<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO. 333-39275
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CYGNUS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 94-2978092
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) Number)
</TABLE>
400 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063-4719
(415) 369-4300
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
GREGORY B. LAWLESS, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CYGNUS, INC.
400 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063-4719
(415) 369-4300
(Name and Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------------
COPIES TO:
THOMAS A. BEVILACQUA, ESQ.
CURTIS L. MO, ESQ.
BROBECK, PHLEGER & HARRISON LLP
TWO EMBARCADERO PLACE
2200 GENG ROAD
PALO ALTO, CALIFORNIA 94303
(650) 424-0160
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, 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. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT
TITLE OF SECURITIES AGGREGATE OF REGISTRATION
TO BE REGISTERED OFFERING PRICE(1)(2) FEE(3)
<S> <C> <C>
Debt Securities and Common Stock, par value $0.001 per
share $90,000,000 $27,273
</TABLE>
(1) Or (i) if any Debt Securities are issued at an original issue discount, such
greater principal amount as shall result in an aggregate initial offering
price equal to the amount to be registered or (ii) if any Debt Securities
are issued with a principal amount denominated in a foreign currency or
composite currency, such principal amount as shall result in an aggregate
initial offering price equivalent thereto in United States dollars at the
time of initial offering.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
amended.
(3) A filing fee of $22,728 has previously been paid in connection with the
$75,000,000 of Debt Securities and Common Stock included in the initial
filing of this Registration Statement on October 31, 1997.
------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF 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.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1997
PRELIMINARY PROSPECTUS
$90,000,000
CYGNUS, INC.
DEBT SECURITIES AND COMMON STOCK
------------------------
Cygnus, Inc. ("Cygnus" or the "Company") may from time to time offer,
together or separately, its (i) debt securities (the "Debt Securities"), which
may be either senior debt securities (the "Senior Debt Securities") or
subordinated debt securities (the "Subordinated Debt Securities") and (ii)
shares of its Common Stock, $.001 par value per share (the "Common Stock"). The
Debt Securities and the Common Stock are collectively referred to herein as the
"Securities".
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $90,000,000 aggregate public
offering price (or its equivalent (based on the applicable exchange rate at the
time of the sale) in one or more foreign currencies, currency units or composite
currencies as shall be designated by the Company). Certain specific terms of the
particular Securities in respect of which this Prospectus is being delivered are
set forth in the accompanying Prospectus Supplement (the "Prospectus
Supplement"), including, where applicable, (i) in the case of Debt Securities,
the specific title, aggregate principal amount, the denomination, whether such
Debt Securities are secured or unsecured obligations, whether such Debt
Securities are senior or subordinated, maturity, premium, if any, the interest
rate or rates (which may be fixed, floating or adjustable), the time and method
of calculating payment of interest, if any, the place or places where principal
of (and premium, if any) and interest, if any, on such Debt Securities will be
payable, the currency in which principal of (and premium, if any) and interest,
if any, on such Debt Securities will be payable, any terms of redemption at the
option of the Company or the Holder, any sinking fund provisions, terms for any
conversion into other Securities, the initial public offering price and other
special terms and (ii) in the case of Common Stock, the number of shares offered
for sale by the Company and the initial public offering price or method of
determining the initial public offering price. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities. The
Company's Common Stock is listed on the Nasdaq National Market under the symbol
"CYGN." Any Common Stock sold pursuant to a Prospectus Supplement will be listed
for quotation on such market.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Debt (as defined) of the Company, including any outstanding Senior Debt
Securities. See "Description of Debt Securities--Subordination of Subordinated
Debt Securities."
The Prospectus Supplement may contain information concerning U.S. federal
income tax considerations, if applicable to the Securities offered.
The Securities may be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. See
"Plan of Distribution." If agents of the Company or any dealers or underwriters
are involved in the sale of the Securities in respect of which the Prospectus is
being delivered, the names of such agents, dealers or underwriters and any
applicable commissions or discounts, if any, are set forth in or may be
calculated from the Prospectus Supplement with respect to such Securities.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement. Any statement contained in this
Prospectus will be deemed to be modified or superseded by any inconsistent
statement contained in the accompanying Prospectus Supplement.
SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SECURITIES.
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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 , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C.
20549, at prescribed rates. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the World Wide Web site is http://www.sec.gov. The Common Stock is listed for
quotation on the Nasdaq National Market under the symbol "CYGN." Reports and
other information concerning the Company may be inspected at the offices of the
Nasdaq Stock Market at 1735 K Street, Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities. This Prospectus which
constitutes part of the Registration Statement does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete, and in each instance, reference
is made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1997; and
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A for such securities, including
any amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Registration Statement of which
this Prospectus forms a part and prior to the termination of the offering of the
Securities offered hereby shall be deemed to be incorporated by reference into
this Prospectus and be a part hereof from the dates of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded
2
<PAGE>
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents. Requests should be directed to
Corporate Marketing, Cygnus, Inc., at the principal executive offices of the
Company. Cygnus, Inc., 400 Penobscot Drive, Redwood City, California 94063-4719,
telephone: (650) 369-4300.
3
<PAGE>
THE COMPANY
Cygnus, Inc. ("Cygnus" or the "Company") is engaged in the development of
diagnostic and drug delivery systems, designed to satisfy unmet medical needs
cost-effectively. The Company's current efforts are primarily focused on two
technological platforms: a painless, bloodless and automatic glucose monitoring
device and transdermal drug delivery systems. The Company's products in the most
advanced stages of development include two in the market
(Nicotrol-Registered Trademark- and FemPatch-Registered Trademark-) and several
in different stages of clinical trials.
Cygnus, the Cygnus logo, GlucoWatch and AutoSensor are trademarks of the
Company. FemPatch is a registered trademark of Warner-Lambert and Nicotrol is a
registered trademark of Pharmacia & Upjohn. All other trademarks included in
this Prospectus are the property of their respective holders.
The Company was incorporated in the State of California in 1985, and
reincorporated in the State of Delaware in 1994. The Company's corporate
headquarters and principal executive offices are located at 400 Penobscot Drive,
Redwood City, California 94063-4719, telephone number 415/369-4300.
RECENT DEVELOPMENTS
On June 30, 1994, Sanofi, S.A. ("Sanofi") filed a request for arbitration
against Cygnus with the International Court of Arbitration. In its request for
arbitration, Sanofi alleged that Cygnus breached its existing contract with
Sanofi by, among other things, entering into a product development agreement
with another company for the development of transdermal systems in the field of
hormone replacement therapy. The International Chambers of Commerce (the
"Tribunal") announced an interim award in the arbitration proceedings in October
1996. The Tribunal found that two transdermal products for hormone replacement
therapy licensed by Cygnus to another company fall within the scope of an
exclusive license previously granted to Sanofi. In September 1997, the Company
and Sanofi agreed to a settlement of the arbitration dispute. Under the terms of
the settlement, Cygnus will pay Sanofi $14.0 million in cash and royalty
payments of between 6.5% to 8.5% of any and all net sales of two specific
products, and will issue a convertible promissory note in the principal amount
of $6.0 million payable in full at the end of four years and bearing interest at
6.5% per annum. The note will be convertible into the Company's Common Stock at
Sanofi's option, exercisable at any time during the four year term, at a
conversion rate of $21.725 per share. The above royalty payments are subject to
minimum payments in an aggregate amount equal to $17.0 million, which minimum
payments commence in 2001 and end in 2005 regardless of whether any net sales of
the two related products have occurred or the amount or timing of any such net
sales. Overall, Cygnus' non-recurring expenses attributable to the arbitration
settlement recorded in the quarter ended September 30, 1997 totalled
approximately $39.6 million, of which $23.0 million is long-term.
RISK FACTORS
Prior to making an investment decision with respect to the Securities
offered hereby, prospective investors should carefully consider the specific
factors set forth under the caption "Risk Factors" in the applicable Prospectus
Supplement pertaining thereto, together with all of the other information
appearing herein or therein or incorporated by reference herein, in light of
their particular investment objectives and financial circumstances.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities will be
used for general corporate purposes, including capital expenditures and to meet
working capital needs. Pending such uses, the Company will invest the net
proceeds in interest-bearing securities.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Company has a history of operating and net losses, and therefore no
earnings have been available to cover fixed charges. Fixed charges consist of
interest, whether expensed or capitalized, and totalled $307,222, $449,383,
$291,964, $548,387, $744,311 and $718,730 for each of the five years in the
period ended December 31, 1996 and for the nine months ended September 30, 1997,
respectively.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture"), between the Company, as Issuer, and State Street Bank and Trust
Company of California, N.A., as Trustee (the "Trustee"). The Subordinated Debt
Securities are to be issued under a separate Indenture (the "Subordinated
Indenture"), also between the Company, as issuer, and State Street Bank and
Trust Company of California, N.A., as Trustee. The Senior Indenture and the
Subordinated Indenture are sometimes referred to collectively as the
"Indentures." A copy of the form of each Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Debt Securities
may be issued from time to time in one or more series. The particular terms of
each series, or of Debt Securities forming a part of a series, which are offered
by a Prospectus Supplement will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indentures, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
GENERAL
The Indentures will provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Debt Securities of any series. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indentures,
including as to maturity, principal and interest, as the Company may determine.
Unless otherwise specified in the applicable Prospectus Supplement, the Senior
Debt Securities when issued will be unsecured and unsubordinated obligations of
the Company and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment in
full of all Senior Debt of the Company, including any outstanding Senior Debt
Securities, as described under "Subordination of Subordinated Debt Securities"
and in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will set forth whether the Debt
Securities offered shall be Senior Debt Securities or Subordinated Debt
Securities, and the price or prices at which the Debt Securities to be offered
will be issued, and will describe the following terms of such Debt Securities:
(1) the title of such Debt Securities; (2) any limit on the aggregate principal
amount of such Debt Securities or the series of which they are a part; (3) the
Person to whom any interest on a Debt Security shall be payable, if other than
the Person in whose name that Debt Security (or one or more predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest; (4) the date or dates on which the principal of any of such
Debt Securities will be payable; (5) the rate or rates at which any of such Debt
Securities will bear interest, if any, the date or dates from which any such
interest will accrue, the Interest Payment Dates on which any such interest will
be payable and the Regular Record Date for any such interest payable on any
Interest Payment Date; (6) the place or places where the principal of and any
premium and interest on any of such Debt Securities will be payable; (7) the
period or periods within which, the price or prices at which and the terms and
conditions on which any of such Debt Securities may
5
<PAGE>
be redeemed, in whole or in part, at the option of the Company; (8) the
obligation, if any, of the Company to redeem or purchase any of such Debt
Securities pursuant to any sinking fund or analogous provision or at the option
of the Holder thereof, and the period or periods within which, the price or
prices at which and the terms and conditions on which any of such Debt
Securities will be redeemed or purchased, in whole or in part, pursuant to any
such obligation; (9) the denominations in which any of such Debt Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof; (10) if the amount of principal of or any premium or interest on any of
such Debt Securities may be determined with reference to an index or pursuant to
a formula, the manner in which such amounts will be determined; (11) if other
than the currency of the United States of America, the currency, currencies or
currency units in which the principal of or any premium or interest on any of
such Debt Securities will be payable (and the manner in which the equivalent of
the principal amount thereof in the currency of the United States of America is
to be determined for any purpose, including for the purpose of determining the
principal amount deemed to be Outstanding at any time); (12) if the principal of
or any premium or interest on any of such Debt Securities is to be payable, at
the election of the Company or the Holder thereof, in one or more currencies or
currency units other than those in which such Debt Securities are stated to be
payable, the currency, currencies or currency units in which payment of any such
amount as to which such election is made will be payable, the periods within
which and the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount is to be determined);
(13) if other than the entire principal amount thereof, the portion of the
principal amount of any of such Debt Securities which will be payable upon
declaration of acceleration of the Maturity thereof; (14) if the principal
amount payable at the Stated Maturity of any of such Debt Securities will not be
determinable as of any one or more dates prior to the Stated Maturity, the
amount which will be deemed to be such principal amount as of any such date for
any purpose, including the principal amount thereof which will be due and
payable upon any Maturity other than the Stated Maturity or which will be deemed
to be Outstanding as of any such date (or, in any such case, the manner in which
such deemed principal amount is to be determined); (15) if applicable, that such
Debt Securities, in whole or any specified part, are defeasible pusuant to the
provisions of the Indentures described under "Defeasance and Covenant
Defeasance--Defeasance and Discharge" or "Defeasance and Covenant
Defeasance--Defeasance of Certain Covenants," or under both such captions; (16)
if applicable, the terms of any right to convert Debt Securities into shares of
Common Stock of the Company or other securities or property; (17) whether any of
such Debt Securities will be issuable in whole or in part in the form of one or
more Global Securities and, if so, the respective Depositaries for such Global
Securities, the form of any legend or legends to be borne by any such Global
Security in addition to or in lieu of the legends referred to under "Form,
Exchange and Transfer" or "Global Securities" and, if different from those
described under such captions, any circumstances under which any such Global
Security may be exchanged in whole or in part for Securities registered, and any
transfer of such Global Security in whole or in part may be registered, in the
names of Persons other than the Depositary for such Global Security or its
nominee; (18) any addition to or change in the Events of Default applicable to
any of such Debt Securities and any change in the right of the Trustee or the
Holders to declare the principal amount of any of such Debt Securities due and
payable; (19) any addition to or change in the covenants in the Indentures
described under "Restrictive Covenants" applicable to any of such Debt
Securities; and (20) any other terms of such Debt Securities not inconsistent
with the provisions of the relevant Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt Securities
sold at an original issue discount will be described in the applicable
Prospectus Supplement under "United States Taxation." In addition, certain
special United States federal income tax or other considerations (if any)
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars will be described in the
applicable Prospectus Supplement.
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CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into Common
Stock or other securities or property will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions as to whether
conversion is mandatory or at the option of the Holder and may include
provisions pursuant to which the number of shares of Common Stock or other
securities or property to be received by the Holders of Debt Securities upon
conversion would be calculated according to the market price of Common Stock or
other securities or property as of a time stated in the applicable Prospectus
Supplement. (Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt, including the Senior Debt Securities. In the event
of any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization, debt restructuring or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or any assignment for the benefit of creditors or any
other marshaling of assets and liabilities of the Company, the holders of Senior
Debt will be entitled to receive payment in full of all amounts due or to become
due on or in respect of all Senior Debt in cash or other payment satisfactory to
the holders of Senior Debt before the Holders of the Subordinated Debt
Securities are entitled to receive any payment on account of principal of or any
premium or interest on the Subordinated Debt Securities or on account of the
purchase, redemption or other acquisition of Subordinated Debt Securities or
before the Company may make any sinking fund or defeasance payment to the
Trustee or any Paying Agent in accordance with the Subordinated Indenture.
Notwithstanding the foregoing, any amounts previously deposited by the Company
with the Trustee or Paying Agent in accordance with the subordination provisions
of Article Fifteen of the Subordinated Indenture at the time of such deposit may
be paid to the Holders of Subordinated Debt Securities ("Defeased Payments").
(Section 1502)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are not holders of Senior Debt may recover less,
ratably, than holders of Senior Debt and may recover more, ratably, than the
Holders of the Subordinated Debt Securities.
In the event that any Subordinated Debt Securities are declared due and
payable before their Stated Maturity as a result of an Event of Default, the
holders of the Senior Debt outstanding at the time such Subordinated Debt
Securities so become due and payable will be entitled to receive payment in full
of all amounts due or to become due on or in respect of all Senior Debt in cash
or other payment satisfactory to the holders of Senior Debt before the Holders
of the Subordinated Debt Securities are entitled to receive any payment by the
Company on account of the principal of or any premium or interest on the
Subordinated Debt Securities or on account of the purchase, redemption or other
acquisition of Subordinated Debt Securities or before the Company may make any
sinking fund or defeasance payment to the Trustee or any Payment Agent in
accordance with the Subordinated Indenture (other than Defeased Payments). If
the payment of Subordinated Debt Securities is accelerated because of an Event
of Default, the Company and the Trustee are required under the Subordinated
Indenture to promptly notify holders of Senior Debt of the acceleration.
(Section 1503)
The Company may not make any payment of principal (or premium, if any) or
interest, if any, in respect of the Subordinated Debt Securities or on account
of the purchase, redemption or other acquisition of Subordinated Debt Securities
or any payment constituting a sinking fund or defeasance payment to the Trustee
or Paying Agent in accordance with the Subordinated Indenture (other than
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Defeased Payments) if (i) a default in the payment of principal, premium, if
any, or interest (including a default under any repurchase or redemption
obligation) or other amounts with respect to any Senior Debt occurs and is
continuing beyond the applicable grace period or (ii) any other event of default
occurs and is continuing with respect to Designated Senior Debt (as defined)
that permits the holders thereof or their representatives to accelerate the
maturity thereof, and the Trustee under the Subordinated Indenture receives a
notice of such default (a "Payment Blockage Notice") from the Company, a holder
of such Designated Senior Debt or other person permitted to give such notice
under the Subordinated Indenture. The Company may and shall resume payments on
the Subordinated Debt Securities and may purchase, redeem or otherwise acquire
the Subordinated Debt Securities and may make a sinking fund or defeasance
payment to the Trustee or Paying Agent in accordance with the Subordinated
Indenture (a) in the case of a payment default, upon the date on which such
default is cured or waived or ceases to exist and (b) in the case of a
nonpayment default, the earlier of the date on which such nonpayment default is
cured or waived or ceases to exist or 179 days after the date on which the
applicable Payment Blockage Notice is received (unless the subordination
provisions of Article Fifteen of the Indenture prohibit the payment, purchase,
redemption, acquisition, sinking fund payment or defeasance payment at the time
of such payment, purchase, redemption, acquisition, sinking fund payment or
defeasance payment (including, without limitation, in the case of a nonpayment
referred to in clase (ii) above, as a result of a payment default with respect
to applicable Senior Debt as a consequence of the acceleration of the maturity
thereof or otherwise)). No new period of payment blockage may be commenced
unless and until 365 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee under the Subordinated Indenture shall be, or be made, the basis for a
subsequent Payment Blockage Notice. (Section 1504) In the case of Subordinated
Debt Securities that are convertible at the option of the Holder, the payment,
issuance and delivery of cash, property or securities (other than stock and
certain subordinated securities of the Company) upon conversion of a
Subordinated Debt Security will be deemed to constitute payment on account of
the principal of such Subordinated Debt Security. (Section 1515)
"Senior Debt" is defined in the Indenture to mean: the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on, rent with respect to, and all fees and other amounts payable in
connection with, the following, whether absolute or contingent, secured or
unsecured, due or to become due, outstanding on the date of the Subordinated
Indenture or thereafter created, incurred or assumed: (a) indebtedness of the
Company evidenced by a credit or loan agreement, note, bond, debenture or other
written obligation, (b) all obligations of the Company for money borrowed, (c)
all obligations of the Company evidenced by a note or similar instrument given
in connection with the acquisition of any businesses, properties or assets of
any kind, (d) obligations of the Company (i) as lessee under leases required to
be capitalized on the balance sheet of the lessee under generally accepted
accounting principles, (ii) as lessee under other leases for facilities,
equipment or related assets, whether or not capitalized, entered into or leased
after the date of the Subordinated Indenture for financing purposes (as
determined by the Company) or (iii) under any lease or related document
(including a purchase agreement) that provides that the Company is contractually
obligated to purchase or cause a third party to purchase the leased property and
the obligations of the Company under such lease or related document to purchase
or to cause a third party to purchase such leased property, (e) all obligations
of the Company under interest rate and currency swaps, caps, floors, collars,
hedge agreements, forward contracts, or similar agreements or arrangements, (f)
all obligations of the Company with respect to letters of credit, bankers'
acceptances or similar facilities (including reimbursement obligations with
respect to any of the foregoing), (g) all obligations of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable arising in the ordinary course of business), (h) all
obligations of the type referred to in clauses (a) through (g) above of another
Person and all dividends of another Person, the payment of which, in either
case, the Company has assumed or guaranteed (or in effect guaranteed through an
agreement to purchase or
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otherwise (including, without limitation, "take or pay" and similar
arrangements)), or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor, or otherwise, or which
is secured by a lien on property of the Company, and all obligations of the
Company with respect thereto, and (i) renewals, extensions, modifications,
replacements, restatements and refundings of, or any indebtedness or obligation
issued in exchange for, any such indebtedness or obligation described in clauses
(a) through (h) of this paragraph; provided, however, that Senior Debt shall not
include the Subordinated Debt Securities or any such indebtedness or obligation
if the terms of such indebtedness or obligation (or the terms of the instrument
under which, or pursuant to which it is issued) expressly provide that such
indebtedness or obligation is not superior in right of payment to the
Subordinated Debt Securities.
"Designated Senior Debt" means certain existing Senior Debt (including the
Company's obligations under its existing bank term loan agreement) and the
Company's obligations under any other particular Senior Debt having an
outstanding principal amount or commitment in excess of $10.0 million in which
the instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such Senior Debt shall be "Designated Senior Debt" for
purposes of the Subordinated Indenture and any Senior Debt so designated as
Designated Senior Debt by the Company in the applicable Prospectus Supplement
(provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Debt to exercise the
rights of Designated Senior Debt).
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indentures and the
limitations applicable to Global Securities, Debt Securities of each series will
be exchangeable for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount. (Section 305)
Subject to the terms of the Indentures and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security Registrar
or at the office of any transfer agent designated by the Company for such
purposes. No service charge will be made for any registration or transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in addition
to the Security Registrar) initially designated by the Company for any Debt
Securities will be named in the applicable Prospectus Supplement. (Section 305)
The Company may at any time designate additional
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transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts, except that the
Company will be required to maintain a transfer agent in each Place of Payment
for the Debt Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register the
transfer of or exchange any Debt Security so selected for redemption, in whole
or in part, except the unredeemed portion of any such Debt Security being
redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more global securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby (a
"Global Security"). Each Global Security will be registered in the name of a
depositary (the "Depositary") or a nominee thereof identified in the applicable
Prospectus Supplement, will be deposited with such Depositary or nominee or a
custodian therefor and will bear a legend regarding the restrictions on
exchanges and registration of transfer thereof referred to below and any such
other matters as may be provided for pursuant to the Indentures.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for
such Global Security or any nominee of such Depositary unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as such
as required by the Indentures, (ii) there shall have occurred and be continuing
an Event of Default with respect to the Debt Securities represented by such
Global Security or (iii) there shall exist such circumstances, if any, in
addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All securities issued in exchange for a Global
Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the Indentures.
All payments of principal of and any premium and interest on a Global Security
will be made to the Depositary or its nominee, as the case may be, as the Holder
thereof. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Those
laws may impair the ability to transfer beneficial interests in a Global
Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such
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participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies and
procedures adopted by the Depositary from time to time. None of the Company, the
Trustee or any agent of the Company or the Trustee will have any responsibility
or liability for any aspect of the Depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that at the
option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporate Trust Office of the Trustee will be designated as the Company's
sole Paying Agent for payments with respect to Debt Securities of each series.
Any other Paying Agents initially designated by the Company for the Debt
Securities of a particular series will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the Debt Securities of a
particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed for a period ending the earlier of 10 business days prior to the date
such money would escheat to the State or at the end of two years after such
principal, premium or interest has become due and payable will be repaid in the
Company, and the Holder of such Debt Security thereafter may look only to the
Company for payment thereof. (Section 1003)
RESTRICTIVE COVENANTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to the Senior Debt Securities.
LIMITATIONS ON LIENS
The Senior Indenture will provide that the Company will not issue, incur,
create, assume or guarantee, and will not permit any Restricted Subsidiary (as
defined below) to issue, incur, create, assume or guarantee, any debt for
borrowed money secured by a mortgage, security interest, pledge, lien, charge or
other encumbrance ("mortgages") upon any Principal Property (as defined below)
of the Company or any Restricted Subsidiary or upon any shares of stock or
indebtedness of any Restricted Subsidiary (whether such Principal Property,
shares or indebtedness are now existing or owned or hereafter created or
acquired) without in any such case effectively providing concurrently with the
issuance, incurrence, creation, assumption or guarantee of any such secured
debt, or the grant of a mortgage with respect to any such indebtedness, that the
Senior Debt Securities (together with, if the Company shall so determine, any
other indebtedness of or guarantee by the Company or such Restricted Subsidiary
ranking equally with the Senior Debt Securities) shall be secured equally and
ratably with (or, at the option of the Company, prior to) such secured debt. The
foregoing restriction, however, will not apply to: (a) mortgages on property
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existing at the time of acquisition thereof by the Company or any Subsidiary,
provided that such mortgages were in existence prior to the contemplation of
such acquisition, (b) mortgages on property, shares of stock or indebtedness or
other assets of any corporation existing at the time such corporation becomes a
Restricted Subsidiary, provided that such mortgages are not incurred in
anticipation of such corporation becoming a Restricted Subsidiary; (c) mortgages
on property, shares of stock or indebtedness existing at the time of acquisition
thereof by the Company or a Restricted Subsidiary or mortgages thereon to secure
the payment of all or any part of the purchase price thereof, or mortgages on
property, shares of stock or indebtedness to secure any indebtedness for
borrowed money incurred prior to, at the time of, or within 270 days after, the
latest of the acquisition thereof, or, in the case of property, the completion
of construction, the completion of improvements, or the commencement of
substantial commercial operation of such property for the purpose of financing
all or any part of the purchase price thereof, such construction, or the making
of such improvements; (d) mortgages to secure indebtedness owing to the Company
or to a Restricted Subsidiary; (e) mortgages existing at the date of the Senior
Indenture; (f) mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety to
the Company or a Restricted Subsidiary, provided that such mortgage was not
incurred in anticipation of such merger or consolidation or sale, lease or other
disposition; (g) mortgages in favor of the United States or any State, territory
or possession thereof (or the District of Columbia), or any department, agency,
instrumentality or political subdivision of the United States or any State,
territory or possession thereof (or the District of Columbia), to secure
partial, progress, advance or other payments pursuant to any contract or statute
or to secure any indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of constructing or improving the property
subject to such mortgages; (h) mortgages created in connection with the
acquisition of assets or a project financed with, and created to secure, a
Nonrecourse Obligation (as defined below); and (i) extensions, renewals,
refinancings or replacements of any mortgage referred to in the foregoing
clauses (a), (b), (c), (d), (e), (f), (g), and (h), provided, however, that any
mortgages permitted by any of the foregoing clauses (a), (b), (c), (d), (e),
(f), (g), and (h) shall not extend to or cover any property of the Company or
such Restricted Subsidiary, as the case may be, other than the property, if any,
specified in such clauses and improvements thereto, and provided further that
any refinancing or replacement of any mortgages permitted by the foregoing
clauses (g) and (h) shall be of the type referred to in such clauses (g) or (h),
as the case may be.
Notwithstanding the restrictions described in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to issue, incur, create,
assume or guarantee debt secured by a mortgage which would otherwise be subject
to such restrictions, without equally and ratably securing the Senior Debt
Securities, provided that after giving effect thereto, the aggregate amount of
all debt so secured by mortgages (not including mortgages permitted under
clauses (a) through (i) above) does not exceed 15% of the Consolidated Net
Tangible Assets (as defined below) of the Company as most recently determined on
or prior to such date.
LIMITATIONS ON SALE AND LEASE BACK TRANSACTIONS
The Senior Indenture will provide that the Company will not, nor will it
permit any Restricted Subsidiary to, enter into any Sale and Lease-Back
Transaction (as defined below) with respect to any Principal Property, other
than any such transaction involving a lease for a term of not more than three
years or any such transaction between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries, unless (a) the Company or such Restricted
Subsidiary would be entitled to incur indebtedness secured by a mortgage on the
Principal Property involved in such transaction at least equal in amount to the
Attributable Debt (as defined below) with respect to such Sale and Lease-Back
Transaction, without equally and ratably securing the Senior Debt Securities,
pursuant to the limitation on liens in the Senior Indenture; or (b) the Company
shall apply an amount equal to the greater of the net proceeds of such sale or
the Attributable Debt with respect to such Sale and Lease-Back Transaction
within 180 days of such sale
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to either (or a combination of) the retirement (other than any mandatory
retirement, mandatory prepayment or sinking fund payment or by payment at
maturity) of debt for borrowed money of the Company or a Restricted Subsidiary
that matures more than 12 months after the creation of such indebtedness or the
purchase, construction or development of other comparable property.
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS
The term "Attributable Debt" when used in connection with a Sale and
Lease-Back Transaction involving a Principal Property shall mean, at the time of
determination, the lesser of: (a) the fair value of such property (as determined
in good faith by the Board of Directors of the Company); or (b) the present
value of the total net amount of rent required to be paid under such lease
during the remaining term thereof (including any renewal term or period for
which such lease has been extended), discounted at the rate of interest set
forth or implicit in the terms of such lease or if not practicable to determine
such rate, the weighted average interest rate per annum (in the case of Original
Issue Discount Securities, the imputed interest rate) borne by the Senior Debt
Securities of each series outstanding pursuant to the Indenture compounded
semi-annually. For purposes of the foregoing definition, rent shall not include
amounts required to be paid by the lessee, whether or not designated as rent or
additional rent, on account of or contingent upon maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges. In the case of
any lease which is terminable by the lessee upon the payment of a penalty, such
net amount shall be the lesser of the net amount determined assuming termination
upon the first date such lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated) and the net amount determined assuming no such
termination.
The term "Consolidated Net Tangible Assets" shall mean, as of any particular
time, total assets (excluding applicable reserves and other properly deductible
items) less: (a) total current liabilities, except for (1) notes and loans
payable, (2) current maturities of long-term debt and (3) current maturities of
obligations under capital leases; and (b) goodwill, patents and trademarks, to
the extent included in total assets; all as set forth on the most recent
consolidated balance sheet of the Company and its Restricted Subsidiaries and
computed in accordance with generally accepted accounting principles.
The term "Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned by
the Company or any Restricted Subsidiary or (ii) the financing of a project
involving the development or expansion of properties of the Company or any
Restricted Subsidiary, as to which the obligee with respect to such indebtedness
or obligation has no recourse to the Company or any Restricted Subsidiary or any
assets of the Company or any Restricted Subsidiary other than the assets which
were acquired with the proceeds of such transaction or the project financed with
the proceeds of such transaction (and the proceeds thereof).
The term "Principal Property" shall mean the land, land improvements,
buildings and fixtures (to the extent they constitute real property interests,
including any leasehold interest therein) constituting the principal corporate
office, any manufacturing facility or any distribution center (whether now owned
or hereafter acquired) which: (a) is owned by the Company or any Subsidiary; (b)
is located within any of the present 50 states of the United States (or the
District of Columbia); (c) has not been determined in good faith by the Board of
Directors of the Company not to be materially important to the total business
conducted by the Company and its Subsidiaries taken as a whole; and (d) has a
market value on the date as of which the determination is being made in excess
of 2.0% of Consolidated Net Tangible Assets of the Company as most recently
determined on or prior to such date.
The term "Restricted Subsidiary" shall mean any Subsidiary that owns any
Principal Property; provided, however, that the term "Restricted Subsidiary"
shall not include (a) any Subsidiary which is principally engaged in financing
receivables, or which is principally engaged in financing the Company's
operations outside the United States of America or (b) any Subsidiary less than
80% of the voting stock of
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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 if the common
stock of such Subsidiary is traded on any national securities exchange or quoted
on the Nasdaq National Market or other over-the-counter market.
The term "Sale and Lease-Back Transaction" shall mean any arrangement with
any person providing for the leasing by the Company or any Restricted Subsidiary
of any Principal Property which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such person.
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding voting stock having the power to elect a majority of
the board of directors of such corporation is at the time owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries, and the accounts of which are
consolidated with those of the Company in its most recent consolidated financial
statement in accordance with generally accepted accounting principles. For the
purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with or
merge into any other Person (in a transaction in which the Company is not the
surviving corporation), or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person (a "Successor Person"), unless (i)
the Successor Person (if any) is a corporation, limited liability company,
partnership, trust or other entity organized and existing under the laws of any
domestic jurisdiction and assumes the Company's obligations on the Debt
Securities and under the Indentures, (ii) immediately after giving effect to the
transaction, and treating any indebtedness which becomes an obligation of the
Company or any Subsidiary as a result of the transaction as having been incurred
by it at the time of the transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing and (iii) certain other conditions are met.
(Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indentures with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due,
whether or not such payment is prohibited by the subordination provisions of the
Subordinated Indenture; (b) failure to pay any interest on any Debt Securities
of that series when due, continued for 30 days, whether or not such payment is
prohibited by the subordination provisions of the Subordinated Indenture; (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series, whether or not such deposit is prohibited by the
subordination provisions of the Subordinated Indenture; (d) failure to perform
any other covenant of the Company in the Indentures (other than a covenant
included in the Indentures solely for the benefit of a series other than that
series), continued for 60 days after written notice has been given by the
Trustee, or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series, as provided in the Indentures; (e)
certain events in bankruptcy, insolvency or reorganization with respect to the
Company; and (f) any other Event of Default specified in the applicable
Prospectus Supplement. (Section 501)
The Indentures will provide that, if an Event of Default (other than an
Event of Default described in clause (e) above) with respect to the Debt
Securities of any series at the time Outstanding shall occur and be continuing,
either the Trustee or the Holders of at least 25% in aggregate principal amount
of the Outstanding Securities of that series by notice as provided in the
Indentures may declare the principal amount of the debt securities of that
series (or, in the case of any Debt Security that is an Original Issue Discount
Security or the principal amount of which is not then determinable, such portion
of the principal amount of such Debt Security, or such other amount in lieu of
such principal amount, as may be specified
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in the terms of such Debt Security) to be due and payable immediately. If an
Event of Default described in clause (e) above with respect to the Debt
Securities of any series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified amount)
will automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. Any payment by the Company on the Subordinated Debt
Securities following any such acceleration will be subject to the subordination
provisions of Article Fifteen of the Subordinated Indenture. After any such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal (or other specified amount), have been cured or waived as provided in
the Indentures. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver."
Subject to the provisions of the Indentures relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions of the indemnification of the Trustee, the Holders of
a majority in aggregate principal amount of the Outstanding Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to the Debt Securities of that
series. (Section 512)
No holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures, or for the appointment of a
receiver or trustee, or for any other remedy thereunder, unless (i) such Holder
has previously given to the Trustee written notice of a continuing Event of
Default with respect to the Debt Securities of that series, (ii) the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of that
series have made a written request, and such Holder or Holders have offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee and
(iii) the Trustee has failed to institute such proceeding, and has not received
from the Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series a direction inconsistent with such request, within 60
days after such notice, request and offer. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
the enforcement of payment of the principal of or any premium or interest on
such Debt Security on or after the applicable due date specified in such Debt
Security. (Section 508)
The Indentures will include a covenant requiring the Company to furnish to
the Trustee annually a statement by certain of its officers as to whether or not
the Company, to their knowledge, is in default in the performance or observance
of any of the terms, provisions and conditions of the Indentures and, if so,
specifying all such known defaults. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, (b) reduce the
principal amount of, or any premium or interest on, any Debt Security, (c)
reduce the amount of principal of an Original Issue Discount Security or any
other Debt Security payable upon acceleration of the Maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f) in the
case of Subordinated Debt Securities, modify the subordination provisions in a
manner materially adverse to the Holders of the
15
<PAGE>
Subordinated Debt Securities, (g) reduce the percentage in principal amount of
Outstanding Securities of any series, the consent of whose Holders is required
for modification or amendment of the Indentures, (h) reduce the percentage in
principal amount of Outstanding Securities of any series necessary for waiver of
compliance with certain provisions of the Indentures or for waiver of certain
defaults or (i) modify such provisions with respect to modification and waiver.
(Section 902)
The Indentures will provide that the Holders of a majority in aggregate
principal amount of the Outstanding Securities of any series may waive, on
behalf of the Holders of all Debt Securities of such series, compliance by the
Company with certain restrictive provisions of the Indentures. (Sections 1010
and 1008 of the Senior Indenture and the Subordinated Indenture, respectively).
The Holders of a majority in principal amount of the Outstanding Securities of
any series may waive any past default under the Indentures, except a default in
the payment of principal, premium or interest and certain covenants and
provisions of the Indentures which cannot be amended without the consent of the
Holder of each Outstanding Security of such series affected. (Section 513)
The Indentures will provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken any
direction, notice, consent, waiver or other action under the Indentures as of
any date, (i) the principal amount of an Original Issue Discount Security that
will be deemed to be Outstanding will be the amount of the principal thereof
that would be due and payable as of such date upon acceleration of the Maturity
thereof to such date, (ii) if, as of such date, the principal amount payable at
the Stated Maturity of a Debt Security is not determinable (for example, because
it is based on an Index), the principal amount of such Debt Security deemed to
be Outstanding as of such date will be an amount determined in the manner
prescribed for such Debt Security and (iii) the principal amount of a Debt
Security denominated in one or more foreign currencies or currency units that
will be deemed to be Outstanding will be the U.S. dollar equivalent, determined
as of such date in the manner prescribed for such Debt Security, of the
principal amount of such Debt Security (or, in the case of a Debt Security
described in clause (i) or (ii) above, of the amount described in such clause).
Certain Debt Securities, including those for whose payment or redemption money
has been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1302, will not be deemed to be
Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indentures, in the manner and
subject to the limitations provided in the Indentures. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on the record date. To be effective, such
action must be taken by Holders of the requisite principal amount of such Debt
Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other shorter
period as may be specified by the Company (or the Trustee, if it set the record
date), and may be shortened or lengthened (but not beyond 180 days) from time to
time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, and
subject to such other conditions and limitations as may be set forth in the
applicable Prospectus Supplement, the Company may elect, at its option at any
time, to have the provisions of Section 1302, relating to defeasance and
discharge of indebtedness, or Section 1303, relating to defeasance of certain
restrictive covenants in the Indenture, applied to the Debt Securities of any
series, or to any specified part of a series. (Section 1301)
16
<PAGE>
DEFEASANCE AND DISCHARGE. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Subordinated Debt Securities, the provisions of Article Fifteen of the
Subordinated Indenture relating to subordination will cease to be effective and,
with respect to any Debt Securities, the Company will be discharged from all its
obligations with respect thereto (except for certain obligations to exchange or
register the transfer of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain paying agencies, to hold moneys for payment in
trust and, if applicable, to effect conversions of Debt Securities) upon the
deposit in trust for the benefit of the Holders of such Debt Securities of money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indentures and such Debt Securities. Such
defeasance or discharge may occur only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Company
has received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur. (Sections 1302 and 1304)
DEFEASANCE OF CERTAIN COVENANTS. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and any that
may be described in the applicable Prospectus Supplement, and the occurrence of
certain Events of Default, which are described above in clause (d) (with respect
to such restrictive covenants) under "Events of Default" and any that may be
described in the applicable Prospectus Supplement, will be deemed not to be or
result in an Event of Default, in each case with respect to such Debt
Securities, and, in the case of the Subordinated Indenture, the provisions of
Article Fifteen relating to subordination will cease to be effective with
respect to any Subordinated Debt Securities. The Company, in order to exercise
such option, will be required to deposit, in trust for the benefits of the
Holders of such Debt Securities, money or U.S. Government Obligations, or both,
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indentures and
such Debt Securities. The Company will also be required, among other things, to
deliver to the Trustee an Opinion of Counsel to the effect that Holders of such
Debt Securities will not recognize gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and defeasance were not
to occur. In the event the Company exercised this option with respect to any
Debt Securities and such Debt Securities were declared due and payable because
of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations so deposited in trust would be sufficient to pay amounts
due on such Debt Securities at the time of their respective Stated Maturities
but may not be sufficient to pay amounts due on such Debt Securities upon any
acceleration resulting from such Event of Default, in such case, the Company
would remain liable for such payments. (Sections 1303 and 1304)
The Company may, at its option, satisfy and discharge each of the Indentures
(except for certain obligations of the Company and the Trustee, (including,
among others, the obligations to apply money held in trust) when (i) either (a)
all Debt Securities under such Indenture previously authenticated and delivered
(other than (1) Debt Securities that were destroyed, lost or stolen and that
have been replaced or paid and (2) Debt Securities for the payment of which
money has been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or discharge from such trust) have
been delivered to the Trustee for cancellation or (b) all such Debt Securities
under such Indenture not theretofore delivered to
17
<PAGE>
the Trustee for cancellation (1) have become due and payable, (2) will become
due and payable at their Stated Maturity within one year, or (3) are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name and at
the expense of the Company, and the Company has deposited or caused to be
deposited with the Trustee as trust funds in trust for such purpose an amount
sufficient to pay and discharge the entire indebtedness on such Debt Securities
under such Indenture not previously delivered to the Trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in the
case of Debt Securities under such Indenture which have become due and payable)
or to the Stated Maturity or redemption date as the case may be, (ii) the
Company has paid or caused to be paid all other sums payable under such
Indenture by the Company, and (iii) the Company has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect that all
conditions precedent relating to the satisfaction and discharge of such
Indenture have been satisfied.
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 613) The Trustee is
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Securities of any series
for which the Trustee serves as trustee, the Trustee must eliminate such
conflict or resign. (Section 608)
DESCRIPTION OF CAPITAL STOCK
The Company's Certificate of Incorporation authorizes capital stock
consisting of 30,000,000 shares of Common Stock, $0.001 par value per share, of
which 18,934,609 shares were outstanding as of September 30, 1997, and 5,000,000
shares of preferred stock, $0.001 par value per share, none of which is
outstanding. The following summary is qualified in its entirety by reference to
the Company's Amended and Restated Certificate of Incorporation and Bylaws.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders, including the election of
directors, and are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The Company's Amended and Restated Certificate of
Incorporation does not provide for cumulative voting with respect to the
election of directors. As a result, the holders of a majority of the shares
voting in the election of directors can elect all of the directors then standing
for election. In the event of liquidation
18
<PAGE>
or dissolution of the Company, the holders of Common Stock are entitled to
receive all assets available for distribution to the stockholders, subject to
any preferential rights of any preferred stock then outstanding. The holders of
Common Stock have no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to the
Common Stock. All outstanding shares of Common Stock are fully paid and
nonassessable.
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of "blank check"
preferred stock that may be issued from time to time in one or more series upon
authorization by the Company's Board of Directors. The Board of Directors,
without further approval of the stockholders, is authorized to fix the dividend
rights and terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of preferred stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company, discourage bids for the Company's Common Stock at a premium or
otherwise adversely affect the market price of the Common Stock. The Company has
no current plans to issue any preferred stock.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors
and may indemnify its officers and employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. The Company's Bylaws also permit it to secure insurance on
behalf of any officer, director, employee or other agent for any liability
arising out of his actions in such capacity, regardless of whether the Bylaws
would permit indemnification.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the Company's
Bylaws and Amended and Restated Certificate of Incorporation. These agreements,
among other things, indemnify the Company's directors and executive officers for
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts incurred by any such person in any action or proceeding, including any
action by or in the right of the Company, arising out of such person's services
as a director or executive officer of the Company, any subsidiary of the Company
or any other company or enterprise to which the person provides services at the
request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
19
<PAGE>
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a publicly held
Delaware corporation from engaging in a "business combination" transaction with
any "interested stockholder" for a period of three years after the date of the
transaction in which the person became an "interested stockholder," unless the
business combination is approved in a prescribed manner. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of a corporation's
voting stock. By virtue of the Company's decision not to elect out of the
statute's provisions, the statute applies to the Company. The statute could
prohibit or delay the accomplishment of mergers or other takeover or change in
control attempts with respect to the Company and, accordingly, may discourage
attempts to acquire the Company.
Stockholders who are officers and directors or their affiliates may be able
to significantly influence the election of the Company's directors and the
determination of the outcome of corporate actions requiring stockholder
approval, such as mergers and acquisitions. This may have a significant effect
in delaying, deferring or preventing a change in control of the Company and may
adversely affect the voting and other rights of other holders of Common Stock.
Certain provisions of the Company's Certificate of Incorporation, Bylaws and
equity compensation plans and Delaware law may also discourage certain
transactions involving a change in control of the Company. This may, when
combined with the Company's classified Board of Directors and the ability of the
Board of Directors to issue blank check Preferred Stock without further
stockholder approval, have the effect of delaying, deferring or preventing a
change in control of the Company and may adversely affect the voting and other
rights of other holders of Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C. Its telephone number is (415) 743-1424.
PLAN OF DISTRIBUTION
The Company may sell the Securities separately or together, (i) to one or
more underwriters or dealers for public offering and sale by them and (ii) to
investors directly or through agents. The distribution of the Securities may be
effected from time to time in one or more transactions at a fixed price or
prices (which may be changed from time to time), at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Each Prospectus Supplement will describe the method of
distribution of the Securities offered thereby.
In connection with the sale of the Securities, underwriters, dealers or
agents may receive compensation from the Company or from purchasers of the
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents which
participate in the distribution of the Securities may be deemed to be
underwriters under the Securities Act and any discounts or commissions received
by them and any profit on the resale of the Securities received by them may be
deemed to be underwriting discounts and commissions thereunder. Any such
underwriter, dealer or agent will be identified and any such compensation
received from the Company will be described in the Prospectus Supplement. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Under agreements that may be entered into with the Company, underwriters,
dealers and agents may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters, dealers or agents
may be required to make in respect thereof.
20
<PAGE>
The Company may grant underwriters who participate in the distribution of
Securities an option to purchase additional Securities to cover over-allotments,
if any.
All Debt Securities will be new issues of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any Debt Securities.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with or perform services for the Company in the
ordinary course of business.
LEGAL OPINIONS
The validity of the Securities is being passed upon for the Company by
Brobeck, Phleger & Harrison LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Cygnus Inc. incorporated by
reference in the Cygnus, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report, given on the
authority of such firm as experts in accounting and auditing.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses incurred in connection with the issuance and distribution of
the securities being registered will be paid by the Registrant. The following is
an itemized statement of these expenses. All amounts are estimates except the
Securities and Exchange Commission registration fee and the Nasdaq listing fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee...................................................... $ 27,273
Nasdaq listing fee........................................................ 17,500
Printing and engraving.................................................... 100,000
Legal fees and expenses of the Registrant................................. 150,000
Trustee's fees and expenses............................................... 19,500
Accounting fees and expenses.............................................. 75,000
Transfer agent and registrar fees and expenses............................ 10,000
Miscellaneous............................................................. 5,727
---------
Total................................................................. $ 405,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Section 145")
authorizes a court to award or a corporation's Board of Directors to grant
indemnification to directors and officers in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
Registrant's Certificate of Incorporation and Bylaws provide for mandatory
indemnification by the Registrant of all persons the Registrant may indemnify
under Section 145 to the maximum extent permitted by the Delaware General
Corporation Law. The Registrant's Certificate of Incorporation further provides
that the liability of its directors is eliminated to the fullest extent
permitted by the Delaware General Corporation Law. These provisions in the
Certificate of Incorporation do not eliminate the directors' fiduciary duty, and
in appropriate circumstances equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Registrant has entered into
indemnification agreements with all of its officers and directors.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------
1.1 Form of Underwriting Agreement (Common
Stock)
1.2 Form of Underwriting Agreement (Debt
Securities)
4.1 Form of Senior Indenture
4.2 Form of Subordinated Indenture
4.3 Form of Senior Debt Security (included
in Exhibit 4.1)
4.4 Form of Subordinated Debt Security
(included in Exhibit 4.2)
5.1 Opinion of Brobeck, Phleger & Harrison
LLP
12.1 Statement as to Computation of Ratio of
Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP,
independent auditors
23.2 Consent of Brobeck, Phleger & Harrison
LLP (included in Exhibit 5.1).
*24.1 Powers of Attorney.
25.1 Statement of Eligibility and
Qualification under the Trust Indenture
Act of 1939 of Trustee (Form T-1).
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time to be the initial
BONA FIDE offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
II-2
<PAGE>
securities being registered hereunder, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement for the securities offered in the
registration statement, and that offering of the securities at that time as
the initial bona fide offering of those securities.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-3
<PAGE>
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 authorized this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in Redwood
City, California, on this 12th day of November, 1997.
<TABLE>
<S> <C> <C>
CYGNUS, INC.
By: /s/ GREGORY B. LAWLESS
-----------------------------------------
Gregory B. Lawless, Ph.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment has been signed by the persons whose signatures appear below, which
persons have signed such Registration Statement in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------- ---------------------------------------- ------------------
<C> <C> <S> <C>
*
-------------------------------------- Chairman of the Board of Directors and November 12, 1997
Gary W. Cleary, Ph.D. Chief Technical Officer
/s/ GREGORY B. LAWLESS President, Chief Executive Officer
-------------------------------------- (Principal Executive Officer) and November 12, 1997
Gregory B. Lawless, Ph.D. Director
* Chief Financial Officer (and Principal
-------------------------------------- Accounting Officer); President, Cygnus November 12, 1997
John C. Hodgman Diagnostics
*
-------------------------------------- Senior Vice President, Human Resources November 12, 1997
James Grady, Jr., Ph.D. (and Secretary)
*
-------------------------------------- Director November 12, 1997
Frank T. Cary
*
-------------------------------------- Director November 12, 1997
Andre F. Marion
*
-------------------------------------- Director November 12, 1997
Richard G. Rogers
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------- ---------------------------------------- ------------------
<C> <C> <S> <C>
*
-------------------------------------- Director November 12, 1997
Walter B. Wriston
*By: /s/ GREGORY B. LAWLESS Attorney-in-Fact November 12, 1997
---------------------------------
Gregory B. Lawless, Ph.D.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<C> <S> <C>
EXHIBIT NO. DESCRIPTION PAGE PAGE
- ----------- ---------------------------------------- ----
1.1 Form of Underwriting Agreement (Common
Stock)
1.2 Form of Underwriting Agreement (Debt
Securities)
4.1 Form of Senior Indenture
4.2 Form of Subordinated Indenture
4.3 Form of Senior Debt Security (included
in Exhibit 4.1)
4.4 Form of Subordinated Debt Security
(included in Exhibit 4.2)
5.1 Opinion of Brobeck, Phleger & Harrison
LLP
12.1 Statement as to Computation of Ratio of
Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP,
independent auditors
23.2 Consent of Brobeck, Phleger & Harrison
LLP (included in Exhibit 5.1).
*24.1 Powers of Attorney.
25.1 Statement of Eligibility and
Qualification under the Trust
Indenture Act of 1939 of Trustee (Form
T-1).
</TABLE>
- ------------------------
* Previously filed.
II-6
<PAGE>
Exhibit 1.1
CYGNUS, INC.
Common Stock
UNDERWRITING AGREEMENT
[DATE]
The Representatives of the
several Underwriters listed on
Schedule I hereto
Ladies and Gentlemen:
Cygnus, Inc., a Delaware corporation (the "Company"),
proposes to sell an aggregate of _______ shares (the "Firm Shares") of the
Company's Common Stock, $____ par value per share (the "Common Stock"), to
you and to the other underwriters named in Schedule I (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
______ shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b). The Firm Shares and the Option Shares
are hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares
and the purchase price per share for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company and the Representatives,
acting on behalf of the several Underwriters, and such agreement shall be set
forth in a separate written instrument substantially in the form of Exhibit A
hereto (the "Price Determination Agreement"). The Price Determination
Agreement may take the form of an exchange of any standard form of written
telecommunication among the Company and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The
offering of the Shares will be governed by this Agreement, as supplemented by
the Price Determination Agreement. From and after the date of the execution
and delivery of the Price Determination Agreement, this Agreement shall be
deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein to "this Agreement" and to the phrase "herein"
shall be deemed to include the Price Determination Agreement.
<PAGE>
2
The Company confirms as follows its agreements with the
Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all
the terms and conditions of this Agreement, the Company agrees to sell to
each Underwriter named below, and each Underwriter, severally and not
jointly, agrees to purchase from the Company at the purchase price per share
for the Firm Shares to be agreed upon by the Representatives and the Company
in accordance with Section 1(c) or 1(d) hereof and set forth in the Price
Determination Agreement, the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I, plus such additional number of Firm
Shares which such Underwriter may become obligated to purchase pursuant to
Section 8 hereof. Schedule I may be attached to the Price Determination
Agreement.
(b) Subject to all the terms and conditions of
this Agreement, the Company grants the Option to the several Underwriters to
purchase, severally and not jointly, up to ___ Option Shares from the Company
at the same price per share as the Underwriters shall pay for the Firm
Shares. The Option may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time (but not more than once) on or before the 45th day after the
date of this Agreement (or, if the Company has elected to rely on Rule 430A,
on or before the 45th day after the date of the Price Determination
Agreement), upon written or telegraphic notice (the "Option Shares Notice")
by the Representatives to the Company no later than 12:00 noon, New York City
time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date")
setting forth the aggregate number of Option Shares to be purchased and the
time and date for such purchase. On the Option Closing Date, the Company
will issue and sell to the Underwriters the number of Option Shares set forth
in the Option Shares Notice, and each Underwriter will purchase such
percentage of the Option Shares as is equal to the percentage of Firm Shares
that such Underwriter is purchasing, as adjusted by the Representatives in
such manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share
for the Firm Shares and the purchase price per share for the Firm Shares to
be paid by the several Underwriters shall be agreed upon and set forth in the
Price Determination Agreement, if the Company has elected to rely on Rule
430A. In the event such price has not been agreed upon and the Price
Determination Agreement has not been executed by the close of business on the
fourteenth business day following the date on which the Registration
Statement (as hereinafter defined) becomes effective, this Agreement shall
terminate forthwith, without liability of any party to any other party except
that Section 6 shall remain in effect.
<PAGE>
3
(d) If the Company has elected not to rely on
Rule 430A, the initial public offering price per share for the Firm Shares
and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement, which shall be dated the date hereof, and an
amendment to the Registration Statement containing such per share price
information shall be filed before the Registration Statement becomes
effective.
2. Delivery and Payment. Delivery of the Firm Shares
shall be made to the Representatives for the accounts of the Underwriters at
the office of ______________________, against payment of the purchase price
by {Federal Reserve Funds check payable in immediately available funds to the
order of the Company} {by wire transfer of Federal Funds or similar same day
funds to an account designated in writing by the Company to ___________ at
least one business day prior to the Closing Date (as hereinafter defined)}.
Such payment shall be made at 10:00 a.m., New York City time, on the third
business day (or fourth business day, if the Price Determination Agreement is
executed after 4:30 p.m.) after the date on which the first bona fide
offering of the Shares to the public is made by the Underwriters or at such
time on such other date, not later than ten business days after such date, as
may be agreed upon by the Company and the Representatives (such date is
hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the
Option Shares against payment by the Underwriters (in the manner specified
above) will take place at the offices specified above for the Closing Date at
the time and date (which may be the Closing Date) specified in the Option
Shares Notice.
{Certificates evidencing the Shares shall be in definitive
form and shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.}
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder of the
Shares harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying Federal and state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance or sale to such Underwriter of the Firm
Shares and Option Shares.
3. Representations and Warranties of the Company. The
Company represents, warrants and covenants to each Underwriter that:
<PAGE>
4
(a) The Company meets the requirements for use
of Form S-3 and registration statement (Registration No. ) on Form S-3
relating to the Shares, including a preliminary prospectus and such
amendments to such registration statement as may have been required to the
date of this Agreement, has been prepared by the Company under the provisions
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder for the
offering of the Shares from time to time in accordance with Rule 415 of the
Rules and Regulations, and has been filed with the Commission. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and
Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the
time it becomes or became effective (the "Effective Date"), including
financial statements and all exhibits and any information deemed to be
included by Rule 430A or Rule 434 of the Rules and Regulations. If the
Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules and Regulations for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to include the Rule 462 Registration Statement, as amended
from time to time. A prospectus supplement relating to the Shares, the terms
of the offering thereof and the other matters set forth therein has been
prepared and will be filed pursuant to Rule 424 of the Rules and Regulations.
Such prospectus supplement, in the form first filed after the date hereof
pursuant to Rule 424, is herein referred to as the "Prospectus Supplement".
The term "Prospectus" means the form of final prospectus included in the
Registration Statement at the Effective Date as supplemented by the
Prospectus Supplement; provided that if the Prospectus is amended or
supplemented on or after the date hereof by prior to the date on which the
Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Prospectus as so amended or supplemented and
as supplemented by the Prospectus Supplement. Any reference herein to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on or before the
Effective Date or the date of such preliminary prospectus or the Prospectus,
as the case may be. Any reference herein to the terms "amend," "amendment"
or "supplement" with respect to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include the
filing of any document under the Exchange Act after the Effective Date, or
the date of any preliminary prospectus or the Prospectus, as the case may be,
and deemed to be incorporated therein by reference.
(b) On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b), at all
times subsequent to and including the Closing Date and, if later, the Option
Closing Date and when any post-effective amendment to the
<PAGE>
5
Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission, the Registration Statement and
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement thereto), including the
financial statements included or incorporated by reference in the Prospectus,
did or will comply with all applicable provisions of the Act, the Exchange
Act, the rules and regulations thereunder (the "Exchange Act Rules and
Regulations") and the Rules and Regulations and will contain all statements
required to be stated therein in accordance with the Act, the Exchange Act,
the Exchange Act Rules and Regulations and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any
such amendment did or will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date,
the date the Prospectus or any amendment or supplement to the Prospectus is
filed with the Commission and at the Closing Date and, if later, the Option
Closing Date, the Prospectus did not or will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company
by the Representatives specifically for inclusion in the Registration
Statement or Prospectus or any amendment or supplement thereto. For all
purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. The Company has not distributed
any offering material in connection with the offering or sale of the Shares
other than the Registration Statement, the preliminary prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(c) The documents which are incorporated by
reference in the preliminary prospectus and the Prospectus or from which
information is so incorporated by reference, when they become effective or
were filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Act or the Exchange Act, as applicable,
the Exchange Act Rules and Regulations and the Rules and Regulations; and any
documents so filed and incorporated by reference subsequent to the Effective
Date shall, when they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange Act, as
applicable, the Exchange Act Rules and Regulations and the Rules and
Regulations.
(d) The only subsidiaries (as defined in the
Rules and Regulations) of the Company are the subsidiaries listed on Exhibit
21 to the Registration Statement (the "Subsidiaries"). The Company and each
of its Subsidiaries is, and at the Closing Date will be, a corporation duly
organized, validly existing and in good standing under the laws of its
<PAGE>
6
jurisdiction of incorporation. The Company and each of its Subsidiaries has,
and at the Closing Date will have, full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is,
and at the Closing Date will be, duly licensed or qualified to do business
and in good standing as a foreign corporation in all jurisdictions in which
the nature of the activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification necessary. All
of the outstanding shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company free and clear of all liens, encumbrances and claims
whatsoever. Except for the stock of the Subsidiaries and as disclosed in the
Registration Statement, the Company does not own, and at the Closing Date
will not own, directly or indirectly, any shares of stock or any other equity
or long-term debt securities of any corporation or have any equity interest
in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificate of incorporation and of the
by-laws of the Company and each of its Subsidiaries and all amendments
thereto have been delivered to the Representatives, and no changes therein
will be made subsequent to the date hereof and prior to the Closing Date or,
if later, the Option Closing Date.
(e) The outstanding shares of Common Stock have
been, and the Shares to be issued and sold by the Company upon such issuance
will be, duly authorized, validly issued, fully paid and nonassessable and
will not be subject to any preemptive or similar right. The description of
the Common Stock in the Registration Statement and the Prospectus is, and at
the Closing Date will be, complete and accurate in all respects. Except as
set forth in the Prospectus, the Company does not have outstanding, and at
the Closing Date will not have outstanding, any options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
convertible into, or any contracts or commitments to issue or sell, any
shares of Common Stock, any shares of capital stock of any Subsidiary or any
such warrants, convertible securities or obligations.
(f) The financial statements and schedules
included or incorporated by reference in the Registration Statement or the
Prospectus present fairly the consolidated financial condition of the Company
as of the respective dates thereof and the consolidated results of operations
and cash flows of the Company for the respective periods covered thereby, all
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The pro forma financial statements and other
pro forma financial information included in the Registration Statement or the
Prospectus (i) present fairly in all material respects the information shown
therein, (ii) have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and (iii) have
been properly computed on the bases described therein. The assumptions used
in the preparation of the pro forma financial statements and other pro forma
financial information included in the Registration Statement or the
Prospectus are reasonable and the adjustments
<PAGE>
7
used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or
schedules of the Company are required by the Act, the Exchange Act or the
Rules and Regulations to be included in the Registration Statement or the
Prospectus. Ernst & Young, LLP (the "Accountants"), who have reported on
such financial statements and schedules, are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations.
The statements included in the Registration Statement with respect to the
Accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
(g) The Company maintains a system of internal
accountings control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(h) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus
and prior to the Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (i) there has not been and will
not have been any change in the capitalization of the Company, or in the
business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, arising for any
reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class of its
capital stock.
(i) The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended.
(j) Except as set forth in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding might materially and
adversely affect the Company or any of its Subsidiaries or its business,
properties, business prospects, condition (financial or otherwise) or results
of operations.
<PAGE>
8
(k) The Company and each of its Subsidiaries
has, and at the Closing Date will have, (i) all governmental licenses,
permits, consents, orders, approvals and other authorizations necessary to
carry on its business as contemplated in the Prospectus, (ii) complied in all
respects with all laws, regulations and orders applicable to it or its
business and (iii) performed all its obligations required to be performed by
it, and is not, and at the Closing Date will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected. To the best knowledge
of the Company and each of its Subsidiaries, no other party under any
contract or other agreement to which it is a party is in default in any
respect thereunder. Neither the Company nor any of its Subsidiaries is, nor
at the Closing Date will any of them be, in violation of any provision of its
certificate of incorporation or by-laws.
(l) No consent, approval, authorization or
order of, or any filing or declaration with, any court or governmental agency
or body is required in connection with the authorization, issuance, transfer,
sale or delivery of the Shares by the Company, in connection with the
execution, delivery and performance of this Agreement by the Company or in
connection with the taking by the Company of any action contemplated hereby,
except such as have been obtained under the Act or the Rules and Regulations
and such as may be required under state securities or Blue Sky laws or the
by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares.
(m) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of
the net proceeds from the offering and sale of the Shares in the manner set
forth in the Prospectus under "Use of Proceeds" will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right
to terminate any of its obligations under, or result in the acceleration of
any obligation under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, any contract or other agreement to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or any of its properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order, statute, rule
or regulation of any court or other governmental agency or body applicable to
the business or properties of the Company or any of its Subsidiaries.
(n) The Company and each of its Subsidiaries
has good and
<PAGE>
9
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company and
each of its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such exceptions
as are not material and do not materially interfere with the use made and
proposed to be made of such properties by the Company and such Subsidiaries.
(o) There is no document or contract of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required. All such contracts to which the
Company or any Subsidiary is a party have been duly authorized, executed and
delivered by the Company or such Subsidiary, constitute valid and binding
agreements of the Company or such Subsidiary and are enforceable against the
Company or such Subsidiary in accordance with the terms thereof.
(p) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representatives
was or will be, when made, inaccurate, untrue or incorrect.
(q) Neither the Company nor any of its
directors, officers or controlling persons has taken, directly or indirectly,
any action intended, or which might reasonably be expected, to cause or
result, under the Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(r) No holder of securities of the Company has
rights to the registration of any securities of the Company because of the
filing of the Registration Statement.
(s) Prior to the Closing Date, the Shares will
be approved for quotation on the Nasdaq National Market.
(t) The Company and its Subsidiaries are in
compliance with all federal, state and local employment and labor laws,
including, but not limited to, laws relating to non-discrimination in hiring,
promotion and pay of employees; no labor dispute with the employees of the
Company or any Subsidiary exists or, to the knowledge of the Company, is
imminent or threatened; and the Company is not aware of any existing,
imminent or threatened labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could result in a
material adverse effect on the condition (financial or otherwise) or on the
earnings, business, properties, business prospects or operations of the
Company and its Subsidiaries, taken as a whole.
<PAGE>
10
(u) The Company and its Subsidiaries own, or
are licensed or otherwise have the full exclusive right to use, the material
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, services marks
and trade names (collectively, "patent and proprietary rights") presently
employed by them or which are necessary in connection with the conduct of the
business now operated by them, and neither the Company nor any of its
Subsidiaries has received any written notice or otherwise has actual
knowledge of any infringement of or conflict with asserted rights of others
or any other claims with respect to any patent or proprietary rights, or of
any basis for rendering any patent and proprietary rights invalid or
inadequate to protect the interest of the Company or any of its Subsidiaries.
(v) Neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any employee or agent of the
Company or any Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus.
(w) The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate result in a material
adverse effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company and its
Subsidiaries, taken as a whole. The term "Hazardous Material" means (A) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (B) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous, or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other Environmental Law.
(x) In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its Subsidiaries, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating
<PAGE>
11
activities and any potential liabilities to third parties). Except as set
forth in the Registration Statement and the Prospectus there are no costs and
liabilities associated with or arising in connection with Environmental Laws
as currently in effect (including, without limitation, costs of compliance
therewith) which would, singly or in the aggregate have a material adverse
effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company and its
Subsidiaries, taken as a whole.
(y) The Company maintains insurance with
respect to its properties and business of the types and in amounts generally
deemed adequate for its business and consistent with insurance coverage
maintained by similar companies and businesses, all of which insurance is in
full force and effect.
(z) The Company has filed all material federal,
state and foreign income and franchise tax returns and has paid all taxes
shown as due thereon, other than taxes which are being contested in good
faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles ("GAAP"); and the Company has
no knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company. There are no tax returns of the Company or
any of its Subsidiaries that are currently being audited by state, local or
federal taxing authorities or agencies (and with respect to which the Company
or any Subsidiary has received notice), where the findings of such audit, if
adversely determined, would result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiaries, taken
as a whole.
(aa) With respect to each employee benefit plan,
program and arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) maintained or contributed to by the
Company, or with respect to which the Company could incur any liability under
ERISA (collectively, the "Benefit Plans"), no event has occurred and, to the
best knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company could be subject to any
liability under the terms of such Benefit Plan, applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended)
or any applicable agreement that could materially adversely affect the
business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a
whole.
4. Agreements of the Company. The Company agrees with
the several Underwriters as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an
Underwriter or dealer, file any amendment or
<PAGE>
12
supplement to the Registration Statement or the Prospectus, unless a copy
thereof shall first have been submitted to the Representatives within a
reasonable period of time prior to the filing thereof and the Representatives
shall not have objected thereto in good faith.
(b) The Company will use its best efforts to
cause the Registration Statement to become effective, and will notify the
Representatives promptly, and will confirm such advice in writing, (1) when
the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (4) of
the happening of any event during the period mentioned in the second sentence
of Section 4(e) that in the judgment of the Company makes any statement made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in
order to make the statements therein, in light of the circumstances in which
they are made, not misleading and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Company, the Registration Statement, any
preliminary prospectus or the Prospectus. If at any time the Commission
shall issue any order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. The Company will
use its best efforts to comply with the provisions of and make all requisite
filings with the Commission pursuant to Rule 430A and to notify the
Representatives promptly of all such filings.
(c) The Company will furnish to the
Representatives, without charge, two signed copies of the Registration
Statement and of any post-effective amendment thereto, including financial
statements and schedules, and all exhibits thereto (including any document
filed under the Exchange Act and deemed to be incorporated by reference into
the Prospectus), and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the
provisions of any undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from
time to time, the Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement
thereto as the Representatives may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by the
several Underwriters and by all dealers to whom the Shares may be sold, both
in connection with the offering or sale of the Shares and for any period of
time thereafter during which the Prospectus is required by law to be
delivered in connection
<PAGE>
13
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of the Underwriters, without
charge, such number of copies thereof as the Representatives may reasonably
request. The Company shall not file any document under the Exchange Act
before the termination of the offering of the Shares by the Underwriters if
such document would be deemed to be incorporated by reference into the
Prospectus which is not approved by the Representatives after reasonable
notice thereof.
(f) Prior to any public offering of the Shares
by the Underwriters, the Company will cooperate with the Representatives and
counsel to the Underwriters in connection with the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Representatives may request; provided,
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action which
would subject it to general service of process in any jurisdiction where it
is not now so subject.
(g) The Company will make generally available
to holders of its securities as soon as may be practicable but in no event
later than the last day of the fifteenth full calendar month following the
calendar quarter in which the Effective Date falls, an earnings statement
(which need not be audited but shall be in reasonable detail) for a period of
12 months ended commencing after the Effective Date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the Rules and
Regulations).
(h) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is
terminated, the Company will pay, or reimburse if paid by the
Representatives, all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited to
costs and expenses of or relating to (1) the preparation, printing and filing
of the Registration Statement and exhibits to it, each preliminary
prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (2) the preparation and delivery of
certificates representing the Shares, (3) the word processing, printing and
reproduction of this Agreement, the Agreement Among Underwriters, any Dealer
Agreements and any Underwriters' Questionnaire, (4) furnishing (including
costs of shipping, mailing and courier) such copies of the Registration
Statement, the Prospectus and any preliminary prospectus, and all amendments
and supplements thereto, as may be requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold, (5) the approval of the Shares for quotation on the
Nasdaq National Market, (6) any filings required to be made by the
Underwriters with the NASD, and the fees, disbursements and other charges of
counsel for the Underwriters in connection therewith, (7) the registration
<PAGE>
14
or qualification of the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions designated pursuant to Section 4(f),
including the fees, disbursements and other charges of counsel to the
Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (8) counsel to the
Company, (9) the transfer agent for the Shares and (10) the Accountants.
(i) If this Agreement shall be terminated by
the Company pursuant to any of the provisions hereof (otherwise than pursuant
to Section 8) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters
for all out-of-pocket expenses (including the fees, disbursements and other
charges of counsel to the Underwriters) reasonably incurred by them in
connection herewith.
(j) The Company will not at any time, directly
or indirectly, take any action intended, or which might reasonably be
expected, to cause or result in, or which will constitute, stabilization of
the price of the shares of Common Stock to facilitate the sale or resale of
any of the Shares.
(k) The Company will apply the net proceeds
from the offering and sale of the Shares to be sold by the Company in the
manner set forth in the Prospectus under "Use of Proceeds".
(l) During the period of [180] days commencing
at the Closing Date, the Company will not, without the prior written consent
of PaineWebber Incorporated, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any Common Stock
or securities convertible into Common Stock, other than to the Underwriters
pursuant to this Agreement and other than pursuant to employee benefit plans,
provided, that the Company will not grant options to purchase shares of
Common Stock pursuant to such employee benefit plans at a price less than the
initial public offering price.]
(m) The Company will not, and will cause each
of its executive officers, directors and each beneficial owner of more than
5% of the outstanding shares of Common Stock to enter into agreements with
the Representatives in the form set forth in Exhibit B to the effect that
they will not, for a period of [90] days after the commencement of the public
offering of the Shares, without the prior written consent of __________,
directly or indirectly sell, contract to sell, grant an option for the sale
of or otherwise dispose of any shares of Common Stock or Securities
convertible into Common Stock (other than to the Underwriting pursuant to
this Agreement and pursuant to employee benefit plans provided that the
Company will not grant option to purchase shares of Common Stock pursuant to
such Employee Benefit Plans at a price less than the initial public offering
price).
5. Conditions of the Obligations of the Underwriters.
In addition to the execution and delivery of the Price Determination
Agreement, the obligations of each
<PAGE>
15
Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration
Statement has become effective shall be received by the Representatives not
later than 5:00 p.m., New York City time, on the date of this Agreement or at
such later date and time as shall be consented to in writing by the
Representatives and all filings required by Rule 424 of the Rules and
Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the
Commission, (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of the
Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Representatives and the Representatives did not object
thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed
by the Chief Executive Officer or the Chairman of the Board of Directors of
the Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief),
to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been, and no development shall have occurred which could
reasonably be expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii)
neither the Company nor any of its Subsidiaries shall have sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the initial public offering
price.
(d) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the
Company or any of its Subsidiaries or any of their respective
<PAGE>
16
officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
(e) Each of the representations and warranties
of the Company contained herein shall be true and correct in all material
respects at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and all
conditions herein contained to be fulfilled or complied with by the Company
at or prior to the Closing Date and, with respect to the Option Shares, at or
prior to the Option Closing Date, shall have been duly performed, fulfilled
or complied with.
(f) The Representatives shall have received an
opinion, dated the Closing Date and, with respect to the Option Shares, the
Option Closing Date, and satisfactory in form and substance to counsel for
the Underwriters, from (i) ____________________, counsel to the Company, to
the effect set forth in Exhibit C and (ii) __________, patent and regulatory
counsel for the Company, to the effect set forth in Exhibit D.
(g) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, from
_____________________, counsel to the Underwriters, with respect to the
Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the
Accountants shall have furnished to the Representatives a letter, dated the
date of its delivery, addressed to the Representatives and in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants with respect to the Company as required by the Act
and the Rules and Regulations and with respect to the financial and other
statistical and numerical information contained in the Registration Statement
or incorporated by reference therein. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished
to the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth
in the letter from the Accountants, that nothing has come to their attention
during the period from the date of the letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior to
the Closing Date and the Option Closing Date which would require any change
in their letter dated the date of the Prospectus, if it were required to be
dated and delivered at the Closing Date and the Option Closing Date.
<PAGE>
17
(i) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial Officer
of the Company, in form and substance satisfactory to the Representatives, to
the effect that:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus
(including any documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus) and (A) as of the
date of such certificate, such documents are true and correct in all
material respects and do not omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not untrue or misleading and (B) since the Effective Date,
no event has occurred as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein
not untrue or misleading in any material respect and there has been no
document required to be filed under the Exchange Act and the Exchange
Act Rules and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so
filed;
(ii) Each of the representations and
warranties of the Company contained in this Agreement were, when
originally made, and are, at the time such certificate is delivered,
true and correct in all material respects;
(iii) Each of the covenants required
herein to be performed by the Company on or prior to the delivery of
such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or
prior to the date of such certificate has been duly, timely and fully
complied with; and
(iv) Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, (A) there has not been, and no development has occurred
which could reasonably be expected to result in, a material adverse
change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by
the Registration Statement and the Prospectus and (B) neither the
Company nor any of its Subsidiaries has sustained any material loss
or interference with its business or properties from fire, explosion,
flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration
Statement and the Prospectus,
<PAGE>
18
and such other matter as the Representatives may reasonably request.
(j) On or prior to the Closing Date, the
Representatives shall have received the executed agreements referred to in
Section 4(n).
(k) The Shares shall be qualified for sale in
such states as the Representatives may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall
have been approved for quotation on the Nasdaq National Market.
(m) The National Association of Securities
Dealers, Inc. shall have approved the underwriting terms and arrangements and
such approval shall not have been withdrawn or limited.
(n) The Company shall have furnished to the
Representatives such certificates, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested as to
the accuracy and completeness at the Closing Date and the Option Closing Date
of any statement in the Registration Statement or the Prospectus or any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company
herein, as to the performance by the Company of its obligations hereunder, or
as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person, if any, who controls each Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, liabilities, expenses and
damages (including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of
the indemnified parties and any indemnifying parties or between any
indemnified party and any third party, or otherwise, or any claim asserted),
as and when incurred, to which any Underwriter, or any such person, may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or
the Prospectus
<PAGE>
19
or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the Securities Laws thereof
or filed with the Commission, (ii) the omission or alleged omission to state
in such document a material fact required to be stated in it or necessary to
make the statements in it not misleading or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim,
liability, expense or damage arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable under
this clause (iii) to the extent it is finally judicially determined by a
court of competent jurisdiction that such loss, claim, liability, expense or
damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such underwriter through its gross negligence or
willful misconduct); provided that the Company will not be liable to the
extent that such loss, claim, liability, expense or damage arises from the
sale of the Shares in the public offering to any person by an Underwriter and
is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to
any Underwriter furnished in writing to the Company by the Representatives on
behalf of any Underwriter expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that the Company might
otherwise have.
(b) Each Underwriter will indemnify and hold
harmless the Company, each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing
to the Company by the Representatives on behalf of such Underwriter expressly
for use in the Registration Statement, the Preliminary Prospectus or the
Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no case shall
any Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by such Underwriter.
(b) Any party that proposes to assert the right
to be indemnified under this Section 6 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim
is to be made against an indemnifying party or parties under this Section 6,
notify each such indemnifying party of the commencement of such action,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified
<PAGE>
20
party under the foregoing provisions of this Section 6 unless, and only to
the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from
the indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection
with the defense. The indemnified party will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it
or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf
of the indemnified party) or (4) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of
which cases the reasonable fees, disbursements and other charges of counsel
will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time
for all such indemnified party or parties. All such fees, disbursements and
other charges will be reimbursed by the indemnifying party promptly as they
are incurred. An indemnifying party will not be liable for any settlement of
any action or claim effected without its written consent (which consent will
not be unreasonably withheld). No indemnifying party shall, without the
prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated by this Section 6
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding. Notwithstanding any other provision of this
Section 6 [(b)], if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such
<PAGE>
21
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(c) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
the foregoing paragraphs of this Section 6 is applicable in accordance with
its terms but for any reason is held to be unavailable from the Company or
the Underwriters, the Company and the Underwriters will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be
liable for contribution) to which the Company and any one or more of the
Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one
hand, and the Underwriters, on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage,
or action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or the Representatives on
behalf of the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 6(c) were
to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, liability, expense or damage, or action in respect thereof,
referred to above in this Section 6(c) shall be deemed to include, for
purpose of this Section 6(c), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 6(c),
no Underwriter shall be required to contribute any amount in excess of the
underwriting
<PAGE>
22
discounts and commissions received by it and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(c) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(c),
any person who controls a party to this Agreement within the meaning of the
Act will have the same rights to contribution as that party, and each officer
of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim
for contribution may be made under this Section 6(c), will notify any such
party or parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 6
(d). Except for a settlement entered into pursuant to the last sentence of
Section 6 (c) hereof, no party will be liable for contribution with respect
to any action or claim settled without its written consent (which consent
will not be unreasonably withheld).
(d) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of the
Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of the Shares and payment therefore or (iii)
any termination of this Agreement.
7. Termination. The obligations of the several
Underwriters under this Agreement may be terminated at any time on or prior
to the Closing Date (or, with respect to the Option Shares, on or prior to
the Option Closing Date), by notice to the Company from the Representatives,
without liability on the part of any Underwriter to the Company, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may
be), in the sole judgment of the Representatives, (i) there has been, since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the Company's business, properties,
business prospects, condition (financial or otherwise) or results of
operations, (ii) trading in any of the equity securities of the Company shall
have been suspended by the Commission, the NASD, by an exchange that lists
the Shares or by the Nasdaq Stock Market, (iii) trading in securities
generally on the New York Stock Exchange or the Nasdaq Stock Market shall
have been suspended or limited or minimum or maximum prices shall have been
generally established on such exchange or over the counter market, or
additional material governmental restrictions, not in force on the date of
this Agreement, shall have been imposed upon trading in securities generally
by such exchange or by order of the Commission or the NASD or any court or
other governmental authority, (iv) a general banking moratorium shall have
been declared by either Federal or New York State authorities or (v) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States
or any outbreak or
<PAGE>
23
material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred the
effect of any of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
8. Substitution of Underwriters. If any one or more
of the Underwriters shall fail or refuse to purchase any of the Firm Shares
which it or they have agreed to purchase hereunder, and the aggregate number
of Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
number of Firm Shares, the other Underwriters shall be obligated, severally,
to purchase the Firm Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase, in the proportions which the number
of Firm Shares which they have respectively agreed to purchase pursuant to
Section 1 bears to the aggregate number of Firm Shares which all such
non-defaulting Underwriters have so agreed to purchase, or in such other
proportions as the Representatives may specify; provided that in no event
shall the maximum number of Firm Shares which any Underwriter has become
obligated to purchase pursuant to Section 1 be increased pursuant to this
Section 8 by more than one-ninth of the number of Firm Shares agreed to be
purchased by such Underwriter without the prior written consent of such
Underwriter. If any Underwriter or Underwriters shall fail or refuse to
purchase any Firm Shares and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any
Shares under this Agreement. In any such case either the Representatives or
the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. Any action taken pursuant to this Section 8
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
9. Miscellaneous. (a) Notice given pursuant to any of
the provisions of this Agreement shall be in writing and, unless otherwise
specified, shall be mailed or delivered (a) if to the Company, at the office
of the Company, 400 Penobscot Drive, Redwood City, CA 94063, Attention:
Gregory B. Lawless, Ph.D., President and Chief Executive Officer, or (b) if
to the Underwriters, to the Representatives at the offices of
______________________, Attention: ________________. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the
benefit of the several Underwriters and the Company and of the controlling
persons, directors and officers
<PAGE>
24
referred to in Section 6, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Shares from any of the several
Underwriters.
(c) All representations, warranties and agreements of
the Company contained herein or in certificates or other instruments
delivered pursuant hereto, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any
Underwriter or any of its controlling persons and shall survive delivery of
and payment for the Shares hereunder.
(d) Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by
____________.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(f) This Agreement may be signed in two or more
counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.
(g) In case any provision in this Agreement 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.
(h) THE COMPANY AND THE UNDERWRITERS EACH HEREBY
IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(i) This Agreement may not be amended or otherwise
modified or any provision hereof waived except by an instrument in writing
signed by the Representatives and the Company.
<PAGE>
25
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the several Underwriters.
Very truly yours,
CYGNUS, INC.
By: _____________________
Title:
Confirmed as of the date first
above mentioned:
[Representatives]
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule I hereof.
By: ____________________________
By: ____________________________
Title:
<PAGE>
SCHEDULE I
UNDERWRITERS
Number of
Name of Firm Shares
Underwriters to be Purchased
- ------------ ---------------
Total . . . . . . . --------------------
--------------------
<PAGE>
EXHIBIT A
CYGNUS, INC.
_____________________
PRICE DETERMINATION AGREEMENT
[Date]
[Representatives]
As Representatives of the several Underwriters
Dear Sirs:
Reference is made to the Underwriting Agreement, dated
______, 199___ (the "Underwriting Agreement"), among __________________, a
__________ corporation (the "Company") and the several Underwriters named in
Schedule I thereto or hereto (the "Underwriters"), for whom __________,
__________ [and __________________] is [are] acting as representatives (the
"U.S. Representatives"). The Underwriting Agreement provides for the
purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of an aggregate of ________ shares (the "Firm
Shares") of the Company's common stock, par value $____ per share. This
Agreement is the Price Determination Agreement referred to in the
Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agree with the Representatives as follows:
The initial public offering price per share for the Firm
Shares shall be $_______.
The purchase price per share for the Firm Shares to be paid
by the several Underwriters shall be $_______ representing an amount equal to
the initial public offering price set forth above, less $______ per share.
<PAGE>
The Company represents and warrants to each of the
Underwriters that the representations and warranties of the Company set forth
in Section 3 of the Underwriting Agreement are accurate as though expressly
made at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as
Schedule I is a completed list of the several Underwriters, which shall be a
part of this Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of
New York without regard to the conflict of laws principles of such State.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters and the Company, please sign and return
to the Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
A-2
<PAGE>
Very truly yours,
CYGNUS, INC.
By:_________________________
Title:
Confirmed as of the date
first above mentioned:
[Representatives]
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule I hereof.
By: ________________________
By: ________________________
Title:
A-3
<PAGE>
EXHIBIT B
[DATE]
[Representatives]
As Representatives of the
several Underwriters
Dear Sirs:
In consideration of the agreement of the several
Underwriters, for which ___________, ________[and ______________] (the
"Representatives") intend to act as Representatives to underwrite a proposed
public offering (the "Offering") of ____ shares of Common Stock, par value
$_____ per share (the "Common Stock") of ______, a ______________
corporation, as contemplated by a registration statement with respect to such
shares filed with the Securities and Exchange Commission on Form S-3
(Registration No. _________), the undersigned hereby agrees that the
undersigned will not, for a period of [90] days after the commencement of the
public offering of such shares, without the prior written consent of
________________, offer to sell, sell, contract to sell, grant any option to
sell, or otherwise dispose of, or require the Company to file with the
Securities and Exchange Commission a registration statement under the
Securities Act of 1933 to register any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other rights
to acquire shares of Common Stock of which the undersigned is now, or may in
the future become, the beneficial owner within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934)
[(other than pursuant to employee stock option plans or in connection with other
employee incentive compensation arrangements)].
Very truly yours,
By:________________________
Print Name:________________________
- --------------------------
* Insert if this agreement will be signed by an employee of the Company.
<PAGE>
EXHIBIT C
Form of Opinion of
Counsel to the Company
1. The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has full corporate power
and authority to conduct all the activities conducted by it, to own or lease
all the assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus. The Company is the sole
record owner and, to our knowledge, the sole beneficial owner of all of the
capital stock of each of its Subsidiaries.
2. All of the outstanding shares of Common Stock have
been, and the Shares, when paid for by the Underwriters in accordance with
the terms of the Agreement, will be, duly authorized, validly issued, fully
paid and nonassessable and will not be subject to any preemptive or similar
right under (i) the statutes, judicial and administrative decisions, and the
rules and regulations of the governmental agencies of the State of Delaware,
(ii) the Company's certificate of incorporation or by-laws or (iii) any
instrument, document, contract or other agreement referred to in the
Registration Statement or any instrument, document, contract or agreement
filed as an exhibit to, or incorporated as an exhibit by reference in, the
Registration Statement. Except as described in the Registration Statement or
the Prospectus, to the best of our knowledge, there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights calling for the issuance of, any share of capital stock of the Company
or any Subsidiary to any person or any security or other instrument that by
its terms is convertible into, exercisable for or exchangeable for capital
stock of the Company.
3. No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of the Agreement by the Company or in connection
with the taking by the Company of any action contemplated thereby or, if so
required, all such consents, approvals, authorizations and orders specifying
the same have been obtained and are in full force and effect, except such as
have been obtained under the Act and the Rules and Regulations and such as
may be required under state securities or "Blue Sky" laws or by the by-laws
and rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by the Company. All references
<PAGE>
in this opinion to the Agreement shall include the Price Determination
Agreement.
4. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization." The description of the Common
Stock contained in the Prospectus is complete and accurate in all material
respects. The form of certificate used to evidence the Common Stock is in
due and proper form and complies with all applicable statutory requirements.
5. The Registration Statement and the Prospectus
(including any documents incorporated by reference into the Prospectus, at
the time they were filed) comply or complied in all material respects as to
form with the requirements of the Act, the Exchange Act, the Exchange Act
Rules and Regulations and the Rules and Regulations (except that we express
no opinion as to financial statements, schedules and other financial data
contained in the Registration Statement or the Prospectus or incorporated by
reference therein).
6. To the best of our knowledge, any instrument,
document, lease, license, contract or other agreement (collectively,
"Documents") required to be described or referred to in the Registration
Statement or the Prospectus has been properly described or referred to
therein and any Document required to be filed as an exhibit to the
Registration Statement has been filed as an exhibit thereto or has been
incorporated as an exhibit by reference in the Registration Statement; and no
default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any Document filed
or required to be filed as an exhibit to the Registration Statement.
7. To the best of our knowledge, except as disclosed
in the Registration Statement or the Prospectus, no person or entity has the
right to require the registration under the Act of shares of Common Stock or
other securities of the Company by reason of the filing or effectiveness of
the Registration Statement.
8. To the best of our knowledge, the Company is not in
violation of, or in default with respect to, any law, rule, regulation,
order, judgment or decree, except as may be described in the Prospectus or
such as in the aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business or assets of the
Company and the Subsidiaries, taken as a whole.
9. All descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are accurate and fairly
present the information required to be shown.
10. The Company has full corporate power and authority
to enter into the Agreement, and the Agreement has been duly authorized,
executed and delivered by the Company, is a valid and binding agreement of
the Company and, except for the
C-2
<PAGE>
indemnification and contribution provisions thereof, as to which we express
no opinion, is enforceable against the Company in accordance with the terms
thereof.
11. The execution and delivery by the Company of, and
the performance by the Company of its agreements in, the Agreement do not and
will not (i) violate the certificate of incorporation or by-laws of the
Company, (ii) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its Subsidiaries pursuant to the terms of,
(x) any indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement, capital lease or other evidence of indebtedness of which we
have knowledge, (y) any voting trust arrangement or any contract or other
agreement to which the Company is a party that restricts the ability of the
Company to issue securities and of which we have knowledge or (z) any
Document filed as an exhibit to, or incorporated as an exhibit by reference
in, the Registration Statement, (iii) breach or otherwise violate any
existing obligation of the Company under any court or administrative order,
judgment or decree of which we have knowledge or (iv) violate applicable
provisions of any statute or regulation in the States of Delaware or
Califronia or of the United States.
12. Delivery of certificates for the Shares will
transfer valid and marketable title thereto to each Underwriter that has
purchased such Shares in good faith and without notice of any adverse claim
with respect thereto.
13. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
14. The Shares have been approved for quotation on the
Nasdaq National Market.
We hereby confirm to you that we have been advised by the
Commission that the Registration Statement has become effective under the Act
and that no order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted or is
pending, threatened or contemplated.
We hereby further confirm to you that there are no actions,
suits, proceedings or investigations pending or, to our knowledge, overtly
threatened in writing against the Company or any of its Subsidiaries, or any
of their respective officers or directors in their capacities as such, before
or by any court, governmental agency or arbitrator which (i) seek to
challenge the legality or enforceability of the Agreement, (ii) seek to
challenge the legality or enforceability of any of the Documents filed, or
required to be filed, as exhibits to the Registration Statement, (iii) seek
damages or other remedies with respect to any of the Documents filed, or
required to be filed, as exhibits to the Registration Statement, (iv) except
C-3
<PAGE>
as set forth in or contemplated by the Registration Statement and the
Prospectus, seek money damages in excess of $_______ or seek to impose
criminal penalties upon the Company, any of its Subsidiaries or any of their
respective officers or directors in their capacities as such and of which we
have knowledge or (v) seek to enjoin any of the business activities of the
Company or any of its Subsidiaries or the transactions described in the
Prospectus and of which we have knowledge.
15. We have participated in the preparation of the
Registration Statement and the Prospectus and, without assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus or in any amendment
or supplement thereto or in any document incorporated by reference into the
Prospectus, nothing has come to our attention that causes us to believe that,
both as of the Effective Date and as of the Closing Date and the Option
Closing Date, the Registration Statement or any amendment thereto contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that any Prospectus or any amendment or
supplement thereto including any documents incorporated by reference into the
Prospectus, at the time such Prospectus was issued, at the time any such
amended or supplemented Prospectus was issued, at the Closing Date and the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances in which they were
made, not misleading (except that we express no opinion as to financial
statements, schedules and other financial data contained in the Registration
Statement or the Prospectus or incorporated by reference therein).
The foregoing opinion is subject to the qualification that
the enforceability of the Agreement may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at
law or in equity) including principles of commercial reasonableness or
conscionability and an implied covenant of good faith and fair dealing.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person, except that this letter
may be relied upon by your counsel in connection with the opinion letter to
be delivered to you pursuant to Section 5(g) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the
extent they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel as to matters governed by the laws of
jurisdictions other than the United States and the States of California and
Delaware, and as to matters of fact, upon certificates of officers of the
Company, the Selling Shareholders and of government officials; provided that
such counsel
C-4
<PAGE>
shall state that the opinion of any other counsel is in form satisfactory to
such counsel. Copies of all such opinions and certificates shall be furnished
to counsel to the Underwriters on the Closing Date.
C-5
<PAGE>
EXHIBIT D
Form of opinion of
Patent and Regulatory Counsel
1. I have studied and agree with the statements in the
Prospectus under the captions [insert sections of Prospectus relating to
intellectual property and government regulation of the Company].
2. I do not know of any pending or threatened legal or
governmental proceeding relating to patents or proprietary know-how owned or
used by the Company or any of its Subsidiaries, to which the Company or any
of its Subsidiaries is a party or to which any of the properties of the
Company or any of its Subsidiaries is subject, except as disclosed in the
Registration Statement, which, if adversely decided, would have a material
adverse effect on the business, financial condition or results of operations
of the Company or any of its Subsidiaries.
3. I have no knowledge of any infringement or alleged
infringement by the Company or any of its Subsidiaries of issued patent
rights of others, except as disclosed in the Registration Statement, which
would have a material adverse effect on the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
4. To the best of my knowledge, each of the Company
and each of its Subsidiaries possesses all governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on
their respective businesses as now conducted and as described in the
Prospectus, except for those the absence of which will not have a material
adverse effect on the business, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole.
<PAGE>
EXHIBIT 1.2
CYGNUS, INC.
Debt Securities
UNDERWRITING AGREEMENT
[DATE]
The Representatives of
the several Underwriters
listed on Schedule I hereto
Dear Sirs:
Cygnus, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell an aggregate of $___________ (the "Firm Securities") principal
amount of the Company's [insert title of securities] (the "Securities") to be
issued pursuant to an Indenture dated as of __________, 19__ (the
"Indenture"), between the Company and ________, as Trustee (the "Trustee").
[The Securities are convertible into shares of common stock, par value ___ per
share, of the Company (the "Common Stock").] The Company has also agreed to
grant to you and the other Underwriters an option (the "Option") to purchase up
to an additional _____ Securities (the "Option Securities") on the terms and for
the purposes set forth in Section 1(b). The Firm Securities and the Option
Securities are hereafter collectively referred to as the "Securities". The
Securities will be sold to you and to the other underwriters named in Schedule I
(collectively, the "Underwriters") for whom you are acting as representatives
(the "Representatives").
The purchase price for the Securities to be paid by the several
Underwriters shall be agreed upon by the Company and the Representatives,
acting on behalf of the several Underwriters, and such agreement shall be set
forth in a separate written instrument substantially in the form of Exhibit A
hereto (the "Price Determination Agreement"). The Price Determination
Agreement may take the form of an exchange of any standard form of written
telecommunication among the Company and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The
offering of the Securities will be governed by this Agreement, as
supplemented by the Price Determination Agreement. From and after the date
of the execution and delivery of the Price Determination Agreement, this
Agreement shall be deemed to incorporate, and, unless the context otherwise
indicates, all
<PAGE>
2
references contained herein to "this Agreement" and to the phrase "herein"
shall be deemed to include the Price Determination Agreement.
The Company confirms as follows its agreements with the
Representatives and the several other Underwriters.
1. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each
Underwriter named below, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, the principal amount of the Firm
Securities set forth opposite the name of such Underwriter in Schedule I,
plus such additional principal amount of Firm Securities which such
Underwriter may become obligated to purchase pursuant to Section 8 hereof,
all at the purchase price [plus accrued interest, if any, from _________,
19__, to the Closing Date (as hereinafter defined)], to be agreed upon by
the Representatives and the Company in accordance with Section 1(c) or 1(d)
and set forth in the Price Determination Agreement. Schedule I may be
attached to the U.S. Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase,
severally and not jointly, up to ____ Option Securities from the Company at
the same price per Security as the Underwriters shall pay for the Firm
Securities. The Option may be exercised only to cover over-allotments in
the sale of the Firm Securities by the Underwriters and may be exercised in
whole or in part at any time (but not more than once) on or before the 30th
day after the date of the Price Determination Agreement), upon written or
telegraphic notice (the "Option Securities Notice") by the Representatives
to the Company no later than 12:00 noon, New York City time, at least two
and no more than five business days before the date specified for closing
in the Option Securities Notice (the "Option Closing Date") setting forth
the aggregate number of Option Securities to be purchased and the time and
date for such purchase. On the Option Closing Date, the Company will issue
and sell to the Underwriters the number of Option Securities set forth in
the Option Securities Notice, and each Underwriter will purchase such
percentage of the Option Securities as is equal to the percentage of Firm
Securities that such Underwriter is purchasing, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares.
(c) The purchase price for the Firm Securities to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed upon
and the Price Determination Agreement has not been executed by the close of
business on the
<PAGE>
3
fourteenth business day following the date on which the Registration
Statement becomes effective, this Agreement shall terminate forthwith,
without liability of any party to any other party except that Section 6
shall remain in effect.
2. DELIVERY AND PAYMENT. Delivery of the Firm Securities shall be
made to the Representatives for the accounts of the Underwriters against payment
of the purchase price [Federal Reserve Funds check payable in immediately
available funds to the order of the Company] [wire transfer of Federal Funds or
similar same day funds to an account designated in writing by the Company to
________ at least one business day prior to the Closing Date (as hereinafter
defined)]. Such payment shall be made at 10:00 a.m., New York City time, on the
[third] [fourth] business day after the date on which the first bona fide
offering of the Securities to the public is made by the Underwriters or at such
time on such other date, not later than 10 business days after such date as may
be agreed upon by the Company and the Representatives (such date is hereinafter
referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option
Securities against payment by the Underwriters (in the manner specified above)
will take place [at the offices specified above for the Closing Date] at the
time and date (which may be the Closing Date) specified in the Option Securities
Notice.
[Certificates evidencing the Securities shall be in definitive form
and shall be registered in such names and in such authorized denominations as
the Representatives shall request by written notice to the Company at least two
business days prior to the Closing Date or the Option Closing Date, as the case
may be. For the purpose of expediting the checking and packaging of
certificates for the Securities, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.]
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Securities by the Company to the respective
Underwriters shall be borne by the Company. The Company will pay and save each
Underwriter and any subsequent holder of the Securities harmless from any and
all liabilities with respect to or resulting from any failure or delay in paying
Federal and state stamp and other issuance taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
such Underwriter of the Securities.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. ) on Form S-3 relating to
the Securities [and the shares of Common Stock to be delivered upon
conversion thereof], including
<PAGE>
4
a preliminary prospectus and such amendments to such registration statement
as may have been required to the date of this Agreement, has been prepared
by the Company under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (collectively referred to
as the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder for the offering of the Securities [(including
the Common Stock issuable upon conversion thereof)] from time to time in
accordance with Rule 415 of the Rules and Regulations, and has been filed
with the Commission. The term "preliminary prospectus" as used herein means
a preliminary prospectus as contemplated by Rule 430 or Rule 430A ("Rule
430A") of the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and amendments
and of each related preliminary prospectus have been delivered to the
Representatives. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the
"Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A or Rule 434 of the Rules and
Regulations. If the Company files a registration statement to register a
portion of the Securities and relies on Rule 462(b) of the Rules and
Regulations for such registration statement to become effective upon filing
with the Commission (the "Rule 462 Registration Statement"), then any
reference to the "Registration Statement" shall be deemed to include the
Rule 462 Registration Statement, as amended from time to time. A prospectus
supplement relating to the Securities [(and the shares of Common Stock to
be delivered upon conversion thereof)], the terms of the offering thereof
and the other matters set forth therein has been prepared and will be filed
pursuant to Rule 424 of the Rules and Regulations. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule
424, is herein referred to as the "Prospectus Supplement". The term
"Prospectus" means the form of final prospectus included in the
Registration Statement at the Effective Date as supplemented by the
Prospectus Supplement; PROVIDED that if the Prospectus is amended or
supplemented on or after the date hereof by prior to the date on which the
Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Prospectus as so amended or supplemented
and as supplemented by the Prospectus Supplement. Any reference herein to
the Registration Statement, any preliminary prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or
before the Effective Date or the date of such preliminary prospectus or the
Prospectus, as the case may be. Any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date, or the date of any preliminary prospectus or the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
<PAGE>
5
(b) On the Effective Date, the date the Prospectus is first
filed with the Commission pursuant to Rule 424(b), at all times subsequent
to and including the Closing Date and, if later, the Option Closing Date
and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with
the Commission, the Registration Statement and the Prospectus (as amended
or as supplemented if the Company shall have filed with the Commission any
amendment or supplement thereto), including the financial statements
included or incorporated by reference in the Prospectus, did or will comply
with the applicable provisions of the Act, the Exchange Act, the rules and
regulations thereunder (the "Exchange Act Rules and Regulations"), the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), the
rules and regulations thereunder (the "Trust Indenture Act Rules and
Regulations") and the Rules and Regulations and will contain all statements
required to be stated therein in accordance with the Act, the Exchange Act,
the Exchange Act Rules and Regulations and the Rules and Regulations. On
the Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, no part of the Registration
Statement, or any such amendment did or will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission and
at the Closing Date, and, if later, the Option Closing Date, the Prospectus
did not or will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the satements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations
and warranties in this Section 3(b) do not apply to any statements or
omissions made in reliance on and in conformity with information relating
to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. For all purposes of
this Agreement, the amounts of the selling concession and reallowance set
forth in the Prospectus constitute the only information relating to any
Underwriter furnished in writing to the Company by the Representatives
specifically for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Securities other
than the Registration Statement, the preliminary prospectus, the Prospectus
or any other materials, if any, permitted by the Act. On the Effective
Date, the date the Prospectus is first filed with the Commission pursuant
to Rule 497 (if required), and at all subsequent times to and including the
Closing Date or, if later, the Option Closing Date, the Indenture will
comply with all applicable provisions of the Trust Indenture Act and the
Trust Indenture Act Rules and Regulations.
<PAGE>
6
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with
the Commission, as the case may be, complied in all material respects with
the requirements of the Act or the Exchange Act, as applicable, the
Exchange Act Rules and Regulations and the Rules and Regulations; and any
documents so filed and incorporated by reference subsequent to the
Effective Date shall, when they are filed with the Commission, conform in
all material respects with the requirements of the Act and the Exchange
Act, as applicable, the Exchange Act Rules and Regulations and the Rules
and Regulations.
(d) The only subsidiaries (as defined in the Rules and
Regulations) of the Company are the subsidiaries listed on Exhibit 21 to
the Registration Statement (the Subsidiaries"). The Company and each of
its Subsidiaries is, and at the Closing Date will be, a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company and each of its Subsidiaries
has, and at the Closing Date will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is,
and at the Closing Date will be, duly licensed or qualified to do business
and in good standing as a foreign corporation in all jurisdictions in which
the nature of the activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification necessary. All
of the outstanding shares of capital stock of the Subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable
and are owned by the Company free and clear of all liens, encumbrances and
claims whatsoever. Except for the stock of the Subsidiaries and as
disclosed in the Registration Statement, the Company does not own, and at
the Closing Date will not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have
any equity interest in any firm, partnership, joint venture, association or
other entity. Complete and correct copies of the certificate of
incorporation and of the by-laws of the Company and each of its
Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(e) [The outstanding shares of Common Stock have been duly
authorized, validly issued, and are fully paid and nonassessable and not
subject to any preemptive or similar right.] The Securities have been duly
and validly authorized and, when authenticated by the Trustee and issued,
delivered and sold in accordance with this Agreement and the Indenture,
will have been duly and validly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
<PAGE>
7
terms and entitled to the benefits provided by the Indenture. [The shares
of Common Stock to be delivered upon conversion of the Securities have been
duly authorized and reserved for issuance upon such conversion and, when
issued and delivered upon conversion of the Securities, will be validly
issued, fully paid and nonassessable and will not be subject to any
preemptive or similar right.] At the Closing Date, the Company will have
an authorized and outstanding capitalization as set forth in the
Prospectus.
(f) The description of the Securities [and the Common Stock] in
the Registration Statement and the Prospectus is, and at the Closing Date
will be, complete and accurate in all respects. The Indenture conforms to
the description thereof contained in the Registration Statement and the
Prospectus.
(g) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company as of
the respective dates thereof and the consolidated results of operations and
cash flows of the Company for the respective periods covered thereby, all
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The pro forma financial statements and other
pro forma financial information included in the Registration Statement or
the Prospectus (i) present fairly in all material respects the information
shown therein, (ii) have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
(iii) have been properly computed on the bases described therein. The
assumptions used in the preparation of the pro forma financial statements
and other pro forma financial information included in the Registration
Statement or the Prospectus are reasonable and the adjustments used therein
are appropriate to give effect to the transactions or circumstances
referred to therein. No other financial statements or schedules of the
Company are required by the Act, the Exchange Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Ernst & Young, LLP (the "Accountants"), who have reported on such financial
statements and schedules, are independent accountants with respect to the
Company as required by the Act and the Rules and Regulations. The
statements included in the Registration Statement with respect to the
Accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
(h) The Company maintains a system of internal accounting
control sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets;
<PAGE>
8
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been
any change in the capitalization of the Company, or in the business,
properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, arising for any
reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct
or contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class of
its capital stock.
(j) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended.
(k) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or
threatened against or affecting the Company or any of its Subsidiaries or
any of their respective officers in their capacity as such, before or by
any Federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein an
unfavorable ruling, decision or finding might materially and adversely
affect the Company or any of its Subsidiaries or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations.
(l) The Company and each of its Subsidiaries has, and at the
Closing Date will have, (i) all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus, (ii) complied in all respects
with all laws, regulations and orders applicable to it or its business and
(iii) performed all its obligations required to be performed by it, and is
not, and at the Closing Date will not be, in default, under any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease, contract or other agreement or instrument
(collectively, a "contract or other agreement") to which it is a party or
by which its property is bound or affected. To the best knowledge of the
Company and each of its Subsidiaries, no other party under any contract or
other agreement to which it is a
<PAGE>
9
party is in default in any respect thereunder. Neither the Company nor any
of its Subsidiaries is, nor at the Closing Date will any of them be, in
violation of any provision of its certificate of incorporation or by-laws.
(m) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Securities [or the shares of Common Stock to be delivered
upon conversion thereof] by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in connection
with the taking by the Company of any action contemplated hereby and in the
Indenture and the Securities, except such as have been obtained under the
Act, the Trust Indenture Act, the Trust Indenture Act Rules and Regulations
or the Rules and Regulations and such as may be required under state
securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Securities.
(n) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company and is enforceable against the Company in accordance with the
terms hereof. The Indenture has been duly authorized and, when executed
and delivered by the Company and the Trustee and qualified under the Trust
Indenture Act, will constitute a valid and binding agreement of the Company
and will be enforceable against the Company in accordance with its terms.
The performance by the Company of this Agreement, the Indenture and the
Securities and the consummation of the transactions contemplated hereby and
thereby and the application of the net proceeds from the offering and sale
of the Securities to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries pursuant to the terms or provisions of,
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate
any of its obligations under, or result in the acceleration of any
obligation under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, any contract or other agreement to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or governmental agency or body
applicable to the business or properties of the Company or any of its
Subsidiaries.
<PAGE>
10
(o) The Company and each of its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus
as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company
and each of its Subsidiaries has valid, subsisting and enforceable leases
for the properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such properties by the Company and such
Subsidiaries.
(p) There is no document or contract of a character required to
be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or filed
as required. All such contracts to which the Company or any Subsidiary is
a party have been duly authorized, executed and delivered by the Company or
such Subsidiary, constitute valid and binding agreements of the Company or
such Subsidiary and are enforceable against the Company or such Subsidiary
in accordance with the terms thereof.
(q) No statement, representation, warranty or covenant made by
the Company in this Agreement or the Indenture or made in any certificate
or document required by this Agreement to be delivered to the
Representatives was or will be, when made, inaccurate, untrue or incorrect.
(r) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities.
(s) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
[(t) Prior to the Closing Date, the Securities [and the shares of
Common Stock to be delivered upon conversion thereof] will be approved for
quotation on the Nasdaq National Market.]
(u) The Company and its Subsidiaries are in compliance with all
federal, state and local employment and labor laws, including, but not
limited to, laws relating to non-discrimination in hiring, promotion and
pay of employees; no labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent or
threatened; and the Company is not aware of any existing, imminent or
threatened labor disturbance by the employees of any of
<PAGE>
11
its principal suppliers, manufacturers or contractors that could result in
a material adverse effect on the condition (financial or otherwise) or on
the earnings, business, properties, business prospects or operations of the
Company and its Subsidiaries, taken as a whole.
(v) The Company and its Subsidiaries own, or are licensed or
otherwise have the full exclusive right to use, the material patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, services
marks and trade names (collectively, "patent and proprietary rights")
presently employed by them or which are necessary in connection with the
conduct of the business now operated by them, and neither the Company nor
any of its Subsidiaries has received any written notice or otherwise has
actual knowledge of any infringement of or conflict with asserted rights of
others or any other claims with respect to any patent or proprietary
rights, or of any basis for rendering any patent and proprietary rights
invalid or inadequate to protect the interest of the Company or any of its
Subsidiaries.
(w) Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary or received
or retained any funds in violation of any law, rule or regulation or of a
character required to be disclosed in the Prospectus.
(x) The Company and its Subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, individually or in the aggregate
result in a material adverse effect on the condition (financial or
otherwise) or on the earnings, business, properties, business prospects or
operations of the Company and its Subsidiaries, taken as a whole. The term
"Hazardous Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous,
<PAGE>
12
dangerous, or toxic chemical, material, waste or substance regulated under
or within the meaning of any other Environmental Law.
(y) In the ordinary course of its business, the Company conducts
a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). Except as set forth in the Registration Statement and the
Prospectus there are no costs and liabilities associated with or arising in
connection with Environmental Laws as currently in effect (including,
without limitation, costs of compliance therewith) which would, singly or
in the aggregate have a material adverse effect on the condition (financial
or otherwise) or on the earnings, business, properties, business prospects
or operations of the Company and its Subsidiaries, taken as a whole.
(z) The Company maintains insurance with respect to its
properties and business of the types and in amounts generally deemed
adequate for its business and consistent with insurance coverage maintained
by similar companies and businesses, all of which insurance is in full
force and effect.
(aa) The Company has filed all material federal, state and
foreign income and franchise tax returns and has paid all taxes shown as
due thereon, other than taxes which are being contested in good faith and
for which adequate reserves have been established in accordance with
generally accepted accounting principles ("GAAP"); and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company. There are no tax returns of the Company or
any of its Subsidiaries that are currently being audited by state, local or
federal taxing authorities or agencies (and with respect to which the
Company or any Subsidiary has received notice), where the findings of such
audit, if adversely determined, would result in a material adverse effect
on the condition (financial or otherwise) or on the earnings, business,
properties, business prospects or operations of the Company and its
Subsidiaries, taken as a whole.
(bb) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) maintained or contributed to by the Company, or
with respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company could be
<PAGE>
13
subject to any liability under the terms of such Benefit Plan, applicable
law (including, without limitation, ERISA and the Internal Revenue Code of
1986, as amended) or any applicable agreement that could materially
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole.
4. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Securities by an Underwriter or
dealer, file any amendment or supplement to the Registration Statement or
the Prospectus, unless a copy thereof shall first have been submitted to
the Representatives within a reasonable period of time prior to the filing
thereof and the Representatives shall not have objected thereto in good
faith.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the
Representatives promptly, and will confirm such advice in writing, (1) when
the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the Commission
for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose or the threat thereof, (4) of the happening of any event during the
period mentioned in the second sentence of Section 4(e) that in the
judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any
changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances in which they are
made, not misleading and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from
the Commission relating to the Company, the Registration Statement, any
preliminary prospectus or the Prospectus. If at any time the Commission
shall issue any order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. The Company will
use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and to notify
the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without
charge, two signed copies of the Registration Statement and of any post-
effective
<PAGE>
14
amendment thereto, including financial statements and schedules, and all
exhibits thereto (including any document filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus), and will
furnish to the Representatives, without charge, for transmittal to each of
the other Underwriters, a copy of the Registration Statement and any post-
effective amendment thereto, including financial statements and schedules
but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto, as the
Representatives may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Securities may be sold, both in
connection with the offering or sale of the Securities and for any period
of time thereafter during which the Prospectus is required by law to be
delivered in connection therewith. If during such period of time any event
shall occur which in the judgment of the Company or counsel to the
Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was
made, not misleading, or if it is necessary to supplement or amend the
Prospectus to comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto,
and will deliver to each of the Underwriters, without charge, such number
of copies thereof as the Representatives may reasonably request. The
Company shall not file any document under the Exchange Act before the
termination of the offering of the Securities by the Underwriters if such
document would be deemed to be incorporated by reference into the
Prospectus which is not approved by the Representatives after reasonable
notice thereof.
(f) Prior to any public offering of the Securities by the
Underwriters, the Company will cooperate with the Representatives and
counsel to the Underwriters in connection with the registration or
qualification of the Securities [and the shares of Common Stock to be
delivered upon conversion thereof] for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Representatives may request;
provided, that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other
Underwriter who
<PAGE>
15
may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally
to the holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the
last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, an earnings statement (which
need not be audited but shall be in reasonable detail) for a period of
12 months ended commencing after the Effective Date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the Rules and
Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Representatives, all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating
to (1) the preparation, printing and filing of the Registration Statement
and exhibits to it, each preliminary prospectus, the Prospectus, any
amendment or supplement to the Registration Statement or the Prospectus and
the Indenture, (2) the preparation and delivery of certificates
representing the Securities [and the shares of Common Stock to be delivered
upon conversion thereof], (3) the word processing, printing and
reproduction of this Agreement, the Agreement Among Underwriters, any
Dealer Agreements and any Underwriters' Questionnaire, (4) furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and
all amendments and supplements thereto, as may be requested for use in
connection with the offering and sale of the Securities by the Underwriters
or by dealers to whom Securities may be sold, [(5) the listing of the
Securities [and the shares of Common Stock to be delivered upon conversion
thereof] for quotation on the Nasdaq National Market], (6) any filings
required to be made by the Underwriters with the NASD, and the fees,
disbursements and other charges of counsel for the Underwriters in
connection therewith, (7) the registration or qualification of the
Securities [and the shares of Common Stock to be delivered upon conversion
thereof] for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the fees,
disbursements and other charges of counsel to the Underwriters in
connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (8) counsel to the Company,
(9) the transfer agent and registrar for the Securities [and the shares of
Common Stock to be delivered upon conversion thereof], (10) the rating of
the Securities by one or more rating agencies, (11) the Trustee and any
agent of the Trustee and the fees,
<PAGE>
16
disbursements and other charges of counsel for the Trustee in connection
with the Indenture and the Securities and (12) the Accountants.
(j) If this Agreement shall be terminated by the Company
pursuant to any of the provisions hereof (other than pursuant to Section 8)
or if for any reason the Company shall be unable to perform its obligations
hereunder, the Company will reimburse the several Underwriters for all out-
of-pocket expenses (including the fees, disbursements and other charges of
counsel to the Underwriters) reasonably incurred by them in connection
herewith.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause
or result in, or which will constitute, stabilization of the price of the
Securities [or the shares of Common Stock to be delivered upon conversion
thereof] to facilitate the sale or resale of any of the Securities [or such
shares of Common Stock].
(l) The Company will apply the net proceeds from the offering
and sale of the Securities in the manner set forth in the Prospectus under
"Use of Proceeds".
(m) The Company will not claim the benefit of any usury law
against any holders of Securities.
(n) The Company will not, and will cause each of its executive
officers, directors and each beneficial owner of more than 5% of the
outstanding shares of Common Stock to enter into agreements with the
Representatives in the form set forth in Exhibit B to the effect that they
will not, for a period of 90 days after the commencement of the public
offering of the Securities, without the prior written consent of
____________, contract to sell or otherwise dispose of any shares of Common
Stock or securities convertible into common stock (other than to the
underwriters pursuant to this Agreement and pursuant to employee benefit
plans).
5. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than
5:00 P.M., New York City time, on the date of this Agreement or at such
later date and time as shall be consented to in writing by the
Representatives and all filings required by Rule 424 of the Rules and
Regulations and Rule 430A shall have been made.
<PAGE>
17
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the
qualification or registration of the Securities [and the shares of Common
Stock to be delivered upon conversion thereof] under the securities or Blue
Sky laws of any jurisdiction shall be in effect and no proceeding for such
purpose shall be pending before or threatened or contemplated by the
Commission or the authorities of any such jurisdiction, (iii) any request
for additional information on the part of the staff of the Commission or
any such authorities shall have been complied with to the satisfaction of
the staff of the Commission or such authorities and (iv) after the date
hereof no amendment or supplement to the Registration Statement or the
Prospectus shall have been filed unless a copy thereof was first submitted
to the Representatives and the Representatives did not object thereto in
good faith, and the Representatives shall have received certificates, dated
the Closing Date and the Option Closing Date and signed by the Chief
Executive Officer or the Chairman of the Board of Directors of the Company
and the Chief Financial Officer of the Company (who may, as to proceedings
threatened, rely upon the best of their information and belief), to the
effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus (i) there shall not have
been and no development shall have occurred which could reasonably be
expected to result in a material adverse change in the general affairs,
business, business prospects, properties, management, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, in each case other than as set forth in or contemplated
by the Registration Statement and the Prospectus, and (ii) neither the
Company nor any of its Subsidiaries shall have sustained any material loss
or interference with its business or properties from fire, explosion, flood
or other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Registration Statement and the
Prospectus, if in the judgment of the Representatives any such development
makes it impracticable or inadvisable to consummate the sale and delivery
of the Securities by the Underwriters in accordance with the terms hereof
and thereof.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court,
commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, in which litigation or proceeding an
<PAGE>
18
unfavorable ruling, decision or finding would materially and adversely
affect the business, properties, business prospects, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Securities, at the Option
Closing Date, as if made at the Closing Date, and, with respect to the
Option Securities, at the Option Closing Date, and all covenants and
agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the
Company at or prior to the Closing Date and, with respect to the Option
Securities, at or prior to the Option Closing Date, shall have been duly
performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated
the Closing Date and, with respect to the Option Securities, the Option
Closing Date, and satisfactory in form and substance to counsel for the
Underwriters, from ______________, counsel to the Company, to the effect
set forth in Exhibit C, and (ii) _______, patent and regulatory counsel for
the Company, to the effect set forth in Exhibit D.
(g) The Representatives shall have received an opinion, dated
the Closing Date and, with respect to the Option Securities, the Option
Closing Date, from ___________________, counsel to the Underwriters, with
respect to the Registration Statement, the Prospectus and this Agreement,
which opinion shall be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to
the Representatives, confirming that they are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations
and with respect to the financial and other statistical and numerical
information contained or incorporated by reference in the Registration
Statement. At the Closing Date and, as to the Option Securities, the
Option Closing Date, the Accountants shall have furnished to the
Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set
forth in the letter from the Accountants, that nothing has come to their
attention during the period from the date of the letter referred to in the
prior sentence to a date (specified in the letter) not more than five days
prior to the Closing Date and the Option Closing Date which would require
any change in their letter dated the date of the Prospectus, if it were
required to be dated and delivered at the Closing Date and the Option
Closing Date.
<PAGE>
19
(i) At the Closing Date and, as to the Option Securities, the
Option Closing Date], there shall be furnished to the Representatives an
accurate certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer and the Chief Financial Officer of the Company, in
form and substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus (including any documents
filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus) and (A) as of the date of such
certificate, such documents are true and correct in all material
respects and do not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not untrue or misleading and (B) since the Effective Date, no event
has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect and there has been no
document required to be filed under the Exchange Act and the Exchange
Act Rules and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so
filed.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in
all material respects.
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the delivery of such
certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or
prior to the date of such certificate has been duly, timely and fully
complied with; and
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) there has
not been, and no development has occurred which could reasonably be
expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, in each case
other than as set forth in or contemplated by the Registration
Statement and the Prospectus and (B) neither the Company nor any of
its Subsidiaries has sustained any material loss or interference with
its business or properties from fire, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
<PAGE>
20
order or decree, which is not set forth in the Registration Statement
and the Prospectus,
and such other matters as the Representatives may reasonably request.
(j) On or prior to the Closing Date, the Representatives shall
have received the executed agreements referred to in Section 4(n).
(k) The Securities [and the shares of Common Stock to be
delivered upon conversion thereof] shall be qualified for sale in such
states as the Representatives may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
[(l) Prior to the Closing Date, the Securities [and the shares of
Common Stock to be delivered upon conversion thereof] shall have been
approved for quotation on the Nasdaq National Market.]
(m) The Company shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus or any documents
filed under the Exchange Act and deemed to be incorporated by reference
into the Prospectus, as to the accuracy at the Closing Date and the Option
Closing Date of the representations and warranties of the Company herein,
as to the performance by the Company of its obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Representatives.
6. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act from
and against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and other
expenses reasonably incurred in connection with, and all amounts paid in
settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and
when incurred to which any Underwriter, or any such person, may become
subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or
<PAGE>
21
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to
the Registration Statement or the Prospectus or in any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, or in any application or other document executed by or on
behalf of the Company or based on written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the
Securities under the Securities Laws thereof or filed with the Commission,
(ii) the omission or alleged omission to state in such document a material
fact required to be stated in it or necessary to make the statements in it
not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any
manner to, the Securities or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, liability, expense
or damage arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent it is finally judicially determined by a court of
competent jurisdiction that such loss, claim, liability, expense or damage
resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such underwriter through its gross negligence or
willful misconduct); provided that the Company will not be liable to the
extent that such loss, claim, liability, expense or damage arises from the
sale of the Securities in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company
by the Representatives on behalf of any Underwriter expressly for inclusion
in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity agreement will be in addition to any liability
that the Company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, each director
of the Company and each officer of the Company who signs the Registration
Statement to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only insofar as losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity
with information relating to any Underwriter furnished in writing to the
Company by the Representatives on behalf of such Underwriter expressly for
use in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no event shall
any
<PAGE>
22
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts as commissions received by such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim
is to be made against an indemnifying party or parties under this
Section 6, notify each such indemnifying party of the commencement of such
action, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party will not relieve it from any liability that
it may have to any indemnified party under the foregoing provisions of this
Section 6 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If
any such action is brought against any indemnified party and it notifies
the indemnifying party of its commencement, the indemnifying party will be
entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of
the commencement of the action from the indemnified party, jointly with any
other indemnifying party similarly notified, to assume the defense of the
action, with counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of its election
to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred
by the indemnified party in connection with the defense. The indemnified
party will have the right to employ its own counsel in any such action, but
the fees, expenses and other charges of such counsel will be at the expense
of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties.
All such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying party
will not be liable for any
<PAGE>
23
settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld). No indemnifying party
shall, without the prior written consent of each indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters contemplated
by this Section 6 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
or that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company or the
Underwriters, the Company and the Underwriters will contribute to the total
losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who
control the Company within the meaning of the Act, officers of the Company
who signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and any one or
more of the Underwriters may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus.
If, but only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative
benefits referred to in the foregoing sentence but also the relative fault
of the Company, on the one hand, and the Underwriters, on the other, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering.
Such relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Representatives on behalf of the Underwriters, the intent of
the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one
<PAGE>
24
entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, liability, expense or damage, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to include, for
purpose of this Section 6(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 6(d), no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts received by it, and no
person found guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 6(d)
are several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section 6(d), any person who controls a
party to this Agreement within the meaning of the Act will have the same
rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution
as the Company, subject in each case to the provisions hereof. Any party
entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for
contribution may be made under this Section 6(d), will notify any such
party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution
may be sought from any other obligation it or they may have under this
Section 6(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will
not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company contained
in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Securities and payment therefor
or (iii) any termination of this Agreement.
7. TERMINATION. The obligations of the several Underwriters under
this Agreement may be terminated at any time on or prior to the Closing Date
(or, with respect to the Option Securities, on or prior to the Option Closing
Date), by notice to the Company from the Representatives, without liability
on the part of any Underwriter to the Company, if, prior to delivery and
payment for the Securities (or the Option Securities, as the case may be), in
the sole judgment of the Representatives, (i) trading in any of the equity
securities of the Company shall have been suspended by the Commission, by an
exchange that lists the Securities or by the Nasdaq Stock Market, (ii)
trading in securities generally on the New York Stock Exchange shall have
been suspended or limited or minimum or maximum prices shall have been
generally established on such exchange, or additional material governmental
<PAGE>
25
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by such exchange or by order of
the Commission or any court or other governmental authority, (iii) a general
banking moratorium shall have been declared by either Federal or New York
State authorities or (iv) any material adverse change in the financial or
securities markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred the effect
of any of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to market the Securities on the
terms and in the manner contemplated by the Prospectus.
8. SUBSTITUTION OF UNDERWRITERS. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Securities
which it or they have agreed to purchase hereunder, and the aggregate
principal amount of Firm Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate principal amount of Firm Securities, the other
Underwriters shall be obligated, severally, to purchase the Firm Securities
which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the principal amount of Firm
Securities which they have respectively agreed to purchase pursuant to
Section 1 bears to the aggregate principal amount of Firm Securities which
all such non-defaulting Underwriters have so agreed to purchase, or in such
other proportions as the Representatives may specify; provided that in no
event shall the maximum principal amount of Firm Securities which any
Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 8 by more than one-ninth of the principal
amount of Firm Securities agreed to be purchased by such Underwriter without
the prior written consent of such Underwriter. If any Underwriter or
Underwriters shall fail or refuse to purchase any Firm Securities and the
aggregate principal amount of Firm Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase exceeds
one-tenth of the aggregate principal amount of the Firm Securities and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Securities are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any
Securities under this Agreement. In any such case either the Representatives
or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. Any action taken pursuant to this Section 8
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
9. MISCELLANEOUS.
<PAGE>
26
(a) Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company,
400 Penobscot Drive, Redwood City, California 94063, Attention: Gregory B.
Lawless, Ph.D., President and Chief Executive Officer or (b) if to the
Underwriters, to the Representatives at the offices of
_____________________, _________________, Attention: _________________.
Any such notice shall be effective only upon receipt. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the benefit
of the several Underwriters and the Company and of the controlling persons,
directors and officers referred to in Section 6, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as
used in this Agreement shall not include a purchaser, as such purchaser, of
Securities from any of the several Underwriters.
(c) All representations, warranties and agreements of the
Company contained herein or in certificates or other instruments delivered
pursuant hereto, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or
any of their controlling persons and shall survive delivery of and payment
for the Securities hereunder.
(d) Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by
_______________.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(f) This Agreement may be signed in two or more counterparts
with the same effect as if the signatures thereto and hereto were upon the
same instrument.
(g) In case any provision in this Agreement 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.
(h) THE COMPANY AND THE UNDERWRITERS EACH HEREBY IRREVOCABLY
WAIVE ANY RIGHT THEY MAY HAVE TO TRAIL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
<PAGE>
27
(i) This Agreement may not be amended or otherwise modified or
any provision hereof waived except by an instrument in writing signed by
the Representatives and the Company.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
CYGNUS, INC.
By: ________________________
Title:
Confirmed as of the date first
above mentioned:
[Representatives]
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule I hereof.
By:______________________________
By:______________________________
Title:
<PAGE>
SCHEDULE I
UNDERWRITERS
Principal Amount
of Firm Securities
Name To Be Purchased
____ ___________________
_________________
Total.....................................................$_________________
_________________
<PAGE>
EXHIBIT A
[NAME OF COMPANY]
_____________________
PRICE DETERMINATION AGREEMENT
[Date]
[Representatives]
As Representatives of the several Underwriters
Dear Sirs:
Reference is made to the Underwriting Agreement, dated ______,
199___ (the "Underwriting Agreement"), among __________________, a __________
corporation (the "Company") and the several Underwriters named in Schedule I
thereto or hereto (the "Underwriters"), for whom _____________,
_________________ [and __________________] are acting as representatives (the
"Representatives"). The Underwriting Agreement provides for the purchase by
the Underwriters from the Company, subject to the terms and conditions set
forth therein, of an aggregate of $________ (the "Firm Securities") principal
amount of the Company's [insert title of securities] (the "Securities") to be
issued pursuant to an Indenture dated as of ____________, 19__ between the
Company and ____________, as Trustee. This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives that the purchase price for the Firm
Securities to be paid by each of the several Underwriters shall be %_______
of the aggregate principal amount of the Firm Securities set forth opposite
the name of such Underwriter in Schedule I attached hereto.
The Company represents and warrants to each of the Underwriters
that the representations and warranties of the Company set forth in Section 3
of the Underwriting Agreement are accurate as though expressly made at and as
of the date hereof.
<PAGE>
As contemplated by the Underwriting Agreement, attached as Schedule
I is a completed list of the several Underwriters, which shall be a part of
this Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES OF SUCH STATE.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters and the Company, please sign and return to
the Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
Very truly yours,
CYGNUS, INC.
By:_________________________
Title:
Confirmed as of the date
first above mentioned:
[Representatives]
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule I hereof.
By:______________________________
By:______________________________
Title:
A-2
<PAGE>
EXHIBIT B
[DATE]
[Representatives]
As Representatives of the
several Underwriters
Dear Sirs:
In consideration of the agreement of the several Underwriters, for
which ______________, __________________ [and ______________] (the
"Representatives") intend to act as RG1 representatives to underwrite a
proposed public offering (the "Offering") of an aggregate of $_____ principal
amount of [insert title of securities] of ______, a ______________
corporation (the "Company"), as contemplated by a registration statement with
respect to such securities filed with the Securities and Exchange Commission
on Form S-3 (Registration No. _________), the undersigned hereby agrees that
the undersigned will not, for a period of [90] days after the commencement of
the public offering of such securities, without the prior written consent
of___________________, offer to sell, sell, contract to sell, grant any
option to sell, or otherwise dispose of, or require the Company to file with
the Securities and Exchange Commission a registration statement under the
Securities Act of 1933 to register any shares of the Company's common stock
or securities convertible into or exchangeable for such common stock or
warrants or rights to acquire shares of the Company's common stock of which
the undersigned is now, or may in the future become, the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934)
[(other than pursuant to employee stock option plans or in connection with
other employee incentive compensation arrangements)].*
Very truly yours,
By:_____________________________________________
Print Name:_____________________________________
____________
* Insert if this letter agreement will be signed by an employee of the
Company.
<PAGE>
EXHIBIT C
Form of Opinion of
COUNSEL TO THE COMPANY
1. The Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority
to conduct all the activities conducted by it, to own or lease all the assets
owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. The Company is the sole record
owner and, to our knowledge, the sole beneficial owner of all of the capital
stock of each of its Subsidiaries.
2. All of the outstanding shares of Common Stock have been,
and the shares of Common Stock to be delivered upon conversion of the
Securities, when they are issued upon such conversion in accordance with the
terms of the Securities, will be, duly authorized, validly issued, fully paid
and nonassessable and will not be subject to any preemptive or similar right
under (i) the statutes, judicial and administrative decisions and the rules
and regulations of the governmental agencies of the State of Delaware, (ii)
the Company's certificate of incorporation or by-laws or (iii) any
instrument, document, contract or other agreement referred to in the
Registration Statement or any instrument, document, contract or agreement
filed as an exhibit to, or incorporated by reference in the Registration
Statement. Except as described in the Registration Statement or the
Prospectus, to the best of our knowledge, there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights calling for the issuance of, any share of capital stock of the Company
or any Subsidiary to any person or any security or other instrument that by
its terms is convertible into, exercisable for or exchangeable for capital
stock of the Company. [The shares of Common Stock to be delivered upon the
conversion of the Securities have been duly reserved for issuance by the
Company.]
3. No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Securities,
[or the shares of Common Stock to be delivered upon conversion thereof,] in
connection with the execution, delivery and performance of the Agreement by
the Company or in connection with the taking by the Company of any action
contemplated thereby or, if so required, all such consents, approvals,
authorizations and orders have been obtained and are in full force and
effect, except such as have been obtained under the Act, the Trust Indenture
Act and the Rules and Regulations and such as may be required under state
securities or "Blue Sky" laws or by the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the
Securities.
<PAGE>
4. The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus under
the caption "Capitalization." [The description of the Common Stock to be
delivered upon conversion of the Securities contained in the Prospectus is
complete and accurate in all material respects. The form of certificate used
to evidence the Common Stock to be delivered upon conversion of the Securities
is in due and proper form and complies with all statutory requirements.]
5. The Registration Statement and the Prospectus (including any
documents incorporated by reference into the Prospectus, at the time they were
filed) comply or complied in all material respects as to form with the
requirements of the Act, the Exchange Act, the Exchange Act Rules and
Regulations, the Trust Indenture Act, the Trust Indenture Act Rules and
Regulations and the Rules and Regulations and the Indenture complies in all
material respects as to form with the Trust Indenture Act (except that we
express no opinion as to (i) financial statements, schedules and other financial
data contained in the Registration Statement or the Prospectus or incorporated
by reference therein) and (ii) the Statement of Eligibility and Qualification
under the Trust Indenture Act of the Trustee on Form T-1.
6. To the best of our knowledge, any instrument, document,
lease, license, contract or other agreement (collectively, "Documents") required
to be described or referred to in the Registration Statement or the Prospectus
has been properly described or referred to therein and any Document required to
be filed as an exhibit to the Registration Statement has been filed as an
exhibit thereto or has been incorporated as an exhibit by reference in the
Registration Statement; and no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any Document filed or required to be filed as an exhibit to the
Registration Statement.
7. To the best of our knowledge, except as disclosed in the
Registration Statement or the Prospectus, no person or entity has the right to
require the registration under the Act of shares of common stock or other
securities of the Company by reason of the filing or effectiveness of the
Registration Statement.
8. To the best of our knowledge, the Company is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment or decree, except as may be described in the Prospectus or such as in
the aggregate do not now have and will not in the future have a material adverse
effect upon the operations, business or assets of the Company and the
Subsidiaries, taken as a whole.
9. The Securities and the Indenture conform in all material
respects as to legal matters to the description thereof contained in the
Registration Statement and the Prospectus. All descriptions in the Prospectus
of statutes, regulations or legal or governmental proceedings are accurate and
fairly present the information required to be shown.
10. The information in the Registration Statement under the
caption "certain federal Income Tax Consequences" to the extent it constitutes
matters of law or legal
A-5
<PAGE>
conclusions, has been reviewed by us and is an accurate description under
applicable law of the principal Federal income tax consequences of an
investment in the Securities.
11. The Company has full corporate power and authority to enter
into the Agreement, and the Agreement has been duly authorized, executed and
delivered by the Company, is a valid and binding agreement of the Company and,
except for the indemnification and contribution provisions thereof, as to which
we express no opinion, is enforceable against the Company in accordance with the
terms thereof.
12. The Company has full corporate power and authority to
enter into the Indenture and to issue the Securities, and the Indenture has
been duly authorized, executed and delivered by the Company and duly
qualified under the Trust Indenture Act; the Securities have been duly
authorized, executed, authenticated (assuming due authentication by or on
behalf of the Trustee), issued and delivered and are entitled to the benefits
of the Indenture; and each of the Indenture and the Securities are legal,
valid and binding obligations of the Company and are enforceable against the
Company in accordance with their respective terms.
13. The execution and delivery by the Company of, and the
performance by the Company of its agreements in, the Agreement, the Indenture
and the Securities do not and will not (i) violate the certificate of
incorporation or by-laws of the Company, (ii) breach or result in a default
under, cause the time for performance of any obligation to be accelerated
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its Subsidiaries
pursuant to the terms of, (x) any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, capital lease or other evidence
of indebtedness of which we have knowledge, (y) any voting trust arrangement
or any contract or other agreement to which the Company is a party that
restricts the ability of the Company to issue securities or (z) any Document
filed as an exhibit to, or incorporated as an exhibit by reference in, the
Registration Statement, (iii) breach or otherwise violate any existing
obligation of the Company under any court or administrative order, judgment
or decree of which we have knowledge or (iv) violate applicable provisions of
any statute or regulation in the States of Delaware or California or of the
United States.
14. Delivery of certificates for the Securities will transfer
valid and marketable title thereto to each Underwriter that has purchased
such Securities in good faith and without notice of any adverse claim with
respect thereto.
15. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
[16. The Securities [and the shares of Common Stock issuable upon
conversion thereof] have been approved for quotation on the Nasdaq National
Market.]
A-6
<PAGE>
We hereby confirm to you that we have been advised by the Commission
that the Registration Statement has become effective under the Act and that
no order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or is
threatened, pending or contemplated.
We hereby further confirm to you that there are no actions, suits,
proceedings or investigations pending or, to our knowledge, overtly
threatened in writing against the Company or any of its Subsidiaries, or any
of their respective officers or directors in their capacities as such, before
or by any court, governmental agency or arbitrator which (i) seek to
challenge the legality or enforceability of the Agreement, the Indenture or
the Securities, (ii) seek to challenge the legality or enforceability of any
of the Documents filed, or required to be filed, as exhibits to the
Registration Statement, (iii) seek damages or other remedies with respect to
any of the Documents filed, or required to be filed, as exhibits to the
Registration Statement, (iv) except as set forth in or contemplated by the
Registration Statement and the Prospectus, seek money damages in excess of
$________ or seek to impose criminal penalties upon the Company, any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such and of which we have knowledge or (v) seek to enjoin any
of the business activities of the Company or any of its Subsidiaries or the
transactions described in the Prospectus and of which we have knowledge.
We have participated in the preparation of the Registration
Statement and the Prospectus and, without assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or in any document incorporated by reference into the Prospectus,
nothing has come to our attention that causes us to believe that, both as of
the Effective Date and as of the Closing Date and the Option Closing Date,
the Registration Statement, or any amendment thereto, contained or contains
any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that any Prospectus or any amendment or
supplement thereto including any documents incorporated by reference into the
Prospectus], at the time such Prospectus was issued, at the time any such
amended or supplemented Prospectus was issued, at the Closing Date, and the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances in which they were
made, not misleading (except that we express no opinion as to financial
statements, schedules and other financial data contained in the Registration
Statement or the Prospectus or incorporated by reference therein).
The foregoing opinion is subject to the qualification that the
enforceability of the Agreement, the Indenture and the Securities may be: (i)
subject to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally; and (ii) subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity), including principles of commercial
reasonableness or conscionability and an implied covenant of good faith and
fair dealing.
A-7
<PAGE>
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Agreement and may not be circulated
to, or relied upon by, any other person, except that this letter may be
relied upon by our counsel in connection with the opinion letter to be
delivered pursuant to Section 5(g) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the extent
they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel as to matters governed by the laws of
jurisdictions other than the United States and the States of California and
Delaware and as to matters of fact, upon certificates of officers of the
Company and of government officials; provided that such counsel shall state
that the opinion of any other counsel is in form satisfactory to such
counsel. Copies of all such opinions and certificates shall be furnished to
counsel to the Underwriters on the Closing Date.
<PAGE>
Exhibit 4.1
- -------------------------------------------------------------------------------
Cygnus, Inc.
TO
State Street Bank and Trust Company of California, N.A.,
as Trustee
---------------------------------
Indenture
Dated as of _________________, 1997
---------------------------------
Senior Debt Securities
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
"Act,". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Attributable Debt" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authenticating Agent". . . . . . . . . . . . . . . . . . . . . . . . 2
"Board of Directors". . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board Resolution". . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day," . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Commission". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Common Stock". . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Request" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Consolidated Net Tangible Assets". . . . . . . . . . . . . . . . . . 3
"Corporate Trust Office". . . . . . . . . . . . . . . . . . . . . . . 3
"Corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Defaulted Interest". . . . . . . . . . . . . . . . . . . . . . . . . 4
"Defeasance". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Depositary". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Event of Default". . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Exchange Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Expiration Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Holder". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Interest," . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Interest Payment Date,". . . . . . . . . . . . . . . . . . . . . . . 5
"Investment Company Act". . . . . . . . . . . . . . . . . . . . . . . 5
"Maturity," . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Nonrecourse Obligation". . . . . . . . . . . . . . . . . . . . . . . 5
"Notice of Default" . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Officers' Certificate" . . . . . . . . . . . . . . . . . . . . . . . 5
"Opinion of Counsel". . . . . . . . . . . . . . . . . . . . . . . . . 5
i.
<PAGE>
"Original Issue Discount Security". . . . . . . . . . . . . . . . . . 6
"Outstanding,". . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Paying Agent". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Person". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Place of Payment," . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Predecessor Security". . . . . . . . . . . . . . . . . . . . . . . . 7
"Principal Property". . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Date,". . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Price," . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Responsible Officer" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Restricted Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . 7
"Sale and Leaseback Transaction". . . . . . . . . . . . . . . . . . . 8
"Securities". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Securities Act". . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Security Register" . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Security Registrar". . . . . . . . . . . . . . . . . . . . . . . . . 8
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . . . . 8
"Stated Maturity,". . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Subsidiary". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"U.S. Government Obligation". . . . . . . . . . . . . . . . . . . . . 9
"Vice President," . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . 9
SECTION 104. Acts of Holders; Record Dates. . . . . . . . . . . . . . . .10
SECTION 105. Notices, Etc., to Trustee and Company. . . . . . . . . . . .12
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . .12
SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . .13
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . .13
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . .13
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . .13
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . .13
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 114. Indenture and Securities Solely Corporate Obligations. . . .14
ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . .14
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . .15
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . .16
SECTION 204. Form of Legend for Global Securities . . . . . . . . . . . .21
SECTION 205. Form of Trustee's Certificate of Authentication. . . . . . .21
ii.
<PAGE>
SECTION 206. Form of Conversion Notice. . . . . . . . . . . . . . . . . .22
ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . .23
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . .26
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . .28
SECTION 305. Registration; Registration of Transfer and Exchange. . . . .28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . .30
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . .31
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . .32
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . .32
ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . .32
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . .32
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . .34
ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . .34
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . .35
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . .37
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . .37
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . .38
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. . . . . . . . . . . . . . . . . . .38
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . .38
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . .39
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . .39
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . .39
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . .39
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . .40
SECTION 515. Waiver of Usury, Stay or Extension Laws. . . . . . . . . . .40
ARTICLE SIX THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . .40
SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . .40
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . .40
iii.
<PAGE>
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . .41
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . .41
SECTION 605. May Hold Securities and Act as Trustee Under Other
Indentures . . . . . . . . . . . . . . . . . . . . . . . . . .42
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . .42
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . .42
SECTION 608. Conflicting Interests. . . . . . . . . . . . . . . . . . . .42
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . .43
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . .43
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . .44
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 613. Preferential Collection of Claims Against Company. . . . . .46
SECTION 614. Appointment of Authenticating Agent. . . . . . . . . . . . .46
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 702. Preservation of Information; Communications to Holders . . .48
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . .48
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . .48
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . .49
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . .49
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . .49
ARTICLE NINE SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . .50
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . .50
SECTION 902. Supplemental Indentures With Consent of Holders. . . . . . .51
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . .52
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . .52
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . .53
SECTION 906. Reference in Securities to Supplemental Indentures . . . . .53
ARTICLE TEN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 1001. Payment of Principal, Premium and Interest. . . . . . . . .53
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . .53
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . .53
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . .54
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . .55
iv.
<PAGE>
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . .55
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . .55
SECTION 1008. Limitation on Liens . . . . . . . . . . . . . . . . . . . .55
SECTION 1009. Limitations on Sale and Leaseback Transactions. . . . . . .57
SECTION 1010. Waiver of Certain Covenants . . . . . . . . . . . . . . . .57
ARTICLE ELEVEN REDEMPTION OF SECURITIES. . . . . . . . . . . . . . . . . .58
SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . .58
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . .58
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . .58
SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . .59
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . .60
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . .60
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . .60
ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . .61
SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . .61
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . .61
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . .61
ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . . . . . . .62
SECTION 1301. Company's Option to Effect Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 1302. Defeasance and Discharge. . . . . . . . . . . . . . . . . .62
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . . .62
SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . .63
SECTION 1305. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions . . . . . . . . . . .64
SECTION 1306. Reinstatement . . . . . . . . . . . . . . . . . . . . . . .65
ARTICLE FOURTEEN CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . .65
SECTION 1401. Applicability of Article. . . . . . . . . . . . . . . . . .65
SECTION 1402. Exercise of Conversion Privilege. . . . . . . . . . . . . .65
SECTION 1403. No Fractional Shares. . . . . . . . . . . . . . . . . . . .67
SECTION 1404. Adjustment of Conversion Price. . . . . . . . . . . . . . .67
SECTION 1405. Notice of Certain Corporate Actions . . . . . . . . . . . .68
SECTION 1406. Reservation of Shares of Common Stock . . . . . . . . . . .68
SECTION 1407. Payment of Certain Taxes Upon Conversion. . . . . . . . . .69
SECTION 1408. Nonassessability. . . . . . . . . . . . . . . . . . . . . .69
SECTION 1409. Provision in Case of Consolidation, Merger or Sale of
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
v.
<PAGE>
SECTION 1410. Duties of Trustee Regarding Conversion. . . . . . . . . . .70
SECTION 1411. Repayment of Certain Funds Upon Conversion. . . . . . . . .70
vi.
<PAGE>
Certain Sections of this Indenture relating
to Sections 310 through 318, inclusive, of the Trust
Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
ss.310 (a)(1) . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 608, 610
ss.311 (a) . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . 613
ss.312 (a) . . . . . . . . . . . . . . . . . . . . 701, 702
(b) . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . 702
ss.313 (a) . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . 703
ss.314 (a) . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . 102
ss.315 (a) . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . 514
ss.316 (a) . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . 104
ss.317 (a)(1) . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . 1003
ss.318 (a) . . . . . . . . . . . . . . . . . . . . 107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
vii.
<PAGE>
INDENTURE, dated as of ___________, 1997, between Cygnus, Inc., a
corporation duly organized and existing under the State of Delaware (herein
called the "Company"), having its principal executive office at 400 Penobscot
Drive, Redwood City, CA 94063-4719, and State Street Bank and Trust Company
of California, N.A., a national banking association duly organized and
existing under the laws of the United States of America, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this
Indenture.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
<PAGE>
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"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.
"Attributable Debt" means, in respect of a Sale and Lease-Back
Transaction involving a Principal Property, at the time of determination, the
lesser of: (a) the fair value of such property (as determined in good faith
by the Board of Directors); or (b) the present value of the total net amount
of rent required to be paid under such lease during the remaining term
thereof (including any renewal term or period for which such lease has been
extended), discounted at the rate of interest set forth or implicit in the
terms of such lease or, if not practicable to determine such rate, the
weighted average interest rate per annum (in the case of Original Issue
Discount Securities, the imputed interest rate) borne by the Securities of
each series outstanding pursuant to this Indenture compounded semi-annually.
For purposes of the foregoing definition, rent shall not include amounts
required to be paid by the lessee, whether or not designated as rent or
additional rent, on account of or contingent upon maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges. In the case
of any lease which is terminable by the lessee upon the payment of a penalty,
such net amount shall be the lesser of the net amount determined assuming
termination upon the first date such lease may be terminated (in which case
the net amount shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated) and the net amount determined
assuming no such termination.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board empowered to act for
it with respect to this Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
2.
<PAGE>
"Business Day," when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in that Place of Payment are authorized or
obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company; provided,
however, subject to the provisions of Section 1409, shares issuable upon
conversion of Securities shall include only shares of the class designated as
Common Stock of the Company at the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company and which are not subject to redemption by the
Company; provided, further that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"Company" means the corporation 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, its
Vice Chairman of the Board, its President or a Vice President, and by its
principal financial officer, its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means, as of the time of
determination, total assets (excluding applicable reserves and other property
deductible items) less: (a) total current liabilities, except for (1) notes
and loans payable, (2) current maturities of long-term debt and (3) current
maturities of obligations under capital leases; and (b) goodwill, patents and
trademarks, to the extent included in total assets, all as set forth on the
most recent consolidated balance sheet of the Company and its Restricted
Subsidiaries and computed in accordance with generally accepted accounting
principles.
"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time the trust created by this Indenture
shall be administered, which office on the date hereof is located at 725
Figueroa Street, Suite 3100, Los Angeles, CA 90017.
3.
<PAGE>
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series
issuable in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act
as Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or
such legend as may be specified as contemplated by Section 301 for such
Securities).
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively. The term "Indenture" shall also include the terms of
particular series of Securities established as contemplated by Section 301;
provided, however, that if at any time more than one Person is acting as
Trustee under this Indenture due to the appointment of one or more separate
Trustees for any one or more separate series of Securities, "Indenture" shall
mean, with respect to such series of Securities for which any such Person is
Trustee, 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 and shall include
the terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for
which such Person is not Trustee, regardless of when such terms or provisions
were adopted, and exclusive of any provisions or terms adopted by means of
one
4.
<PAGE>
or more indentures supplemental hereto executed and delivered after such
person had become such Trustee, but to which such person, as such Trustee,
was not a party; provided, further that in the event that this Indenture is
supplemented or amended by one or more indentures supplemental hereto which
are only applicable to certain series of Securities, the term "Indenture" for
a particular series of Securities shall only include the supplemental
indentures applicable thereto.
"Interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date," when used with respect to any Security,
means the Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940
and any statute successor thereto, in each case as amended from time to time.
"Maturity," when used with respect to any Security, means the date
on which the principal of such Security or an instalment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
"Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned
by the Company or any Restricted Subsidiary or (ii) the financing of a
project involving the development or expansion of properties of the Company
or any Restricted Subsidiary, as to which the obligee with respect to such
indebtedness or obligation has no recourse to the Company or any Restricted
Subsidiary or any assets of the Company or any Restricted Subsidiary other
than the assets which were acquired with the proceeds of such transaction or
the project financed with the proceeds of such transaction (and the proceeds
thereof).
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the principal financial officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. One of the officers signing an Officers'
Certificate given pursuant to Section 1004 shall be the principal executive,
financial or accounting officer of the Company.
"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.
5.
<PAGE>
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding," when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 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 the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original
Issue Discount Security which shall be deemed to be Outstanding shall be the
amount of the principal thereof which would be due and payable as of such
date upon acceleration of the Maturity thereof to such date pursuant to
Section 502, (B) if, as of such date, the principal amount payable at the
Stated Maturity of a Security is not determinable, the principal amount of
such Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the principal
amount of a Security denominated in one or more foreign currencies or
currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as
contemplated by Section 301, of the principal amount of such Security (or, in
the case of a Security described in Clause (A) or (B) above, of the amount
determined as provided in such Clause), and (D) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee
knows to be so owned shall be so disregarded.
6.
<PAGE>
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"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 306 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.
"Principal Property" means the land, land improvements, buildings
and fixtures (to the extent they constitute real property interests,
including any leasehold interest therein) constituting the principal
corporate office, any manufacturing facility or any distribution center
(whether now owned or hereafter acquired) which: (a) is owned by the Company
or any Subsidiary; (b) is located within any of the present 50 states of the
United States (or the District of Columbia); (c) has not been determined in
good faith by he Board of Directors not to be materially important to the
total business conducted by the Company and its Subsidiaries taken as a
whole; and (d) has a market value on the date as of which the determination
is being made in excess of 2.0% of Consolidated Net Tangible Assets of the
Company as most recently determined on or prior to such date.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for
that purpose as contemplated by Section 301.
"Responsible Officer" means an officer in the Corporate Trust Office
of the Trustee.
"Restricted Subsidiary" means any Subsidiary that owns any Principal
Property; provided, however, that the term "Restricted Subsidiary" shall not
include (a) any Subsidiary
7.
<PAGE>
which is principally engaged in financing receivables, or which is
principally engaged in financing the Company's operations outside the United
States of America or (b) any Subsidiary less than 80% of the 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 if
the Common Stock of such Subsidiary is traded on any national securities
exchange or quoted on the Nasdaq National Market or in the over-the-counter
market.
"Sale and Leaseback Transaction" means any arrangement with any
person providing for the leasing by the Company or any Restricted Subsidiary
of any Principal Property which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such person.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly,
by the Company or by one or more other Subsidiaries, or by the Company and
one or more other Subsidiaries, and the accounts of which are consolidated
with those of the Company in its most recent consolidated financial
statements in accordance with generally accepted accounting principles. For
the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only
so long as no senior class of stock has such voting power by reason of any
contingency.
"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.
8.
<PAGE>
"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 or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect
to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section
1304.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Company to the Trustee to take any action under any
provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this
Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as
9.
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to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her 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 104. ACTS OF HOLDERS; RECORD DATES. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company. The Trustee shall
promptly deliver to the Company copies of all such instrument or instruments
and records delivered to the Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
601) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him or her the execution
thereof. Where such execution is by a signer acting in a capacity other than
his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
The ownership of Securities shall be proved by the Security Register.
10.
<PAGE>
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is
made upon such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, vote,
notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such series,
provided that the Company may not set a record date for, and the provisions
of this paragraph shall not apply with respect to, the giving or making of
any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities of the relevant series on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant
to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its
own expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of such series on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing
in this paragraph shall be construed to prevent the Trustee from setting a
new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph,
11.
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the Trustee, at the Company's expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Company in writing and to each Holder of Securities of the
relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 106, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall
be deemed to have initially designated the 180th day after such record date
as the Expiration Date with respect thereto, subject to its right to change
the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders
or other document provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing (or
by facsimile transmissions ((213) 362-7357), provided that oral confirmation
of receipt by a Responsible Officer of the Trustee shall have been received)
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Department (Cygnus, Inc. Senior Debt Securities), or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company addressed
to it at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in writing to
the Trustee by the Company, Attention: Chief Financial Officer.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest
date (if any), and not earlier than the earliest date (if any), prescribed
for the giving of such notice. In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice
12.
<PAGE>
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act
which 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 which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 109. 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 110. SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security or the last date on
which a Holder has the right to convert a Security at a particular conversion
price shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or
principal (and premium, if any) or, if applicable to a particular series of
Securities, conversion need not be made at such Place of Payment on
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<PAGE>
such date, but may be made on the next succeeding Business Day at such Place
of Payment with the same force and effect as if made on the Interest Payment
Date or Redemption Date, at the Stated Maturity or on such last day for
conversion, as the case may be.
SECTION 114. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest
on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement
of the Company in this Indenture or in any supplemental indenture or in any
Security, or because any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer, or director
or subsidiary, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly understood that all such liability is hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY. The Securities of each series shall be in
substantially the form set forth in this Article, or in such other form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or
Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof.
If the form of Securities of any series is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery
of such Securities. Any such Board Resolution or record of such action shall
have attached thereto a true and correct copy of the form of Security
referred to therein approved by or pursuant to such Board Resolution.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
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<PAGE>
SECTION 202. FORM OF FACE OF SECURITY.
CYGNUS, INC.
No. _________ $_____________
Cygnus, Inc., a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ____________, or registered assigns, the
principal sum of _____________ Dollars on _____________________________ [if
the Security is to bear interest prior to Maturity, insert --, and to pay
interest thereon from __________ or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
___________ and __________ in each year, commencing _________, at the rate of
___% per annum, until the principal hereof is paid or made available for
payment [if applicable, insert --, provided that any principal and premium,
and any such instalment of interest, which is overdue shall bear interest at
the rate of ___% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment, and such interest shall be payable on
demand] . The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such 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 ______ or ______ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at
Stated Maturity and in such case the overdue principal and any overdue
premium shall bear interest at the rate of ___% per annum (to the extent that
the payment of such interest shall be legally enforceable), from the dates
such amounts are due until they are paid or made available for payment.
Interest on any overdue principal or premium shall be payable on demand. [Any
such interest on overdue principal or premium which is not paid on demand
shall bear interest at the rate of ___% per annum (to the extent that the
payment of such interest on interest shall be legally enforceable), from the
date of such demand until the amount so demanded is paid or made available
for payment. Interest on any overdue interest shall be payable on demand.]]
15
<PAGE>
Payment of the principal of (and premium, if any) and [if
applicable, insert -- any such] interest on this Security will be made at the
office or agency of the Company maintained for that purpose in _______, in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts [if
applicable, insert -- ; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register}.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:__________________
CYGNUS, INC.
By:___________________
Title:________________
Attest:_________________
SECTION 203. FORM OF REVERSE OF SECURITY. This Security is one of a duly
authorized issue of securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture, dated as of
__________ (herein called the "Indenture," which term shall have the meaning
assigned to it in such instrument), between the Company and State Street Bank
and Trust Company of California, N.A., as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture and all indentures supplemental thereto for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof [if
applicable, insert -- , limited in aggregate principal amount to $________].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert --
(1) on __________ in any year commencing with the year ________ and ending with
the year ________ through operation of
16
<PAGE>
the sinking fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2)] at any time {if applicable, insert -- on or after
__________, 19__], as a whole or in part, at the election of the Company, at
the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed {if applicable, insert -- on or before __________, ___%,
and if redeemed] during the 12-month period beginning ____________ of the
years indicated,
Redemption Redemption
Year Price Year Price
---- ----- ---- -----
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments 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 applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on __________ in any
year commencing with the year _____ and ending with the year _____ through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert -- on or after __________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning __________ of the years indicated,
Redemption Price For Redemption Price For
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ------------- --------------------
17
<PAGE>
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments 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 applicable, insert -- Notwithstanding the foregoing, the Company
may not, prior to __________, redeem any Securities of this series as
contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph
as a part of, or in anticipation of, any refunding operation by the application,
directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of
less than ___% per annum.]
[If applicable, insert -- The sinking fund for this series provides
for the redemption on __________ in each year beginning with the year ______
and ending with the year ______ of {if applicable, insert -- not less than
$_______ ("mandatory sinking fund") and not more than] $_______ aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [if applicable,
insert--mandatory] sinking fund payments may be credited against subsequent
[if applicable, insert -- mandatory] sinking fund payments otherwise required
to be made [if applicable, insert -- , in the inverse order in which they
become due].]
[If the Security is subject to redemption of any kind, insert -- In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Indenture contains provisions for
defeasance at any time of [the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance with certain conditions set forth in
the Indenture.]
[If the Security is convertible into Common Stock of the Company,
insert - --Subject to the provisions of the Indenture, the Holder of this
Security is entitled, at its option, at any time on or before [insert date]
(except that, in case this Security or any portion hereof shall be called for
redemption, such right shall terminate with respect to this Security or portion
hereof, as the case may be, so called for redemption at the close of business on
the first Business Day preceding the date fixed for redemption as provided in
the Indenture unless the Company defaults in making the payment due upon
redemption), to convert the principal amount of this Security (or any portion
hereof which is $1,000 or an integral multiple thereof), into fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of the Common Stock of the Company, as said shares shall be
constituted at the date of conversion, at the conversion price of $______
principal amount of Securities for each share of Common Stock,
18
<PAGE>
or at the adjusted conversion price in effect at the date of conversion
determined as provided in the Indenture, upon surrender of this Security,
together with the conversion notice hereon duly executed, to the Company at
the designated office or agency of the Company in __________, accompanied (if
so required by the Company) by instruments of transfer, in form satisfactory
to the Company and to the Trustee, duly executed by the Holder or by its duly
authorized attorney in writing. Such surrender shall, if made during any
period beginning at the close of business on a Regular Record Date and ending
at the opening of business on the Interest Payment Date next following such
Regular Record Date (unless this Security or the portion being converted
shall have been called for redemption on a Redemption Date during the period
beginning at the close of business on a Regular Record Date and ending at the
opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business
Day, the second such Business Day), also be accompanied by payment in 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. 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 (with certain
exceptions provided in the Indenture), no adjustment is to be made on
conversion for interest accrued hereon or for dividends on shares of Common
Stock issued on conversion. The Company is not required to issue fractional
shares upon any such conversion, but shall make adjustment therefor in cash
on the basis of the current market value of such fractional interest 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 consolidations or mergers to which the Company is a party or the
sale of substantially all of the 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 the
consolidation, merger or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior to
such consolidation, merger or sale (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares). In the
event of conversion of this Security in part only, a new Security or
Securities for the unconverted portion hereof shall be issued in the name of
the Holder hereof upon the cancellation hereof.]
[If the Security is convertible into other securities of the Company,
specify the conversion features.]
[If the Security is not an Original Issue Discount Security, insert --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If
an Event of
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Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining
the amount. Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal, premium and interest
(in each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and premium and interest, if any, on the
Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, 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 upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this 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 with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding 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
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
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 and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
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As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, 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 hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $______ and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made to a Holder for any such
registration of transfer or exchange, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this 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 this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES. Unless otherwise
specified as contemplated by Section 301 for the Securities evidenced thereby,
every Global Security authenticated and delivered hereunder shall bear a legend
in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR
IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN
WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's certificates of authentication shall be in substantially the following
form:
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This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
N.A., As Trustee
By:________________________________
Authorized Officer
SECTION 206. FORM OF CONVERSION NOTICE.
To Cygnus, Inc.:
The undersigned owner of this Security hereby irrevocably exercises
the option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date within such
period), this Notice is accompanied by payment, in funds acceptable to the
Company, of an amount equal to the interest payable on such Interest Payment
Date of the principal of this Security to be converted. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect hereto. Any amount required to be
paid by the undersigned on account of interest accompanies this Security.
Principal Amount to be Converted
(in an integral multiple of $1,000, if less than all)
U.S. $_________
Dated:______________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) must be guaranteed by an
eligible guarantor institution (banks,
stock brokers, savings and loan associations
and credit unions) with membership in an
approved signature guarantee medallion program
pursuant to Securities and Exchange Commission
Rule 17Ad-15 if shares of Common Stock are to
be delivered, or Securities to be issued,
other than to and in the name of the
registered owner.
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___________________________________
Signature Guaranty
Fill in for registration of shares of
Common Stock and Security if to be
issued otherwise than to the registered
Holder.
_____________ ______________________
(Name) Social Security or
Other Taxpayer
Identification
Number
__________________________________
(Address)
__________________________________
Please print Name and Address (including
zip code number)
[The above conversion notice is to be
modified, as appropriate, for conversion
into other securities or property of the
Company.]
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The
aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution and, subject
to Section 303, set forth, or determined in the manner provided, in an
Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other
23
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Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and
except for any Securities which, pursuant to Section 303, are deemed never to
have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any
Securities of the series is payable;
(5) the rate or rates at which any Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for any such
interest payable on any Interest Payment Date;
(6) the place or places where the principal of and any
premium and interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices
at which and the terms and conditions upon which any Securities of the
series may be redeemed, in whole or in part, at the option of the
Company and, if other than by a Board Resolution, the manner in which
any election by the Company to redeem the Securities shall be
evidenced;
(8) the obligation, if any, of the Company to redeem or
purchase any Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of the Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which any Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Securities of the
series shall be issuable;
(10) if the amount of principal of or any premium or
interest on any Securities of the series may be determined with
reference to an index or pursuant to a formula, the manner in which
such amounts shall be determined;
(11) if other than the currency of the United States of
America, the currency, currencies or currency units in which the
principal of or any premium or interest on any Securities of the
series shall be payable and the manner of determining the equivalent
thereof in the currency of the United States of America for any
purpose, including for purposes of the definition of "Outstanding" in
Section 101; provided, however, that prior to the issuance of any such
Securities, the Company shall have obtained the written consent of the
Trustee, which
24
<PAGE>
consent may be withheld in the sole discretion of the Trustee, to the
currency, currencies or currency units so established;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or the Holder thereof, in one or more currencies or currency
units other than that or those in which such Securities are stated to
be payable, the currency, currencies or currency units in which the
principal of or any premium or interest on such Securities as to which
such election is made shall be payable, the periods within which and
the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount shall be
determined provided); however, that prior to the issuance of any such
Securities, the Company shall have obtained the written consent of the
Trustee, which consent may be withheld in the sole discretion of the
Trustee, to the currency, currencies or currency units so established;
(13) if other than the entire principal amount thereof, the
portion of the principal amount of any Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(14) if the principal amount payable at the Stated Maturity
of any Securities of the series will not be determinable as of any one
or more dates prior to the Stated Maturity, the amount which shall be
deemed to be the principal amount of such Securities as of any such
date for any purpose thereunder or hereunder, including the principal
amount thereof which shall be due and payable upon any Maturity other
than the Stated Maturity or which shall be deemed to be Outstanding as
of any date prior to the Stated Maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
(15) if applicable, that the Securities of the series, in
whole or any specified part, shall be defeasible pursuant to Section
1302 or Section 1303 or both such Sections and, if other than by a
Board Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(16) if applicable, the terms of any right to convert
Securities of the series into shares of Common Stock of the Company or
other securities or property;
(17) if applicable, that any Securities of the series shall
be issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for such
Global Securities, the form of any legend or legends which shall be
borne by any such Global Security in addition to or in lieu of that
set forth in Section 204 and any circumstances in addition to or in
lieu of those set forth in Clause (2) of the last paragraph of Section
305 in which any such Global Security may be exchanged in whole or in
part for Securities registered, and any transfer of such Global
Security in whole or in part may be registered, in the name or names
of Persons other than the Depositary for such Global Security or a
nominee thereof;
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<PAGE>
(18) any addition to or change in the Events of Default
which applies to any Securities of the series and any change in the
right of the Trustee or the requisite Holders of such Securities to
declare the principal amount thereof due and payable pursuant to
Section 502;
(19) any addition to or change in the covenants set forth in
Article Ten which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be
provided in or pursuant to the Board Resolution referred to above and
(subject to Section 303) set forth, or determined in the manner
provided, in the Officers' Certificate referred to above or in any
such indenture supplemental hereto.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record
of such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate setting forth the terms of
the series.
SECTION 302. DENOMINATIONS. The Securities of each series shall
be issuable only in registered form without coupons and only in such
denominations as shall be specified as contemplated by Section 301. In
the absence of any such specified denomination with respect to the
Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its principal
financial officer, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one
of its Assistant Secretaries. The signature of any of these officers
on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication
and delivery of such Securities or did not hold such offices at the
date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of
such Securities, and the Trustee in accordance with the Company Order
shall authenticate and deliver such Securities. If the form or terms
of the Securities of the series have been established by or pursuant
to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional
responsibilities under this Indenture
26
<PAGE>
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion
of Counsel stating,
(1) if the form of such Securities has been established by
or pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established
by or pursuant to Board Resolution as permitted by Section 301, that
such terms have been established in conformity with the provisions of
this Indenture; and
(3) that such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
If such form or terms have been so established, the Trustee
shall not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable
to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to be
originally issued at one time, it shall not be necessary to deliver
the Officers' Certificate otherwise required pursuant to Section 301
or the Company Order and Opinion of Counsel otherwise required
pursuant to such preceding paragraph at or prior to the authentication
of each Security of such series if such documents are delivered at or
prior to the authentication upon original issuance of the first
Security of such series to be issued.
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 by manual
signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing,
if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
27
<PAGE>
SECTION 304. TEMPORARY SECURITIES. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be prepared
without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series
shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or
agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities of any series, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor one or
more definitive Securities of the same series, of any authorized
denominations and of like tenor and aggregate principal amount. Until
so exchanged, the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities of such series and tenor.
SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. 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 in a Place of
Payment 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 of Securities as herein provided.
Upon surrender for registration of transfer of any Security
of a series at the office or agency of the Company in a Place of
Payment for that series, 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 the same
series, of any authorized denominations and of like tenor and
aggregate principal amount.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of like tenor and aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to
receive.
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<PAGE>
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the
Trustee) 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 its attorney duly
authorized in writing.
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 exchange of Securities, other than exchanges pursuant to
Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and
specified tenor) are to be redeemed in part, the Company shall not be
required (A) to issue, register the transfer of or exchange any
Securities of that series (or of that series and specified tenor, as
the case may be) during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, or (B) to
register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary
or a nominee thereof or custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this
Indenture.
(2) Notwithstanding any other provision in this Indenture,
no Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary
for such Global Security or a nominee thereof unless (A) such
Depositary (i) has notified the Company that it is unwilling or unable
to continue as Depositary for such Global Security or (ii) has ceased
to be a clearing agency registered under the Exchange Act, (B) there
shall have occurred and be continuing an Event of Default with respect
to such Global Security or (C) there shall exist such circumstances,
if any, in addition to or in lieu of the foregoing as have been
specified for this purpose as contemplated by Section 301.
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<PAGE>
(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion thereof, whether pursuant to this
Section, Section 304, 306, 906 or 1107 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee
thereof.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft
of any Security and (ii) such security or indemnity as may be required
by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same
series and 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 may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section,
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 and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall
be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and
all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities.
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SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security of any series 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 of such series
(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 of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given to each Holder of
Securities of such series in the manner set forth in Section 106, 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 of such series (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
on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such 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, each
Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security
31
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shall carry the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Security. Subject to the provisions of Section
1402, in the case of any Security (or any part thereof) which is converted
after any Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Security the principal of (or premium, if any,
on) which shall become due and payable, whether at Stated Maturity or by
declaration of acceleration 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 that Security (or any 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 or in Section 1402, in the case of any Security (or any part
thereof) which is converted, interest whose Stated Maturity is after the date
of conversion of such Security (or such part thereof) shall not be payable.
SECTION 308. 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 and any premium and
(subject to Section 307) any 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 309. CANCELLATION. All Securities surrendered for
payment, redemption, registration of transfer or exchange or for
credit against any sinking fund payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall
be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and
all Securities so delivered shall be promptly canceled by the Trustee.
No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise
specified as contemplated by Section 301 for Securities of any series,
interest on the Securities of each series shall be computed on the
basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration
<PAGE>
of transfer or exchange of Securities herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) 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
306 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 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense,
of the Company, and the Company,
in the case of (i), (ii) or (iii) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose
money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and any premium and interest
to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(1) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(2) 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
607, the obligations of the Trustee to any Authenticating Agent under
Section 614 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
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SECTION 402. APPLICATION OF TRUST MONEY. Subject to the
provisions of the last paragraph of Section 1003, all money deposited
with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal and any premium and interest for whose payment such money
has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever
used herein with respect to Securities of any series, means any one of
the following events (whatever the reason for such Event of Default
and whether it shall 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 upon any
Security of that series 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 any
premium on any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment,
when and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of
Securities other than that series), 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 of that series 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) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any
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substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to
Securities of that series.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) with respect to Securities of any series at
the time Outstanding 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 of that series may declare the principal
amount of all the Securities of that series (or, if any Securities of
that series are Original Issue Discount Securities, such portion of
the principal amount of such Securities as may be specified by the
terms thereof) to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount)
shall become immediately due and payable. If an Event of Default
specified in Section 501(5) or 501(6) with respect to Securities of
any series at the time Outstanding occurs, the principal amount of all
the Securities of that series (or, if any Securities of that series
are Original Issue Discount Securities, such portion of the principal
amount of such Securities as may be specified by the terms thereof)
shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and
payable.
At any time after such a declaration of acceleration with
respect to Securities of any series 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 provided, the Holders of a
majority in principal amount of the Outstanding Securities of that
series, 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
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(A) all overdue interest on all Securities of that
series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, 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 with respect to Securities of
that series, other than the non-payment of the principal of Securities
of that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5130
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest 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 any premium and
interest and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal and premium and
on any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any
series 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 of such series 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.
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SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any
judicial proceeding relative to the Company (or any other obligor upon
the Securities), its property or its creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts
due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding; provided, however, that the Trustee
may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. 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 such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in
case of the distribution of such money on account of principal or any
premium 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 607; and
SECOND: To the payment of the amounts then due and unpaid
for principal of and any premium, if any, and 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 and any premium, if any, and interest, respectively.
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SECTION 507. LIMITATION ON SUITS. No Holder of any Security of
any series 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 with respect to the
Securities of that series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series 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 of that
series;
it being understood and intended that no one or more of such Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other of such Holders, or to obtain or to
seek to obtain priority or preference over any other of such Holders
or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. 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 and any premium and (subject to Section
307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the
Redemption Date), to convert such Securities in accordance with
Article Fourteen and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee
or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the
Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the
Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding
had been instituted.
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SECTION 510. 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 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient,
by the Trustee (subject to the limitations contained in this
Indenture) or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in
principal amount of the Outstanding Securities of any series 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, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture and the Trustee shall not have
determined that the action so directed would be unjustly prejudicial
to Holders of Securities of that series, or any other series, not
taking part in such direction, and
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction or this
Indenture.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Securities of
any series may on behalf of the Holders of all the Securities of such
series waive any past default hereunder with respect to such series
and its consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Security of such series 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
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no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any
court to require such an undertaking or to make such an assessment in
any suit instituted by the Company or in any suit for the enforcement
of the right to convert any Security in accordance with Article
Fourteen.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS. The
Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. The duties
and responsibilities of the Trustee shall be as provided by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS. If a default occurs hereunder
with respect to Securities of any series, the Trustee shall give the
Holders of Securities of such series notice of such default as and to
the extent provided by the Trust Indenture Act; provided, however,
that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to
Holders 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 with respect to Securities of such series.
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SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order, and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be 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 and the written
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 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, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 604. 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 neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness.
The Trustee makes no representations as to the
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validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER
INDENTURES. The Trustee, any Authenticating Agent, any Paying Agent,
any Security Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of
Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Security Registrar or
such other agent.
Subject to the limitations imposed by the Trust Indenture
Act, nothing in this Indenture shall prohibit the Trustee from
becoming and acting as trustee under other indentures under which
other securities, or certificates of interest of participation in
other securities, of the Company are outstanding in the same manner as
if it were not Trustee hereunder.
SECTION 606. 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 with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation 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 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 the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
SECTION 608. CONFLICTING INTERESTS. If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the
extent permitted by such Act, the Trustee shall
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not be deemed to have a conflicting interest by virtue of being a trustee
under this Indenture with respect to Securities of more than one series.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be one (and only one) Trustee hereunder with respect to the
Securities of each series, which may be Trustee hereunder for Securities of
one or more other series. Each Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has (or if the Trustee
is a subsidiary of a bank holding company its parent shall have) a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the
Securities of any series shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
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 611.
The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee
required by Section 611 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 with respect to the Securities
of such series.
The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any
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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, (A) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or (B) subject to
Section 514, any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
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, with respect to the Securities of one or more series, the
Company, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply
with the applicable requirements of Section 611. If, within one year
after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities of
any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series
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
611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company
or the Holders and accepted appointment in the manner required by
Section 611, the retiring Trustee may petition, or any Holder who has
been a bona fide Holder of a Security of such series 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 with respect to the Securities of such series.
The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series
and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series
in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee with respect to the Securities of such
series and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of
the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed 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 the successor
Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor
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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.
In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series,
the Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring
with respect to all Securities, shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust and that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
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 referred to in the first or second preceding
paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee (including the trust created by this Indenture),
shall be the successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any
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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 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue and upon
exchange, registration of transfer or partial redemption thereof or pursuant
to Section 306, and Securities so authenticated 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. Wherever reference is made in
this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference 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 acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having (or if the Authenticating Agent is a
subsidiary of a bank holding company its parent shall have) a combined
capital and surplus of not less than $50,000,000 and subject to supervision
or examination by Federal or State authority. If such Authenticating Agent
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
Authenticating Agent 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 an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
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 (including the
authenticating agency contemplated by this Indenture), shall continue to be
an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section, 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
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any time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 106 to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve. 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.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 607.
If an appointment with respect to one or more series is made
pursuant to this Section 612, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the
following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.,
As Trustee
By:
--------------------------------------
As Authenticating Agent
By:
--------------------------------------
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the
Trustee
(1) semi-annually, not later than 15 days after the Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of
each series as of such Regular Record Date, as the case may be, and
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(2) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished; provided that no
such list need be furnished by the Company to the Trustee so long as
the Trustee is acting as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS. 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 701 and the names and addresses of Holders received by the
Trustee in its capacity as Security Registrar. The Trustee may destroy
any list furnished to it as provided in Section 701 upon receipt of a
new list so furnished.
The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities,
and the corresponding rights and privileges of the Trustee, shall be
as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to names and
addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of
not more than 12 months shall be transmitted no later than July 1 in
each calendar year, commencing with the first July 1 after the first
issuance of Securities pursuant to this Indenture.
A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are listed, with the Commission and
with the Company. The Company will notify the Trustee when any
Securities are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY. The Company shall file with
the Trustee and the Commission, and transmit to Holders, such
information, documents and other reports, and such summaries thereof,
as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to the Trust Indenture Act;
provided that any such information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person (in a
transaction in which the Company is not the surviving corporation) or convey,
transfer or lease its properties and assets substantially as an entirety to
any Person, unless:
(1) in case the Company shall consolidate with or merge
into another Person (in a transaction in which the Company is not the
surviving corporation) or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, the Person formed
by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety
shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and any
premium and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the
Company to be performed or observed and the conversion rights shall be
provided for in accordance with Article Fourteen, if applicable, or as
otherwise specified pursuant to Section 301, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the
Trustee, by the Person (if other than the Company) formed by such
consolidation or into which the Company shall have been merged or by
the Person which shall have acquired the Company's assets;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company
or any Subsidiary as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation of
the Company with, or merger of the Company into, any other Person or
any conveyance, transfer or lease of the properties and assets of the
Company substantially as an entirety in accordance with Section 801,
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
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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 NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, 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, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, or successive successions, and the assumption by any such
successor of the covenants of the Company herein and in the
Securities; or
(2) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit
of the Holders of all or any series of Securities (and if such
additional Events of Default are to be for the benefit of less than
all series of Securities, stating that such additional Events of
Default are expressly being included solely for the benefit of such
series); or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to permit or facilitate the issuance of Securities in uncertificated
form; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change or elimination (A) shall
neither (i) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit
of such provision nor (ii) modify the rights of the Holder of any such
Security with respect to such provision or (B) shall become effective
only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301; or
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(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 611; or
(9) to make provision with respect to the conversion rights
of Holders pursuant to the requirements of Article Fourteen, including
providing for the conversion of the securities into any security
(other than the Common Stock of the Company) or property of the
Company; or
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this Clause (10) shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect; or
(11) to supplement any of the provisions of the Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Articles Four and Thirteen, provided that any such action shall not
adversely affect the interests of the Holders of Securities of such
series or any other series of Securities in any material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of a majority in principal amount of
the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the
Company and the Trustee, 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 of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security or any other
Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date), or
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(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, 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 any of the provisions of this Section, Section
513 or Section 10010, except to increase any such percentage 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; provided, however, that this
clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section and Section 1010, or the deletion of this
proviso, in accordance with the requirements of Sections 611 and
901(8), or
(4) if applicable, make any change that adversely affects
the right to convert any security as provided in Article Fourteen or
pursuant to Section 301 (except as permitted by Section 901(9)) or
decrease the conversion rate or increase the conversion price of any
such security.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities
of such series with respect to such covenant or other provision, shall
be deemed not to affect the rights under this Indenture of the Holders
of Securities of any other series.
It shall not be necessary for any Act of Holders 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 903. 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 601 and 603) 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. 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 904. 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 shall be bound thereby.
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements
of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series 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 of any series so modified as to conform,
in the opinion of the Trustee and the Company, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of such
series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees for the benefit of each series of Securities that it
will duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the Securities
and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration
of transfer or exchange, where Securities of that series may be surrendered
for conversion and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal of
or any premium or interest on any of the Securities
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of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal
of or any premium or interest on any Securities of that series, deposit with
a Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of
Securities 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) comply
with the provisions of the Trust Indenture Act applicable to it as a Paying
Agent and (2) during the continuance of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment in respect of the Securities of that series, upon the written request
of the Trustee, forthwith pay to the Trustee all sums held in trust by such
Paying Agent for payment in respect of the Securities of that series.
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 or any premium or interest on any Security of
any series and remaining unclaimed for a period ending on the earlier of the
date that is ten Business Days prior to the date such money would escheat to
the State or two years after such principal, premium or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only
to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in each Place of Payment, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of
the Company ending after the date
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hereof, an Officers' Certificate, stating whether or not to the best
knowledge of the signers thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions of this
Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.
SECTION 1005. EXISTENCE. Subject to Article Eight, the Company will do
or cause to be done all things necessary to preserve and keep in full force
and effect its existence.
SECTION 1006. MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business 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, and to
the extent, 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 and not
disadvantageous in any material respect to the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company upon the income, profits or property of the Company,
and (2) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company; provided,
however, that the Company shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim (i) whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings or (ii) if the failure to pay or discharge would not
have a material adverse effect on the assets, business, operations,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
SECTION 1008. LIMITATION ON LIENS. The Company will not issue, incur,
create, assume or guarantee, and will not permit any Restricted Subsidiary to
issue, incur, create, assume or guarantee, any debt for borrowed money
secured by a mortgage, security interest, pledge, lien, charge or other
encumbrance ("mortgages") upon any Principal Property of the Company or any
Restricted Subsidiary or upon any shares of stock or indebtedness of any
Restricted Subsidiary (whether such Principal Property, shares or
indebtedness are now existing or owned or hereafter created or acquired)
without in any such case effectively providing concurrently with issuance,
incurrence, creation, assumption or guarantee of any such secured debt, or
the grant of a mortgage with respect to any such indebtedness, that the
Securities (together with, if the Company shall so determine, any other
indebtedness of or guarantee by the Company or such Restricted Subsidiary
ranking equally with the Securities) shall be secured equally and ratably
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with (or, at the option of the Company, prior to) such secured debt. The
foregoing restriction, however, will not apply to:
(1) mortgages on property existing at the time of acquisition
thereof by the Company or any Subsidiary, provided that such mortgages were
in existence prior to the contemplation of such acquisitions;
(2) mortgages on property, shares of stock or indebtedness or other
assets of any corporation existing at the time such corporation becomes a
Restricted Subsidiary, provided that such mortgages are not incurred in
anticipation of such corporation becoming a Restricted Subsidiary;
(3) mortgages on property, shares of stock or indebtedness existing
at the time of acquisition thereof by the Company or a Restricted Subsidiary
or mortgages thereon to secure the payment of all or any part of the purchase
price thereof, or mortgages on property, shares of stock or indebtedness to
secure any indebtedness for borrowed money incurred prior to, at the time of
or within 270 days after, the latest of the acquisition thereof, or, in the
case of property, the completion of construction, the completion of
improvements, or the commencement of substantial commercial operation of such
property for the purpose of financing all or any part of the purchase price
thereof, such construction, or the making of such improvements;
(4) mortgages to secure indebtedness owing to the Company or to a
Restricted Subsidiary:
(5) mortgages existing at the date of this Indenture;
(6) mortgages on property of a corporation existing at the time
such corporation is merged into or consolidated with the Company or a
Restricted Subsidiary or at the time of a sale, lease or other disposition of
the properties of a corporation as an entirety or substantially as an
entirety to the Company or a Restricted Subsidiary, provided that such
mortgage was not incurred in anticipation of such merger or consolidation or
sale, lease or other disposition;
(7) mortgages in favor of the United States or any State, territory
or possession thereof (or the District of Columbia), or any department,
agency, instrumentality or political subdivision of the United States or any
State, territory or possession thereof (or the District of Columbia), to
secure partial, progress, advance or other payments pursuant to any contract
or statute or to secure any indebtedness incurred for the purpose of
financing all or any part of the purchase price of the cost of constructing
or improving the property subject to such mortgages;
(8) mortgages created in connection with the acquisition of assets
or a project financed with, and created to secure, a Nonrecourse Obligation;
(9) extensions, renewals, refinancings or replacements of any
mortgage referred to in the foregoing clauses (1), (2), (3), (4), (5), (6),
(7) and (8) provided, however, that any
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mortgages permitted by any of the foregoing clauses (1), (2), (3), (4), (5),
(6), (7) and (8) shall not extend to or cover any property of the Company or
such Restricted Subsidiary, as the case may be, other than the property, if
any, specified in such clauses and improvements thereto, and provided further
that any refinancing or replacement of any mortgages permitted by the
foregoing clauses (7) and (8) shall be of the type referred to in such
clauses (7) or (8), as the case may be.
Notwithstanding the restrictions set forth in the preceding
paragraph, the Company or any Restricted Subsidiary will be permitted to
issue, incur, create, assume or guarantee debt secured by a mortgage which
would otherwise be subject to such restrictions, without equally and ratably
securing the Securities, provided that after giving effect thereto, the
aggregate amount of all debt so secured by mortgages (not including mortgages
permitted under clauses (1) through (10) above) does not exceed 15% of the
Consolidated Net Tangible Assets of the Company as most recently determine on
or prior to such date.
SECTION 1009. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. The
Company will not, nor will it permit any Restricted Subsidiary to, enter into
any Sale and Lease-Back Transaction with respect to any Principal Property,
other than any such transaction involving a lease for a term of not more than
three years of any such transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries, unless: (1) the Company or
such Restricted Subsidiary would be entitled to incurs indebtedness secured
by a mortgage on the Principal Property involved in such transaction at least
equal in amount to the Attributable Debt with respect to such Sale and
Lease-Back Transaction, without equally and ratably securing the Securities,
pursuant to Section 1008; or (2) the Company shall apply an amount equal to
the greater of the net proceeds of such sale or the Attributable Debt with
respect to such Sale and Lease-Back Transaction within 180 days of such sale
to either (or a combination of) the retirement (other than mandatory
retirement, mandatory prepayment or sinking fund payment or by a payment at
maturity) of debt for borrowed money of the Company or a Restricted
Subsidiary that matures more than 12 months after the creation of such
indebtedness or the purchase, construction or development of other comparable
property.
SECTION 1010. WAIVER OF CERTAIN COVENANTS. Except as otherwise
specified as contemplated by Section 301 for Securities of such series, the
Company may, with respect to the Securities of any series, omit in any
particular instance to comply with any term, provision or condition set forth
in any covenant provided pursuant to Section 301(19), 901(2), 901(7), 1006,
1007, 1008 or 1009 for the benefit of the Holders of such series if before
the time for such compliance the Holders of at least a majority in principal
amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision 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 in respect of any
such term, provision or condition shall remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series which
are redeemable before their Stated Maturity shall be redeemable in accordance
with their terms and (except as otherwise specified as contemplated by
Section 301 for such Securities) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Securities shall be evidenced by a Board Resolution
or in another manner specified as contemplated by Section 301 for such
Securities. In case of any redemption at the election of the Company of less
than all the Securities of any series (including any such redemption
affecting only a single Security), 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 of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less
than all the Securities of any series are to be redeemed (unless all the
Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities of such
series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such
series, provided that the unredeemed portion of the principal amount of any
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security. If less than all the
Securities of such series and of a specified tenor are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
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
shall be treated by the Trustee as Outstanding for the purpose of such
selection.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
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 1104. NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at its address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any),
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price,
(6) if applicable, the conversion price, that the date on which the
right to convert the principal of the Securities or the portions thereof to
be redeemed will terminate will be the Redemption Date and the place or
places where such Securities may be surrendered for conversion, and
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(7) that the redemption is for a sinking fund, if such is the case.
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 request, by
the Trustee in the name and at the expense of the Company and shall be
irrevocable.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money 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 date.
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 the right of
any Holder of such Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company on Company Request, or if
then held by the Company, shall be discharged from such trust.
SECTION 1106. 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 and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity
is on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor
in the Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Security which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor
(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 its attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, 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.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of
any series except as otherwise specified as contemplated by Section 301 for
such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by
the terms of such Securities is herein referred to as an "optional sinking
fund payment." If provided for by the terms of any Securities, the cash
amount of any sinking fund payment may be subject to reduction as provided in
Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities as provided for by the terms of such Securities.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking
fund payment with respect to any Securities of such series required to be
made pursuant to the terms of such Securities as and to the extent provided
for by the terms of such Securities; provided that the Securities to be so
credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at
the Redemption Price, as specified in the Securities so to be redeemed, for
redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than
60 days prior to each sinking fund payment date for any Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for such Securities pursuant
to the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 1202 and
will also deliver to the Trustee any Securities to be so delivered. Not less
than 30 days prior to each such sinking fund payment date, the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
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ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE. The Company may elect, at its option at any time, to have
Section 1302 or Section 1303 applied to any Securities or any series of
Securities, as the case may be, designated pursuant to Section 301 as being
defeasible pursuant to such Section 1302 or 1303, in accordance with any
applicable requirements provided pursuant to Section 301 and upon compliance
with the conditions set forth below in this Article. Any such election shall
be evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities.
SECTION 1302. DEFEASANCE AND DISCHARGE. Upon the Company's exercise of
its option (if any) to have this Section applied to any Securities or any
series of Securities, as the case may be, the Company shall be deemed to have
been discharged from its obligations with respect to such Securities as
provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by such Securities and to
have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise
terminated or discharged hereunder: (1) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 1304
and as more fully set forth in such Section, payments in respect of the
principal of and any premium and interest on such Securities when payments
are due, (2) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, and, if applicable, Article Fourteen,
(3) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (4) this Article. Subject to compliance with this Article, the
Company may exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.
SECTION 1303. COVENANT DEFEASANCE. Upon the Company's exercise of its
option (if any) to have this Section applied to any Securities or any series
of Securities, as the case may be, (1) the Company shall be released from its
obligations under Sections 1006 through 1009, inclusive, and any covenants
provided pursuant to Section 301(19), 901(2) or 901(7) for the benefit of the
Holders of such Securities and (2) the occurrence of any event specified in
Sections 501(4), Sections 1006 through 1009, inclusive, and any such
covenants provided pursuant to Section 301(19), 901(2) or 901(7)) shall be
deemed not to be or result in an Event of Default, in each case with respect
to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means
that, with respect to such Securities, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation
set forth in any such specified Section (to the extent so specified in the
case of Section 501(4)), whether directly or indirectly by reason of any
reference elsewhere herein to any such
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Section or by reason of any reference in any such Section to any other
provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may
be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefits of the Holders of such Securities,
(A) money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of
any payment, money in an amount, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the Trustee
(or any such other qualifying trustee) to pay and discharge, the principal of
and any premium and interest on such Securities on the respective Stated
Maturities, in accordance with the terms of this Indenture and such
Securities. As used herein, "U.S. Government Obligation" means (x) any
security which is (i) a direct obligation of the United States of America for
the payment of which the full faith and credit of the United States of
America is pledged or (ii) an obligation of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof, and
(y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any U.S. Government
Obligation which is specified in Clause (x) above and held by such bank for
the account of the holder of such depositary receipt, or with respect to any
specific payment of principal of or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required
by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal or interest evidenced by such depositary
receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this instrument, there has
been a change in the applicable Federal income tax law, in either case (A) or
(B) to the effect that, and based thereon such opinion shall confirm that,
the Holders of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit, Defeasance and discharge to
be effected with respect to such Securities and will be subject to Federal
income tax on the
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same amount, in the same manner and at the same times as would be the case if
such deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize gain or loss for Federal income
tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to such Securities or any
other Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(5) and
(6), at any time on or prior to the 90th day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until
after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning of
such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee or other
qualifying trustee (solely for purposes of this Section and Section 1306, the
Trustee and any such other trustee are referred to collectively as the
"Trustee") pursuant to Section 1304 in respect of any Securities shall be
held in trust and applied by the Trustee, in
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accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in trust
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
SECTION 1306. REINSTATEMENT. If the Trustee or the Paying Agent is
unable to apply any money in accordance with this Article with respect to any
Securities by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the obligations under this Indenture and such Securities from which the
Company has been discharged or released pursuant to Section 1302 or 1303
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to
Section 1305 with respect to such Securities in accordance with this Article;
provided, however, that if the Company makes any payment of principal of or
any premium or interest on any such Security following such reinstatement of
its obligations, the Company shall be subrogated to the rights (if any) of
the Holders of such Securities to receive such payment from the money so held
in trust.
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to the Securities of any series which are convertible
into shares of Common Stock of the Company, and the issuance of such shares
of Common Stock upon the conversion of such Securities, except as otherwise
specified as contemplated by Section 301 for the Securities of such series.
SECTION 1402. EXERCISE OF CONVERSION PRIVILEGE. In order to exercise a
conversion privilege, the Holder of a Security of a series with such a
privilege shall surrender such Security
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to the Company at the office or agency maintained for that purpose pursuant
to Section 1002, accompanied by a duly executed conversion notice to the
Company substantially in the form set forth in Section 206 stating that the
Holder elects to convert such Security or a specified portion thereof. Such
notice shall also state, if different from the name and address of such
Holder, the name or names (with address) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued. Securities surrendered for conversion shall (if
so required by the Company or the Trustee) be duly endorsed by or accompanied
by instruments of transfer in forms satisfactory to the Company and the
Trustee duly executed by the registered Holder or its attorney duly
authorized in writing; and Securities so 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 (excluding Securities or portions thereof called for redemption
during the period beginning at the close of business on a Regular Record Date
and ending at the opening of business on the first Business Day after the
next succeeding Interest Payment Date, or if such Interest Payment Date is
not a Business Day, the second such Business Day) shall also be accompanied
by payment in 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 then being converted, and such interest shall be payable to
such registered Holder notwithstanding the conversion of such Security,
subject to the provisions of Section 307 relating to the payment of Defaulted
Interest by the Company. As promptly as practicable after the receipt of such
notice and of any payment required pursuant to a Board Resolution and,
subject to Section 303, set forth, or determined in the manner provided, in
an Officers' Certificate, or established in one or more indentures
supplemental hereto setting forth the terms of such series of Security, and
the surrender of such Security in accordance with such reasonable regulations
as the Company may prescribe, the Company shall issue and shall deliver, at
the office or agency at which such Security is surrendered, to such Holder or
on its written order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Security (or
specified portion thereof), in accordance with the provisions of such Board
Resolution, Officers' Certificate or supplemental indenture, and cash as
provided therein in respect of any fractional share of such Common Stock
otherwise issuable upon such conversion. Such conversion shall be deemed to
have been effected immediately prior to the close of business on the date on
which such notice and such payment, if required, shall have been received in
proper order for conversion by the Company and such Security shall have been
surrendered as aforesaid (unless such Holder shall have so surrendered such
Security and shall have instructed the Company to effect the conversion on a
particular date following such surrender and such Holder shall be entitled to
convert such Security on such date, in which case such conversion shall be
deemed to be effected immediately prior to the close of business on such
date) and at such time the rights of the Holder of such Security as such
Security Holder shall cease and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock of the Company
shall be issuable upon such conversion shall be deemed to have become the
Holder or Holders of record of the shares represented thereby. Except as set
forth above and subject to the final paragraph of Section 307, no payment or
adjustment shall be made upon any conversion on account of any interest
accrued on the Securities (or any part thereof) surrendered for conversion or
on account of any dividends on the Common Stock of the Company issued upon
such conversion.
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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 or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted portion
of such Security.
SECTION 1403. NO FRACTIONAL SHARES. No fractional share of Common Stock
of the Company shall be issued upon conversions of Securities of any series.
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 shall be computed on the basis of the aggregate principal amount
of the Securities (or specified portions thereof to the extent permitted
hereby) so surrendered. If, except for the provisions of this Section 1403,
any Holder of a Security or Securities would be entitled to a fractional
share of Common Stock of the Company upon the conversion of such Security or
Securities, or specified portions thereof, the Company shall pay to such
Holder an amount in cash equal to the current market value of such fractional
share computed, (i) if such Common Stock is listed or admitted to unlisted
trading privileges on a national securities exchange or market, on the basis
of the last reported sale price regular way on such exchange or market on the
last trading day prior to the date of conversion upon which such a sale shall
have been effected, or (ii) if such Common Stock is not at the time so listed
or admitted to unlisted trading privileges on a national securities exchange
or market, on the basis of the average of the bid and asked prices of such
Common Stock in the over-the-counter market, on the last trading day prior to
the date of conversion, as reported by the National Quotation Bureau,
Incorporated or similar organization if the National Quotation Bureau,
Incorporated is no longer reporting such information, or if not so available,
the fair market price as determined by the Board of Directors. For purposes
of this Section, "trading day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday other than any day on which the Common Stock is not
traded on the Nasdaq National Market, or if the Common Stock is not traded on
the Nasdaq National Market, on the principal exchange or market on which the
Common Stock is traded or quoted.
SECTION 1404. ADJUSTMENT OF CONVERSION PRICE. The conversion price of
Securities of any series that is convertible into Common Stock of the Company
shall be adjusted for any stock dividends, stock splits, reclassifications,
combinations or similar transactions in accordance with the terms of the
supplemental indenture or Board Resolutions setting forth the terms of the
Securities of such series.
Whenever the conversion price is adjusted, the Company shall compute
the adjusted conversion price in accordance with terms of the applicable
Board Resolution or supplemental indenture and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002 and, if
different, with the Trustee. The
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Company shall forthwith cause a notice setting forth the adjusted
conversion price to be mailed, first class postage prepaid, to each Holder of
Securities of such series at its address appearing on the Security Register
and to any conversion agent other than the Trustee. Unless and until a
Responsible Officer of the Trustee shall have received an Officers'
Certificate setting forth an adjustment of the conversion price, the Trustee
may assume that no such adjustment has been made and that the last conversion
price of which it has notice remains in effect.
SECTION 1405. NOTICE OF CERTAIN CORPORATE ACTIONS. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
retained earnings (other than a dividend for which approval of any
shareholders of the Company is required) that would require an adjustment
pursuant to Section 1404; or
(2) the Company shall authorize the granting to all or
substantially all of the holders of its Common Stock of rights, options or
warrants to subscribe for or purchase any shares of capital stock of any
class or of any other rights (other than any such grant for which approval of
any shareholders of the Company is required); or
(3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock, or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required), or of the sale of all or substantially all of the assets of the
Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause to
be mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 20 days (or 10 days in any case specified in
Clause (1) or (2) above) prior to the applicable record date hereinafter
specified, a notice in the form of an Officers' Certificate stating (i) 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, or (ii) the date on which such reclassification,
consolidation, merger, share exchange, sale, 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, sale, dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee. Unless and until a
Responsible Officer of the Trustee shall have received such Officers'
Certificate, the Trustee shall not be charged with knowledge of any event
described in this Section 1405.
SECTION 1406. RESERVATION OF SHARES OF COMMON STOCK. The Company shall
at all times reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of
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shares of Common Stock of the Company then issuable upon the conversion of
all outstanding Securities of any series that has conversion rights.
SECTION 1407. PAYMENT OF CERTAIN TAXES UPON CONVERSION. Except as
provided in the next sentence, the Company will pay any and all taxes that
may be payable in respect of the issue or delivery of shares of its Common
Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of its Common Stock in
a name other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such
tax, or has established, to the satisfaction of the Company, that such tax
has been paid.
SECTION 1408. NONASSESSABILITY. The Company covenants that all shares
of its Common Stock which may be issued upon conversion of Securities will
upon issue in accordance with the terms hereof be duly and validly issued and
fully paid and nonassessable.
SECTION 1409. PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS. In case of any consolidation or merger of the Company with or into
any other Person, any merger of another Person with or into the Company
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any conveyance, sale, transfer or lease of all or
substantially all of the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security of a series then
Outstanding that is convertible into Common Stock of the Company shall have
the right thereafter (which right shall be the exclusive conversion right
thereafter available to said Holder), during the period such Security shall
be convertible, to convert such Security only into the kind and amount of
securities, cash and other property receivable upon such consolidation,
merger, conveyance, sale, transfer or lease by a holder of the number of
shares of Common Stock of the Company into which such Security might have
been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, assuming such holder of Common Stock of the Company
(i) is not a Person with which the Company consolidated or merged with or
into or which merged into or with the Company or to which such conveyance,
sale, transfer or lease was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease (provided that if the kind or amount of securities,
cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, or lease is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-electing Share"), then for the purpose of this
Section 1409 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or
lease by the
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holders of each Non-electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-electing Shares). Such
supplemental indenture shall provide for adjustments 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 or in accordance with the terms of the supplemental indenture or
Board Resolutions setting forth the terms of such adjustments. The above
provisions of this Section 1409 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. Notice of
the execution of such a supplemental indenture shall be given by the Company
to the Holder of each Security of a series that is convertible into Common
Stock of the Company as provided in Section 106 promptly upon such execution.
Neither the Trustee nor any conversion agent, if any, shall be under
any responsibility to determine the correctness of any provisions contained
in any such supplemental indenture relating either to the kind or amount of
shares of stock or other securities or property or cash receivable by Holders
of Securities of a series convertible into Common Stock of the Company 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.
SECTION 1410. DUTIES OF TRUSTEE REGARDING CONVERSION. Neither the
Trustee nor any conversion agent shall at any time be under any duty or
responsibility to any Holder of Securities of any series that is convertible
into Common Stock of the Company 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, whether herein or in any supplemental indenture, any
resolutions of the Board of Directors or written instrument executed by one
or more officers of the Company provided to be employed in making the same.
Neither the Trustee nor any conversion agent shall be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Common Stock of the Company, or of any securities or property, which may at
any time be issued or delivered upon the conversion of any Securities and
neither the Trustee nor any conversion agent makes any representation with
respect thereto. Subject to the provisions of Section 601, neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of its Common Stock or stock
certificates or other securities or property upon the surrender of any
Security for the purpose of conversion or to comply with any of the covenants
of the Company contained in this Article Fourteen or in the applicable
supplemental indenture, resolutions of the Board of Directors or written
instrument executed by one or more duly authorized officers of the Company.
SECTION 1411. REPAYMENT OF CERTAIN FUNDS UPON CONVERSION. Any funds
which at any time shall have been deposited by the Company or on its behalf
with the Trustee or any other paying agent for the purpose of paying the
principal of, and premium, if any, and interest, if any, on any of the
Securities (including, but not limited to, funds deposited for the sinking
fund
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referred to in Article Twelve and funds deposited pursuant to Article
Thirteen hereof) and which shall not be required for such purposes because of
the conversion of such Securities as provided in this Article Fourteen shall
after such conversion be repaid to the Company by the Trustee upon the
Company's written request.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the day and year first above written.
CYGNUS, INC.
By:
Title:
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as
Trustee
By:
Title:
<PAGE>
EXHIBIT 4.2
- ------------------------------------------------------------------------------
Cygnus, Inc.
To
State Street Bank and Trust Company of California, N.A.,
as Trustee
- ------------------------------------------------------------------------------
Indenture
Dated as of _________________, 1997
---------------------------
Subordinated Debt Securities
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . 1
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authenticating Agent". . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board of Directors". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board Resolution". . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day," . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Commission". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Common Stock". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Request" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Corporate Trust Office". . . . . . . . . . . . . . . . . . . . . . . . . 3
"corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Defaulted Interest". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Defeasance". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Depositary". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Designated Senior Debt". . . . . . . . . . . . . . . . . . . . . . . . . 3
"Event of Default". . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Exchange Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Expiration Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Holder". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"interest," . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Interest Payment Date,". . . . . . . . . . . . . . . . . . . . . . . . . 5
"Investment Company Act". . . . . . . . . . . . . . . . . . . . . . . . . 5
"Loan Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Maturity". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Notice of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Officers' Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Opinion of Counsel". . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Original Issue Discount Security". . . . . . . . . . . . . . . . . . . . 5
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"Outstanding,". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Paying Agent". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Payment Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Person". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Place of Payment," . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Predecessor Security". . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Redemption Date,". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Price," . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Responsible Officer" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Representative". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Securities". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Securities Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Security Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Security Registrar". . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Senior Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Stated Maturity,". . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Subsidiary". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"U.S. Government Obligation". . . . . . . . . . . . . . . . . . . . . . . 9
"Vice President," . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . 9
SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc. to Trustee and Company . . . . . . . . . . . . . . 12
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . . 12
SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . 13
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . 13
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 13
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 114. Indenture and Securities Solely Corporate Obligations. . . . . . 14
ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . 14
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . . . 16
SECTION 204. Form of Legend for Global Securities . . . . . . . . . . . . . . 21
SECTION 205. Form of Trustee's Certificate of Authentication. . . . . . . . . 21
SECTION 206. Form of Conversion Notice. . . . . . . . . . . . . . . . . . . . 21
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ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . 23
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . 26
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 305. Registration; Registration of Transfer and Exchange. . . . . . . 27
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . 29
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . 30
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . 32
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . 32
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . 33
ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . 34
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. 35
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . 36
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . 37
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. . . . . . . . . . . . . . . . . 38
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . 38
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . 38
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . 38
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . 39
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 515. Waiver of Usury, Stay or Extension Laws. . . . . . . . . . . . . 39
ARTICLE SIX THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . . . 40
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . 40
iii
<PAGE>
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . 41
SECTION 605. May Hold Securities and Act as Trustee Under Other Indentures. . 41
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . 42
SECTION 608. Conflicting Interests. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . 42
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . . . 42
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . 44
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 613. Preferential Collection of Claims Against Company. . . . . . . . 45
SECTION 614. Appointment of Authenticating Agent. . . . . . . . . . . . . . . 45
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . . . . . . . . 47
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 702. Preservation of Information; Communications to Holders . . . . . 47
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . 48
SECTION 801. Company May Consolidate, Etc. Only on Certain Terms. . . . . . . 48
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE NINE SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . 49
SECTION 902. Supplemental Indentures With Consent of Holders. . . . . . . . . 51
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . 52
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . 52
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . 52
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . 52
SECTION 907. Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . 52
ARTICLE TEN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1001. Payment of Principal, Premium and Interest. . . . . . . . . . . 53
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 53
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . 53
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . 54
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . 55
iv
<PAGE>
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . 55
SECTION 1008. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . 55
ARTICLE ELEVEN REDEMPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . 55
SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . . . . 55
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . 56
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . 56
SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . 57
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . 58
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . 58
ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . . . . 58
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . . . 59
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . 59
ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . . . . . . . . . 59
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance . 59
SECTION 1302. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . 60
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . . . . 60
SECTION 1305. Deposited Money and U.S. Government Obligations to be Held in
Trust; Miscellaneous Provisions. . . . . . . . . . . . . . . . 62
SECTION 1306. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE FOURTEEN CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . 63
SECTION 1401. Applicability of Article. . . . . . . . . . . . . . . . . . . . 63
SECTION 1402. Exercise of Conversion Privilege. . . . . . . . . . . . . . . . 64
SECTION 1403. No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1404. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . 65
SECTION 1405. Notice of Certain Corporate Actions . . . . . . . . . . . . . . 66
SECTION 1406. Reservation of Shares of Common Stock . . . . . . . . . . . . . 66
SECTION 1407. Payment of Certain Taxes Upon Conversion. . . . . . . . . . . . 67
SECTION 1408. Nonassessability. . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1409. Provision in Case of Consolidation, Merger or Sale of
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1410. Duties of Trustee Regarding Conversion. . . . . . . . . . . . . 68
SECTION 1411. Repayment of Certain Funds Upon Conversion. . . . . . . . . . . 68
v
<PAGE>
ARTICLE FIFTEEN SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . 69
SECTION 1501. Securities Subordinate to Senior Debt . . . . . . . . . . . . . 69
SECTION 1502. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . 69
SECTION 1503. Prior Payment to Senior Debt Upon Acceleration of Securities. . 70
SECTION 1504. No Payment in Certain Circumstances . . . . . . . . . . . . . . 71
SECTION 1505. Payment Permitted If No Default . . . . . . . . . . . . . . . . 72
SECTION 1506. Subrogation to Rights of Holders of Senior Debt . . . . . . . . 73
SECTION 1507. Provisions Solely to Define Relative Rights . . . . . . . . . . 73
SECTION 1508. Trustee to Effectuate Subordination . . . . . . . . . . . . . . 73
SECTION 1509. No Waiver of Subordination Provisions . . . . . . . . . . . . . 73
SECTION 1510. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1511. Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1512. Trustee Not Fiduciary for Holders of Senior Debt. . . . . . . . 75
SECTION 1513. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights . . . . . . . . . . . . . . . . . 75
SECTION 1514. Article Applicable to Paying Agents . . . . . . . . . . . . . . 75
SECTION 1515. Certain Conversions Deemed Payment. . . . . . . . . . . . . . . 75
SECTION 1516. Obligations of Company and Right to Convert
Unconditional.. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1517. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. .. . . . . . . . . . . . . . . . . . . . 76
</TABLE>
vi
<PAGE>
Certain Sections of this Indenture relating
to Sections 310 through 318, inclusive, of the Trust
Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
ss.310 (a)(1). . . . . . . . . . . . . . . . . . . . 609
(a)(2). . . . . . . . . . . . . . . . . . . . 609
(a)(3). . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . 608, 610
ss.311 (a) . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . 613
ss.312 (a) . . . . . . . . . . . . . . . . . . . . . 701, 702
(b) . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . 702
ss.313 (a) . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . 703
ss.314 (a) . . . . . . . . . . . . . . . . . . . . . 704
(a)(4). . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . 102
(c)(2). . . . . . . . . . . . . . . . . . . . 102
(c)(3). . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . 102
ss.315 (a) . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . 514
ss.316 (a) . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . 513
(a)(2). . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . 104
ss.317 (a)(1). . . . . . . . . . . . . . . . . . . . 503
(a)(2). . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . 1003
ss.318 (a) . . . . . . . . . . . . . . . . . . . . . 107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
vii
<PAGE>
INDENTURE, dated as of __________, 1997, between Cygnus, Inc., a
corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal executive office
at 400 Penobscot Drive, Redwood City, CA 94063-4719, and State Street Bank
and Trust Company of California, N.A., a national banking association duly
organized and existing under the laws of the United States of America, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this
Indenture.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
<PAGE>
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"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.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board empowered to act for
it with respect to this Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in that Place of Payment are authorized or
obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company; provided,
however, subject to the provisions of Section 1409, shares issuable upon
conversion of Securities shall include only shares of the class designated as
Common Stock of the Company at the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in
2
<PAGE>
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
are not subject to redemption by the Company; provided, further, that if at
any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the corporation 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, its
Vice Chairman of the Board, its President or a Vice President, and by its
principal financial officer, its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time the trust created by this Indenture
shall be administered, which office on the date hereof is located at 725
South Figueroa Street, Suite 3100, Los Angeles, CA 90017.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series
issuable in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act
as Depositary for such Securities as contemplated by Section 301.
"Designated Senior Debt" means the Company's obligations under the
Loan Agreements and the Company's obligations under any particular Senior
Debt having an outstanding principal amount or commitment in excess of $10.0
million in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which
the Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for purposes of this Indenture (provided that such
instrument, agreement or other document may place limitations and conditions
on the right of such Senior Debt to exercise the rights of Designated Senior
Debt).
"Event of Default" has the meaning specified in Section 501.
3
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or
such legend as may be specified as contemplated by Section 301 for such
Securities).
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively. The term "Indenture" shall also include the terms of
particular series of Securities established as contemplated by Section 301;
provided, however, that if at any time more than one Person is acting as
Trustee under this Indenture due to the appointment of one or more separate
Trustees for any one or more separate series of Securities, "Indenture" shall
mean, with respect to such series of Securities for which any such Person is
Trustee, 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 and shall include
the terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for
which such Person is not Trustee, regardless of when such terms or provisions
were adopted, and exclusive of any provisions or terms adopted by means of
one or more indentures supplemental hereto executed and delivered after such
person had become such Trustee, but to which such person, as such Trustee,
was not a party; provided, further that in the event that this Indenture is
supplemented or amended by one or more indentures supplemental hereto which
are only applicable to certain series of Securities, the term "Indenture" for
a particular series of Securities shall only include the supplemental
indentures applicable thereto.
"interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date," when used with respect to any Security,
means the Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940
and any statute successor thereto, in each case as amended from time to time.
4
<PAGE>
"Loan Agreements" means those agreements listed on ANNEX A, attached
hereto as amended, amended and restated, supplemented or otherwise modified
from time to time.
"Maturity," when used with respect to any Security, means the date
on which the principal of such Security or an instalment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the principal financial officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. One of the officers signing an Officers'
Certificate given pursuant to Section 1004 shall be the principal executive,
financial or accounting officer of the Company.
"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.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 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
5
<PAGE>
hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original
Issue Discount Security which shall be deemed to be Outstanding shall be the
amount of the principal thereof which would be due and payable as of such
date upon acceleration of the Maturity thereof to such date pursuant to
Section 502, (B) if, as of such date, the principal amount payable at the
Stated Maturity of a Security is not determinable, the principal amount of
such Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the principal
amount of a Security denominated in one or more foreign currencies or
currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as
contemplated by Section 301, of the principal amount of such Security (or, in
the case of a Security described in Clause (A) or (B) above, of the amount
determined as provided in such Clause), and (D) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or
any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Payment Blockage Notice" has the meaning specified in Section 1504.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"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 306 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.
"Redemption Date," when used with respect to any Security to be
redeemed, means
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the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for
that purpose as contemplated by Section 301.
"Responsible Officer" means an officer in the Corporate Trust Office
of the Trustee.
"Representative" means the (a) indenture trustee or other trustee,
agent or representative for any Senior Debt or (b) with respect to any Senior
Debt that does not have any such trustee, agent or other representative, (i)
in the case of such Senior Debt issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Debt, any
holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii)
in the case of all other such Senior Debt, the holder or owner of such Senior
Debt.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding),
on, rent with respect to, and all fees and other amounts payable in
connection with, the following, whether absolute or contingent, secured or
unsecured, due or to become due, outstanding on the date of this Indenture or
thereafter created, incurred or assumed: (a) indebtedness of the Company
evidenced by a credit or loan agreement, note, bond, debenture or other
written obligation, (b) all obligations of the Company for money borrowed,
(c) all obligations of the Company evidenced by a note or similar instrument
given in connection with the acquisition of any businesses, properties or
assets of any kind, (d) obligations of the Company (i) as lessee under leases
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles and (ii) as lessee under other leases for
facilities, equipment or related assets, whether or not capitalized, entered
into or leased after the date of this Indenture for financing purposes (as
determined by the Company) or (iii) under any lease or related document
(including a purchase agreement) that provides that the Company is
contractually obligated to purchase or cause a third party to purchase the
leased property and the obligations of the Company under such lease or
related document to purchase or to cause a third party to purchase such
leased property, (e) all obligations of the Company under interest rate and
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currency swaps, caps, floors, collars, hedge agreements, forward contracts,
or similar agreements or arrangements, (f) all obligations of the Company
with respect to letters of credit, bankers' acceptances or similar facilities
(including reimbursement obligations with respect to any of the foregoing),
(g) all obligations of the Company issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable arising
in the ordinary course of business), (h) all obligations of the type referred
to in clauses (a) through (g) above of another Person and all dividends of
another Person, the payment of which, in either case, the Company has assumed
or guaranteed (or in effect guaranteed through an agreement to purchase or
otherwise (including, without limitation, "take or pay" and similar
arrangements)), or for which the Company is responsible or liable, directly
or indirectly, jointly or severally, as obligor, guarantor or otherwise, or
which is secured by a lien on property of the Company, and all obligations of
the Company with respect thereto, and (i) renewals, extensions,
modifications, replacements, restatements and refundings of, or any
indebtedness or obligation issued in exchange for, any such indebtedness or
obligation described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Debt shall not include the Securities or any such
indebtedness or obligation if the terms of such indebtedness or obligation
(or the terms of the instrument under which, or pursuant to which it is
issued) expressly provide that such indebtedness or obligation is not
superior in right of payment to the Securities.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly,
by the Company or by one or more other Subsidiaries, or by the Company and
one or more other Subsidiaries and the accounts of which are consolidated
with those of the Company in its most recent consolidated financial
statements in accordance with generally accepted accounting principles. For
the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only
so long as no senior class of stock has such voting power by reason of any
contingency.
"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
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of this Indenture, and thereafter "Trustee" shall mean or include each Person
who is then a Trustee hereunder, and if at any time there is more than one
such Person, "Trustee" as used with respect to the Securities of any series
shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section
1304.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Company to the Trustee to take any action under any
provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this
Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
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Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her 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 104. ACTS OF HOLDERS. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Indenture to be given, made or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. The Trustee shall promptly deliver
to the Company copies of all such instrument or instruments delivered to the
Trustee. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him or her the execution
thereof. Where such execution is by a signer acting in a capacity other than
his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the
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Company in reliance thereon, whether or not notation of such action is made
upon such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, vote,
notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such series,
provided that the Company may not set a record date for, and the provisions
of this paragraph shall not apply with respect to, the giving or making of
any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities of the relevant series on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant
to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its
own expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of such series on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing
in this paragraph shall be construed to prevent the Trustee from setting a
new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record date,
the proposed action by Holders and the applicable Expiration Date to be given
to the Company in writing and to each Holder of Securities of the relevant
series in the manner set forth in Section 106.
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With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of
the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 106, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall
be deemed to have initially designated the 180th day after such record date
as the Expiration Date with respect thereto, subject to its right to change
the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing (or
by facsimile transmissions ((213) 362-7357), provided that oral confirmation
of receipt shall have been received) to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Department (Cygnus, Inc.
Subordinated Debt Securities), or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company addressed
to it at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in writing to
the Trustee by the Company, Attention: Chief Financial Officer.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest
date (if any), and not earlier than the earliest date (if any), prescribed
for the giving of such notice. In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
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In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act
which 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 which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 109. 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 110. SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior Debt and
the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security or the last date on
which a Holder has the right to convert a Security at a particular conversion
price shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or
principal (and premium, if any) or, if applicable to a particular series of
Securities, conversion need not be made at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment
Date or Redemption Date, at the Stated Maturity or on such last day for
conversion, as the case may be.
SECTION 114. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS. No
recourse for
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the payment of the principal of or premium, if any, or interest on any
Security, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer,
or director or subsidiary, as such, past, present or future, of the Company
or of any successor corporation, either directly or through the Company or
any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that all such liability is hereby expressly
waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY. The Securities of each series shall be in
substantially the form set forth in this Article, or in such other form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or
Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof.
If the form of Securities of any series is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery
of such Securities. Any such Board Resolution or record of such action shall
have attached thereto a true and correct copy of the form of Security
referred to therein approved by or pursuant to such Board Resolution.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
SECTION 202. FORM OF FACE OF SECURITY. [Insert any legend required by the
Internal Revenue Code and the regulations thereunder.]
CYGNUS, INC.
________________
No. _________ $_____________
Cygnus, Inc., a corporation duly organized and existing under the laws
of Delaware
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(herein called the "Company," which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby promises
to pay to ________________________, or registered assigns, the principal sum
of ____________________ Dollars on ________________ [if the Security is to
bear interest prior to Maturity, insert -- , and to pay interest thereon
from _________ or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on _________ and _________ in
each year, commencing _________, at the rate of ___% per annum, until the
principal hereof is paid or made available for payment [if applicable,
insert --, provided that any principal and premium, and any such instalment
of interest, which is overdue shall bear interest at the rate of ___% per annum
(to the extent that the payment of such interest shall be legally enforceable),
from the dates such amounts are due until they are paid or made available
for payment, and such interest shall be payable on demand]. The interest
so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such 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 ______ or _______ (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to
be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture].
[If the Security is not to bear interest prior to Maturity, insert --
The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon
redemption or at Stated Maturity and in such case the overdue principal
and any overdue premium shall bear interest at the rate of ___% per annum
(to the extent that the payment of such interest shall be legally enforceable),
from the dates such amounts are due until they are paid or made available
for payment. Interest on any overdue principal or premium shall be payable
on demand. Any such interest on overdue principal or premium which is not
paid on demand shall bear interest at the rate of ___% per annum (to the extent
that the payment of such interest on interest shall be legally enforceable),
from the date of such demand until the amount so demanded is paid or made
available for payment. Interest on any overdue interest shall be payable
on demand.]
Payment of the principal of (and premium, if any) and
[if applicable, insert -- any such] interest on this Security will be made at
the office or agency of the Company maintained for that purpose in ____, in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts
[if applicable, insert --; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the
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Security Register].
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:___________________ CYGNUS, INC.
By:___________________________________
Title:________________________________
Attest:______________________________
SECTION 203. FORM OF REVERSE OF SECURITY. This Security is one of a duly
authorized issue of securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture, dated as of
__________, 1997 (herein called the "Indenture," which term shall have the
meaning assigned to it in such instrument), between the Company and State Street
Bank and Trust Company of California, N.A., as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee, the holders of Senior
Debt and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof [if applicable, insert -- , limited
in aggregate principal amount to $_________].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than [If applicable, insert -- 30] days' notice by
mail, [if applicable, insert -- (1) on _________ in any year commencing with the
year _____ and ending with the year _____ through operation of the sinking fund
for this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [if applicable, insert -- on or after _________, 19__], as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [if
applicable, insert -- on or before _________, ___%, and if redeemed] during the
12-month period beginning ________ of the years indicated, and thereafter at a
Redemption Price equal to .....% of the principal amount, together
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<PAGE>
in the case of any such redemption [if applicable, insert -- (whether through
operation of the sinking fund or otherwise)] with accrued interest to the
Redemption Date, but interest installments 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.]
<TABLE>
Year Redemption Price Year Redemption Price
<S> <C> <C> <C>
</TABLE>
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than [if applicable, insert -- 30] days' notice
by mail, (1) on _________ in any year commencing with the year _____
and ending with the year _____ through operation of the sinking fund
for this series at the Redemption Prices for redemption through operation of
the sinking fund (expressed as percentages of the principal amount) set forth
in the table below, and (2) at any time [if applicable, insert -- on or
after __________], as a whole or in part, at the election of the Company,
at the Redemption Prices for redemption otherwise than through operation
of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below: If redeemed during the 12-month period
beginning ________ of the years indicated,
<TABLE>
Redemption Price For Redemption Price For
Redemption Through Redemption Otherwise Than
Operation of the Through Operation of the
Year Sinking Fund Sinking Fund
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments 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 applicable, insert -- Notwithstanding the foregoing, the Company
may not, prior to __________, redeem any Securities of this series as
contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph
as a part of, or in anticipation of, any refunding operation by the application,
directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of
less than ___% per annum.]
[If applicable, insert -- The sinking fund for this series provides
for the redemption on _________, in each year beginning with the year _____ and
ending with the year _____ of [if applicable, insert -- not less than $_______
("mandatory sinking fund") and not more than] $_______ aggregate principal
amount of Securities of this series. Securities of this series acquired
17
<PAGE>
or redeemed by the Company otherwise than through [if applicable, insert --
mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert -- mandatory] sinking fund payments otherwise required to be
made [if applicable, insert -- , in the inverse order in which they become
due].]
[If the Security is subject to redemption of any kind, insert -- In the event
of redemption of this Security in part only, a new Security or Securities of
this series and of like tenor for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Indenture contains provisions for defeasance at
any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security]
[, in each case] upon compliance with certain conditions set forth in the
Indenture.] [If the Security is convertible into Common Stock of the Company,
insert -- Subject to the provisions of the Indenture, the Holder of this
Security is entitled, at its option, at any time on or before [insert date]
(except that, in case this Security or any portion hereof shall be called for
redemption, such right shall terminate with respect to this Security or
portion hereof, as the case may be, so called for redemption at the close of
business on the first Business Day next preceding the date fixed for
redemption as provided in the Indenture unless the Company defaults in making
the payment due upon redemption), to convert the principal amount of this
Security (or any portion hereof which is $1,000 or an integral multiple
thereof), into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of the Common Stock of the
Company, as said shares shall be constituted at the date of conversion, at
the conversion price of $______ principal amount of Securities for each share
of Common Stock, or at the adjusted conversion price in effect at the date of
conversion determined as provided in the Indenture, upon surrender of this
Security, together with the conversion notice hereon duly executed, to the
Company at the designated office or agency of the Company in ____________,
accompanied (if so required by the Company) by instruments of transfer, in
form satisfactory to the Company and to the Trustee, duly executed by the
Holder or by its duly authorized attorney in writing. Such surrender shall,
if made during any period beginning at the close of business on a Regular
Record Date and ending at the opening of business on the Interest Payment
Date next following such Regular Record Date (unless this Security or the
portion being converted shall have been called for redemption on a Redemption
Date during the period beginning at the close of business on a Regular Record
Date and ending at the opening of business on the first Business Day after
the next succeeding Interest Payment Date, or if such Interest Payment Date
is not a Business Day, the second such Business Day), also be accompanied by
payment in 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. 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 (with certain exceptions provided in the Indenture), no adjustment
is to be made on conversion for interest accrued hereon or for dividends on
shares of Common Stock issued on conversion. The Company
18
<PAGE>
is not required to issue fractional shares upon any such conversion, but shall
make adjustment therefor in cash on the basis of the current market value of
such fractional interest 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 consolidations or mergers to which the Company
is a party or the sale of substantially all of the 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 the consolidation, merger or sale by a holder of the number of shares of
Common Stock into which this Security might have been converted immediately
prior to such consolidation, merger or sale (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the
kind and amount received per share by a plurality of non-electing shares). In
the event of conversion of this Security in part only, a new Security or
Securities for the unconverted portion hereof shall be issued in the name of
the Holder hereof upon the cancellation hereof.]
[If the Security is convertible into other securities of the Company,
specify the conversion features.]
[If the Security is not an Original Issue Discount Security, insert --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to --insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, 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
19
<PAGE>
of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this 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 with
respect to the Securities of this series, the Holders of not less than 25% in
principal amount of the Securities of this series at the time Outstanding
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 Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
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 and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, 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 hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $_____ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made to a Holder for any such
registration of transfer or exchange, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this 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
20
<PAGE>
this Security is registered as the owner hereof for all purposes, whether or
not this Security be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES. Unless otherwise
specified as contemplated by Section 301 for the Securities evidenced thereby,
every Global Security authenticated and delivered hereunder shall bear a legend
in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR
IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN
WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., As Trustee
By:__________________________________
Authorized Officer
SECTION 206. FORM OF CONVERSION NOTICE. To Cygnus, Inc.: The owner of
this Security hereby irrevocably exercises the option to convert this
Security, or portion hereof (which is $1,000 or an integral multiple thereof)
below designated, into shares of Common Stock of the Company in accordance
with the terms of the Indenture referred to in this Security, and directs
that the shares issuable and deliverable upon the conversion, together with
any check in payment for fractional shares and any Securities representing
any unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated below.
If this Notice is being delivered on a date after the close of business on a
Regular Record Date and prior to the opening of business on the related
Interest Payment Date (unless this
21
<PAGE>
Security or the portion thereof being converted has been called for
redemption on a Redemption Date within such period), this Notice is
accompanied by payment, in funds acceptable to the Company, of an amount
equal to the interest payable on such Interest Payment Date of the principal
of this Security to be converted. If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect hereto. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
Principal Amount to be Converted
(in an integral multiple of $1,000, if less than all)
U.S. $ __________
Dated:_______________ ___________________________________________________
Signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokerages,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be delivered, or Securities to
be issued, other than to and in the name of the
registered owner.
__________________________________________________
Signature Guaranty
Fill in for registration of shares of Common Stock and Security if to
be issued otherwise than to the registered Holder.
______________________________________ __________________________________
(Name) Social Security or Other Taxpayer
Identification Number
______________________________________
(Address)
______________________________________
Please print Name and Address
(including zip code number)
[The above conversion notice is to be modified, as appropriate, for conversion
into other securities or property of the Company.]
ARTICLE THREE
22
<PAGE>
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of
the series is payable;
(5) the rate or rates at which any Securities of the series shall
bear interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which any Securities of the series
may be redeemed, in whole or in part, at the option of the Company and, if
other than by a Board Resolution, the manner in which any election by the
Company to redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of the Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which any Securities
of the series shall be redeemed or purchased, in
23
<PAGE>
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be determined;
(11) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any Securities of the series shall be payable and the
manner of determining the equivalent thereof in the currency of the United
States of America for any purpose, including for purposes of the definition
of "Outstanding" in Section 101; provided, however, that prior to the
issuance of any such Securities, the Company shall have obtained the written
consent of the Trustee, which consent may be withheld in the sole discretion
of the Trustee, to the currency, currencies or currency units so established;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company or
the Holder thereof, in one or more currencies or currency units other than
that or those in which such Securities are stated to be payable, the
currency, currencies or currency units in which the principal of or any
premium or interest on such Securities as to which such election is made
shall be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in
which such amount shall be determined); provided, however, that prior to the
issuance of any such Securities, the Company shall have obtained the written
consent of the Trustee, which consent may be withheld in the sole discretion
of the Trustee, to the currency, currencies or currency units so established;
(13) if other than the entire principal amount thereof, the portion
of the principal amount of any Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall
be due and payable upon any Maturity other than the Stated Maturity or which
shall be deemed to be Outstanding as of any date prior to the Stated Maturity
(or, in any such case, the manner in which such amount deemed to be the
principal amount shall be determined);
(15) if applicable, that the Securities of the series, in whole or
any specified part, shall be defeasible pursuant to Section 1302 or Section
1303 or both such Sections and, if other than by a Board Resolution, the
manner in which any election by the Company to defease
24
<PAGE>
such Securities shall be evidenced;
(16) if applicable, the terms of any right to convert Securities of
the series into shares of Common Stock of the Company or other securities or
property;
(17) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204 and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of Section 305 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or
names of Persons other than the Depositary for such Global Security or a
nominee thereof;
(18) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of the
Trustee or the requisite Holders of such Securities to declare the principal
amount thereof due and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section
303) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Debt as provided in Article Fifteen.
SECTION 302. DENOMINATIONS. The Securities of each series shall be
issuable only in registered form without coupons and only in such
denominations as shall be specified as contemplated by Section 301. In the
absence of any such specified denomination with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations
of $1,000 and any integral multiple thereof.
25
<PAGE>
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its Vice Chairman of the Board, its principal financial officer, its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities
or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities, and the Trustee
in accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established by or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form has
been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in
a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order
26
<PAGE>
and Opinion of Counsel otherwise required pursuant to such preceding
paragraph at or prior to the authentication of each Security of such series
if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be issued.
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 by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company in a Place
of Payment for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor one or more definitive Securities of the same series, of
any authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series and tenor.
SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. 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 in a Place of Payment 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 of Securities as herein provided.
27
<PAGE>
Upon surrender for registration of transfer of any Security of a
series at the office or agency of the Company in a Place of Payment for that
series, 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 the same series, of any authorized denominations and of
like tenor and aggregate principal amount.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of like tenor and aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) 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 its attorney duly authorized in writing.
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 exchange of Securities,
other than exchanges pursuant to Section 304, 906 or 1107 not involving any
transfer.
If the Securities of any series (or of any series and specified
tenor) are to be redeemed in part, the Company shall not be required (A) to
issue, register the transfer of or exchange any Securities of that series (or
of that series and specified tenor, as the case may be) during a period
beginning at the opening of business 15 days before the day of the mailing of
a notice of redemption of any such Securities selected for redemption under
Section 1103 and ending at the close of business on the day of such mailing,
or (B) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such
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Global Security shall constitute a single Security for all purposes of this
Indenture.
(2) any other provision in this Indenture, no Global Security may
be exchanged in whole or in part for Securities registered, and no transfer
of a Global Security in whole or in part may be registered, in the name of
any Person other than the Depositary for such Global Security or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered under the Exchange Act,
(B) there shall have occurred and be continuing an Event of Default with
respect to such Global Security or (C) there shall exist such circumstances,
if any, in addition to or in lieu of the foregoing as have been specified for
this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906 or
1107 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any
mutilated Security is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and 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
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, 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 and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
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Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Except as
otherwise provided as contemplated by Section 301 with respect to any series
of Securities, interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security of any series 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 of such series (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 of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be given to each Holder of
Securities of such series in the manner set forth in Section 106, 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 of such series (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).
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(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such 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, 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.
Subject to the provisions of Section 1402, in the case of any
Security (or any part thereof) which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security the principal of (or premium, if any, on) which shall become due
and payable, whether at Stated Maturity or by declaration of acceleration
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 that
Security (or any 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 or in Section 1402, in the
case of any Security (or any part thereof) which is converted, interest whose
Stated Maturity is after the date of conversion of such Security (or such
part thereof) shall not be payable.
SECTION 308. 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 and any premium and (subject to Section
307) any 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 309. CANCELLATION. All Securities surrendered for payment,
redemption, registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and may deliver to the Trustee
(or to any other Person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly canceled
by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
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SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified as
contemplated by Section 301 for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall upon Company Request cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) 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 306 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 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an
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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 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY. Subject to the provisions of the
last paragraph of Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal and any premium and interest for whose payment such money has been
deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used herein
with respect to Securities of any series, 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 Fifteen 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 upon any Security of that
series 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 any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this Indenture
solely for the benefit of series of Securities other than that series), 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 of that series
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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) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of
that series;
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default (other than an Event of Default specified in Section 501(5) or
501(6)) with respect to Securities of any series at the time Outstanding 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 of that series
may declare the principal amount of all the Securities of that series (or, if
any Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Securities as may be specified by the
terms thereof) to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable. If an Event of Default specified in Section 501(5) or 501 (6) with
respect to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of that series (or, if any Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified by the terms thereof)
shall
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automatically, and without any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable. Any payments by
the Company on the Securities following any such acceleration will be subject to
the subordination provisions of Article Fifteen to the extent provided therein.
At any time after such a declaration of acceleration with respect to
Securities of any series 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 provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, 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 of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, 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 with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, but subject to the provisions of
Article Fifteen,
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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 any premium
and interest and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal and premium and on any
overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If an Event of Default with respect to Securities of any series 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 of such series 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 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial
proceeding relative to the Company (or any other obligor upon the Securities),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the Holders
and the Trustee allowed in any such proceeding. In particular, the Trustee shall
be authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 505. 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 such judgment has been
recovered.
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SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal or any premium 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
607; and
SECOND: Subject to Article Fifteen, to the payment of the amounts then
due and unpaid for principal of and any premium, if any, and 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 and any premium, if
any, and interest, respectively.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of any series
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 with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series 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 of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST AND TO CONVERT. Notwithstanding any other provision in this
Indenture, but subject to the provisions of Article Fifteen, the Holder of any
Security shall have the right, which is absolute
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and unconditional, to receive payment of the principal of and any premium and
(subject to Section 307) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date), to convert such Securities in accordance with Article
Fourteen and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. 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 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee (subject to the limitations contained in this
Indenture) or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in principal
amount of the Outstanding Securities of any series 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, with respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture and the Trustee shall not have determined that the action so
directed would be unjustly prejudicial to Holders of Securities of that series,
or any other series, not taking part in such direction, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction or this Indenture.
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SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series 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 514. UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, a court may require any
party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company or in any suit for the enforcement of the right to convert any
Security in accordance with Article Fourteen.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment
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of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS. If a default occurs hereunder with
respect to Securities of any series, the Trustee shall give the Holders of
Securities of such series notice of such default as and to the extent provided
by the Trust Indenture Act; provided, however, that in the case of any default
of the character specified in Section 501(4) with respect to Securities of such
series, no such notice to Holders 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 with respect to Securities of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be 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 and the written 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 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,
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request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records
and premises of the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. 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 neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER
INDENTURES. The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Subject to the limitations imposed by the Trust Indenture Act, nothing
in this Indenture shall prohibit the Trustee from becoming and acting as trustee
under other indentures under which other securities, or certificates of interest
of participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.
SECTION 606. 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 with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
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
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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 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
the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
SECTION 608. CONFLICTING INTERESTS. If the Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture Act, the Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture. To the extent permitted by such Act, the Trustee shall not be deemed
to have a conflicting interest by virtue of being a trustee under this Indenture
with respect to Securities of more than one series.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be one (and only one) Trustee hereunder with respect to the
Securities of each series, which may be Trustee hereunder for Securities of
one or more other series. Each Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has (or if the Trustee
is a subsidiary of a bank holding company its parent shall have) a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the
Securities of any series shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. 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 611.
The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 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 with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of
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such series, delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (A) the
Company by a Board Resolution may remove the Trustee with respect to all
Securities, or (B) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities
and the appointment of a successor Trustee or Trustees.
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, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
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 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, the
retiring Trustee may petition, any Holder who has been a bona fide Holder of a
Security of such series 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 with respect to the Securities of such
series.
The Company shall give notice of each resignation and each removal of
the
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Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all
Holders of Securities of such series in the manner provided in Section 106.
Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the
appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed 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 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.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
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
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all such rights, powers and trusts referred to in the first or second
preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee (including the trust created by this Indenture),
shall be the successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of 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 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue and upon
exchange, registration of transfer or partial redemption thereof or pursuant
to Section 306, and Securities so authenticated 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. Wherever reference is made in
this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference 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 acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having (or if the Authenticating Agent is a
subsidiary of a bank holding company its parent shall have) a combined
capital and surplus of not less than $50,000,000 and subject to supervision
or examination by Federal or State authority. If such Authenticating Agent
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
Authenticating Agent 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 an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent (including the
authenticating agency contemplated by this Indenture), shall continue to be
an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section, 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, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. 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.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made pursuant
to this Section 612, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., As Trustee
By:
------------------------------------
As Authenticating Agent
By:
------------------------------------
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 15 days after the Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of Securities of each series as of such Regular
Record Date, as the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided that no such list need be furnished by the Company to the Trustee so
long as the Trustee is acting as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. 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 701, if any, and the names and addresses of
Holders received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE. The Trustee shall transmit to Holders
such reports concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 1 in each calendar year,
commencing with the first July 1 after the first issuance of Securities pursuant
to this Indenture.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the
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Commission and with the Company. The Company will notify the Trustee when any
Securities are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY. The Company shall file with the Trustee
and the Commission, and transmit to Holders, such information, documents and
other reports, and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to the
Trust Indenture Act; provided that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the same is so
required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS. The
Company shall not consolidate with or merge into any other Person (in a
transaction in which the Company is not the surviving corporation) or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1) in case the Company shall consolidate with or merge into another
Person (in an transaction in which the Company is not the surviving corporation)
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and the conversion rights shall be provided
for in accordance with Article Fourteen, if applicable, or as otherwise
specified pursuant to Section 301, by supplemental indenture satisfactory in
form to the Trustee, executed and delivered to the Trustee, by the Person (if
other than the Company) formed by such consolidation or into which the Company
shall have been merged or by the Person which shall have acquired the Company's
assets;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any Subsidiary as
a result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an
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Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company
with, or merger of the Company into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety in accordance with Section 801, 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 NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without
the consent of any Holders, 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, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely for
the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal, and
with or without interest coupons, or to permit or facilitate the issuance of
Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in
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respect of one or more series of Securities, provided that any such addition,
change or elimination (A) shall neither (i) apply to any Security of any
series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (ii) modify the rights of the
Holder of any such Security with respect to such provision or (B) shall
become effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section 611;
or
(9) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Fourteen, including providing
for the conversion of the securities into any security (other than the Common
Stock of the Company) or property of the Company; or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this Clause (10)
shall not adversely affect the interests of the Holders of Securities of any
series in any material respect; or
(11) to supplement any of the provisions of the Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Articles Four and Thirteen,
provided that any such action shall not adversely affect the interests of the
Holders of Securities of such series or any other series of Securities in any
material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of a majority in principal amount of the Outstanding
Securities of each series affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, 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 of such
series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
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(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or modify the provisions of this Indenture with respect to the
subordination of such series of Securities in a manner adverse to the Holders of
Securities of such series, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, 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 any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage 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; provided,
however, that this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section and Section 1008, or the deletion of this
proviso, in accordance with the requirements of Sections 611 and 901(8), or
(4) if applicable, make any change that adversely affects the right
to convert any security as provided in Article Fourteen or pursuant to Section
301 (except as permitted by Section 901(9)) or decrease the conversion rate or
increase the conversion price of any such security.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders 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 903. 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
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receive, and (subject to Sections 601 and 603) 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. 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 904. 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 shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series 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 of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
SECTION 907. SUBORDINATION UNIMPAIRED. No provision in any supplemental
indenture which affects the superior position of the holders of Senior Debt
shall be effective against holders of Senior Debt.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay the principal of and any premium and interest on the
Securities of that series in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain
in each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange, where Securities of that series may be surrendered for conversion and
where notices and demands to or upon the Company in respect of the Securities of
that series and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any
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time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal of
or any premium or interest on any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal
of or any premium or interest on any Securities of that series, deposit with
a Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of
Securities 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) comply
with the provisions of the Trust Indenture Act applicable to it as a Paying
Agent and (2) during the continuance of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment in respect of the Securities of that series, upon the written request
of the Trustee, forthwith pay to the Trustee all sums held in trust by such
Paying Agent for payment in respect of the Securities of that series.
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
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Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for a period
ending on the earlier of the date that is ten Business Days prior to the date
such money would escheat to the State or two years after such principal,
premium or interest has become due and payable shall be paid to the Company
on Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in each
Place of Payment, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of
the Company ending after the date hereof, an Officers' Certificate, stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. EXISTENCE. Subject to Article Eight, the Company will do
or cause to be done all things necessary to preserve and keep in full force
and effect its existence.
SECTION 1006. MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business 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, and to
the extent, 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 and not
disadvantageous in any material respect to the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the
Company, and (2) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company;
provided, however, that the Company shall not be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim
(i) whose amount, applicability or
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validity is being contested in good faith by appropriate proceedings or (ii)
if the failure to pay or discharge would not have a material adverse effect
on the assets, business, operations, properties or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
SECTION 1008. WAIVER OF CERTAIN COVENANTS. Except as otherwise
specified as contemplated by Section 301 for Securities of such series, the
Company may, with respect to the Securities of any series, omit in any
particular instance to comply with any term, provision or condition set forth
in any covenant provided pursuant to Section 301(19), 901(2), 901(7), 1006 or
1007 for the benefit of the Holders of such series if before the time for
such compliance the Holders of at least 50% in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or
affect such term, provision 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 in respect of any such term, provision
or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series which
are redeemable before their Stated Maturity shall be redeemable in accordance
with their terms and (except as otherwise specified as contemplated by
Section 301 for such Securities) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Securities shall be evidenced by a Board Resolution
or in another manner specified as contemplated by Section 301 for such
Securities. In case of any redemption at the election of the Company of less
than all the Securities of any series (including any such redemption
affecting only a single Security), 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 of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If
less than all the Securities of any series are to be redeemed (unless all the
Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities of such
series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which
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may provide for the selection for redemption of a portion of the principal
amount of any Security of such series, provided that the unredeemed portion
of the principal amount of any Security shall be in an authorized
denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such
series and of a specified tenor are to be redeemed (unless such redemption
affects only a single Security), the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series and specified tenor
not previously called for redemption in accordance with the preceding
sentence.
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
shall be treated by the Trustee as Outstanding for the purpose of such
selection.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
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 1104. NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at its address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any),
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
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redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price,
(6) if applicable, the conversion price, that the date on which the
right to convert the principal of the Securities or the portions thereof to
be redeemed will terminate will be the Redemption Date and the place or
places where such Securities may be surrendered for conversion, and
(7) that the redemption is for a sinking fund, if such is the case.
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 request, by
the Trustee in the name and at the expense of the Company and shall be
irrevocable.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money 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 date.
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 the right of
any Holder of such Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company on Company Request, or if
then held by the Company, shall be discharged from such trust.
SECTION 1106. 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 and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity
is on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant
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Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor
in the Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Security which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor
(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 its attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, 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.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of
any series except as otherwise specified as contemplated by Section 301 for
such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by
the terms of such Securities is herein referred to as an "optional sinking
fund payment." If provided for by the terms of any Securities, the cash
amount of any sinking fund payment may be subject to reduction as provided in
Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities as provided for by the terms of such Securities.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking
fund payment with respect to any Securities of such series required to be
made pursuant to the terms of such Securities as and to the extent provided
for by the terms of such Securities; provided that the Securities to be so
credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at
the Redemption Price, as specified in the Securities so to be redeemed, for
redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
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SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than
60 days prior to each sinking fund payment date for any Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for such Securities pursuant
to the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 1202 and
will also deliver to the Trustee any Securities to be so delivered. Not less
than 30 days prior to each such sinking fund payment date, the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE. The Company may elect, at its option at any time, to have
Section 1302 or Section 1303 applied to any Securities or any series of
Securities, as the case may be, designated pursuant to Section 301 as being
defeasible pursuant to such Section 1302 or 1303, in accordance with any
applicable requirements provided pursuant to Section 301 and upon compliance
with the conditions set forth below in this Article. Any such election shall
be evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities.
SECTION 1302. DEFEASANCE AND DISCHARGE. Upon the Company's exercise of
its option (if any) to have this Section applied to any Securities or any
series of Securities, as the case may be, the Company shall be deemed to have
been discharged from its obligations, and the provisions of Article Fifteen
shall cease to be effective, with respect to such Securities as provided in
this Section on and after the date the conditions set forth in Section 1304
are satisfied (hereinafter called "Defeasance"). For this purpose, such
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Securities and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely
from the trust fund described in Section 1304 and as more fully set forth in
such Section, payments in respect of the principal of and any premium and
interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 306,
1002 and 1003, and, if applicable, Article Fourteen, (3) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (4) this Article.
Subject to compliance with this Article, the Company may exercise its option
(if any) to have this Section applied to any Securities notwithstanding the
prior exercise of its option (if any) to have Section 1303 applied to such
Securities.
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SECTION 1303. COVENANT DEFEASANCE. Upon the Company's exercise of its
option (if any) to have this Section applied to any Securities or any series
of Securities, as the case may be, (1) the Company shall be released from its
obligations under Sections 1006 through 1007, inclusive, and any covenants
provided pursuant to Section 301(19), 901(2) or 901(7) for the benefit of the
Holders of such Securities and (2) the occurrence of any event specified in
Sections 501(4) (with respect to any of Sections 1006 through 1007,
inclusive, and any such covenants provided pursuant to Section 301(19),
901(2) or 901(7)), shall be deemed not to be or result in an Event of
Default, and (3) the provisions of Article Fifteen shall cease to be
effective, in each case with respect to such Securities as provided in this
Section on and after the date the conditions set forth in Section 1304 are
satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that, with respect to such Securities, the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section (to the
extent so specified in the case of Section 501(4)) or Article Fifteen,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section or Article or by reason of any reference in any such Section
or Article to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may
be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefits of the Holders of such Securities,
(A) money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of
any payment, money in an amount, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the Trustee
(or any such other qualifying trustee) to pay and discharge, the principal of
and any premium and interest on such Securities on the respective Stated
Maturities, in accordance with the terms of this Indenture and such
Securities. As used herein, "U.S. Government Obligation" means (x) any
security which is (i) a direct obligation of the United States of America for
the payment of which the full faith and credit of the United States of
America is pledged or (ii) an obligation of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof, and
(y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any U.S. Government
Obligation which is specified in Clause (x) above and held by such bank for
the account of the holder of such depositary receipt, or with
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respect to any specific payment of principal of or interest on any U.S.
Government Obligation which is so specified and held, provided that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S. Government Obligation
or the specific payment of principal or interest evidenced by such depositary
receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this instrument, there has
been a change in the applicable Federal income tax law, in either case (A) or
(B) to the effect that, and based thereon such opinion shall confirm that,
the Holders of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit, Defeasance and discharge to
be effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize gain or loss for Federal income
tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to such Securities or any
other Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(5) and
(6), at any time on or prior to the 90th day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until
after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning of
such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the
trust
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arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) At the time of such deposit, (A) no default in the payment of
any principal of or premium or interest on any Senior Debt shall have
occurred and be continuing, (B) no event of default with respect to any
Senior Debt shall have resulted in such Senior Debt becoming, and continuing
to be, due and payable prior to the date on which it would otherwise have
become due and payable (unless payment of such Senior Debt has been made or
duly provided for), and (C) no other event of default with respect to any
Senior Debt shall have occurred and be continuing permitting (after notice or
lapse of time or both) the holders of such Senior Debt (or a trustee on
behalf of such holders) to declare such Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable.
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee or other
qualifying trustee (solely for purposes of this Section and Section 1306, the
Trustee and any such other trustee are referred to collectively as the
"Trustee") pursuant to Section 1304 in respect of any Securities shall be
held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any such Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Securities, of
all sums due and to become due thereon in respect of principal and any
premium and interest, but money so held in trust need not be segregated from
other funds except to the extent required by law. Money and U.S. Government
Obligations so held in trust shall not be subject to the provisions of
Article Fifteen.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
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SECTION 1306. REINSTATEMENT. If the Trustee or the Paying Agent is
unable to apply any money in accordance with this Article with respect to any
Securities by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the obligations under this Indenture and such Securities from which the
Company has been discharged or released pursuant to Section 1302 or 1303
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to
Section 1305 with respect to such Securities in accordance with this Article;
provided, however, that if the Company makes any payment of principal of or
any premium or interest on any such Security following such reinstatement of
its obligations, the Company shall be subrogated to the rights (if any) of
the Holders of such Securities to receive such payment from the money so held
in trust.
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to the Securities of any series which are convertible
into shares of Common Stock of the Company, and the issuance of such shares
of Common Stock upon the conversion of such Securities, except as otherwise
specified as contemplated by Section 301 for the Securities of such series.
SECTION 1402. EXERCISE OF CONVERSION PRIVILEGE. In order to exercise a
conversion privilege, the Holder of a Security of a series with such a
privilege shall surrender such Security to the Company at the office or
agency maintained for that purpose pursuant to Section 1002, accompanied by a
duly executed conversion notice to the Company substantially in the form set
forth in Section 206 stating that the Holder elects to convert such Security
or a specified portion thereof. Such notice shall also state, if different
from the name and address of such Holder, the name or names (with address) in
which the certificate or certificates for shares of Common Stock which shall
be issuable on such conversion shall be issued. Securities surrendered for
conversion shall (if so required by the Company or the Trustee) be duly
endorsed by or accompanied by instruments of transfer in forms satisfactory
to the Company and the Trustee duly executed by the registered Holder or its
attorney duly authorized in writing; and Securities so 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 (excluding Securities or portions thereof called for
redemption during the period beginning at the close of business on a Regular
Record Date and ending at the opening of business on the first Business Day
after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in 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 then being converted, and such interest shall be payable to
such registered Holder notwithstanding the conversion of such Security,
subject to the provisions of Section 307 relating to the payment of Defaulted
Interest by the Company. As
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promptly as practicable after the receipt of such notice and of any payment
required pursuant to a Board Resolution and, subject to Section 303, set
forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth the
terms of such series of Security, and the surrender of such Security in
accordance with such reasonable regulations as the Company may prescribe, the
Company shall issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Security (or specified portion thereof),
in accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in
respect of any fractional share of such Common Stock otherwise issuable upon
such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which such notice
and such payment, if required, shall have been received in proper order for
conversion by the Company and such Security shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such Security and
shall have instructed the Company to effect the conversion on a particular
date following such surrender and such Holder shall be entitled to convert
such Security on such date, in which case such conversion shall be deemed to
be effected immediately prior to the close of business on such date) and at
such time the rights of the Holder of such Security as such Security Holder
shall cease and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock of the Company shall be issuable
upon such conversion shall be deemed to have become the Holder or Holders of
record of the shares represented thereby. Except as set forth above and
subject to the final paragraph of Section 307, no payment or adjustment shall
be made upon any conversion on account of any interest accrued on the
Securities (or any part thereof) surrendered for conversion or on account of
any dividends on the Common Stock of the Company issued upon such conversion.
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 or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted portion
of such Security.
SECTION 1403. NO FRACTIONAL SHARES. No fractional share of Common Stock
of the Company shall be issued upon conversions of Securities of any series.
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 shall be computed on the basis of the aggregate principal amount
of the Securities (or specified portions thereof to the extent permitted
hereby) so surrendered. If, except for the provisions of this Section 1403,
any Holder of a Security or Securities would be entitled to a fractional
share of Common Stock of the Company upon the conversion of such Security or
Securities, or specified portions thereof, the Company shall pay to such
Holder an amount in cash equal to the current market value of such fractional
share computed, (i) if such Common Stock is listed or admitted to unlisted
trading privileges on a national securities exchange or market, on the basis
of the last reported sale price regular way on such exchange or market on the
last trading day prior to the date of conversion upon which such
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a sale shall have been effected, or (ii) if such Common Stock is not at the
time so listed or admitted to unlisted trading privileges on a national
securities exchange or market, on the basis of the average of the bid and
asked prices of such Common Stock in the over-the-counter market, on the last
trading day prior to the date of conversion, as reported by the National
Quotation Bureau, Incorporated or similar organization if the National
Quotation Bureau, Incorporated is no longer reporting such information, or if
not so available, the fair market price as determined by the Board of
Directors. For purposes of this Section, "trading day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday other than any day on which
the Common Stock is not traded on the Nasdaq National Market, or if the
Common Stock is not traded on the Nasdaq National Market, on the principal
exchange or market on which the Common Stock is traded or quoted.
SECTION 1404. ADJUSTMENT OF CONVERSION PRICE. The conversion price of
Securities of any series that is convertible into Common Stock of the Company
shall be adjusted for any stock dividends, stock splits, reclassifications,
combinations or similar transactions in accordance with the terms of the
supplemental indenture or Board Resolutions setting forth the terms of the
Securities of such series.
Whenever the conversion price is adjusted, the Company shall compute
the adjusted conversion price in accordance with terms of the applicable
Board Resolution or supplemental indenture and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002 and, if
different, with the Trustee. The Company shall forthwith cause a notice
setting forth the adjusted conversion price to be mailed, first class postage
prepaid, to each Holder of Securities of such series at its address appearing
on the Security Register and to any conversion agent other than the Trustee.
Unless and until a Responsible Officer of the Trustee shall have received an
Officers' Certificate setting forth an adjustment of the conversion price,
the Trustee may assume that no such adjustment has been made and that the
last conversion price of which it has knowledge remains in effect.
SECTION 1405. NOTICE OF CERTAIN CORPORATE ACTIONS. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
retained earnings (other than a dividend for which approval of any
shareholders of the Company is required) that would require an adjustment
pursuant to Section 1404; or
(2) the Company shall authorize the granting to all or
substantially all of the holders of its Common Stock of rights, options or
warrants to subscribe for or purchase any shares of capital stock of any
class or of any other rights (other than any such grant for which approval of
any shareholders of the Company is required); or
(3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock, or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required), or of the sale of all or substantially all of the assets
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of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause to
be mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 20 days (or 10 days in any case specified in
Clause (1) or (2) above) prior to the applicable record date hereinafter
specified, a notice in the form of an Officers' Certificate stating (i) 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, or (ii) the date on which such reclassification,
consolidation, merger, share exchange, sale, 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, sale, dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee. Unless and until a
Responsible Officer of the Trustee shall have received such Officers'
Certificate, the Trustee shall not be charged with knowledge of any event
described in this Section 1405.
SECTION 1406. RESERVATION OF SHARES OF COMMON STOCK. The Company shall
at all times reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock of the
Company then issuable upon the conversion of all outstanding Securities of
any series that has conversion rights.
SECTION 1407. PAYMENT OF CERTAIN TAXES UPON CONVERSION. Except as
provided in the next sentence, the Company will pay any and all taxes that
may be payable in respect of the issue or delivery of shares of its Common
Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of its Common Stock in
a name other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such
tax, or has established, to the satisfaction of the Company, that such tax
has been paid.
SECTION 1408. NONASSESSABILITY. The Company covenants that all shares
of its Common Stock which may be issued upon conversion of Securities will
upon issue in accordance with the terms hereof be duly and validly issued and
fully paid and nonassessable.
SECTION 1409. PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS. In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which
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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
of a series then Outstanding that is convertible into Common Stock of the
Company shall have the right thereafter (which right shall be the exclusive
conversion right thereafter available to said Holder), during the period such
Security shall be convertible, to convert such Security only into the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by a holder of the
number of shares of Common Stock of the Company into which such Security
might have been converted immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease, assuming such holder of Common Stock of
the Company (i) is not a Person with which the Company consolidated or merged
with or into or which merged into or with the Company or to which such
conveyance, sale, transfer or lease was made, as the case may be (a
"Constituent Person"), or an Affiliate of a Constituent Person and (ii)
failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such consolidation,
merger, conveyance, sale, transfer or lease (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same
for each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-electing Share"), then
for the purpose of this Section 1409 the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease by the holders of each Non-electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of
the Non-electing Shares). Such supplemental indenture shall provide for
adjustments 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 or in accordance with the
terms of the supplemental indenture or Board Resolutions setting forth the
terms of such adjustments. The above provisions of this Section 1409 shall
similarly apply to successive consolidations, mergers, conveyances, sales,
transfers or leases. Notice of the execution of such a supplemental indenture
shall be given by the Company to the Holder of each Security of a series that
is convertible into Common Stock of the Company as provided in Section 106
promptly upon such execution.
Neither the Trustee nor any conversion agent, if any, shall be under
any responsibility to determine the correctness of any provisions contained
in any such supplemental indenture relating either to the kind or amount of
shares of stock or other securities or property or cash receivable by Holders
of Securities of a series convertible into Common Stock of the Company 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.
SECTION 1410. DUTIES OF TRUSTEE REGARDING CONVERSION. Neither the Trustee
nor any conversion agent shall at any time be under any duty or responsibility
to any Holder of Securities
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of any series that is convertible into Common Stock of the Company 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, whether herein
or in any supplemental indenture, any resolutions of the Board of Directors
or written instrument executed by one or more officers of the Company
provided to be employed in making the same. Neither the Trustee nor any
conversion agent shall be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock of the Company, or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Securities and neither the Trustee nor any conversion
agent makes any representation with respect thereto. Subject to the
provisions of Section 601, neither the Trustee nor any conversion agent shall
be responsible for any failure of the Company to issue, transfer or deliver
any shares of its Common Stock or stock certificates or other securities or
property upon the surrender of any Security for the purpose of conversion or
to comply with any of the covenants of the Company contained in this Article
Fourteen or in the applicable supplemental indenture, resolutions of the
Board of Directors or written instrument executed by one or more duly
authorized officers of the Company.
SECTION 1411. REPAYMENT OF CERTAIN FUNDS UPON CONVERSION. Any funds
which at any time shall have been deposited by the Company or on its behalf
with the Trustee or any other paying agent for the purpose of paying the
principal of, and premium, if any, and interest, if any, on any of the
Securities (including, but not limited to, funds deposited for the sinking
fund referred to in Article Twelve hereof and funds deposited pursuant to
Article Thirteen hereof) and which shall not be required for such purposes
because of the conversion of such Securities as provided in this Article
Fourteen shall after such conversion be repaid to the Company by the Trustee
upon the Company's written request.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. SECURITIES SUBORDINATE TO SENIOR DEBT. Except as
otherwise provided in a supplemental indenture or pursuant to Section 301,
the Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of and any
premium and interest on each and all of the Securities or on the account of
the purchase, redemption or other acquisition of the Securities or
constituting a sinking fund or defeasance payment by the Company to the
Trustee or any Paying Agent, as the case may be, in accordance with Article
Twelve or Article Thirteen, respectively, on the Securities are hereby
expressly made subordinate and subject in right of payment to the prior
payment in full of all Senior Debt. Notwithstanding the foregoing, the
Article Fifteen shall not apply to the application of any amounts deposited
with the Trustee or any Paying Agent pursuant to any sinking fund requirement
or defeasance which, at the time such amounts were deposited with the Trustee
or Paying Agent, as the case may be, such deposits were not prohibited by the
provisions of this Article Fifteen ("Previous Payments").
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The expressions "prior payment in full," "payment in full" and "paid
in full" and any other similar term or phrase when used in this Article
Fifteen with respect to Senior Debt shall mean in the case of Senior Debt
consisting of contingent obligations in respect of letters of credit (or
local guaranties, as applicable), bankers' acceptances, interest rate
protection agreements or currency exchange or purchase agreements, the
setting apart of cash or other payment acceptable to holders of such Senior
Debt sufficient to discharge such portions of Senior Debt in an account for
the exclusive benefit of the holders thereof, in which account such holders
shall be granted by the Company a first priority perfected security interest,
which first priority perfected security interest shall have been retained by
the holders of Senior Debt for a period of time in excess of all applicable
preference or other similar periods, if any, under applicable bankruptcy,
insolvency or creditors' rights laws.
SECTION 1502. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization, debt restructuring or other
similar case or proceeding in connection therewith, relative to the Company
or to its creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Company, then and in any such event the holders of Senior
Debt shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Senior Debt, in cash or other payment
satisfactory to the holders of Senior Debt, before the Holders of the
Securities are entitled to receive any payment on account of principal of or
any premium or interest on the Securities or on account of the purchase,
redemption or other acquisition of Securities or constituting a sinking fund
or defeasance payment by the Company to the Trustee or the Paying Agent, as
the case may be, in accordance with Article Twelve or Article Thirteen,
respectively, on the Securities (other than Previous Payments), and to that
end the holders of Senior Debt or their representative or representatives or
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Debt may have been issued shall be entitled to
receive, for application to the payment thereof, any payment or distribution
of any kind or character, whether in cash, property or securities, which may
be payable or deliverable in respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding up or event, to the
extent necessary to pay all Senior Debt in full in cash or other payment
satisfactory to the holders of Senior Debt, after giving effect to any
concurrent payment or distribution to or for the holders of other Senior
Debt. In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, before all Senior Debt is paid in
full in cash or other payment satisfactory to the holders of Senior Debt,
then and in such event such payment or distribution shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt
in full, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt.
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For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which
are subordinated in right of payment to all Senior Debt which may at the time
be outstanding to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of
assets and liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or
which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
SECTION 1503. PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF
SECURITIES. In the event that any Securities are declared due and payable
before their Stated Maturity, then and in such event the holders of the
Senior Debt outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full in cash or other payment
satisfactory to the holders of Senior Debt of all amounts due or to become
due on or in respect of all Senior Debt, before the Holders of the Securities
are entitled to receive any payment by the Company on account of the
principal of or any premium or interest on the Securities or on account of
the purchase, redemption or other acquisition of Securities or constituting
any sinking fund or defeasance payment by the Company to the Trustee or the
Paying Agent, as the case may be, in accordance with Article Twelve or
Article Thirteen, respectively, on the Securities (other than Previous
Payments); provided, however, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article Twelve by
delivering and crediting pursuant to Section 1202 Securities which have been
acquired (upon redemption or otherwise) prior to such declaration of
acceleration or which have been converted pursuant to Article Fourteen. If
the payment of Securities is accelerated because of an Event of Default, the
Company and the Trustee shall promptly notify holders of Senior Debt of the
acceleration.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by
the foregoing provisions of this Section, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the
case may be, such Holder, then and in such event such payment shall be paid
over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1502 would be applicable.
SECTION 1504. NO PAYMENT IN CERTAIN CIRCUMSTANCES. The Company may not
make any payment of principal of, or premium, if any, or interest on the
Securities or on account of
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the purchase, redemption or other acquisition of Securities or constituting
any sinking fund or defeasance payment by the Company to the Trustee or the
Paying Agent, as the case may be, in accordance with Article Twelve or
Article Thirteen, respectively, on the Securities (other than Previous
Payments), if:
(i) a default in the payment of principal, premium, if any, or
interest (including a default under any redemption or repurchase obligation)
or other amounts with respect to any Senior Debt occurs and is continuing
(or, in the case of Senior Debt for which there is a period of grace, in the
event of such a default that continues beyond the period of grace, if any,
specified in the instrument or lease evidencing such Senior Debt) unless and
until such default shall have been cured or waived or shall have ceased to
exist; or
(ii) a default, other than a payment default, on any Designated
Senior Debt occurs and is continuing that then permits holders of such
Designated Senior Debt to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from the Company, a
holder of such Designated Senior Debt or a Representative of such Designated
Senior Debt;
provided, however, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article Twelve by
delivering and crediting pursuant to Section 1202 Securities which have been
acquired (upon redemption or otherwise) prior to such declaration of
acceleration or which have been converted pursuant to Article Fourteen. If
the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section unless and until at least 365 days shall have elapsed since
the initial effectiveness of the immediately prior Payment Blockage Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities and may purchase, redeem or otherwise acquire
Securities and may make a sinking find or defeasance payment to the Trustee
or Paying Agent, as the case may be, in accordance with Article Twelve or
Article Thirteen, respectively, on the Securities, upon the earlier of:
(1) the date upon which the default is cured or waived or ceases to
exist, or
(2) in the case of a default referred to in clause (ii) above, 179
days after the Payment Blockage Notice is received, unless this Article Fifteen
otherwise prohibits the payment distribution, purchase, redemption, acquisition,
sinking fund payment or defeasance payment at the time of such payment,
distribution, purchase, redemption, acquisition, sinking fund payment or
defeasance payment (including, without limitation, in the case of a default
referred to in clause (ii) above, as a result of a payment default with respect
to the applicable Senior Debt as a consequence of the acceleration of the
maturity thereof or otherwise). In the event that, notwithstanding the
foregoing, the Company shall make any payment to the Trustee or the Holder
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of any Security prohibited by the foregoing provisions of this Section, and
if such fact shall, at or prior to the time of such payment, have been made
known to the Trustee or, as the case may be, such Holder, then and in such
event such payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1502 would be applicable.
SECTION 1505. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in
this Article or elsewhere in this Indenture or in any of the Securities shall
prevent (a) the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, debt restructuring,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 1502 or under the
conditions described in Section 1503 or 1504, from making payments at any
time of principal of and any premium or interest on the Securities or on
account of the purchase, redemption or other acquisition of Securities, or
(b) the application by the Trustee of any money deposited with it hereunder
to the payment of or on account of the principal of and any premium or
interest on the Securities or on account of the purchase, redemption or other
acquisition of Securities or the retention of such payment by the Holders,
if, at the time of such application by the Trustee, it did not have knowledge
that such payment would have been prohibited by the provisions of this
Article.
SECTION 1506. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. Subject
to the payment in full of all Senior Debt, the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities
applicable to the Senior Debt until the principal of and any premium and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt
of any cash, property or securities to which the Holders of the Securities or
the Trustee would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt and the Holders of
the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Debt.
SECTION 1507. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under
this Article of the holders of Senior Debt, is intended to rank equally with
all other general obligations of the Company), to pay to the Holders of the
Securities the principal of and any premium and interest on the Securities as
and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Holders
of the Securities and creditors of the Company other than
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<PAGE>
the holders of Senior Debt; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1508. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a
Security by its acceptance thereof authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate
the subordination provided in this Article and appoints the Trustee its
attorney-in-fact for any and all such purposes.
SECTION 1509. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Debt to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the
Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders
of Senior Debt, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, Senior Debt, or otherwise amend or supplement in any manner Senior
Debt or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding; (ii) sell, exchange, release or otherwise dispose
of any property pledged, mortgaged or otherwise securing Senior Debt; (iii)
release any Person liable in any manner for the collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against the Company
and any other Person.
SECTION 1510. NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit
the making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, unless and until the Trustee shall have
received written notice thereof from the Company or a holder of Senior Debt
or from any trustee or other Representative therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section by at least 12:00 noon New York City time
one Business Day prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the
payment of the principal of and any premium or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to
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<PAGE>
receive such money and to apply the same to the purpose for which such money
was received and shall not be affected by any notice to the contrary which
may be received by it after 12:00 noon New York time one Business Day prior
to such date.
Subject to the provisions of Section 601, 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 Debt (or a trustee or other
Representative therefor) to establish that such notice has been given by a
holder of Senior Debt (or a trustee or other Representative 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 Debt
to participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is 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 1511. 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 601, and
the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 1512. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT. The
Trustee, in its capacity as trustee under this Indenture, shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt and shall not be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article or otherwise.
SECTION 1513. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION
OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article with respect to any
Senior Debt which may at any time be held by it, to the same extent as any
other holder of Senior Debt, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under
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or pursuant to Section 607.
SECTION 1514. 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 1512 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.
SECTION 1515. 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 Fourteen shall not be
deemed to constitute a payment or distribution on account of the principal of
or any premium or interest on Securities or on account of the purchase,
redemption or other acquisition of Securities, and (2) the payment, issuance
or delivery of cash, property or securities (other than junior securities and
cash paid for fractional shares) upon conversion of a Security shall be
deemed to constitute payment on account of the principal of such Security.
For the purposes of this Section, the term "junior securities" means (a)
shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to all Senior Debt which
may be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.
SECTION 1516. OBLIGATIONS OF COMPANY AND RIGHT TO CONVERT UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of and
any premium and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or affect the relative rights
of the Holders of the Securities and creditors of the Company other than the
holders of Senior Debt, nor shall anything herein or therein prevent the
Trustee or the Holder of any Securities from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior
Debt in respect of cash, property or securities of the Company received upon
the exercise of any such remedy.
Nothing contained in this Article or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of
any Security to convert such Security in accordance with Article Fourteen (if
applicable).
SECTION 1517. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS. Each Holder by accepting a Security acknowledges and agrees that
the foregoing
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<PAGE>
subordination provisions are, and are intended to be, an inducement and an
consideration to each holder of any Senior Debt, whether such Senior Debt was
created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and
such holder of Senior Debt, shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt, and no amendment or modification of the
provisions contained herein shall diminish the rights of such holders of
Senior Debt unless such holders shall have agreed in writing hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the day and year first above written.
CYGNUS, INC.
By:
-------------------------------
Title:
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
-------------------------------
Title:
77
<PAGE>
ANNEX A
LOAN AGREEMENTS
78
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF BROBECK, PHLEGER & HARRISON LLP]
November 13, 1997
Cygnus, Inc.
400 Penobscot Drive
Redwood City, CA 94063-4719
Re: CYGNUS, INC. REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 (No. 333-39275), including Amendment No. 1 thereto (the "Registration
Statement"), filed or to be filed by Cygnus, Inc., a Delaware corporation
(the "Company"), with the Securities and Exchange Commission in connection
with the registration pursuant to the Securities Act of 1933, as amended (the
"Act"), of the Company's debt securities (the "Debt Securities") and shares
of the Company's Common Stock, $0.001 par value per share (the "Common
Stock"), with an aggregate offering price of up to $90,000,000 or the
equivalent thereof in one or more foreign currencies or composite currencies.
The Debt Securities and the Common Stock are to be sold from time to time as
set forth in the Registration Statement, the Prospectus contained therein
(the "Prospectus") and the supplements to the Prospectus (the "Prospectus
Supplements"). The Debt Securities may be either senior debt securities (the
"Senior Debt Securities") or subordinated debt securities (the "Subordinated
Debt Securities"). The Senior Debt Securities are to be issued pursuant to a
Senior Indenture, which has been filed as an exhibit to the Registration
Statement (the "Senior Indenture"), to be entered into between the Company
and State Street Bank and Trust Company of California, N.A., as Trustee (the
"Senior Trustee"). The Subordinated Debt Securities are to be issued
pursuant to a Subordinated Indenture, which has been filed as an exhibit to
the Registration Statement (the "Subordinated Indenture"),to be entered into
between the Company and State Street Bank and Trust Company of California,
N.A., as Trustee (the "Subordinated Trustee"). The shares of Common Stock
are to be sold pursuant to an Underwriting Agreement (Common Stock) (the
"Common Stock Underwriting Agreement") and the Debt Securities are to be sold
pursuant to an Underwriting Agreement (Debt Securities) (the "Debt Securities
Underwriting Agreement"), in substantially the respective forms filed as
exhibits to the Registration Statement. The Debt Securities are to be issued
in the forms filed as an exhibit to the Registration Statement.
<PAGE>
Cygnus, Inc. November 13, 1997
Page 2
We have examined instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter expressed.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents presented to us as originals, the conformity to
the originals of all documents presented to us as copies, the authenticity of
the originals of such latter documents, and the truth, accuracy, and
completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed.
Based on such examination, we are of the opinion that:
1. When the Registration Statement becomes effective under the Act
and the issuance of Senior Debt Securities has been duly authorized by
appropriate corporate action and the Senior Debt Securities, in the form
filed as an exhibit to the Registration Statement, have been duly completed,
executed, authenticated and delivered in accordance with the Senior Indenture
and sold pursuant to the Debt Securities Underwriting Agreement and as
described in the Registration Statement, any amendment thereto, the
Prospectus and any Prospectus Supplement relating thereto, the Senior Debt
Securities will be legal, valid and binding obligations of the Company,
entitled to the benefits of the Senior Indenture.
2. When the Registration Statement becomes effective under the Act
and the issuance of Subordinated Debt Securities has been duly authorized by
appropriate corporate action and the Subordinated Debt Securities, in the
form filed as an exhibit to the Registration Statement, have been duly
completed, executed, authenticated and delivered in accordance with the
Subordinated Indenture and sold pursuant to the Debt Securities Underwriting
Agreement and as described in the Registration Statement, any amendment
thereto, the Prospectus and any Prospectus Supplement relating thereto, the
Subordinated Debt Securities will be legal, valid and binding obligations of
the Company, entitled to the benefits of the Subordinated Indenture.
3. When the Registration Statement becomes effective under the Act
and the issuance of the shares of Common Stock has been duly authorized by
appropriate corporate action and the shares of Common Stock have been duly
issued, sold and delivered in accordance with the Common Stock Underwriting
Agreement and as described in the Registration Statement, any amendment
thereto, the Prospectus and the Prospectus Supplement relating thereto, the
shares of Common Stock will be validly issued, fully paid and nonassessable.
<PAGE>
Cygnus, Inc. November 13, 1997
Page 3
Our opinion that any document is legal, valid and binding is qualified
as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other laws relating to or
affecting the rights of creditors generally; and
(b) general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether such enforceability is considered in a proceeding in equity or at
law.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the use of our name wherever
it appears in the Registration Statement, the Prospectus, the Prospectus
Supplement, and in any amendment or supplement thereto. In giving such
consent, we do not believe or thereby admit that we are "experts" within the
meaning of such term as used in the Act or the rules and regulations of the
Securities and Exchange Commission issued thereunder with respect to any part
of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 12.1
CYGNUS, INC.
STATEMENT AS TO
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The Company has a history of operating and net losses, and therefore no
earnings have been available to cover fixed charges. Fixed charges consist of
interest, whether expensed or capitalized, and totalled $307,222, $449,383,
$291,964, $548,387, $744,311 and $718,730 for each of the five years in the
period ended December 31, 1996 and for the nine months ended September 30, 1997,
respectively.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 1 of the Registration Statement (Form S-3) and related Prospectus
of Cygnus, Inc. for the registration of up to $90,000,000 of Debt Securities and
Common Stock and to the incorporation by reference therein of our reports dated
January 20, 1997 and March 20, 1997, with respect to the consolidated financial
statements of Cygnus, Inc. incorporated by reference in its Annual Report (Form
10-K) for the year ended December 31, 1996 and the related financial statement
schedule included therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
November 10, 1997
<PAGE>
Exhibit 25.1
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) /X/
State Street Bank and Trust Company of California, N.A.
- --------------------------------------------------------------------------------
(Exact name of trustee as specified in its charter)
United States
- --------------------------------------------------------------------------------
(Jurisdiction of incorporation or organization to use a U.S. national bank)
06-1143380
- --------------------------------------------------------------------------------
(IRS Employer Identification No.)
725 South Figueroa Street, Suite 3100, Los Angeles, California
- --------------------------------------------------------------------------------
(Address of principal executive offices)
90017
- --------------------------------------------------------------------------------
(Zip code)
State Street Bank and Trust Company of California, N.A.
725 South Figueroa Street, Suite 3100, Los Angeles, California, 90017
213-362-7338
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
CYGNUS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Obligor as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
94-2978092
- --------------------------------------------------------------------------------
(IRS Employer Identification No.)
400 Penobscot Drive
Redwood City, California
- --------------------------------------------------------------------------------
(Address of principal executive offices)
94063-4719
- --------------------------------------------------------------------------------
(Zip code)
Debt Securities (proposed maximum aggregate offering price
of $90,000,000)
- --------------------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
(a) The trustee is subject to the supervision of the Comptroller of the
Currency, Western District Office, 50 Fremont Street, Suite 3900,
San Francisco, CA 94105-2292.
(b) The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with the obligor.
The Trustee is not affiliated with the obligor.
No responses are included for Items 3-15 of this form T-1 because the obligor
is not in default on securities issued under indentures under which State
Street Bank and Trust Company of California, N.A. is trustee.
Item 16. List of Exhibits.
1. Articles of Association of State Street Bank and Trust Company of
California, N.A..*
2. Certificate of Corporate Existence (with fiduciary powers) from the
Comptroller of the Currency, Administrator of National Banks.*
3. Authorization of the Trustee to exercise fiduciary powers (included in
Exhibits 1 and 2; no separate instrument).
4. By-laws of State Street Bank and Trust company of California, N.A..*
5. Consent of State Street Bank and Trust Company of California, N.A.
required by Section 321(b) of the Act.*
6. Consolidated Report of Income at the close of business March 31, 1997,
Federal Financial Institutions Examination Council, Consolidated
Reports of Condition and Income for A Bank With Domestic Offices Only
and Total Assets of Less Than $100 Million - FEI 034.**
* The indicated documents have been filed as exhibits with corresponding
exhibit numbers to the Form T-1 of Oasis Residential, Inc., filed
pursuant to Section 305(b)(2) of the Act, filed with the Securities and
Exchange Commission on November 18, 1996 (Registration No. 033-90488),
and are incorporated herein by reference.
** The indicated document was filed as an exhibit with a corresponding
exhibit number to the Form T-1 filed as Exhibit 25 to a Registration
Statement on Form S-4 of Silicon Graphics, Inc., filed with the
Securities and Exchange Commission on July 30, 1997 (Registration No.
333-32379), and is incorporated herein by reference.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee,
State Street Bank and Trust company of California, N.A., organized and
existing under the laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Los Angeles, and State of
California, on the 10th day of November, 1997.
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.
By: /s/ Scott C. Emmons
---------------------------------
Scott C. Emmons
Assistant Vice President
-3-
