible or liable as obligor, guarantor or
otherwise, and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or
assets of the Company (whether
- 99 -
<PAGE> 109
or not such obligation is assumed by the Company), except for any such
indebtedness or other obligation that is by its terms subordinated to or pari
passu with the Securities.
SECTION 13.2. No Payments in Certain Circumstances; Payment Over of Proceeds
Upon Dissolution, Etc.
No payment on account of principal of, premium, if any, or interest on,
or redemption or repurchase of, the Securities shall be made if, at the time of
such payment or immediately after giving effect thereto: (i) there shall exist
a default in the payment of principal of, premium, if any, sinking funds or
interest (including a default under any purchase or redemption obligations)
with respect to any Senior Indebtedness, or (ii) there shall have occurred an
event of default (other than a default in the payment of principal, premium, if
any, sinking funds or interest) with respect to any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof and written
notice of such occurrence shall have been given to the Company and to the
Trustee under this Indenture by the holder or holders of such Senior
Indebtedness and such event of default shall not have been cured or waived or
shall not have ceased to exist after written notice to the Company and the
Trustee by any holder of Senior Indebtedness. Notwithstanding the foregoing,
the Company may make, and the Trustee may receive and shall apply, any payment
in respect of the Securities ( for principal, premium, if any, or interest or
repurchase) if such payment was made prior to the occurrence of any of the
contingencies specified in clauses (i) and (ii) above.
Upon (i) any acceleration of the principal amount due on the Securities
or (ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if any, sinking
fund and interest due or to become due upon all Senior Indebtedness shall first
be paid in full, or payment thereof provided for in money or money's worth in
accordance with its terms, before any payment is made on account of the
principal of, premium, if any, or interest on, or repurchase of, the
indebtedness evidenced by the Securities, and upon any such dissolution or
winding up or liquidation or reorganization any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Securities or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders of
the Securities or by the Trustee under this Indenture if received by them or
it, as the case may be, directly to the holders of Senior Indebtedness (pro
rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holders of the Securities or to the Trustee under this Indenture.
- 100 -
<PAGE> 110
In the event that, contrary to the foregoing, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or the Holders of the Securities
before all Senior Indebtedness is paid in full or provision made for such
payment, in accordance with its terms, such payment or distribution shall be
paid over or delivered to, the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness have been issued, as their respective interests may appear, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all such Senior Indebtedness in full in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the holders of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of
the Securities (together with the holders of any other indebtedness of the
Company which is subordinated in right of payment to the payment in full of all
Senior Indebtedness, which is not subordinated in right of payment to the
Securities and which by its terms grants such right of subrogation to the
holders thereof) shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company made
on the Senior Indebtedness until the principal of, premium, if any, and
interest on, or repurchase of, the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of Senior Indebtedness of any cash, property or securities to which the Holders
of the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payment over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by the Holders of the Securities or the
Trustee, shall, as between the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders of Securities, be deemed to be a payment
by the Company to the holders of or on account of Senior Indebtedness, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities,
on the one hand, and the holders of Senior Indebtedness, on the other hand.
SECTION 13.3. Notice to Trustee of Specified Events; Reliance on Certificate
of Liquidating Agent.
The Company shall give prompt written notice to the Trustee of any
insolvency or bankruptcy proceeding in respect of the Company, of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Company (whether or not involving insolvency or bankruptcy), of the declaration
of any Security as due and payable before its expressed maturity, and of any
event which pursuant to Section 13.2 would prevent payment by the Company on
account of the principal, premium, if any, or interest on, or repurchase of,
the Securities. The Trustee, subject to the provisions of Section 6.1, shall
be entitled to assume that no such event has occurred unless the Company, or a
holder of Senior Indebtedness, or any trustee therefor, has given such notice.
- 101 -
<PAGE> 111
Upon any distribution of assets of the Company or payment by or on behalf
of the Company referred to in this Article, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
Section 13.2 are pending, and the Trustee, subject to the provisions of Section
6.1, and the Holders of the Securities shall be entitled to rely upon a
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of the Securities for the purpose
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article. In the event
that the Trustee determines, in good faith, that further evidence is required
with respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, as to the extent to which such Person is entitled to participate
in such payment or distribution, and as to other facts pertinent to the rights
of such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 13.4. Trustee to Effectuate Subordination.
The Holder of each Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination as provided in this
Article and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Notwithstanding the provisions of this Article or any other provision of
this Indenture, but subject to the provisions of Section 6.1 as between the
Holders of Securities and the Trustee, neither the Trustee nor any Paying Agent
shall be charged with knowledge of any facts which would prohibit the making of
any payment of moneys to or by the Trustee or any such Paying Agent, unless and
until the Trustee or such Paying Agent shall have received written notice
thereof at its Corporate Trust Office from the Company or any holder of Senior
Indebtedness or the trustee or representative of any holder of such Senior
Indebtedness on his behalf; and, prior to the receipt of any such written
notice, the Trustee and any such Paying Agent shall be entitled to assume that
no such facts exist. If the Trustee or Paying Agent, as the case may be, shall
not have received, at least three Business Days prior to the date upon which by
the terms hereof any such moneys may become payable for any purpose (including,
without limitation, the payment of the principal of, premium, if any, or the
interest on any Security) with respect to such moneys, the notice provided for
in this Section, then, anything herein contained to the contrary
notwithstanding, the Trustee and such Paying Agent, as the case may be, shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they
- 102 -
<PAGE> 112
were received and shall not be affected by any notice to the contrary which may
be received by it within three Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Indebtedness
(or a trustee therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 13.6. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent, or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article.
SECTION 13.7. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness and shall not be liable to any such holders if it shall
in good faith mistakenly pay over or distribute to Holders of Securities or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations
as are specifically set forth in this Article and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
SECTION 13.8. Rights of Trustee as Holder of Senior Indebtedness; Preservation
Of
- 103 -
<PAGE> 113
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 13.9. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 13.5, 13.6 and 13.7 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
SECTION 13.10. Certain Conversions Deemed Payment.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article
Twelve or upon the repurchase of Securities in accordance with Article Fourteen
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance or delivery
of cash, property or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on account of the principal
of such Security. For the purposes of this Section, the term "junior
securities" means Common Stock and any other cash, property or securities into
which the Securities are convertible pursuant to Article Twelve. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article Twelve or to exchange such Security
for Common Stock in accordance with Article Fourteen if the Company elects to
satisfy the obligations under Article Fourteen by delivery of Common Stock.
- 104 -
<PAGE> 114
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, to
require the Company to repurchase, and upon the exercise of such right the
Company shall repurchase, all of such Holder's Securities, or any portion of
the principal amount thereof that is equal to U.S.$1,000 or any integral
multiple of U.S.$1,000 in excess thereof (provided that no single Security may
be repurchased in part unless the portion of the principal amount of such
Security to be Outstanding after such repurchase is equal to U.S.$1,000 or
integral multiples of U.S.$1,000 in excess thereof), on the date (the
"Repurchase Date") that is 45 days after the date of the Company Notice (as
defined in Section 14.2) at a purchase price equal to 100% of the principal
amount of the Securities to be repurchased (the "Repurchase Price") plus
interest accrued to the Repurchase Date; provided, however, that installments
of interest on Securities whose Stated Maturity is on or prior to the
Repurchase Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7. Such right to
require the repurchase of the Securities shall not continue after a discharge
of the Company from its obligations with respect to the Securities in
accordance with Article Four, unless a Change in Control shall have occurred
prior to such discharge. At the option of the Company, the Repurchase Price
may be paid in cash or, except as otherwise provided in Section 14.2(j), by
delivery of shares of Common Shares having a fair market value equal to the
Repurchase Price; provided that payment may not be made in Common Shares unless
at the time of payment such stock is listed on a national securities exchange
or quoted on Nasdaq. For purposes of this Section, the fair market value of
Common Shares shall be determined by the Company and shall be equal to 95% of
the average of the Closing Prices Per Share for the five consecutive Trading
Days ending on and including the third Trading Day immediately preceding the
Repurchase Date. Whenever in this Indenture (including Sections 2.2, 3.1,
5.1(2) and 5.8) there is a reference, in any context, to the principal of any
Security as of any time, such reference shall be deemed to include reference to
the Repurchase Price payable in respect of such Security to the extent that
such Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for redemption all
of the Outstanding Securities, on or before the 30th day after the occurrence
of a Change in Control, the Company or, at the request and expense of the
Company, the Trustee, shall give to all Holders of Securities, in the manner
provided in Section 1.6, notice (the "Company Notice")
- 105 -
<PAGE> 115
of the occurrence of the Change in Control and of the repurchase right set
forth herein arising as a result thereof. The Company shall also deliver a copy
of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such
Securities, are to be surrendered for payment of the Repurchase Price and
accrued interest, if any,
(5) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon
shall cease to accrue on and after said date,
(6) the Conversion Price then in effect, the date on which the
right to convert the principal amount of the Securities to be repurchased
will terminate and the place or places where such Securities, may be
surrendered for conversion, and
(7) the place or places that the certificate required by Section
2.2 shall be delivered, and the form of such certificate
In addition, at least two Business Days preceding the Repurchase Date,
the Company shall give to all Holders of the Securities, in the manner provided
in Section 1.6, notice specifying whether the Repurchase Price will be payable
in cash or Common Shares and shall deliver a copy of such notice to the
Trustee.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Company Notice (i) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to repurchased in part,
the serial number thereof, the portion of the principal amount thereof to be
repurchased and the
- 106 -
<PAGE> 116
name of the Person in which the portion thereof to remain Outstanding after
such repurchase is to be registered) and a statement that an election to
exercise the repurchase right is being made thereby, and, in the event that the
Repurchase Price shall be paid in Common Shares, the name or names (with
addresses) in which the certificate or certificates for shares of Common Shares
shall be issued, and (ii) the Securities with respect to which the repurchase
right is being exercised, if any, appertaining thereto maturing after the
Repurchase Date. Such written notice shall be irrevocable, except that the
right of the Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the close of business
on the second Trading Day preceding the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
or the Paying Agent in London the Repurchase Price in cash or Common Shares, as
provided above, for payment to the Holder on the Repurchase Date or, if Common
Shares are to be paid, as promptly after the Repurchase Date as practicable,
together with accrued and unpaid interest to the Repurchase Date payable with
respect to the Securities as to which the purchase right has been exercised;
provided, however, that installments of interest that mature on or prior to the
Repurchase Date shall be payable in cash to the Holders of such Securities, or
one or more Predecessor Securities, registered as such at the close of business
on the relevant Regular Record Date.
(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 6.50% per annum, and each Security shall remain convertible into
Common Shares until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) Any issuance of Common Shares in respect of the Repurchase Price
shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or
names any certificate or certificates for Common Shares shall be issuable upon
such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
however, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as the recordholder or holders thereof for all purposes at the
- 107 -
<PAGE> 117
opening of business on the next succeeding day on which such stock transfer
books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Shares issued upon repurchase of any Security
declared prior to the Repurchase Date.
(g) No fractions of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same
Holder and the Repurchase Price shall be payable in Common Shares, the number
of full shares which shall be issuable upon such repurchase shall be computed
on the basis of the aggregate principal amount of the Securities so
repurchased. Instead of any fractional share of Common Shares which would
otherwise be issuable on the repurchase of any Security or Securities, the
Company will deliver to the applicable Holder its check for the current market
value of such fractional share. The current market value of a fraction of a
share is determined by multiplying the current market price of a full share by
the fraction, and rounding the result to the nearest cent. For purposes of
this Section, the current market price of a Common Share is the Closing Price
Per Share of the Common Share on the last Trading Day prior to the Repurchase
Date.
(h) Any issuance and delivery of certificates for Common Share on
repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any transfer tax or
duty in respect of the issuance or delivery of such certificates or the
securities represented thereby; provided, however, that the Company shall not
be required to pay any transfer tax or duty which may be payable in respect of
(i) income of the Holder or (ii) any transfer involved in the issuance or
delivery of certificates for shares of Common Shares in a name other than that
of the Holder of the Securities being repurchased, and no such issuance or
delivery shall be made unless and until the Person requesting such issuance or
delivery has paid to the Company the amount of any such tax or duty or has
established, to the satisfaction of the Company, that such tax or duty has been
paid.
(i) If any Common Shares to be issued upon repurchase of Securities
hereunder require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon repurchase, the Company covenants that it will in good faith and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be; provided, however, that nothing in this Section shall be
deemed to affect in any way the obligations of the Company to repurchase
Securities as provided in this Article and if such registration is not
completed or does not become effective or such approval is not obtained prior
to the Repurchase Date, the Repurchase Price shall be paid in cash.
(j) The Company covenants that all Common Shares which may be issued
upon repurchase of Securities will upon issue be duly and validly issued and
fully paid and non-assessable.
- 108 -
<PAGE> 118
SECTION 14.3. Certain Definitions.
For purposes of this Article Fourteen,
(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the original execution of
this Indenture, promulgated by the Commission pursuant to the Exchange
Act;
(b) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of the Securities, of: an event or
series of events by which any Person or other entity or Group of Persons
shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases, merger, consolidation or otherwise
(collectively, "Control Acquisitions") have become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more
of the total voting power of all shares of capital stock the Company
entitled to vote generally in the election of directors; (ii) any
consolidation or otherwise of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or
any sales or transfer of all or substantially all of the assets of the
Company to another Person; or (iii) the direct or indirect, sale, lease,
exchange or other transfer of all or substantially all of the assets of
the Company to any Person or Group of Persons;
provided, however, that a Change in Control shall not be deemed to have
occurred if either (x) the Closing Price Per Share on any five Trading Days
within the period of 10 consecutive Trading Days ending immediately after the
later of the date of the Change in Control or the date of the public
announcement of the Change in Control (in the case of a Change in Control under
Clause (i) above) or the period of 10 consecutive Trading Days ending
immediately prior to the date of the Change in Control (in the case of a Change
in Control under Clause (ii) and (iii) above) shall equal or exceed 105% of the
Conversion Price in effect on such trading day or (y) all the consideration
(excluding cash payments for fractional shares) to be paid for the Common
Shares in a transaction or transactions constituting the Change in Control as
described in Clause (ii) above consists of shares of common stock traded on a
United States national securities exchange or quoted on Nasdaq National Market
System and as a result of such transaction or transactions the Securities
become convertible solely into such common stock, and such common stock is a
"prescribed security" with respect to the Securities for purposes of clause
212(1)(b)(vii)(E) of the Income Tax Act (Canada);
(c) In this Article Fourteen, the term "Person" or "Group of Persons"
shall include any syndicate or group which would be deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, as in effect on the date of the
original execution of this Indenture.
- 109 -
<PAGE> 119
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record
Date, a list, in such form as the Trustee mayreasonably require, of the
names and addresses of the Holders of Securities as of such Regular
Record Date, and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 15.2. Preservation of Information.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 15.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it pursuant to
Section 15.1 upon receipt of a new list so furnished.
- ------------------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
- 110 -
<PAGE> 120
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NORTH AMERICAN VACCINE, INC.
(Seal) By /s/ Sharon Mates
--------------------------
Name: Sharon Mates, Ph.D.
Title: President
Attest:
/s/ Daniel J. Abdun-Nabi
- ---------------------------
Name: Daniel J. Abdun-Nabi
Title: Secretary
MARINE MIDLAND BANK,
AS TRUSTEE
(Seal) By /s/ Richard G. Pittius
--------------------------
Name: Richard Pittius
Title: Vice President
Attest:
/s/ Frank J. Godino
- --------------------------
Name: Frank J. Godino
Title: Corporate Trust Officer
- 111 -
<PAGE> 121
WASHINGTON, )
DISTRICT OF ): SS.:
COLUMBIA )
On the 7th day of May, 1996, before me personally came Sharon Mates, to
me known, who, being by me duly sworn, did depose and say that she is Sharon
Mates NORTH AMERICAN VACCINE, INC., one of the corporations described in and
which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that she signed her name thereto by like authority.
/s/ Judith E. Snyder
Notary Public
- 112 -
<PAGE> 122
STATE OF NEW YORK )
):ss.:
COUNTY OF NEW YORK )
On the 7th day of May, 1996, before me personally came Richard G.
Pittius, to me known, who, being by me duly sworn, did depose and say that he
is Richard G. Pittius of Marine Midland Bank, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to the bylaws of said corporation; and that he
signed his name thereto by like authority.
/s/ Marcia A. Markowski
Notary Public
- 113 -
<PAGE> 123
ANNEX A-1
FORM OF CONVERSION NOTICE - - UNRESTRICTED SECURITIES
- ------------------------
as Conversion Agent
[Address]
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003 (the "Securities")
Reference is hereby made to the Indenture, dated as of May 7, 1996 (the
"Indenture"), between North American Vaccine, Inc. (the "Company"), as Issuer,
and Marine Midland Bank, as Trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to the Unrestricted Securities specified below, which
are registered in the name of the undersigned (the "Holder"). The Holder
hereby irrevocably exercises its right to convert such Securities, or the
portion thereof, if any, specified below, into Common Shares and, as specified
below, directs that such Shares, together with any check in payment for a
fractional share and any Security representing any unconverted principal
amount, be issued and delivered in book- entry form through the facilities of
the Depositary, for credit to the account(s) of the Person(s)] [in certificated
form to the Registered owner(s)] indicated below.
The Holder acknowledges and agrees that no Common Shares will be
delivered upon conversion of the specified Securities during the Restricted
Period unless the beneficial owner(s) is not a U.S. Person (as defined in
Regulation S). In addition, no Common Shares will be delivered on conversion
until any amount payable by the Holder on account of interest is paid, any
certificates evidencing specified Securities not held in book-entry form are
duly endorsed or assigned to the Company or in blank and surrendered and any
taxes or other charges or documents required in connection with a transfer on
conversion, and any other required items, are delivered to the Conversion
Agent.
The Holder acknowledges and agrees that, notwithstanding this request for
conversion, the Company and the Trustee may require that the Common Shares
delivered on conversion of the specified Securities be delivered in
certificated form subject to a restrictive legend.
A-1-114
<PAGE> 124
Conversion of the specified Securities is subject to the requirements
established by the Company and the Trustee pursuant to the Indenture, as well
as to the procedures of the Depositary if such Securities are held or to be
held in book-entry form, all as in effect from time to time. The specified
Securities will be deemed to have been converted immediately prior to the close
of business on the day of surrender of the specified Securities for conversion
and on which all other required items have been delivered to the Conversion
Agent as provided above and, upon such conversion, shall cease to accrue
interest or be outstanding. Prior to such conversion, the Holder will have no
rights in the Conversion Securities.
Please provide the information requested below, as applicable.
1. PLEASE SPECIFY THE SECURITIES HELD AND THE PORTION THEREOF TO BE
CONVERTED ;
Principal amount held: U.S. $_____________
CUSIP number(s): __________________
Depositary (DTC) account where held: ______________
Principal amount being converted (if less than all): U.S. $_____________
All Securities to be converted will be converted into Common Shares and
(together with any unconverted Securities) will be delivered in book-entry form
to the DTC account specified in Item 2 below.
2. Please specify the type, number and form of securities to be delivered on
conversion and the name(s) of the account holder(s) or registered owner(s), by
checking the appropriate boxes and providing the information requested:
n Book Entry
Number of Common Shares: __________________
Depositary Account: __________________
n Certificates
Number of Common Shares: __________________
Registered Owner: __________________
n Unconverted Book-Entry
Principal Amount: U.S. $ __________________ *
Depositary Account: __________________
n Unconverted Securities
(Only in Instances
Defined by the Indenture)
Principal Amount: U.S. $ __________________ *
Registered Owner: __________________
A-1-115
<PAGE> 125
- ----------------------
* Aggregate principal amount of each certificate must equal U.S. $1,000 or
any integral multiple thereof.
A-1-116
<PAGE> 126
Please sign and date this notice in the space provided below.
DATE: --------------------
Name of Holder
----------------------
Signature(s) of Holder Title(s):
(If the Holder is a corporation, partnership
or fiduciary, the title of the Person
signing on behalf of the Holder must be
stated.)
Signature(s) must be guaranteed by a commercial bank or trust company or a
member firm of a U.S. national securities exchange or a member of the National
Association of Securities Dealers, Inc. if Common Shares or unconverted
Securities are to be delivered other than to and in the name of the registered
owner.
- ----------------------
Signature Guarantee
A-1-117
<PAGE> 127
ANNEX A-2
FORM OF CONVERSION NOTICE -- RESTRICTED SECURITIES
- ------------------------
as Conversion Agent
[Address]
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003 (the "Securities")
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture"), between North American Vaccine, Inc. (the "Company"), as
Issuer, and Marine Midland Bank, as Trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
This letter relates to the Restricted Securities specified below,
which are registered in the name of the undersigned (the "Holder"). The Holder
hereby irrevocably exercises its right to convert such Securities, or the
portion thereof, if any, specified below, into Common Shares and, except to the
extent specified or required as described below, directs that Restricted Common
Shares, together with any check in payment for a fractional share and any
Security representing any unconverted principal amount, be issued and delivered
[in book-entry form through the facilities of the Depositary, to the account(s)
of the Person(s)] [ in certificated form to the Registered Owner (s)] indicated
below.
No Common Shares will be delivered upon conversion until any amount
payable by the Holder on account of interest is paid, any certificates
evidencing specified Securities not held in book-entry form are duly endorsed
or assigned to the Company or in blank and surrendered and any taxes or other
charges or documents required in connection with a transfer on conversion, and
any other required items, are delivered to the Conversion Agent.
The Holder acknowledges and agrees that, notwithstanding this request
for conversion, the Company may require that the Common Shares delivered on
conversion of the specified Securities be delivered in certificated form
subject to a restrictive legend, or that additional certificates be delivered
on behalf of the relevant beneficial owner(s).
Any Holder requesting Common Shares or unconverted Securities in
book-entry form acknowledges and warrants for the benefit of the Company that
such Holder and any beneficial owner(s) of such Securities are Qualified
Institutional Buyers (as defined in Rule 144A).
A-2-118
<PAGE> 128
Conversion of the specified Securities is subject to the requirements
established by the Company pursuant to the Indenture, as well as to the
procedures of the Depositary if such Securities are held or to be held in
book-entry form, all as in effect from time to time. The specified Securities
will be deemed to have been converted immediately prior to the close of
business on the day of surrender of the specified securities for conversion and
on which all other required items have been delivered to the Conversion Agent
as provided above and, upon such conversion, shall cease to accrue interest or
be outstanding. Prior to such conversion, the Holder will have no rights in
the Conversion Securities.
Please provide the information required below, as applicable:
1. PLEASE SPECIFY THE SECURITIES HELD AND THE PORTION THEREOF TO BE
CONVERTED;
Principal amount held: U.S. $__________________________________
CUSIP number(s):________________________________________________
Depositary (DTC) account where held:____________________________
Principal amount being converted (if less than all): U.S.
$_______________________
2. Please specify the type, number and form of securities to be delivered
on conversion and the name(s) of the account holder(s) or registered
owner(s), by checking the appropriate boxes and providing the
information requested:
n Book Entry *
Number of Common Shares:_______________________
Depositary Account: ___________________________
n Unconverted Book Entry*
Principal Amount: U.S.$_______________________
Depositary Account:____________________________
- --------------
A-2-119
<PAGE> 129
* Only Qualified Institutional Buyers may receive Common Shares in book-entry
form. Others must receive certificates, each in an amount of at least U.S.
$1,000.
n Unconverted Certificates
Principal Amount: U.S.$________________________
Registered Owner:_______________________________
n Certificates
Number of Common Shares: _______________________
Registered Owner:_______________________________
3. Please specify whether the beneficial owner (s) are:
n A Qualified Institutional Buyer, as defined in Rule
144A.
n An institution that is an "accredited investor," as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, that is not a Qualified Institutional
Buyer.
Not a "U. S. person" (as defined in Regulations S).
DATE:
--------------------
Name of Holder
---------------------
Signature(s) of Holder
(If the Holder is a corporation,
partnership or fiduciary, the title
of the Person signing on behalf of
the Holder must be stated.)
Signature(s) must be guaranteed by a commercial bank or trust company or a
member firm of a U.S. national securities exchange or a member of the National
Association of Securities Dealers, Inc. if Common Shares are to be delivered,
or unconverted Securities are to be issued, other than to and in the name of
the registered owner.
A-2-120
<PAGE> 130
- -------------------
Signature Guarantee
(End of Certificate)
A-2-121
<PAGE> 131
ANNEX B-1
FORM OF TRANSFER CERTIFICATE --
RESTRICTED GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Attention: Corporate Trust Department
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $_____________ aggregate principal amount
of Securities which are evidenced by the Restricted Global Security (CUSIP No.
657201AA7) and held with the Depositary in the name of [insert name of
transferor] (the "Transferor"). The Transferor has requested a transfer of
such beneficial interest in the Securities to a Person who will take delivery
thereof in the form of an equal aggregate principal amount of Securities
evidenced by the Regulation S Global Security (CUSIP No. U65777AA9), which
amount, immediately after such transfer, is to be held with the Depositary
through Euroclear or CEDEL or both.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected pursuant to
and in accordance with Rule 904 under the United States Securities Act of 1933,
as amended (the "Securities Act"), and accordingly the Transferor does hereby
further certify that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either:
(A) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person acting on its
behalf reasonably believed that the transferee was outside the United States,
or
B-1-122
<PAGE> 132
(B) the transaction was executed in, on, or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above was held with the Depositary through Euroclear
or CEDEL or both.
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:
-----------------------
Name:
Title:
(If the registered owner is a corporation, partnership or fiduciary, the title
of the Person signing on behalf of such registered owner must be stated.)
B-1-123
<PAGE> 133
ANNEX B-2
FORM OF TRANSFER CERTIFICATE --
DEFINITIVE RESTRICTED SECURITIES TO
RESTRICTED GLOBAL SECURITY, REGULATION S GLOBAL
SECURITY OR UNRESTRICTED GLOBAL SECURITY
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Attention: Corporate Trust Department
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $_____________ aggregate principal amount
of Securities which are evidenced by a Definitive Restricted Security (No.
________ in the name of ___________) [insert name of transferor] (the
"Transferor"). The Transferor has requested a transfer of such interest in the
Securities to a Person that will take delivery thereof in the form of an equal
aggregate principal amount of Securities evidenced by the [Unrestricted Global
Security] [Regulation S Global Security] [(CUSIP No. U65777AA9)]. Restricted
Global Security (CUSIP No. 657201AA7).]
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that: such transfer has been effected pursuant
to and in accordance with Rule 904, Rule 144 or Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act") and
accordingly the Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 904:
(A) the offer of the Securities was not made to a
person in the United States;
(B) either:
B-2-124
<PAGE> 134
(i) at the time the buy order was originated,
the transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed that the transferee was outside
the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor any
person acting on its behalf knows that the
transaction was prearranged with a buyer in the
United States;
(C) no directed selling efforts have been made in
contravention of the requirements of 904(b) of Regulation S,
as applicable; and
(D) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act;
[and
(E) if the transfer is made to the Regulation S
Global Security: the transferee will take delivery in
book-entry form to be held with the Depositary only through
Euroclear or CEDEL or both;]
(2) if the transfer has been effected pursuant to Rule 144,
the Securities have been transferred in a transaction permitted by
Rule 144; or
(3) if the transfer has been effected pursuant to Rule 144A,
the Securities have been transferred to a Qualified Institutional
Buyer.
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:
-----------------------
Name:
Title:
(If the registered owner is a corporation, partnership or fiduciary, the title
of the Person signing on behalf of such registered owner must be stated.)
B-2-125
<PAGE> 135
ANNEX B-3
FORM OF TRANSFER CERTIFICATE --
REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Attention: Corporate Trust Department
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003 (the "Securities")
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture"), between North American Vaccine, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $____________ aggregate principal amount
of Securities which are evidenced by the Regulation S Global Security (CUSIP
No. U65777AA9) and held with the U.S. Depository through Euroclear or CEDEL or
both in the name of (insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the
Securities to a Person that will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the Restricted Global Security
(CUSIP No. 657201AA7).
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Securities for its own account, or for
one or more accounts with respect to which such Person exercises sole
investment discretion, and such person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States.
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers.
Dated: [Insert Name of Transferor]
By:
------------------------
Name:
Title:
(If the registered owner is a corporation, partnership or fiduciary, the title
of the Person
B-3-126
<PAGE> 136
signing on behalf of such registered owner must be stated.)
B-3-127
<PAGE> 137
ANNEX C-1
FORM OF TRANSFER CERTIFICATE --
RESTRICTED GLOBAL SECURITY TO UNRESTRICTED SECURITY
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Attention: Corporate Trust Department
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003 (the "Securities")
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture") between North American Vaccine, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $____________ aggregate principal amount
of Securities which are evidenced by the Restricted Global Security (CUSIP No.
_____________) and held with the Depositary in the name of ______________
[insert name of transferor] (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Securities to a person who will
take delivery in the form of an equal aggregate principal amount of Securities
evidenced by the Unrestricted Global Security (CUSIP No. _________).
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected pursuant to
and in accordance with Rule 904 or Rule 144 under the United States Securities
Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor
does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 904, the offer
of the Securities was not made to a person in the United States;
(A) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States, or
(ii) the transaction was executed in, on or through
the facilities of a designated offshore securities market and
neither the Transferor nor any person
C-1-128
<PAGE> 138
acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(B) no directed selling efforts have been made in
contravention of the requirements of 904(b) of Regulation S, as
applicable;
(C) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; or
(2) if the transfer has been effected pursuant to Rule 144, the
Securities have been transferred in a transaction permitted by Rule 144 under
the Securities Act.
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
Dated: [Insert Name of Beneficial Owner]
By:
------------------------------
Name:
Title:
(If the registered owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such registered
owner must be stated.)
C-1-129
<PAGE> 139
ANNEX C-2
FORM OF TRANSFER CERTIFICATE --
TRANSFER OR EXCHANGE AFTER THREE YEARS
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Attention: Corporate Trust Department
Re: North American Vaccine, Inc.
6.50% Convertible Subordinated Notes
Due May 1, 2003 (the "Securities")
Reference is hereby made to the Indenture, dated as of May 7, 1996
(the "Indenture") between North American Vaccine, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
[For transfers: This letter relates to
U.S.$__________________________ aggregate principal amount of Securities that
are evidenced by a [Restricted Global Security (CUSIP No._____________________)
and held with the Depositary in the name of [insert name of beneficial owner]
[a Restricted Security that is a Definitive Security (CUSIP
No._________________________ ) registered in the name of
_______________________________________ ] [and held for the benefit of
___________________________________ ] (the "Transferor"). The Transferor has
requested that its beneficial interest in such Securities be transferred to a
Person that will take delivery thereof in the form of an equal aggregate
principal amount of Securities evidenced by the Unrestricted Global Security
(CUSIP No.________________________________)
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that upon such transfer, (a) a period of at
least three years will have elapsed since (i) May 7, 1996 or (ii) the resale of
such Securities by an "affiliate" of the Company (as defined in Rule 144 under
the Securities Act), (b) the Transferor during the three months preceding the
date of such transfer was not an "affiliate" of the Company, and it was not
acting on behalf of such an affiliate and (c) such Person to whom such transfer
is being made is not an "affiliate" of the Company.]
[For exchanges: This letter relates to U.S.
$__________________________ aggregate principal amount of Securities that are
evidenced by a [Restricted Security (CUSIP No.______________________) and held
with the Depositary in the name of _____________________________
_________________________________________________________________________
[insert name of beneficial owner] [a Restricted Security that is a Definitive
Security (CUSIP No.___________________________) that is registered in the name
of __________________ and held for
C-1-130
<PAGE> 140
the benefit of ______________________] (the "Beneficial Owner"). The
Beneficial Owner has requested that its beneficial interest in such Securities
be exchanged for a beneficial interest in an equal aggregate principal amount
of [Securities evidenced by the Unrestricted Global Security] [Unrestricted
Securities] (CUSIP No. _________________).
In connection with such request and in respect of such Securities, the
Beneficial Owner does hereby certify that, upon such exchange, (a) it will be
the beneficial owner of such Securities, (b) a period of at least three years
will have elapsed since (i) May 7, 1996 or (ii) the resale of such Securities
by an "affiliate" of the Company and (c) the Beneficial Owner will not be, and
during the three months preceding the date of such exchange will not have been,
an "affiliate" of the Company (as defined in Rule 144 under the Securities
Act), and it is not acting on behalf of such an affiliate.]
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers.
Dated: [Insert Name of Beneficial Owner]
By:
----------------------------
Name:
Title:
(If the registered owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such registered
owner must be stated.)
C-2-131
<PAGE> 1
EXHIBIT 4.6
NORTH AMERICAN VACCINE, INC.
6.50% CONVERTIBLE SUBORDINATED NOTES DUE MAY 1, 2003
REGISTRATION RIGHTS AGREEMENT
May 1, 1996
Goldman, Sachs & Co.
UBS Securities LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
North American Vaccine, Inc., a Canadian corporation (the "Company"),
proposes to issue and sell to Goldman, Sachs & Co. and UBS Securities LLC (the
"Initial Purchasers") upon the terms set forth in a purchase agreement dated
May 1, 1996 (the "Purchase Agreement") between the Initial Purchasers and the
Company, its 6.50% Convertible Subordinated Notes Due May 1, 2003 (the
"Securities"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of
the Initial Purchasers thereunder, the Company agrees with the Initial
Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for the
benefit of the holders from time to time of the Securities and the Common
Stock, no par value per share (the "Stock"), of the Company initially issuable
upon conversion of the Securities (collectively, the "Registrable
Securities"), including the Initial Purchasers (each of the foregoing a
"Holder" and, together, the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Offering Circular, dated May 1, 1996, in respect of the
Securities. As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Act" or "Securities Act" means the United States Securities Act of 1933,
as amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and
-1-
<PAGE> 2
policies of such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Commission" means the United States Securities and Exchange Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b) hereof.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if
any, as set forth in Section 6 hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended
or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities.
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Statement" means a shelf registration statement of
the Company pursuant to the provisions of Section 2 hereof filed with the
Commission which covers some or all of the Registrable Securities, as
applicable, on an appropriate form under Rule 415 under the Act, or any
similar rule that may be adopted by the Commission, amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION. (a) The Company shall, within 90 days following
the date of original issuance (the "Issue Date") of the Securities, file with
the Commission a Shelf Registration Statement relating to the offer and sale
of the Registrable Securities by the Holders from time to time in accordance
with the methods of
-2-
<PAGE> 3
distribution elected by such Holders and set forth in such Shelf Registration
Statement and, thereafter, shall use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective under the Act within 180
calendar days after the date of filing of such Shelf Registration Statement;
provided, however, that no Holder shall be entitled to have the Registrable
Securities held by it covered by such Shelf Registration unless such Holder is
in compliance with Section 3(m) hereof.
(b) The Company shall use its reasonable best efforts:
(i) To keep the Shelf Registration Statement continuously effective
in order to permit the Prospectus forming part thereof to be usable by
Holders for a period of three years from the date the Shelf Registration
Statement is declared effective or such shorter period that will
terminate upon the earliest of the following: (A) when all the Securities
covered by the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement, (B) when all shares of Stock issued
upon conversion of any such Securities that had not been sold pursuant to
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement and (C) when, in the written opinion of
independent counsel to the Company, all outstanding Registrable
Securities held by Persons that are not Affiliates of the Company may be
resold without registration under the Act pursuant to Rule 144(k) under
the Act or any successor or analogous provision thereto (in any such
case, such period being called the "Effectiveness Period"); and
(ii) After the effectiveness of the Shelf Registration Statement,
promptly upon the request of any Holder, to take any action reasonably
necessary to register the sale of any Registrable Securities of such
Holder and to identify such Holder as a selling securityholder.
The Company shall be deemed not to have used its reasonable best efforts to
cause such Registration Statement to be declared effective or to keep the
Shelf Registration Statement effective during the Effectiveness Period if the
Company voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not being able to offer and sell any
such Registrable Securities during that period, unless (x) such action is
required by applicable law, rule or regulation or action of the Commission, or
(y) the Shelf Registration Statement would require the Company to disclose a
material financing, acquisition or other corporate transaction or development,
and the Board of Directors shall have determined in good faith that such
disclosure is not in the best interests of the Company and its stockholders,
and, in the case of clause (x) above, the Company thereafter promptly complies
with the requirements of paragraph 3(i) below.
3. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement, the following provisions shall apply:
-3-
<PAGE> 4
(a) The Company shall furnish to the Initial Purchasers, prior to
the filing thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement,
if any, to the Prospectus included therein and shall use its reasonable
best efforts to reflect in each such document, when so filed with the
Commission, such comments as the Initial Purchasers reasonably may
propose.
(b) The Company shall take such action as may be necessary so that
(i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto
(and each report or other document incorporated therein by reference in
each case) complies in all material respects with the Securities Act and
the Exchange Act and the respective rules and regulations thereunder,
(ii) any Shelf Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements, in the light of the circumstances under
which they were made, not misleading.
(c) (1) The Company shall advise the Initial Purchasers and, in the
case of clause (i), the Holders and, if requested by the Initial Purchasers or
any such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has become
effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise the Initial Purchasers and the Holders and,
if requested by the Initial Purchasers or any such Holder, confirm such advice
in writing of:
(i) the issuance by the Commission of any stop order suspending
effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
-4-
<PAGE> 5
(ii) the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(iii) the happening of any event that requires the making of any
changes in the Shelf Registration Statement or the Prospectus so that, as
of such date, the Shelf Registration Statement and the Prospectus do not
contain an untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(d) The Company shall use its reasonable best efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible
time.
(e) The Company shall, during the Effectiveness Period, furnish to each
Holder of Registrable Securities included within the coverage of any Shelf
Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all reports, other documents and exhibits (including those incorporated by
reference).
(f) The Company shall, during the Effectiveness Period, deliver to each
Holder of Registrable Securities included within the coverage of any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request; and the Company consents (except during the continuance of
any event described in Section 3(c)(2)(i) or (iii)) to the use of the
Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto during the Shelf Registration Period.
(g) Prior to any offering of Registrable Securities pursuant to any
Shelf Registration Statement, the Company shall use its reasonable best
efforts to register or qualify or cooperate with the Holders of Registrable
Securities included therein and their respective counsel in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any such
Holders reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of
the Registrable Securities covered by such Shelf Registration Statement:
provided, however, that in no event shall the Company be obligated to (i)
-5-
<PAGE> 6
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for
this Section 3(g) or (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then so subject.
(h) Unless any Registrable Securities shall be in book-entry only form,
the Company shall cooperate with the Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to any Shelf Registration Statement
free of any restrictive legends and in such permitted denominations and
registered in such names as Holders may request in connection with the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraphs 2(b)(x)
or 3(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Registrable Securities included
therein, the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If the Company notifies the Holders of the occurrence of any
event contemplated by paragraphs 2(b)(x) or 3(c)(2)(iii) above, the Holders
shall suspend the use of the Prospectus until the requisite changes to the
Prospectus have been made.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities registered under such Shelf Registration Statement.
(k) The Company shall use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to their security holders or otherwise provide in accordance with
Section 11(a) of the Securities Act as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Company shall cause the Indenture and the Securities to be
qualified under the Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Registrable Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company
such information regarding the Holder and the distribution of such Registrable
Securities as may be required by applicable law or regulation for inclusion in
such Shelf Registration Statement and may require each Holder to execute an
acknowledgment that such
-6-
<PAGE> 7
Holder agrees to be bound by the terms of this Agreement, and the Company may
exclude from such registration the Registrable Securities of any Holder that
fails to furnish such information or acknowledgment within a reasonable time
after receiving such request.
(n) The Company shall, if requested, promptly include or incorporate in
a Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters reasonably agree
should be included therein and to which the Company does not reasonably object
and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after they are notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment.
(o) The Company shall enter into such customary agreements (including
underwriting agreements in customary form) to take all other appropriate
actions in order to expedite or facilitate the registration or the disposition
of the Registrable Securities, and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification
provisions and procedures substantially identical to those set forth in
Section 5 (or such other provisions and procedures acceptable to the Managing
Underwriters, if any) with respect to all parties to be indemnified pursuant
to Section 5.
(p) The Company shall:
(i) cause the Company's officers, directors and employees to make
reasonably available for inspection all relevant information reasonably
requested by such Holders or any such underwriter, attorney, accountant
or agent in connection with any such Shelf Registration Statement, in
each case, as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing by
the Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by such Holders or any such
underwriter, attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality and the
Company may require that such Holders or any such underwriter, attorney,
accountant and agent execute a confidentiality agreement with respect to
such information; and provided further that the foregoing inspection and
information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled
thereto by one counsel designated by and on behalf of such Holders and
other parties;
(ii) make such representations and warranties to the Holders of
Registrable Securities registered thereunder and the underwriters, if
any, in
-7-
<PAGE> 8
form, substance and scope as are customarily made by the Company to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement;
(iii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any) addressed
to each selling Holder and the underwriters, if any, covering such
matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
Holders and underwriters (it being agreed that the matters to be covered
by such opinion or written statement by such counsel delivered in
connection with such opinions shall include in customary form, as of the
date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto,
as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented,
including the documents incorporated by reference therein, of an untrue
statement of material fact or the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in light of the circumstances
under which they were made) not misleading;
(iv) obtain "cold comfort" letters and updates thereof from the
independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or
of any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the Shelf
Registration Statement), addressed to each such Holder of Registrable
Securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
(v) deliver such documents and certificates as may be reasonably
requested by any such Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this
Section 3(p) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
(q) The Company will use its reasonable best efforts to cause the Stock
issuable upon conversion thereof to be listed for quotation on the American
Stock
-8-
<PAGE> 9
Exchange, the New York Stock Exchange or the Nasdaq National Market on or
prior to the effective date of any Shelf Registration Statement hereunder.
(r) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Registrable Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Rules of Fair Practice and the By-Laws of the
National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as
a Holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, the
Company shall assist such broker-dealer in complying with the requirements of
such Rules and By-Laws, including, without limitation, by (A) if such Rules or
By-Laws, including Schedule E thereto, shall so require, engaging a "qualified
independent underwriter" (as defined in Schedule E) to participate in the
preparation of the Shelf Registration Statement relating to such Registrable
Securities and to exercise usual standards of due diligence in respect
thereto, (B) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 5 hereof and
(C) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules of
Fair Practice of the NASD.
(s) The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration, offering and sale of the
Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise provided in Section 6,
the Company shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by the Company and reasonably acceptable to the Holders of
a majority of the Registrable Securities covered by the Shelf Registration
Statement to act as counsel therefor in connection with an underwritten public
offering.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any Shelf
Registration Statement, the Company shall indemnify and hold harmless the
Initial Purchasers, each Holder, each underwriter who participates in an
offering of Registrable Securities, each person, if any, who controls any of
such parties within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and each of their respective directors, officers,
employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, including any amounts paid in settlement of any investigation,
litigation, proceeding or claim, joint or several, as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact contained
in any Shelf Registration Statement (or
-9-
<PAGE> 10
any amendment thereto) covering Registrable Securities, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company shall not be liable under
this clause (i) for any settlement of any action effected without its written
consent, which consent shall not be unreasonably withheld; and
(ii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of counsel chosen by the Holders, such
Holder or any underwriter (except to the extent otherwise expressly provided
in Section 5(c) hereof)), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under subparagraph (i) of this Section 5(a); provided that this
indemnity shall not apply to any loss, liability, claim, damage or expense to
the extent arising out of an untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchasers, such Holder or
any underwriter in writing expressly for use in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto). Any amounts advanced by the Company to an indemnified
party pursuant to this Section 5 as a result of such losses shall be returned
to the Company if it shall be finally determined by such a court in a judgment
not subject to appeal or final review that such indemnified party was not
entitled to indemnification by the Company.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Initial Purchasers, each underwriter who
participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors, officers including each
officer of the Company who signed the Shelf Registration Statement),
employees, trustees and agents and each Person, if any, who controls the
Company, the Initial Purchasers, any underwriter or any other selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all loss, liability, claim, damage and
expense whatsoever described in the indemnity contained in Section 5(a)(i) and
(ii) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such selling Holder expressly
for use in the Shelf Registration Statement (for any
-10-
<PAGE> 11
amendment thereto) or any Prospectus (or any amendment or supplement thereto);
provided, however, that, no such Holder shall be liable for any claims
hereunder in excess of the amount of proceeds received by such Holder from the
sale of Registrable Securities pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against the indemnified party in respect of
which indemnity may be sought hereunder, enclosing a copy of all papers served
on such indemnified party, but failure to so notify an indemnifying party
shall not relieve it of any liability which it may have to the indemnified
party under such subsection if such failure does not materially prejudice the
indemnifying party in the defense of any such action, and shall not relieve
such indemnifying party from any liability which it may have other than on
account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action. If an indemnifying party
so elects within a reasonable time after receipt of such notice, such
indemnifying party, separately or jointly with any other indemnifying party,
may assume the defense of such action with counsel chosen by it and approved
by the indemnified party or parties defendant in such action, provided that if
any such indemnified party reasonably determines that there may be legal
defenses available to such indemnified party which are different from or in
addition to those available to such indemnifying party or that representation
of such indemnifying party and any indemnified party by the same counsel would
present a conflict of interest, then such indemnifying party or parties shall
not be entitled to assume such defense. If an indemnifying party is not
entitled to assume the defense of such action as a result of the proviso to
the preceding sentence, counsel for such indemnifying party shall be entitled
to conduct the defense of such indemnifying party and counsel for such
indemnified party or parties shall be entitled to conduct the defense of such
indemnified party or parties. If an indemnifying party assumes the defense of
an action in accordance with and as permitted by the provisions of this
paragraph, such indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any one local counsel) separate from the indemnifying parties' own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity provision agreement provided for in this
Section 5 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Initial
Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company, the Initial Purchasers and the
Holders, as incurred; provided that no Person guilty of fraudulent
-11-
<PAGE> 12
misrepresentation (within the meaning of Section 11 (f) of the Securities Act)
shall be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company, the Initial Purchasers
and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company, on the one hand, and the Initial Purchasers and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Initial Purchasers
and the Holders, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on behalf of
the Initial Purchasers or the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Initial Purchasers and the
Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 5 were to be determined by
pro rata allocation or by any other method of allocation that does not take
into account the relevant equitable considerations. For purposes of this
Section 5(d), each director, officer, employee, trustee, agent and Person, if
any, who controls the Initial Purchasers or a Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Initial Purchasers or such Holder, and
each director, officer, employee, trustee and agent of the Company, and each
Person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent.
6. UNDERWRITTEN OFFERING. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an underwritten offering. In any such underwritten
offering, the investment banker or bankers and manager or managers that will
administer the offering will be selected by, and the underwriting arrangements
with respect thereto will be approved by the Holders of a majority of the
Registrable Securities to be included in such offering; provided, however,
that (i) such investment bankers and managers and their counsel and
underwriting arrangements must be reasonably satisfactory to the Company and
(ii) the Company shall not be obligated to arrange for more than one
underwritten offering during the Effectiveness Period. No Holder may
participate in any underwritten offering contemplated hereby unless such
Holder (a) agrees to sell such Holder's Registrable Securities in accordance
with any approved underwriting arrangements, (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other
-12-
<PAGE> 13
documents required under the terms of such approved underwriting arrangements
and (c) at least 40% of the outstanding Registrable Securities are included in
such underwritten offering. The Holders participating in any underwritten
offering shall be responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions and fees and
expenses of counsel to the selling securityholders and shall reimburse the
Company for the fees and disbursements of its counsel, its independent public
accountants and any printing expenses incurred in connection with such
underwritten offerings. Notwithstanding the foregoing or the provisions of
Section 3(n) hereof, upon receipt of a request from the Managing Underwriter
to prepare and file an amendment or supplement to the Shelf Registration
Statement and Prospectus in connection with an underwritten offering, the
Company may delay the filing of any such amendment or supplement for up to 90
days if the Company in good faith has a valid business reason for such delay.
7. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may grant registration
rights that would permit any Person that is a third party the right to
piggy-back on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of such offering delivers an opinion to the selling
Holders that the total amount of securities which they and the holders of such
piggyback rights intend to include in any Shelf Registration Statement is so
large as to materially adversely affect the success of such offering
(including the price at which such securities can be sold), then only the
amount, the number or kind of securities to be offered for the account of
holders of such piggy-back rights will be reduced to the extent necessary to
reduce the total amount of securities to be included in such offering to the
amount, number or kind recommended by the Managing Underwriter prior to any
reduction in the amount of Registrable Securities to be included.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the written consent of the Company and the Initial
Purchasers is obtained.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(c);
(2) if to the Initial Purchasers, initially at the address set
forth in the Purchase Agreement; and
-13-
<PAGE> 14
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and
the Holders, including, without the need for an express assignment or any
consent by the Company thereto, subsequent Holders of Registrable Securities.
The Company hereby agrees to extend the benefits of this Agreement to any
Holder of Registrable Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
(e) COUNTERPARTS. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement .
(f) HEADINGS. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
any provisions relating to conflicts of laws.
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
NORTH AMERICAN VACCINE, INC.
-14-
<PAGE> 15
By: /s/ Sharon Mates
-------------------------------
Name: Sharon Mates, Ph.D.
Title: President
The foregoing Registration Rights Agreement is hereby confirmed and accepted
as of the date first above written.
Goldman, Sachs & Co.
UBS Securities LLC
By /s/ Goldman, Sachs & Co.
---------------------------
(Goldman, Sachs & Co.)
Name: Marcus Colwell
Title: Vice President
-15-
<PAGE> 1
EXHIBIT 12
North American Vaccine, Inc.
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 3/31/96
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest and debt expense $ 304,400 $ 5,000 $ - $ - $ 1,380 $ 1,422
Interest factor of rental expense 112,667 127,333 137,667 247,333 270,667 68,333
Preferred stock dividend of
majority owned subsidiary - - - - - -
---------------------------------------------------------------------------------------
Total fixed charges for ratio $ 416,667 $ 132,333 $ 137,667 $ 247,333 $ 272,047 $ 69,755
EARNINGS:
Net Loss (5,759,000) (10,724,000) (12,128,000) (3,927,000) (4,986,000) (2,515,000)
Total fixed charges for ratio 416,667 132,333 137,667 247,333 272,047 69,755
---------------------------------------------------------------------------------------
Total earnings before fixed charges $ (5,342,333) $(10,591,667) $(11,900,333) $(3,679,667) $(4,713,953) $(2,445,245)
RATIO OF EARNINGS TO
FIXED CHARGES Deficiency Deficiency Deficiency Deficiency Deficiency Deficiency
Deficiency of earnings to $ (5,759,000) $(10,724,000) $(12,128,000) $(3,927,000) $(4,986,000) $(2,515,000)
fixed charges
</TABLE>
Note disclosure: In computing the deficiency of available earnings to fixed
charges, earnings consist of income before income taxes and fixed charges.
Fixed charges include interest and related amortization of discount and
premium on long-term borrowings, interest on short-term borrowings and the
implicit interest component of the rental cost of the Company's various office
facilities. For all periods presented, earnings were insufficient to cover
fixed charges.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 9, 1996
included in North American Vaccine, Inc.'s Form 10-K for the year ended
December 31, 1995 and to all references to our Firm included in or made a part
of this registration statement filed on Form S-3.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Washington, D.C.,
July 24, 1996
<PAGE> 1
EXHIBIT 25.1
CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
NORTH AMERICAN VACCINE, INC.
(Exact name of obligor as specified in its charter)
Canada None
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
12103 Indian Creek Court
Beltsville, Maryland 20705
(301) 470-6100 (Zip Code)
(Address of principal executive offices)
6.50% CONVERTIBLE SUBORDINATED NOTES
(Title of Indenture Securities)
<PAGE> 2
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 3
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C> <C> <C>
T1A(i) * - Copy of the Organization Certificate of Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York Banking Department dated December
31, 1993 as to the authority of Marine Midland Bank to commence business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine Midland Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank required by Section 321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report of condition of the trustee (March 31, 1996),
published pursuant to law or the requirement of its supervisory or
examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York on the 22nd day
of July 1996.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
------------------------------------
Frank J. Godino
Corporate Trust Officer
<PAGE> 5
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
/ 1 /
This financial information has not been reviewed, or confirmed
for accuracy or relevance, by the Federal Reserve System. Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
<S> <C>
REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1996 (950630)
------------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 (State This report form is to be filed by banks with branches and
member banks); 12 U.S.C. Section 1817 (State nonmember consolidated subsidiaries in U.S. territories and possessions,
banks); and 12 U.S.C. Section 161 (National banks). Edge or Agreement subsidiaries, foreign branches,
consoli-dated foreign subsidiaries, or International Banking
Facilities.
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in
an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for NOTE: These instructions may in some cases differ from
State nonmember banks and three directors for State member generally accepted accounting principles.
and National Banks.
I, Gerald A. Ronning, Executive VP & Controller We, the undersigned directors (trustees), attest to the
-------------------------------------------- correctness of this Report of Condition (including the
Name and Title of Officer Authorized to Sign Report supporting schedules) and declare that it has been examined by
us and to the best of our knowledge and belief has been
of the named bank do hereby declare that these Reports of prepared in conformance with the instructions issued by the
Condition and Income (including the supporting schedules) appropriate Federal regulatory authority and is true and
have been prepared in conformance with the instructions correct.
issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and believe. /s/ Henry J. Nowak
-------------------------------------
Director (Trustee)
/s/ Bernard J. Kennedy
-------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ James H. Cleave
---------------------------------- -------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
- -----------------------------------------------------------------------------------------------------------------------------------
4/25/96
----------------------------
Date of Signature
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to the NATIONAL BANKS: Return the original only in the special return
appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of
the special return address envelope, return the original only
STATE NONMEMBER BANKS: Return the original only in the to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite
special return address envelope provided. If express mail is 204, Crofton, MD 21114.
- -----------------------------------------------------------------------------------------------------------------------------------
used in lieu of the special return address envelope, return
the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
FDIC Certificate Number / 0 / 0 / 5 / 8 / 9 /
--------------------
(RCRI 9030)
</TABLE>
<PAGE> 6
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities
for your state publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
March 31, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,344,915
Interest-bearing balances ........................... 1,536,664
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,338,156
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 439,200
Securities purchased under
agreements to resell................................. 323,578
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 13,404,283
LESS: Allowance for loan and lease
losses............................... 470,421
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 12,933,862
Trading assets....................................... 818,882
Premises and fixed assets (including
capitalized leases).................................. 177,937
Other real estate owned................................. 4,004
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 24,688
Intangible assets....................................... 60,829
Other assets............................................ 436,079
Total assets............................................ 21,438,794
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
LIABILITIES
Deposits:
In domestic offices.................................. 13,972,231
Noninterest-bearing.................. 3,227,485
Interest-bearing..................... 10,744,746
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................................. 2,915,229
Noninterest-bearing.................. 0
Interest-bearing..................... 2,915,229
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 759,940
Securities sold under agreements to
repurchase........................................... 809,703
Demand notes issued to the U.S. Treasury 111,294
Trading Liabilities...................................... 323,875
Other borrowed money:
With original maturity of one year
or less.............................................. 83,438
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,696
Bank's liability on acceptances
executed and outstanding................................ 24,688
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 467,094
Total liabilities....................................... 19,727,188
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (115,039)
Net unrealized holding gains (losses)
on available-for-sale securities........................ 8,547
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,711,606
Total liabilities, limited-life
preferred stock, and equity capital..................... 21,438,794
</TABLE>
<PAGE> 1
EXHIBIT 99.3
Exhibit 99.3 -- List of Persons Who Have Executed Indemnity Agreements with
the Company
The Company and certain directors and officers of the Company listed below
(each an "Indemnitee") have executed Indemnity Agreements in the form set forth
in Exhibit 99.2. These agreements are substantially identical, and have been
executed by the following individuals:
<TABLE>
<CAPTION>
1/
Indemnitee Date of Execution
- ---------- -----------------
<S> <C>
Sharon Mates, Ph.D.
Arthur Y. Elliott, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . March 7, 1994
Daniel J. Abdun-Nabi
Edward Arcuri, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . January 3, 1995
Wayne Morges, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . June 8, 1994
Joseph Y. Tai, Ph.D.
Stephen N. Keith, M.S., M.S.P.H. . . . . . . . . . . . . . . . . . . . August 21, 1995
Lawrence J. Hineline
Neil W. Flanzraich
Francesco Bellini, Ph.D.
Phillip Frost, M.D.
Alain Cousineau
Jonathan Deitcher
Denis Dionne
Rondi R. Grey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 21, 1995
Lyle Kasprick
Richard C. Pfenniger, Jr.
Lawrence Wilson
</TABLE>
- ----------------------
1/
Unless indicated otherwise, all Indemnity Agreements were executed on
April 16, 1993.
