<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1997
REGISTRATION NO. 333-30851
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
DURA PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-3645543
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5880 PACIFIC CENTER BLVD., SAN DIEGO, CALIFORNIA 92121
(619) 457-2553
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
CAM L. GARNER
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DURA PHARMACEUTICALS, INC.
5880 PACIFIC CENTER BLVD., SAN DIEGO, CALIFORNIA 92121
(619) 457-2553
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
FAYE H. RUSSELL, ESQ. THOMAS C. JANSON, JR.
DAVID G. ODRICH, ESQ. SKADDEN, ARPS, SLATE,
BROBECK, PHLEGER & HARRISON LLP MEAGHER & FLOM LLP
550 WEST C STREET, SUITE 1300 300 SOUTH GRAND AVENUE, SUITE 3400
SAN DIEGO, CALIFORNIA 92101 LOS ANGELES, CALIFORNIA 90071-3144
(619) 234-1966 (213) 687-5000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE:
--------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
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: / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 2 (this "Amendment") is being filed solely for the
purpose of filing exhibits to the Registration Statement on Form S-3
(Registration No. 333-30851), originally filed by Dura Pharmaceuticals, Inc.
with the Securities and Exchange Commission on July 8, 1997, and as amended on
July 15, 1997 (the "Registration Statement"). This Amendment does not contain a
copy of the prospectus included in the Registration Statement, which is
unchanged from the prospectus included in the Registration Statement.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the
registration, issuance and distribution of the securities being registered
hereby. All the amounts shown are estimates, except for the registration fee,
the listing fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee.................................................. $ 69,697
Listing fee....................................................... 5,000
NASD fee........................................................ . 23,500
Trustee's fees and expenses..................................... . 10,000
Printing and engraving expenses................................. . 65,000
Legal fees and expenses......................................... . 150,000
Rating agency fees.............................................. . 130,000
Accounting fees and expenses.................................... . 30,000
Miscellaneous expenses.......................................... . 66,803
---------
Total....................................................... . $ 550,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of the Company under certain
conditions and subject to certain limitations. Section 145 of the Delaware
General Corporation Law also provides that a corporation has the power to
purchase and maintain insurance on behalf of its officers and directors
against any liability asserted against such person and incurred by him or
her in such capacity, or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against
such liability under the provisions of Section 145 of the Delaware General
Corporation Law.
(b) Article VII, Section (1) of the Bylaws of the Company provides that
the Company shall indemnify its directors and executive officers to the
fullest extent not prohibited by the Delaware General Corporation Law. The
rights to indemnity thereunder continue as to a person who has ceased to be
a director, officer, employee or agent and inure to the benefit of the
heirs, executors and administrators of the person. In addition, expenses
incurred by a director or executive officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding by
reason of the fact that he or she is or was a director or officer of the
Company (or was serving at the Company's request as a director or officer of
another corporation) shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Company as authorized by the relevant section of the
Delaware General Corporation Law.
(c) As permitted by Section 102(b)(7) of the Delaware General
Corporation Law, Article V, Section (A) of the Company's Certificate of
Incorporation provides that a director of the Company shall not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or acts or omissions that involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived
any improper personal benefit.
II-1
<PAGE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. (CONTINUED)
(d) The Company intends to enter into indemnification agreements with
each of its directors and executive officers, effective upon the
reincorporation of the Company in July 1997.
(e) The Purchase Agreement (Exhibit 1.1 hereto) contains provisions by
which the Underwriters have agreed to indemnify the Company, each person, if
any, who controls the Company within the meaning of Section 15 of the Act,
each director of the Company, and each officer of the Company who signs this
Registration Statement, with respect to information furnished in writing by
or on behalf of the Underwriters for use in the Registration Statement.
(f) There is directors and officers liability insurance now in effect
which insures directors and officers of the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<C> <S>
1.1 Form of Purchase Agreement.
4.1 Form of Indenture, including the form of Notes.
5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the securities being registered.
12.1++ Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit 5.1).
23.2++ Independent Auditors' Consent, Deloitte & Touche LLP.
23.3++ Consent of Kleinfeld, Kaplan and Becker.
24.1++ Power of Attorney.
25.1++ Statement of Eligibility and Qualification of Trustee on Form T-1.
</TABLE>
- ------------------------
++ Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15, 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 Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS. (CONTINUED)
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in 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 it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, "thereunto" duly
authorized, in the City of San Diego, State of California, on the 22nd day of
July, 1997.
DURA PHARMACEUTICALS, INC.
By /s/ CAM L. GARNER
------------------------------------------
Cam L. Garner
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman, President and
/s/ CAM L. GARNER Chief Executive Officer
- ------------------------------ (Principal Executive July 22, 1997
Cam L. Garner Officer)
Senior Vice President,
Finance and
/s/ JAMES W. NEWMAN Administration, and
- ------------------------------ Chief Financial Officer July 22, 1997
James W. Newman (Principal Financial and
Accounting Officer)
/s/ DAVID S. KABAKOFF
- ------------------------------ Executive Vice President July 22, 1997
David S. Kabakoff and Director
/s/ WALTER F. SPATH Senior Vice President,
- ------------------------------ Sales and Marketing, and July 22, 1997
Walter F. Spath Director
*
- ------------------------------ Director July 22, 1997
James C. Blair
*
- ------------------------------ Director July 22, 1997
Herbert J. Conrad
*
- ------------------------------ Director July 22, 1997
Joseph C. Cook
*
- ------------------------------ Director July 22 1997
David F. Hale
*
- ------------------------------ Director July 22, 1997
Gordon V. Ramseier
*
- ------------------------------ Director July 22, 1997
Charles G. Smith
* /s/ CAM L. GARNER
- -----------------------------------------
By: Cam L. Garner, Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
- --------- ------------------------------------------------------------------------------------------- ---------------
<C> <S> <C>
1.1 Form of Purchase Agreement
4.1 Form of Indenture, including the form of Notes
5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the securities being registered
12.1++ Statement Regarding Computation of Ratio of Earnings to Fixed Charges
23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit
5.1)
23.2++ Independent Auditors' Consent, Deloitte & Touche LLP
23.3++ Consent of Kleinfeld, Kaplan and Becker
24.1++ Power of Attorney
25.1++ Statement of Eligibility and Qualification of Trustee on Form T-1
</TABLE>
- ------------------------
++ Previously filed.
<PAGE>
DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
Dated: July ___, 1997
<PAGE>
TABLE OF CONTENTS
Pages(s)
--------
PURCHASE AGREEMENT........................................................... 1
SECTION 1. REPRESENTATIONS AND WARRANTIES........................... 3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY............ 3
(i) Compliance with Registration Requirements................ 3
(ii) Incorporated Documents................................... 4
(iii) Independent Accountants.................................. 4
(iv) Financial Statements..................................... 4
(v) No Material Adverse Change in Business................... 5
(vi) Good Standing of the Company............................. 5
(vii) Good Standing of Subsidiaries............................ 5
(viii) Capitalization........................................... 6
(ix) Authorization of Agreement............................... 6
(x) Authorization of the Indenture........................... 6
(xi) Authorization of the Securities.......................... 6
(xii) Description of the Securities and the Indenture.......... 7
(xiii) Authorization and Description of Common Stock............ 7
(xiv) Registration or Similar Rights Waived.................... 7
(xv) Absence of Defaults and Conflicts........................ 7
(xvi) Compliance with Laws..................................... 8
(xvii) Absence of Labor Dispute................................. 8
(xviii) Absence of Proceedings................................... 8
(xix) Accuracy of Exhibits..................................... 8
(xx) Possession of Intellectual Property...................... 8
(xxi) Absence of Further Requirements.......................... 9
(xxii) Possession of Licenses and Permits....................... 9
(xxiii) Title to Property........................................ 9
(xxiv) Compliance with Cuba Act................................. 9
(xxv) Investment Company Act.................................. 10
(xxvi) Environmental Laws....................................... 10
(xxvii) Taxes.................................................... 10
(xxviii) Insurance................................................ 10
(xxix) Accounting Controls...................................... 10
(xxx) Market Stabilization..................................... 11
(xxxi) Lock-Up Agreements....................................... 11
(xxxii) Affiliate Transactions................................... 11
(xxxiii) Distribution of Prospectus............................... 11
(b) OFFICER'S CERTIFICATES............................................. 11
i
<PAGE>
Pages(s)
--------
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.................... 12
(a) INITIAL SECURITIES............................................ 12
(b) OPTION SECURITIES............................................. 12
(c) PAYMENT....................................................... 12
(d) DENOMINATIONS; REGISTRATION................................... 13
SECTION 3. COVENANTS OF THE COMPANY...................................... 13
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS 13
(b) FILING OF AMENDMENTS.......................................... 13
(c) DELIVERY OF REGISTRATION STATEMENTS........................... 14
(d) DELIVERY OF PROSPECTUSES...................................... 14
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS..................... 14
(f) BLUE SKY QUALIFICATIONS....................................... 15
(g) RULE 158...................................................... 15
(h) USE OF PROCEEDS............................................... 15
(i) LISTING....................................................... 15
(j) RESTRICTION ON SALE OF DEBT SECURITIES........................ 15
(k) RESTRICTION ON SALE OF CERTAIN SECURITIES..................... 15
(l) REPORTING REQUIREMENTS........................................ 16
SECTION 4. PAYMENT OF EXPENSES........................................... 16
(a) EXPENSES...................................................... 16
(b) TERMINATION OF AGREEMENT...................................... 17
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS....................... 17
(a) EFFECTIVENESS OF REGISTRATION STATEMENT....................... 17
(b) OPINION OF COUNSEL FOR COMPANY................................ 17
(c) OPINION OF PATENT COUNSEL FOR COMPANY......................... 17
(d) OPINION OF REGULATORY COUNSEL FOR COMPANY..................... 17
(e) OPINION OF COUNSEL FOR UNDERWRITERS........................... 17
(f) OFFICERS' CERTIFICATE......................................... 18
(g) ACCOUNTANT'S COMFORT LETTER................................... 18
(h) BRING-DOWN COMFORT LETTER..................................... 18
(i) MAINTENANCE OF RATING......................................... 18
(j) APPROVAL OF LISTING........................................... 19
(k) NO OBJECTION.................................................. 19
(l) LOCK-UP AGREEMENTS............................................ 19
(m) CONDITIONS TO PURCHASE OF OPTION SECURITIES................... 19
(i) Officers' Certificate.................................... 19
(ii) Opinion of Counsel for Company........................... 19
(iii) Opinion of Patent Counsel for Company.................... 19
(iv) Opinion of Regulatory Counsel for Company................ 19
ii
<PAGE>
Pages(s)
--------
(v) Opinion of Counsel for Underwriters...................... 19
(vi) Bring-down Comfort Letter................................ 20
(vii) No Downgrading........................................... 20
(n) ADDITIONAL DOCUMENTS.......................................... 20
(o) TERMINATION OF AGREEMENT...................................... 20
SECTION 6. INDEMNIFICATION............................................... 20
(a) INDEMNIFICATION OF UNDERWRITERS............................... 20
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS............ 21
(c) ACTIONS AGAINST PARTIES; NOTIFICATION......................... 21
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE............ 22
SECTION 7. CONTRIBUTION.................................................. 22
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
24
SECTION 9. TERMINATION OF AGREEMENT...................................... 24
(a) TERMINATION; GENERAL.......................................... 24
(b) LIABILITIES................................................... 24
SECTION 10. NOTICES....................................................... 24
SECTION 11. PARTIES....................................................... 25
SECTION 12. GOVERNING LAW AND TIME........................................ 25
SECTION 13. EFFECT OF HEADINGS............................................ 26
SCHEDULES
Schedule A - List of Underwriters...................................Sch A-1
Schedule B - Pricing Information....................................Sch B-1
Schedule C - List of Persons and Entities Subject to Lock-Up........Sch C-1
EXHIBITS
Exhibit A - Form of Lock-up Letter......................................A-1
Exhibit B - Form of Opinion of Company's Counsel........................B-1
Exhibit C - Form of Opinion of Patent Counsel...........................C-1
Exhibit D - Form of Opinion of Regulatory Counsel.......................D-1
iii
<PAGE>
Draft of July __, 1997
DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
$200,000,000
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
July __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Dura Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and Goldman, Sachs & Co. (collectively, the
"Underwriters"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of $200,000,000
aggregate principal amount of the Company's Convertible Subordinated Notes due
2002 (the "Notes"), and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of an additional $30,000,000
aggregate principal amount of Notes to cover over-allotments, if any. The
aforesaid $200,000,000 aggregate principal amount of Notes (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the
$30,000,000 aggregate principal amount of Notes subject to the option described
in Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities." The Securities are to be issued pursuant to an
indenture, dated as of July __, 1997 (the "Indenture"), between the Company and
Chase Trust Company of California, as trustee (the "Trustee").
1
<PAGE>
The Securities are convertible into shares of common stock, par value $.001
per share, of the Company (the "Common Stock") in accordance with the terms of
the Securities and the Indenture, at the initial conversion price specified in
Schedule B hereto.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as they deem advisable after this Agreement
has been executed and delivered and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-30851) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to
the preliminary prospectus, dated July ___, 1997, together with the Term Sheet
and all references in this Agreement to the date of the Prospectus shall mean
the date of the Term Sheet. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
2
<PAGE>
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are purchased, at
the Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434. The representations and warranties
in this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in
3
<PAGE>
reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the Prospectus,
when they became effective or at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other information
in the Prospectus, at the time the Registration Statement became effective, at
the time the Prospectus was issued and at the Closing Time (and if any Option
Securities are purchased, at the Date of Delivery), did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company (and,
for relevant periods consistent with the Commission's rules and regulations, the
Company's Subsidiaries (as defined in clause (vii) below)) at the dates
indicated and the statements of operations, shareholders' equity and cash flows
of the Company (and, for relevant periods consistent with the Commission's rules
and regulations, each of the Subsidiaries) for the periods specified; except as
otherwise stated in the Registration Statement, said financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus present fairly in accordance with GAAP the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro forma
financial
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statements and the related notes thereto included in the Registration Statement
and the Prospectus present fairly in accordance with GAAP the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. No other financial statements or schedules are required to be included
in the Registration Statement.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any Subsidiary, other than those in the ordinary
course of business, which are material with respect to the Company and its
Subsidiaries considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement,
the Indenture and the Notes; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Dura Delivery Systems, Inc., a
Delaware corporation ("DDSI"), Health Script Pharmacy Services, Inc., a Colorado
corporation ("Health Script"), Healthco Solutions, Inc., a Colorado corporation
("Healthco"), HS Wholesaler, Inc., a Colorado corporation ("HS Wholesaler") and
DCI, Ltd., a corporation organized under the laws of the Cayman Islands ("DCI")
(DDSI, Health Script, Healthco, HS Wholesaler and DCI are hereinafter referred
to as the "Subsidiaries") are the only subsidiaries of the Company. Except for
the Subsidiaries, neither the Company nor any Subsidiary owns any shares of
stock or any other equity securities of any corporation or has any equity
interests in any firm, partnership, association or other entity. Each
Subsidiary has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned solely by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
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outstanding shares of capital stock of any Subsidiary was issued in violation of
the preemptive or similar rights of any securityholder of such Subsidiary
arising by operation of law, under the charter or by-laws of such Subsidiary or
under any agreement to which the Company or such Subsidiary is a party.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or incorporated by reference therein or
pursuant to the exercise of convertible securities, warrants or options referred
to in the Prospectus). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company arising by operation of law, under the charter or
by-laws of the Company or under any agreement to which the Company is a party.
Except as disclosed in the Prospectus or incorporated by reference therein,
there are no outstanding options, warrants or other rights calling for the
issuance of, and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any Subsidiary or any security convertible into
or exchangeable for capital stock of the Company or any Subsidiary.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been duly
authorized by the Company and duly qualified under the 1939 Act and, when duly
executed and delivered by the Company and the Trustee, will constitute a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) AUTHORIZATION OF THE SECURITIES. The Securities have been
duly authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner provided for
in the Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
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(xii) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will be
in substantially the respective forms filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement.
(xiii) AUTHORIZATION AND DESCRIPTION OF COMMON STOCK. The Common
Stock conforms to all statements relating thereto contained or incorporated by
reference in the Prospectus and such description conforms to the rights set
forth in the instruments defining the same. Upon issuance and delivery of the
Securities in accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof for shares of Common
Stock in accordance with the terms of the Securities and the Indenture; the
shares of Common Stock issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion by all necessary
corporate action and such shares, when issued upon such conversion, will be
validly issued and will be fully paid and non-assessable; no holder of such
shares will be subject to personal liability by reason of being such a holder;
and the issuance of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the Company.
(xiv) REGISTRATION OR SIMILAR RIGHTS WAIVED. There are no persons
with registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act who have not waived such rights.
(xv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any Subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any Subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any Subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture and the Securities and the
consummation of the transactions contemplated herein, therein and in the
Registration Statement (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds" and the issuance of the shares of
Common Stock issuable upon conversion of the Securities) and compliance by the
Company with its obligations hereunder and under the Indenture and the
Securities have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
Subsidiary or any applicable material law, statute, rule,
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regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or any
Subsidiary.
(xvi) COMPLIANCE WITH LAWS. Except as set forth in the
Prospectus, the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, statutes, ordinances, rules or regulations,
the enforcement of which, individually or in the aggregate, would be reasonably
expected to have a Material Adverse Effect.
(xvii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xviii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
Subsidiary, which is required to be disclosed in the Prospectus (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by the Company of
its obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any Subsidiary is a party or of which any of
their respective property or assets is the subject which are not described in
the Prospectus, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xix) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xx) POSSESSION OF INTELLECTUAL PROPERTY. Except as set forth in
the Prospectus, the Company and its Subsidiaries own or possess adequate
licenses or other rights to use the 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, service marks and trade names (collectively, "patent
and proprietary rights") presently employed by them in connection with the
business now operated by them and neither the Company nor any Subsidiary has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any patent and
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proprietary rights or of any facts or circumstances that would render any patent
and proprietary rights invalid or inadequate to protect the interest of the
Company or the affected Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xxi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder, the
issuance of shares of Common Stock upon conversion of Securities or the
consummation of the transactions contemplated by this Agreement or for the due
execution, delivery or performance of the Indenture by the Company, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws and except for the qualification
of the Indenture under the 1939 Act.
(xxii) POSSESSION OF LICENSES AND PERMITS. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies material to the
conduct of the business now operated by them; the Company and its Subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xxiii) TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title to all material properties owned by the Company and
its Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described or incorporated by reference in the Prospectus or (b) do not, singly
or in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or the affected Subsidiaries; and all properties held under lease by the
Company or any Subsidiary are held under valid, subsisting and enforceable
leases.
(xxiv) COMPLIANCE WITH CUBA ACT. The Company has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
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(xxv) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) ENVIRONMENTAL LAWS. Except as described in the Prospectus
or except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) neither the Company nor any Subsidiary is in material violation of
any federal, state, local or foreign law, rule, regulation, ordinance or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any Subsidiary and (D) to the best of
the Company's knowledge, there are no events or circumstances that could form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any Subsidiary relating to Hazardous Materials or any
Environmental Laws.
(xxvii) TAXES. The Company and the Subsidiaries have filed all
federal, state, local and foreign tax returns that are required to be filed or
have duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except for
any such tax, assessment, fine or penalty that is being contested in good faith
and by appropriate proceedings; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section 1(a)(iv)
above in respect of all federal, state, local and foreign taxes for all periods
as to which the tax liability of the Company or any Subsidiary has not been
finally determined or remains open to examination by applicable taxing
authorities.
(xxviii) INSURANCE. The Company and the Subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in the same
or similar business and all such insurance is in full force and effect.
(xxix) ACCOUNTING CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are
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executed in accordance with management's general and specific authorizations;
(B) transactions are recorded as necessary to permit preparations of financial
statements in conformity with GAAP and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's general
or specific authorizations; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxx) MARKET STABILIZATION. The Company and the Subsidiaries have
not (A) taken, directly or indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (B) since the initial filing
of the Registration Statement (1) sold, bid for, purchased, or attempted to
induce any person to bid for or purchase, or paid anyone any compensation for
soliciting purchases of, the Securities, (2) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company, or (3) engaged, directly or indirectly, in any other transaction in
violation of Regulation M under the 1934 Act.
(xxxi) LOCK-UP AGREEMENTS. The Company has obtained and delivered
to the Underwriters the agreements, in the form of Exhibit A hereto, of the
persons and entities named in Schedule C annexed hereto to the effect that each
such person will not, for a period of 90 days from the date of this Agreement
and except as otherwise provided in their respective agreement, without the
prior written consent of Merrill Lynch, directly or indirectly, offer to sell,
grant any option for the sale of, or otherwise dispose of any shares of Common
Stock or any securities convertible into or exercisable for Common Stock owned
by such person or entity or with respect to which such person has the power of
disposition.
(xxxii) AFFILIATE TRANSACTIONS. No relationship, direct or
indirect, exists between or among any of the Company or any affiliate of the
Company, on the one hand, and any director, officer, shareholder, customer or
supplier of any of them, on the other hand, which is required by the 1933 Act or
by the 1933 Act Regulations to be described in the Registration Statement or the
Prospectus and which is not so described or is not described as required.
(xxxiii) DISTRIBUTION OF PROSPECTUS. The Company has not distributed
and, prior to the later to occur of (A) Closing Time and (B) completion of the
distribution of the Securities, will not distribute any prospectus (as such term
is defined in the 1933 Act and the 1933 Act Regulations) in connection with the
offering and sale of the Securities other than the Registration Statement, any
preliminary prospectus, the Prospectus or other materials, if any, permitted by
the 1933 Act or by the 1933 Act Regulations and approved by the Underwriters.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Underwriters or to counsel
for the Underwriters shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
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SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B, the aggregate principal
amount of Initial Securities set forth in Schedule A opposite the name of such
Underwriter.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional $30,000,000 aggregate principal
amount of Securities at the same price per share set forth in Schedule B for the
Initial Securities, plus accrued interest, if any, from the Closing Date to the
Date of Delivery (as defined below). The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Underwriters to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Underwriters, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Brobeck, Phleger & Harrison LLP, 550 West C Street, San Diego, California 92101
or at such other place as shall be agreed upon by the Underwriters and the
Company, at 7:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof, or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriters and the Company (such time and date
of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Underwriters and
the Company, on each Date of Delivery as specified in the notice from the
Underwriters to the Company.
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Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters of certificates for the Securities to be purchased by them.
Merrill Lynch, individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Underwriters may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates, which may be
in temporary form, for the Initial Securities and the Option Securities, if any,
will be made available for examination and packaging by the Underwriters in The
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Underwriters immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give the Underwriters notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Underwriters with
copies of any such documents a reasonable amount of time prior to such
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proposed filing or use, as the case may be, and will not file or use any such
document to which the Underwriters or counsel for the Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriters, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
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(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities and the shares of
Common Stock issuable upon conversion of Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions as the
Underwriters may designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement. The Company
will also supply the Underwriters with such information as is necessary for the
determination of the legality of the Securities for investment under the laws of
such jurisdictions as the Underwriters may reasonably request.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) LISTING. The Company will use its best efforts to effect and maintain
the quotation of the Securities on the Nasdaq SmallCap Market and the Common
Stock issuable upon conversion thereof on the Nasdaq National Market and will
file with the Nasdaq SmallCap and National Markets all documents and notices
required thereby of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
SmallCap and National Markets.
(j) RESTRICTION ON SALE OF DEBT SECURITIES. During a period of ninety
(90) days from the date of the Prospectus, the Company will not, without the
prior written consent of Merrill Lynch, directly or indirectly, issue, sell,
offer or contract to sell, grant any option for the sale of, or otherwise
transfer or dispose of, any debt securities of the Company.
(k) RESTRICTION ON SALE OF CERTAIN SECURITIES. During a period of ninety
(90) days from the date of the Prospectus, the Company will not, without the
prior written consent of Merrill Lynch, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement
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or any transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any such swap
or transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold hereunder,
(B) any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
and referred to in the Prospectus or (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectus.
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities or the issuance or delivery of the Common
Stock issuable upon conversion thereof, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters and the
certificates for the Common Stock issuable upon conversion thereof, (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors,
(v) the qualification of the Securities and the Common Stock under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (ix) the fees and expenses of any transfer agent
or registrar for the Common Stock, (x) any fees payable in connection with the
rating of the Securities, (xi) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the Securities and (xii) the fees and expenses incurred
in connection with the inclusion of the Securities in the Nasdaq SmallCap Market
and the Common Stock issuable upon conversion thereof in the Nasdaq National
Market.
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(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any Subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Underwriters
shall have received the favorable opinions, dated as of Closing Time, of
Brobeck, Phleger & Harrison LLP, counsel for the Company, and, to the extent
provided in Exhibit B hereto, Mitchell R. Woodbury, General Counsel of the
Company, in form and substance satisfactory to counsel for the Underwriters, to
the effect set forth in Exhibit B hereto.
(c) OPINION OF PATENT COUNSEL FOR COMPANY. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Lyon & Lyon LLP (solely with respect to patents concerning the Spiros
product), counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect set forth in Exhibit C hereto.
(d) OPINION OF REGULATORY COUNSEL FOR COMPANY. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Kleinfeld, Kaplan and Becker, regulatory counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, to the effect
set forth in Exhibit D hereto.
(e) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Underwriters,
with respect to such matters as the Underwriters may reasonably request. In
giving such opinion such counsel may rely, as to all matters governed by
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the laws of jurisdictions other than the law of the States of New York and
California and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Underwriters. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied upon certificates of officers and
other representatives of the Company and its Subsidiaries and certificates of
public officials.
(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Underwriters shall have received from Deloitte & Touche LLP a
letter dated such date, in form and substance satisfactory to the Underwriters,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the Underwriters shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(i) MAINTENANCE OF RATING. At Closing Time, the Securities shall be rated
at least "B-1" by Moody's Investor's Service Inc. and "B" by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., and the Company shall have
delivered to the Underwriters a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Underwriters, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities by any "nationally
recognized statistical rating agency," as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization
shall have publicly announced that it has under surveillance or review its
rating of the Securities or any of the Company's other debt securities.
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(j) APPROVAL OF LISTING. At Closing Time, the Securities and the Common
Stock issuable on conversion thereof shall have been approved for inclusion in
the Nasdaq SmallCap and National Markets, respectively, subject only to official
notice of issuance.
(k) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) LOCK-UP AGREEMENTS. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form of Exhibit A hereto
signed by the persons listed on Schedule C hereto.
(m) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any Subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Underwriters shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(f) hereof
remains true and correct as of such Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Brobeck, Phleger & Harrison LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b) hereof.
(iii) OPINION OF PATENT COUNSEL FOR COMPANY. The favorable
opinion of Lyon & Lyon LLP, patent counsel for the Company, dated such Date of
Delivery, to the same effect as the opinion required by Section 5(c) hereof.
(iv) OPINION OF REGULATORY COUNSEL FOR COMPANY. The favorable
opinion of Kleinfeld, Kaplan and Becker, regulatory counsel for the Company,
dated such Date of Delivery, to the same effect as the opinion required by
Section 5(d) hereof.
(v) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
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(vi) BRING-DOWN COMFORT LETTER. A letter from Deloitte & Touche
LLP, in form and substance satisfactory to the Underwriters and dated such Date
of Delivery, substantially in the same form and substance as the letter
furnished to the Underwriters pursuant to Section 5(h) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph shall be a
date not more than five days prior to such Date of Delivery.
(vii) NO DOWNGRADING. Subsequent to the date of this Agreement,
no downgrading shall have occurred in the rating accorded the Securities or of
any of the Company's other securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly
announced that it has under surveillance or review its ratings of any of the
Company's securities.
(n) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
(o) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Underwriters by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or
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supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from
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any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. 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 of the nature contemplated by
Section 6(a) 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 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.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
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The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such 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 by the Underwriters and the parties' relative intent, 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 contribution pursuant to this Section 7 were 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 account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations
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to contribute pursuant to this Section 7 are several in proportion to the
principal amount of Initial Securities set forth opposite their respective names
in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Underwriters may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Underwriters, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the Nasdaq National Market, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York or California authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at:
24
<PAGE>
c/o Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1201
Attn: John B. Kiernan, Jr.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attn: Thomas C. Janson, Jr.
Notices to the Company shall be directed to it at:
Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
San Diego, California 92121-4204
Attn: Mitchell R. Woodbury
with a copy to:
Brobeck, Phleger & Harrison LLP
550 West "C" Street, Suite 1300
San Diego, California 92101
Attn: Faye H. Russell
SECTION 11. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
25
<PAGE>
SECTION 13. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
26
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
DURA PHARMACEUTICALS, INC.
By: ----------------------------------------------
Cam L. Garner
Chairman, President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:----------------------------------------------
Authorized Signatory
27
<PAGE>
SCHEDULE A
Principal
Amount of
Name of Underwriter Securities
- ------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . .
Goldman, Sachs & Co. . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . $200,000,000
Sch A - 1
<PAGE>
SCHEDULE B
DURA PHARMACEUTICALS, INC.
$200,000,000 Convertible Subordinated Notes due 2002
1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Initial
Securities shall be __% of the principal amount thereof.
3. The interest rate on the Securities shall be __% per annum.
4. The Securities shall be convertible into shares of common stock, par
value $.001 per share, of the Company at an initial conversion price of $____
per share (equivalent to a conversion rate of ____ shares per $1,000 principal
amount of Securities).
5. The Securities may be redeemed at the option of the Company at any
time after August __, 2000, in whole or from time to time in part, upon not less
than 15 nor more than 60 days' notice given to the Holders. The redemption
prices (including accrued and unpaid interest up to but not including the date
of redemption), expressed as a percentage of the principal amount, for the 12-
month periods beginning August __, 2000 and August __, 2001 are ___% and ___%,
respectively.
Sch B - 1
<PAGE>
SCHEDULE C
List of Persons and Entities
Subject to Lock-Up
NAME OF HOLDER SHARES
All directors and officers of the Company All shares of Common Stock
beneficially owned by each
such person
Sch C - 1
<PAGE>
FORM OF LOCK-UP PURSUANT TO SECTION 5(l)
EXHIBIT A
July ___, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Goldman, Sachs & Co.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: PROPOSED PUBLIC OFFERING BY DURA PHARMACEUTICALS, INC,
Ladies and Gentlemen:
The undersigned, a shareholder and/or officer and/or director of Dura
Pharmaceuticals, Inc, a Delaware corporation (the "Company"), understands that
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and Goldman, Sachs & Co. ("Goldman, Sachs") propose to enter
into a Purchase Agreement (the "Purchase Agreement") with the Company providing
for the public offering of convertible notes (the "Securities") of the Company
and related Pricing Agreement (the "Pricing Agreement"), which will set forth,
among other things, the public offering price of the Securities. In recognition
of the benefit that such an offering will confer upon the undersigned as a
shareholder and/or officer and/or director of the Company, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of ninety (90) days from the date of
the Purchase Agreement, the undersigned will not, without the prior written
consent of Merrill Lynch, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of or transfer, any shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now
A-1
<PAGE>
owned or hereafter acquired by the undersigned, or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file,
participate in, or request the filing of any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing.
Very truly yours,
Signature:
Print Name:
A-2
<PAGE>
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has full corporate power and authority to own or
lease its properties and conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its obligations under the
Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect (which
opinion may be given by the General Counsel of the Company).
(iv) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in the
Registration Statement and Prospectus. The outstanding shares of capital stock
of the Company have been duly and validly authorized and issued, are, to our
knowledge, fully paid and non-assessable, and are not subject to any preemptive
rights (the opinion called for by the last sentence of this paragraph (iv) may
be given by the General Counsel of the Company).
(v) To our knowledge, the Subsidiaries are the Company's sole
subsidiaries. Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of our
knowledge and information, is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; the
Company, through its ownership of the stock of each Subsidiary is not subject to
liability by reason of being such a holder; and none of the shares of any
Subsidiary was issued in violation of the preemptive rights of any stockholder
or warrantholder of such Subsidiary (the opinion called for by the last sentence
of this paragraph (v) may be given by the General Counsel of the Company).
B-1
<PAGE>
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery thereof
by the Trustee) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(viii) The Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the Securities have
been duly authenticated by the Trustee in the manner described in its
certificate delivered to you today (which fact such counsel need not determine
by an inspection of the Securities), the Securities have been duly executed,
issued and delivered by the Company and constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be entitled to the benefits of the
Indenture.
(ix) Upon issuance and delivery of the Securities in accordance with
the Purchase Agreement and the Indenture, the Securities shall be convertible at
the option of the holder thereof for shares of Common Stock in accordance with
the terms of the Securities and the Indenture; the shares of Common Stock
issuable upon conversion of the Securities have been duly authorized and
reserved for issuance upon such conversion by all necessary corporate action;
such shares, when issued upon such conversion, will be validly issued and will
be fully paid and non-assessable and no holder of such Common Stock is or will
be subject to personal liability by reason of being such a holder.
(x) The issuance of the shares of Common Stock upon conversion of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) Except as disclosed in or specifically contemplated by the
Registration Statement and Prospectus, there are no options, warrants,
conversion privileges, preemptive rights or other rights presently outstanding
calling for the issuance of, or to purchase from the Company, any of the
authorized but unissued capital stock of the Company. The outstanding stock
options relating to the Company's Common Stock have been duly authorized and
validly issued and the description thereof contained in the Prospectus is
accurate in all material respects (the opinion called for by this paragraph (xi)
may be given by the General Counsel of the Company).
B-2
<PAGE>
(xii) The Indenture has been duly qualified under the 1939 Act.
(xiii) The Securities and the Indenture conform as to legal matters in
all material respects to the descriptions thereof contained in the Prospectus.
(xiv) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; and, to
our knowledge, no stop order proceedings suspending the effectiveness of the
Registration Statement have been instituted or threatened or are pending under
the 1933 Act.
(xv) The form of certificate used to evidence the Common Stock is in
due and proper legal form.
(xvi) To our knowledge, there is no legal or governmental proceeding
pending or threatened to which the Company is or may become a party or to which
any of the properties of the Company is or may become subject that is required
to be described in the Registration Statement or the Prospectus and is not so
described, or of any statute or regulation that is required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed as required.
(xvii) The statements in the Prospectus under the caption "Description
of Capital Stock," to the extent that such statements constitute a summary of
documents referred to therein or matters of law, have been prepared by or
reviewed by us and are correct in all material respects.
(xviii) All descriptions in the Prospectus of agreements and other
instruments to which the Company or its Subsidiaries are a party are accurate in
all material respects. To our knowledge, no breach or default exists under any
agreement or instrument to which the Company or any Subsidiary is a party and
which is filed as an Exhibit to the Registration Statement or incorporated by
reference therein (the opinion called for by the last sentence of this paragraph
(xviii) may be given by the General Counsel of the Company).
(xix) Neither the Company nor any Subsidiary is in violation of its
charter or by-laws; to the best of our knowledge, the Company and its
Subsidiaries are in compliance with all laws, rules, regulations, judgments,
decrees, orders and statutes in the jurisdictions in which they are conducting
their business, except where the failure to so comply would not have a Material
Adverse Effect (which opinion may be given by the General Counsel of the
Company).
(xx) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Purchase Agreement, the Indenture
and the Securities will not contravene any provision of applicable law or the
articles of incorporation or bylaws of the Company, or, to our knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any of its property, or, to our knowledge,
constitute a breach of or default or Repayment Event (as defined in Section
1(a)(xv) of the Purchase Agreement) under any agreement or other instrument
filed as an exhibit to the
B-3
<PAGE>
Registration Statement or incorporated by reference therein to which the Company
is a party, and no consent, approval, authorization or order of or qualification
with any governmental body or agency is required for the due authorization,
execution and delivery of the Purchase Agreement or the due execution, delivery
or performance of the Indenture by the Company or for the offering, issuance,
sale or delivery of the Securities and the issuance of shares of Common Stock
upon conversion of Securities, except such as may be required by the securities
or blue sky laws of the various states (on which we need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriters.
(xxi) To our knowledge, no holders of securities of the Company have
rights against the Company which have not been waived to the registration of
shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated thereby.
(xxii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
In addition to the foregoing, (i) the documents incorporated by reference
in the Prospectus (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we need express no opinion),
when they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of the
1933 Act or the 1934 Act, as applicable, and the rules and regulations of the
Commission thereunder; and (ii) the Registration Statement, the Prospectus, and
each amendment or supplement to the Registration Statement and Prospectus, as of
their respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, and the
Trustee's Statement of Eligibility on Form T-1 (the "Form T-1"), as to which we
need express no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations. Nothing has come to
our attention that would lead us to believe that the Registration Statement or
the Prospectus (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which we need make no statement), at the time
the Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and other financial
data included or incorporated by reference therein or omitted therefrom and the
Form T-1, as to which we need make no statement), at the time the Prospectus was
issued, or at the Closing Time, included or includes an 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 under which they
were made, not misleading.
In rendering such opinion, such counsel may rely (A) upon the opinions of
Lyon & Lyon LLP and Kleinfeld, Kaplan & Becker and Mitchell R. Woodbury, Esq.
with respect to the matters opined upon by each, and (B), as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
B-4
<PAGE>
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
B-5
<PAGE>
EXHIBIT C
FORM OF OPINION OF COMPANY'S PATENT COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) The Company owns or possesses licenses to patents which are
directed to the Spiros and to certain uses of the Spiros. With regard to the
business presently and as proposed to be conducted by the Company relating to
the Spiros as described in the Registration Statement and the Prospectus, and,
except as described therein, we have not received any notice of infringement of
or conflict with, and does not otherwise know of any basis for notice of any
such infringement of or conflict with, asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights, technology or
know-how.
(ii) To the extent that the statements relating to the Spiros product
contained in the Prospectus under the subheadings "Risk Factors--Patents and
Proprietary Rights" and the first paragraph of "Business--Patents and
Proprietary Rights" refer to opinions of counsel or matters of law, patents or
patent applications or purport to summarize the status of litigation or the
provisions of statutes, regulations, contracts, agreements or other documents,
such statements (A) have been prepared or reviewed by us and accurately reflect
the status of any such patents or patent applications, litigation, the
provisions purported to be summarized and any of our opinions and (B) do not
contain any untrue statements of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
C - 1
<PAGE>
EXHIBIT D
FORM OF OPINION OF COMPANY'S REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(d)
(i) We represent the Company in certain matters relating to
regulatory compliance under the Federal Food, Drug and Cosmetic Act and the
obtaining of federal regulatory approvals with respect to the development,
testing, manufacturing, safety, labeling, storage, record keeping or marketing
of the company's products.
(ii) We have read the portion of the Registration Statement and the
Prospectus entitled "Risk Factors-Government Regulation; No Assurance of FDA
Approval"; "Business-Government Regulation" and such other portions which
reference federal food and drug regulatory matters as shall have been agreed
upon between us and counsel for the Underwriters (the "Regulatory Portion").
(iii) While we have not conducted an audit of the Company and are
relying as to matters of fact on the accuracy of the Prospectus, and subject to
the description of the status of the Company's products in the section of the
Prospectus entitled "Business--Government Regulation," we have no reason to
believe that the Company's current business is not being conducted in material
compliance with currently applicable requirements under the Federal Food, Drug
and Cosmetic Act or that the U.S. Food and Drug Administration (the "FDA") is
currently considering taking action that would result in withdrawal from
marketing of any of the Company's currently marketed products.
(iv) We have no reason to believe that the information contained in
the Regulatory Portion of the Registration Statement or the Prospectus at the
time they became effective contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that, at Closing Time, the
information contained in the Regulatory Portion of the Prospectus or any
amendment or supplement to the Regulatory Portion of the Prospectus contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
D - 1
<PAGE>
- --------------------------------------------------------------------------------
DURA PHARMACEUTICALS, INC.,
Issuer,
AND
CHASE TRUST COMPANY OF CALIFORNIA,
Trustee
INDENTURE
Dated as of July __, 1997
$200,000,000
__% Convertible Subordinated Notes due 2002
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Page
------
DEFINITIONS
Section 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . .
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . .
Board of Directors . . . . . . . . . . . . . . . . . . . .
Business Day . . . . . . . . . . . . . . . . . . . . . . .
CASH or CASH . . . . . . . . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock . . . . . . . . . . . . . . . . . . . . . . .
Company. . . . . . . . . . . . . . . . . . . . . . . . . .
Company Order. . . . . . . . . . . . . . . . . . . . . . .
Corporate Trust Office . . . . . . . . . . . . . . . . . .
Note or NOTES. . . . . . . . . . . . . . . . . . . . . . .
Noteholder or HOLDER . . . . . . . . . . . . . . . . . . .
Default. . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange Act . . . . . . . . . . . . . . . . . . . . . . .
Event of Default . . . . . . . . . . . . . . . . . . . . .
Indenture. . . . . . . . . . . . . . . . . . . . . . . . .
Officer. . . . . . . . . . . . . . . . . . . . . . . . . .
Officers' Certificate. . . . . . . . . . . . . . . . . . .
Opinion of Counsel . . . . . . . . . . . . . . . . . . . .
Over-Allotment Option. . . . . . . . . . . . . . . . . . .
Person . . . . . . . . . . . . . . . . . . . . . . . . . .
Predecessor Note . . . . . . . . . . . . . . . . . . . . .
Redemption Date. . . . . . . . . . . . . . . . . . . . . .
Redemption Price . . . . . . . . . . . . . . . . . . . . .
Responsible Officer. . . . . . . . . . . . . . . . . . . .
Securities Act . . . . . . . . . . . . . . . . . . . . . .
Senior Indebtedness. . . . . . . . . . . . . . . . . . . .
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . .
Trust Indenture Act. . . . . . . . . . . . . . . . . . . .
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriter. . . . . . . . . . . . . . . . . . . . . . . .
Section 1.2 OTHER DEFINITIONS. . . . . . . . . . . . . . . . . . . . .
Section 1.3 INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . .
Section 1.4 RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . .
ARTICLE II
THE NOTES
Section 2.1 FORM AND DATING. . . . . . . . . . . . . . . . . . . . . .
Section 2.2 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . .
Section 2.3 Registrar, Paying Agent and Conversion
AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . .
i
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Page
------
Section 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST . . . . . . . . . . .
Section 2.5 NOTEHOLDER LISTS . . . . . . . . . . . . . . . . . . . . .
Section 2.6 TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . .
Section 2.7 REPLACEMENT NOTES. . . . . . . . . . . . . . . . . . . . .
Section 2.8 OUTSTANDING NOTES; DETERMINATIONS OF
HOLDERS' ACTION. . . . . . . . . . . . . . . . . . . . . .
Section 2.9 TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . . .
Section 2.10 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
REDEMPTION
Section 3.1 RIGHT TO REDEEM; NOTICES TO TRUSTEE. . . . . . . . . . . .
Section 3.2 SELECTION OF NOTES TO BE REDEEMED. . . . . . . . . . . . .
Section 3.3 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . .
Section 3.4 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . .
Section 3.5 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . .
Section 3.6 NOTES REDEEMED IN PART.. . . . . . . . . . . . . . . . . .
Section 3.7 CONVERSION ARRANGEMENT ON CALL FOR
REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 NOTES SUBORDINATE TO SENIOR
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . .
Section 4.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION. . . . . . . . .
Section 4.3 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.4 PAYMENT PERMITTED IF NO DEFAULT. . . . . . . . . . . . . .
Section 4.5 SUBROGATION TO RIGHTS OF HOLDERS OF
SENIOR INDEBTEDNESS. . . . . . . . . . . . . . . . . . . .
Section 4.6 PROVISIONS SOLELY TO DEFINE RELATIVE
RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.7 TRUSTEE TO EFFECTUATE SUBORDINATION. . . . . . . . . . . .
Section 4.8 NO WAIVER OF SUBORDINATION PROVISIONS. . . . . . . . . . .
Section 4.9 NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . . .
Section 4.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE
OF LIQUIDATING AGENT . . . . . . . . . . . . . . . . . . .
Section 4.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF
SENIOR INDEBTEDNESS. . . . . . . . . . . . . . . . . . . .
Section 4.12 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR
INDEBTEDNESS; PRESERVATION OF TRUSTEE'S
RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
<PAGE>
Page
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Section 4.13 ARTICLE APPLICABLE TO PAYING AGENTS. . . . . . . . . . . .
Section 4.14 APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT . . . .
Section 4.15 CERTAIN CONVERSIONS DEEMED PAYMENT . . . . . . . . . . . . .
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.2 MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . .
Section 5.3 APPOINTMENTS TO FILL VACANCIES IN
TRUSTEE'S OFFICE . . . . . . . . . . . . . . . . . . . . .
Section 5.4 CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . .
Section 5.5 STAY, EXTENSION AND USURY LAWS . . . . . . . . . . . . . .
Section 5.6 COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . .
Section 5.7 SEC REPORTS. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .
Section 6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT
THEREFOR . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE . . . . . . . .
Section 6.4 PROCEEDINGS BY NOTEHOLDER. . . . . . . . . . . . . . . . .
Section 6.5 PROCEEDINGS BY TRUSTEE . . . . . . . . . . . . . . . . . .
Section 6.6 REMEDIES CUMULATIVE AND CONTINUING . . . . . . . . . . . .
Section 6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DE-
FAULTS BY MAJORITY OF NOTEHOLDERS. . . . . . . . . . . . .
Section 6.8 UNDERTAKING TO PAY COSTS . . . . . . . . . . . . . . . . .
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . .
Section 7.2 RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . .
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . .
Section 7.4 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . .
Section 7.5 NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . .
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS. . . . . . . . . . . . . . .
Section 7.7 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . .
Section 7.8 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . .
Section 7.9 SUCCESSOR TRUSTEE BY MERGER. . . . . . . . . . . . . . . .
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Page
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Section 7.10 ELIGIBILITY; DISQUALIFICATION. . . . . . . . . . . . . . .
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 ACTION BY NOTEHOLDERS. . . . . . . . . . . . . . . . . . .
Section 8.2 PROOF OF EXECUTION BY NOTEHOLDERS. . . . . . . . . . . . .
Section 8.3 WHO ARE DEEMED ABSOLUTE OWNERS . . . . . . . . . . . . . .
Section 8.4 REVOCATION OF CONSENTS; FUTURE HOLDERS
BOUND. . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 PURPOSE OF MEETINGS. . . . . . . . . . . . . . . . . . . .
Section 9.2 CALL OF MEETINGS BY TRUSTEE. . . . . . . . . . . . . . . .
Section 9.3 CALL OF MEETINGS BY COMPANY OR
NOTEHOLDERS. . . . . . . . . . . . . . . . . . . . . . . .
Section 9.4 QUALIFICATIONS FOR VOTING. . . . . . . . . . . . . . . . .
Section 9.5 REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . .
Section 9.6 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.7 NO DELAY OF RIGHTS BY MEETING. . . . . . . . . . . . . . .
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . .
Section 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS. . . . . . . . . . . . . . . . . . . . . . . .
Section 10.3 EFFECT OF SUPPLEMENTAL INDENTURE . . . . . . . . . . . . .
Section 10.4 NOTATION ON NOTES. . . . . . . . . . . . . . . . . . . . .
Section 10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL
INDENTURE TO BE FURNISHED TRUSTEE. . . . . . . . . . . . .
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN
TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . .
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Page
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Section 11.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. . . . . . . . . .
Section 11.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE . . . . . . . . . .
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 12.1 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . .
Section 12.2 DEPOSITED MONIES TO BE HELD IN TRUST BY
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.3 PAYING AGENT TO REPAY MONIES HELD. . . . . . . . . . . . .
Section 12.4 RETURN OF UNCLAIMED MONIES . . . . . . . . . . . . . . . .
Section 12.5 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 INDENTURE AND NOTES SOLELY CORPORATE
OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 RIGHT TO CONVERT . . . . . . . . . . . . . . . . . . . . .
Section 14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSU-
ANCE OF COMMON STOCK ON CONVERSION; NO
ADJUSTMENT FOR INTEREST OR DIVIDENDS . . . . . . . . . . .
Section 14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES . . . . . . . .
Section 14.4 CONVERSION PRICE . . . . . . . . . . . . . . . . . . . . .
Section 14.5 ADJUSTMENT OF CONVERSION PRICE . . . . . . . . . . . . . .
Section 14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE . . . . . . . . . . . . . . . . . . . . . .
Section 14.7 TAXES ON SHARES ISSUED . . . . . . . . . . . . . . . . . .
Section 14.8 RESERVATION OF SHARES; SHARES TO BE FULLY
PAID; COMPLIANCE WITH GOVERNMENTAL REQUIRE-
MENTS; LISTING OF COMMON STOCK . . . . . . . . . . . . . .
Section 14.9 RESPONSIBILITY OF TRUSTEE. . . . . . . . . . . . . . . . .
Section 14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS . . . . . . . .
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ARTICLE XV
Page
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REPURCHASE OF NOTES AT THE
OPTION OF THE HOLDER UPON CHANGE IN CONTROL
Section 15.1 RIGHT TO REQUIRE REPURCHASE. . . . . . . . . . . . . . . .
Section 15.2 NOTICES; METHOD OF EXERCISING REPURCHASE
RIGHT, ETC.. . . . . . . . . . . . . . . . . . . . . . . .
Section 15.3 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . .
Section 15.4 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . .
Section 15.5 CONSOLIDATION, MERGER, ETC.. . . . . . . . . . . . . . . .
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . .
Section 16.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION . . . . . . . . . .
Section 16.3 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .
Section 16.4 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .
Section 16.5 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . .
Section 16.6 STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION. . . . . . . . . . . . . . . . . . . . . . . . . .
Section 16.7 LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . .
Section 16.8 TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . .
Section 16.9 NO SECURITY INTEREST CREATED . . . . . . . . . . . . . . .
Section 16.10 BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . . .
Section 16.11 TABLE OF CONTENTS, HEADINGS, ETC.. . . . . . . . . . . . .
Section 16.12 AUTHENTICATING AGENT . . . . . . . . . . . . . . . . . . .
Section 16.13 SEPARABILITY CLAUSE. . . . . . . . . . . . . . . . . . . .
Section 16.14 RULES BY TRUSTEE, PAYING AGENT, CONVERSION
AGENT AND REGISTRAR. . . . . . . . . . . . . . . . . . . .
Section 16.15 NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . .
Section 16.16 EXECUTION IN COUNTERPARTS. . . . . . . . . . . . . . . . .
Section 16.17 QUALIFICATION OF INDENTURE . . . . . . . . . . . . . . . . .
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This INDENTURE, dated as of July __, 1997, is made between Dura
Pharmaceuticals, Inc., a Delaware corporation (the "Company," as more fully set
forth in Section 1.1), and Chase Trust Company of California, a California
corporation, as Trustee.
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the issue of its __%
Convertible Subordinated Notes due 2002 (the "NOTES"), in an aggregate principal
amount specified herein, and has duly authorized the execution and delivery of
this Indenture.
NOW, THEREFORE:
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the respective holders from time to time of
the Notes:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1
(except as otherwise expressly provided herein or in any indenture supplemental
hereto) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings set forth in this Section 1.1.
"AFFILIATE" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purpose of this
definition, "control," when used with respect to any specified Person, means the
power to direct or cause the direction of 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" shall have meanings correlative to the foregoing.
"BOARD OF DIRECTORS" or "BOARD" means, with respect to any Person, the
Board of Directors of such Person or a committee thereof duly authorized, with
respect to any particular matter, to exercise the power of the Board.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday on which banking institutions in New York, New York are not authorized or
obligated by law or executive order to close.
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"CASH" or "CASH" means such coin or currency of The United States of
America as at any time of payment is legal tender for the payment of public and
private debts.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Common Stock, par value $.001 per share, of
the Company as it exists on the date of this Indenture or any other shares of
capital stock of the Company into which such Common Stock shall be reclassified
or changed.
"COMPANY" means Dura Pharmaceuticals, Inc., a Delaware corporation,
until a successor replaces it pursuant to the provisions of Article XI and,
thereafter, shall mean such successor. The foregoing sentence shall likewise
apply to any subsequent successor or successors.
"COMPANY ORDER" means a written order signed in the name and on behalf
of the Company by (a) its Chairman of the Board, Chief Executive Officer,
President or any Vice President, and (b) by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date hereof, located at 101 California
Street, Suite 2725, San Francisco, California, 94111.
"CREDIT AGREEMENT" means that certain Business Loan Agreement dated as
of April 14, 1997, between the Company and Bank of America National Trust and
Savings Association, as the same may be amended, renewed, extended, replaced,
increased or refinanced from time to time.
"DEFAULT" means any event that is, or after notice or passage of time,
or both, would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means the Credit Agreement and any
particular Senior Indebtedness 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
Indebtedness shall be "Designated Senior Indebtedness" for purposes of the
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness under this Indenture).
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<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
and the rules and regulations of the Commission promulgated thereunder, as in
effect from time to time.
"EVENT OF DEFAULT" means any event specified in Section 6.1(a), (b),
(c), (d), (e) or (f).
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board ("FASB") or in such
other statements by such other entity as approved by a significant segment of
the accounting profession which are from time to time in effect in the United
States; PROVIDED, HOWEVER, that for purposes of determining compliance with
covenants in the Indenture, "GAAP" means such generally accepted accounting
principles which are in effect as of the date of any such determination.
"INDENTURE" means this instrument, as originally executed or, if
amended or supplemented in accordance with the terms hereof, as so amended or
supplemented.
"NOTE" means any Note authenticated and delivered under this
Indenture.
"NOTEHOLDER" or "HOLDER" means, as applied to any Note, any Person in
whose name such Note is registered on the Registrar's books.
"OFFICER" means the Chairman of the Board, Chief Executive Officer,
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means, when used with respect to the Company,
a written certificate containing the information required to be contained
therein pursuant to this Indenture, including Sections 16.5 and 16.6, signed by
both (a) the Chief Executive Officer, President, any Vice President and (b) the
Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary of
the Company.
"OPINION OF COUNSEL" means a written opinion, containing the
information required to be contained therein pursuant to this Indenture,
including Sections 16.5 and 16.6, of counsel who is an employee of or counsel to
the Company.
"OVER-ALLOTMENT OPTION" means the option of the Underwriters to
purchase additional Notes in the aggregate principal amount of up to $30,000,000
as provided in the Purchase Agreement referred to in Section 2.2 hereof.
3
<PAGE>
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Notes; and, for the purposes of this definition, any Note
authenticated and delivered pursuant to Section 2.7 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note that it replaces.
"REDEMPTION DATE" means the date specified for redemption of any of
the Notes in accordance with the terms of the Notes and this Indenture.
"REDEMPTION PRICE" shall have the meaning set forth in the Notes.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any officer
within the Corporate Trust Office, including any Vice President, Managing
Director, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"SENIOR INDEBTEDNESS" means, whether outstanding upon issuance of the
Notes or thereafter incurred or created: (i) the principal and premium, if any,
and interest (including post-petition interest) on and fees, costs, enforcement
expenses, collateral protection expenses, and other reimbursement or indemnity
obligations in respect of all indebtedness or obligations of the Company to any
Person, including but not limited to banks and lending institutions, for money
borrowed (other than that evidenced by the Notes) or in respect of credit or
other banking facilities evidenced by a note, bond, debenture, loan agreement, a
lease intended as security or similar instrument or agreement (including
purchase money obligations with original maturities in excess of one year and
noncontingent reimbursement obligations in respect of the amounts paid under
letters of credit); (ii) commitment or standby fees due and payable to lending
institutions with respect to credit facilities available to the Company; (iii)
all obligations of the Company (a) for the reimbursement of any obligor on any
letter of credit, banker's
4
<PAGE>
acceptance, or similar credit transaction, (b) under interest rate swaps, caps,
collars, options, and similar arrangements and (c) under any foreign exchange
contract, currency swap agreement, futures contract, currency option contract,
or other foreign currency hedge; (iv) purchase money obligations, including
contingent payment obligations, with respect to the acquisition by the Company
of products or businesses; (v) all obligations and liabilities (contingent or
otherwise) in respect of leases of the Company required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of the Company and all obligations and
liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with the lease of real property
which provides that the Company is contractually obligated to purchase or cause
a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor 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; (vi) any liabilities of others described
in the preceding clauses that the Company has guaranteed or which are otherwise
its legal liability; and (vii) renewals, extensions, refundings, refinancings,
restructurings, amendments, and modifications of any such indebtedness or
guarantee. Notwithstanding anything to the contrary in the Indenture or the
Notes, "Senior Indebtedness" does not include any indebtedness of the Company
(a) to any person under any employee benefit plan or to any employee or
affiliates of the Company, or (b) any indebtedness or other obligation of the
Company that by its terms of the instrument creating or evidencing it is stated
to be pari passu or junior in right of payment of the Notes.
"SUBSIDIARY" means (i) a corporation, a majority of whose capital
stock with voting power, under ordinary circumstances, to elect directors is, at
the date of determination, directly or indirectly owned by the Company, by one
or more Subsidiaries of the Company, or by the Company and one or more
Subsidiaries of the Company, or (ii) a partnership in which the Company or a
Subsidiary of the Company, at the date of determination is a general partner or
holds in excess of 50% of the profits or voting interests, or (iii) any other
Person (other than a corporation or a partnership) in which the Company, a
Subsidiary of the Company or the Company and one or more Subsidiaries of the
Company, directly or indirectly, at the date of determination, has (x) at least
a majority ownership interest or (y) the power to elect or direct the election
of a majority of the directors or other governing body of such person; PROVIDED,
HOWEVER, that Spiros Development Corporation ("Spiros"), or any substantially
equivalent "off-balance sheet" entity initially organized by the Company or a
Subsidiary, shall not be deemed a Subsidiary unless and until, with respect to
Spiros or such substantially equivalent entity if a corporation, a majority of
5
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the outstanding capital stock with voting power of Spiros or such entity, as the
case may be, is owned directly by the Company, by one or more Subsidiaries, or
by the Company and one or more Subsidiaries, or, with respect to any
substantially equivalent entity, unless and until it meets the requirements of
clause (ii) above if a partnership or clause (iii) above if a Person other than
a corporation or partnership.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, as it was in force at the date of execution of this Indenture.
"TRUSTEE" means Chase Trust Company of California and its successors
and any entity resulting from or surviving any consolidation or merger to which
it or its successors may be a party and any successor trustee at the time
serving as successor trustee hereunder.
"UNDERWRITERS" means Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co.
Section 1.2 OTHER DEFINITIONS:
Defined in
Term Section
---- ----------
"Beneficial Owner" . . . . . . . . . . . . . . . . . . . . . . . . 15.3(1)
"Change in Control". . . . . . . . . . . . . . . . . . . . . . . . 15.4
"Closing Price". . . . . . . . . . . . . . . . . . . . . . . . . . 14.5(f)(1)
"Company Notice" . . . . . . . . . . . . . . . . . . . . . . . . . 15.2(a)
"Conversion Agent" . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Conversion Price" . . . . . . . . . . . . . . . . . . . . . . . . 14.4
"Current Market Price" . . . . . . . . . . . . . . . . . . . . . . 14.5(f)(2)
"Interest Payment Date". . . . . . . . . . . . . . . . . . . . . . 5.1
"Legal Holiday". . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Purchase Agreement" . . . . . . . . . . . . . . . . . . . . . . . 2.2
"Record Date". . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
"Registrar". . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Repurchase Date". . . . . . . . . . . . . . . . . . . . . . . . . 15.1
"Repurchase Price" . . . . . . . . . . . . . . . . . . . . . . . . 15.1
"Senior Indebtedness Default". . . . . . . . . . . . . . . . . . . 4.4
"Trading Day". . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5(f)(5)
"Trigger Event". . . . . . . . . . . . . . . . . . . . . . . . . . 14.5(d)
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture Act, such
provision is incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
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"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other Trust Indenture Act terms used in this Indenture that are
defined by the Trust Indenture Act or defined by Trust Indenture Act reference
to another statute or regulation have the meanings assigned to them by such
definitions.
Section 1.4 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the
plural include the singular;
(6) provisions apply to successive events and transactions;
(7) the words "herein," "hereof," "hereunder," and words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other Subdivision; and
(8) references to Sections or Articles mean references to such
Section or Article in this Indenture, unless stated otherwise.
7
<PAGE>
ARTICLE II
THE NOTES
Section 2.1 FORM AND DATING. The Notes and the Trustee's certificate
of authentication in respect thereof, shall be substantially in the form of
Exhibit A, which is a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage (provided
that any such notation, legend or endorsement required by usage is in a form
acceptable to the Company and the Trustee). Any such notations, legends or
endorsements not contained in the form of Note attached as Exhibit A shall be
delivered to the Trustee in writing. Each Note shall be dated the date of its
authentication.
The terms and provisions contained in the form of Note shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 EXECUTION AND AUTHENTICATION. The Notes shall be
executed by the Company by its Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon, and attested
by its Secretary or one of its Assistant Secretaries. The signature of any of
these Officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were 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 Notes or did not hold such offices at
the time of issuance of such Notes.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
The Trustee shall authenticate and make available for delivery Notes
for original issue in an aggregate principal amount of up to $200,000,000 upon a
Company Order without any further action by the Company; PROVIDED, HOWEVER, that
in the event that the Company sells any Notes pursuant to the Over-Allotment
Option granted pursuant to Section 2(b) of the Purchase
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Agreement, dated July __, 1997, between the Company and the Underwriters (the
"PURCHASE AGREEMENT"), then the Trustee shall authenticate and deliver Notes for
original issue in an aggregate principal amount of up to $200,000,000 plus up to
$30,000,000 aggregate principal amount of the Notes sold pursuant to the
Over-Allotment Option upon a Company Order without any further action by the
Company. Such Company Orders shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be authenticated. The
aggregate principal amount of the Notes outstanding at any time may not exceed
the amount set forth in the foregoing sentence, subject to the proviso set forth
therein, except as provided in Section 2.7.
The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.3 REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The
Company shall maintain an office or agency where the Notes may be presented for
registration of transfer or for exchange ("REGISTRAR"), an office or agency
where the Notes may be presented for repurchase or payment ("PAYING AGENT") and
an office or agency where the Notes may be presented for conversion ("CONVERSION
AGENT"). The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may have one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
Paying Agent includes any additional paying agents. The term Conversion Agent
includes any additional conversion agent. The Company initially appoints the
Trustee as Registrar, Conversion Agent, and Paying Agent in connection with the
Notes.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar other than the
Trustee. The agreement shall implement the provisions of this Indenture that
relate to such agent. The Company shall notify the Trustee and the Holders of
the name and address of any such agent and of any change in the office or agency
referred to in Section 5.2. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any Subsidiary or an Affiliate of either of them may act as Paying
Agent, Registrar, Conversion Agent or co-registrar.
Section 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST. Except as
otherwise provided herein, prior to or on each due date of payments in respect
of any Note, the Company shall deposit with the Paying Agent cash or, if
expressly permitted by the terms hereof, securities sufficient to make such
payments when so becoming due. The Company shall require each Paying Agent
(other
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than the Trustee) to agree in writing that the Paying Agent shall hold in trust
for the benefit of Noteholders or the Trustee all assets held by the Paying
Agent for the making of payments in respect of the Notes and shall notify the
Trustee, in writing, of any default by the Company in making any such payment.
At any time during the continuance of any such default, the Paying Agent shall,
upon the written request of the Trustee, forthwith pay to the Trustee all assets
so held in trust. If the Company, a Subsidiary or an Affiliate of either of
them acts as Paying Agent, it shall segregate the assets held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all assets held by it to the Trustee and to account for
any assets disbursed by it. Upon doing so, the Paying Agent shall have no
further liability for the money and securities.
Section 2.5 NOTEHOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders. If the Trustee is not the Registrar,
the Company shall furnish or cause to be furnished to the Trustee (i) at least
semiannually on January 1 and July 1 of each year a list of the names and
addresses of Noteholders dated within 15 days of the date on which the list is
furnished and (ii) at such other times as the Trustee may request in writing a
list, in such form and as of such date as the Trustee may reasonable require, of
the names and addresses of Noteholders.
Section 2.6 TRANSFER AND EXCHANGE. Upon surrender for registration
of transfer of any Note, together with a written instrument of transfer
satisfactory to the Registrar duly executed by the Noteholder or such
Noteholder's attorney duly authorized in writing, at the office or agency of the
Registrar or co-registrar pursuant to Section 2.3 or at the office or agency
referred to in Section 5.2, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denomination or
denominations, of a like aggregate principal amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Notes from the Noteholder requesting such transfer or
exchange (other than any exchange of a temporary Note for a definitive Note not
involving any change in ownership).
Transfers of Notes may be effected only by surrender of the Notes to
the Company for registration and the issuance by the Company of one or more new
Notes. As provided in Section 8.3, until such surrender and registration, the
Company may treat the
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Holders appearing on the Note register as the absolute owners of such Notes.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denomination or denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged, together with a written
instrument of transfer satisfactory to the Registrar duly executed by the
Noteholder or such Noteholder's attorney duly authorized in writing, at such
office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive.
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of (a) Notes selected for redemption (except,
in the case of Notes to be redeemed in part, the portion thereof not to be
redeemed), (b) any Notes in respect of which a repurchase notice has been given
and not withdrawn by the Holder thereof in accordance with Section 15.2 (except,
in the case of Notes to be purchased in part, the portion thereof not to be
purchased) or (c) any Notes for a period of 15 days before a selection of the
Notes to be redeemed.
Section 2.7 REPLACEMENT NOTES. If (a) any mutilated Note is
surrendered to the Company or the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Note has been acquired
by a BONA FIDE purchaser, the Company shall execute, and upon its written
request the Trustee shall authenticate and deliver, in exchange for any such
mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, or is about to be redeemed by the Company
pursuant to Article III hereof, the Company in its discretion may, instead of
issuing a new Note, pay or redeem such Note, as the case may be.
Upon the issuance of any new Notes 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) in connection therewith.
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Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Notes 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 Notes.
Section 2.8 OUTSTANDING NOTES; DETERMINATIONS OF HOLDERS' ACTION.
Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those cancelled by it, those delivered to it for cancellation,
mutilated, destroyed, lost or stolen Notes for which the Trustee has
authenticated and made available for delivery a new Note in lieu therefor
pursuant to Section 2.7 and those described in this Section 2.8 as not
outstanding. A Note does not cease to be outstanding because the Company or an
Affiliate thereof holds the Note; PROVIDED, HOWEVER, that in determining
whether the Holders of the requisite principal amount of Notes have given or
concurred in any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor upon the Notes
or any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which a Responsible Officer of
the Trustee knows to be so owned shall be so disregarded. Subject to the
foregoing, only Notes outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles VI and X).
If a Note is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a BONA FIDE purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date or on a Repurchase Date, or on the stated maturity date, cash
or, if expressly permitted by the terms hereof, securities sufficient to pay the
Notes payable on that date, then on and after that date such Notes shall cease
to be outstanding and interest, if any, on such Notes shall cease to accrue and
all other rights of the Holder shall terminate (other than the right to receive
the applicable Redemption Price or Repurchase Price, upon delivery of the Note
in accordance with the terms of this Indenture); PROVIDED, that if such Notes
are to
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be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.
If a Note is converted in accordance with Article XIV then from and
after such conversion the Note shall cease to be outstanding and interest, if
any, shall cease to accrue on such Note.
Section 2.9 TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 2.3 or 5.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Notes
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
Section 2.10 CANCELLATION. All Notes surrendered for payment,
redemption by the Company pursuant to Article III, conversion pursuant to
Article XIV, repurchase by the Company pursuant to Article XV, registration of
transfer or exchange shall, if surrendered to any person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. The Company may not issue new Notes to replace Notes it has paid or
delivered to the Trustee for cancellation or that any Holder has converted
pursuant to Article XIV. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of by the Trustee in accordance with its normal procedures and
evidence of such disposition shall be delivered to the
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Company unless the Company timely directs by Company Order that the Trustee
deliver cancelled Notes to the Company.
ARTICLE III
REDEMPTION
Section 3.1 RIGHT TO REDEEM; NOTICES TO TRUSTEE. The Company, at its
option, may redeem the Notes for cash in accordance with the provisions set
forth in the Notes and this Article III. The Company will not have the right to
redeem the Notes prior to August ___, 2000. At any time thereafter, the Company
may redeem the Notes, in whole or from time to time in part, upon written notice
given not less than 15 nor more than 60 days prior to the Redemption Date to
each Holder, for an amount equal to the Redemption Price set forth in the Notes,
including, in each case, accrued and unpaid interest up to but not including the
Redemption Date. If the Company elects to redeem Notes pursuant to such
provisions, it shall notify the Trustee in writing of the Redemption Date, the
principal amount of Notes to be redeemed, the Redemption Price and the
Conversion Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.1 at least 60 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). If fewer than all the Notes are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and provided to the Trustee in writing, which record date shall not be
less than 10 days after the date of notice to the Trustee (unless a shorter
notice shall be satisfactory to the Trustee).
Section 3.2 SELECTION OF NOTES TO BE REDEEMED. If less than all the
Notes are to be redeemed, the Trustee shall select the Notes to be redeemed PRO
RATA or by lot, or by any other method the Trustee considers fair and
appropriate (so long as such method is not prohibited by the rules of any stock
exchange on which the Notes are then listed). The Trustee shall make the
selection at least 35 but not more than 60 days before the Redemption Date from
outstanding Notes not previously called for redemption. The Trustee may select
for redemption portions of the principal amounts of Notes that have
denominations larger than $1,000. Notes and portions of them the Trustee
selects shall be in principal amounts of $1,000 or an integral multiple thereof.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Company promptly, but not less than 35 days before the Redemption Date, of the
Notes or portions of Notes to be redeemed.
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If any Note selected for partial redemption is thereafter surrendered
for conversion in part before termination of the conversion right with respect
to the portion of the Note so selected, the converted portion of such Note shall
be deemed (so far as may be), solely for purposes of determining the aggregate
principal amount of Notes to be redeemed by the Company, to be the portion
selected for redemption. Notes that have been converted during a selection of
Notes to be redeemed may be treated by the Trustee as outstanding for the
purpose of such selection. Nothing in this Section 3.2 shall affect the right
of any Holder to convert any Note pursuant to Article XIV before the termination
of the conversion right with respect thereto.
Section 3.3 NOTICE OF REDEMPTION. At least 15 days but not more than
60 days before a Redemption Date, the Company shall mail a notice of redemption
by first-class mail to each Holder of Notes to be redeemed in the manner
provided in Section 16.3.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including any accrued and unpaid
interest due;
(3) the Conversion Price;
(4) the name and address of the Paying Agent and Conversion
Agent and of the office or agency referred to in Section 5.2;
(5) that Notes called for redemption may be converted at any
time before the close of business on the Redemption Date;
(6) that Holders who want to convert Notes must satisfy the
requirements set forth in the Notes;
(7) that Notes called for redemption must be surrendered to the
Paying Agent or at the office or agency referred to in Section 5.2 to
collect the Redemption Price;
(8) the CUSIP number of the Notes;
(9) if fewer than all the outstanding Notes are to be redeemed,
the certificate numbers and principal amounts of the particular Notes to be
redeemed;
(10) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed, and
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that, upon surrender of such Note, a new Note or Notes in an aggregate principal
amount equal to the unredeemed portion thereof will be issued; and
(11) that, unless the Company defaults in payment of the
Redemption Price, interest, if any, on Notes selected for redemption, will cease
to accrue on and after the Redemption Date.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
Section 3.4 EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is given, Notes called for redemption (except for Notes that are
converted in accordance with the terms of this Indenture) become due and payable
on the Redemption Date stated in the notice and at the Redemption Price
therefor, including accrued and unpaid interest, if any, up to but not including
the Redemption Date; PROVIDED that if the Redemption Date is on the
corresponding Interest Payment Date, the accrued interest up to but not
including the Redemption Date, if any, shall be payable to the registered Holder
of the redeemed Notes on the relevant Record Date, except that, in the case in
which a Note is called for redemption on any Interest Payment Date and such Note
is surrendered for conversion at any time during the ten business days
immediately preceding the date fixed for redemption, such interest shall be
payable on such redemption date to the person who surrenders such Note for
conversion; and PROVIDED, FURTHER, that if a Redemption Date is a Legal Holiday,
payment shall be made on the next succeeding Business Day, and no interest shall
accrue for the period from such Redemption Date to such succeeding Business Day.
Upon the later of the Redemption Date and the date such Notes are surrendered to
the Paying Agent or at the office or agency referred to in Section 5.2, such
Notes called for redemption shall be paid at the Redemption Price therefor.
Section 3.5 DEPOSIT OF REDEMPTION PRICE. Prior to or on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary or an Affiliate of either of them is the Paying Agent,
shall segregate and hold in trust) cash sufficient to pay the Redemption Price,
including any accrued and unpaid interest, of all Notes to be redeemed on that
date other than Notes or portions of Notes called for redemption which prior
thereto have been delivered by the Company to the Trustee for cancellation. The
Paying Agent shall as promptly as practicable return to the Company any cash,
with interest, if any, thereon, not required for that purpose because of
conversion of Notes pursuant to Article XIV. If such cash is then held by the
Company or a Subsidiary or an Affiliate of the Company in
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trust and is not required for such purpose, it shall be discharged from such
trust.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Notes called for redemption is
not prohibited under Article XI or otherwise, interest on the Notes to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Notes are presented for payment. Notwithstanding anything herein to the
contrary, if any Note surrendered for redemption in the manner provided in the
Notes shall not be so paid upon surrender for redemption because of the failure
of the Company to comply with the preceding paragraph, interest shall continue
to accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in
Section 5.1 hereof and in the Notes.
Section 3.6 NOTES REDEEMED IN PART. Upon surrender of a Note that is
redeemed in part, the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder, a new Note in an authorized denomination equal in
principal amount to the unredeemed portion of the Note surrendered.
Section 3.7 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes called for redemption by an agreement with
one or more investment bankers or other purchasers to purchase all or a portion
of such Notes by paying to the Trustee in trust for the Noteholders whose Notes
are to be so purchased, on or before the close of business on the Redemption
Date, an amount that, together with any amounts deposited with the Trustee by
the Company for redemption of such Notes is not less than the Redemption Price,
together with interest, if any, accrued to the Redemption Date, of such Notes.
Notwithstanding anything to the contrary contained in this Article III, the
obligation of the Company to pay the Redemption Price of such Notes, including
all accrued interest, if any, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers, but no such agreement
shall relieve the Company of its obligation to pay such Redemption Price and
interest, if any. If such an agreement is entered into, any Notes not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company be deemed, to the fullest extent permitted (notwithstanding anything to
the contrary contained in Article XIV), surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date, subject to payment of the above amount as aforesaid. The
Trustee shall hold and pay to the Holders whose Notes are selected for
redemption any such amount paid to it for purchase and conversion in the same
manner as it
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would moneys deposited with it by the Company for the redemption of Notes.
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The Company
and each Holder of a Note, by such Holder's acceptance thereof, covenant and
agree, that, to the extent and in the manner hereinafter set forth in this
Article IV, the indebtedness represented by the Notes and the payment of the
principal, Redemption Price (together with accrued and unpaid interest, if any),
Repurchase Price and interest, if any, in respect of each and all of the Notes
are hereby expressly made subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and that these subordination
provisions are for the benefit of the holders of the Senior Indebtedness, any
one or more of whom may enforce such provisions.
No provision of this Article IV shall prevent the occurrence of any
Default or Event of Default hereunder.
Section 4.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION. Upon any
distribution of assets of the Company in the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to the
Company or to its creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company, then and in any such event the holders of Senior Indebtedness shall
be entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Noteholders are entitled to
receive any payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the Redemption Price with respect to Notes
called for redemption in accordance with Section 3.2 or the Repurchase Price of
Notes submitted for repurchase in accordance with Section 15.2) and to that end
the holders of Senior Indebtedness 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 Notes in any such case, proceeding, dissolution, liquidation or
other winding up or event, including any such payment or distribution which may
be payable or deliverable by reason of the payment of any other
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indebtedness of the Company being subordinated to the payment of the Notes.
In the event that, notwithstanding the foregoing provisions of this
Section 4.2, the Trustee or any Noteholder shall have received any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Notes, before all Senior
Indebtedness is paid in full or payment thereof provided for, and if such fact
shall, at or prior to the time of such payment or distribution, have been made
known to a Responsible Officer of the Trustee or, as the case may be, such
Noteholder, then, 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 Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
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 XI
shall not be deemed a dissolution, winding up, liquidation, reorganization,
assignment for the benefit of creditors or marshalling of assets and liabilities
of the Company for the purposes of this Section 4.2 if the Person formed by such
consolidation or into which the Company is merged or the Person that acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall as part of such consolidation, merger, conveyance or
transfer, comply with the conditions set forth in Article XI.
Section 4.3 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT. In the
event and during the continuation of any default in the payment of principal of
(or premium, if any) or interest on any Designated Senior Indebtedness beyond
any applicable grace period with respect thereto, or in the event that any event
of default (other than a default in the payment of principal of, or premium, if
any, or interest on Senior Indebtedness) with respect to any Designated Senior
Indebtedness shall have occurred and be continuing, permitting the holders of
such Designated Senior Indebtedness (or a trustee on behalf of the holders
thereof) to declare such Designated Senior Indebtedness due and payable prior to
the date on which it would otherwise have become due and payable (a "SENIOR
INDEBTEDNESS DEFAULT"), and upon written
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notice of such default to the Trustee and the Company by any holder of such
Designated Senior Indebtedness or its representative ("Payment Notice") then,
unless and until such Designated Senior Indebtedness Default shall have been
cured or waived in writing, or shall have ceased to exist, no payment (including
any payment which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the Notes) of
principal of, premium, if any, and interest on all Notes (including, but not
limited to, the Redemption Price with respect to the Notes called for redemption
in accordance with Section 3.2 or the Repurchase Price of any Notes submitted
for repurchase in accordance with Section 15.2) or on account of the purchase or
other acquisition of Notes shall be made, nor may the Company pay cash with
respect to the purchase price or upon conversion of any Notes (other than cash
in lieu of fractional shares) PROVIDED, that nothing in the above-described
provision will prevent the making of any payment in respect of the Notes for a
period of more than 120 days after the date such written notice of default is
given, unless the maturity of the Designated Senior Indebtedness has been
accelerated, in which case no payment on the Notes may be made until such
acceleration has been waived or such Designated Senior Indebtedness has been
paid in full.
Notwithstanding the foregoing, (i) not more than one Payment Notice
shall be given within a period of 181 consecutive days, (ii) no event of default
that existed or was continuing on the date of any Payment Notice (whether or not
such event of default is on the same issue of Designated Senior Indebtedness)
shall be made the basis for the giving of a subsequent Payment Notice, and (iii)
if the Company or the Trustee receives any Payment Notice, a similar notice
relating to or arising out of the same default or facts giving rise to such
default (whether or not such default is on the same issue of Senior
Indebtedness) shall not be effective for purposes of this Section 4.3.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or any Noteholder prohibited by the foregoing
provisions of this Section 4.3, and if such fact shall then have been made known
to a Responsible Officer of the Trustee or, as the case may be, such Noteholder,
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 4.2 would be applicable.
Section 4.4 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in
this Article or elsewhere in this Indenture or in any of the Notes shall prevent
(a) the Company, at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
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creditors or other marshalling of assets and liabilities of the Company referred
to in Section 4.2 or under the conditions described in Section 4.3, from making
payments at any time of principal of, premium, if any, and interest on all Notes
(including, but not limited to, the Redemption Price with respect to the Notes
called for redemption in accordance with Section 3.2 or the Repurchase Price
with respect to Notes submitted for repurchase in accordance with Section 15.2)
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, premium, if any, and
interest on all Notes (including, but not limited to, the Redemption Price with
respect to the Notes called for redemption in accordance with Section 3.2 or the
Repurchase Price with respect to Notes submitted for repurchase in accordance
with Section 15.2), or the retention of such payment by the Holders of the
Notes, if, at the time of such application by the Trustee, the Trustee did not
have actual knowledge that such payment would have been prohibited by the
provisions of this Article IV.
Section 4.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to payment in full of all Senior Indebtedness, the Noteholders shall be
subrogated, to the extent of the payments or distributions made to the holders
of such Senior Indebtedness pursuant to the provisions of this Article IV
(equally and ratably with the holders of all indebtedness of the Company which
by its express terms is subordinated to indebtedness of the Company to
substantially the same extent as the Notes are subordinated and is entitled to
like rights of subrogation), to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of,
premium, if any, and interest on all Notes (including, but not limited to, the
Redemption Price with respect to the Notes called for redemption in accordance
with Section 3.2 or the Repurchase Price with respect to Notes submitted for
repurchase in accordance with Section 15.2), shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Noteholders
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 Indebtedness by Noteholders or the Trustee, shall, as among the Company,
its creditors other than holders of Senior Indebtedness and the Noteholders, be
deemed to be a payment or distribution by the Company to or of the Senior
Indebtedness.
Section 4.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS; OBLIGATIONS
OF THE COMPANY UNCONDITIONAL. The provisions of this Article are and are
intended solely for the purpose of defining the relative rights of the
Noteholders, on the one hand, and the holders of Senior Indebtedness, on the
other hand.
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Nothing contained in this Article or elsewhere in this Indenture or in the Notes
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Noteholders, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Noteholders the principal of, premium, if any, and interest on all Notes
(including, but not limited to, the Redemption Price with respect to the Notes
called for redemption in accordance with Section 3.2 or the Repurchase Price
with respect to Notes submitted for repurchase in accordance with Section 15.2)
as and when the same shall become due and payable in accordance with the terms
of the Notes and this Indenture; or (b) affect the relative rights against the
Company of the Noteholders and creditors of the Company other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or any Noteholder 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 Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such holder.
Section 4.7 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Noteholder by
such Holder's acceptance thereof authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 4.8 NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Indebtedness 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 Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Noteholders, without
incurring responsibility to the Noteholders and without impairing or releasing
the subordination provided in this Article or the obligations hereunder of the
Noteholders to the holders of Senior Indebtedness, 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 Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is out-
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standing; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.
Section 4.9 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 Notes.
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 Notes, unless and until the Trustee shall have received written
notice therefor from the Company or a holder of Senior Indebtedness or from any
trustee thereof; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 6.1, shall be entitled in all
respects to assume that no such facts exist.
Subject to the provisions of Section 7.1, the Trustee shall be
entitled to rely conclusively on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 4.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 7.1, and the
Holders shall be entitled to rely conclusively 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,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Noteholders, for the purpose of ascertaining the Persons
entitled to participate in such payment or dis-
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tribution, the holders of the Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
Section 4.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders or to the
Company or to any other person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 4.12 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
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 Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
Section 4.13 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 Sections 4.9 and
4.11 shall not apply to the Company or any Affiliate of the Company if it or
such Affiliate acts as Paying Agent.
Section 4.14 APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article XII shall be for the sole benefit of Noteholders and, to
the extent allocated for the payment of Notes, shall not be subject to the
subordination provisions of this Article IV. Otherwise, any deposit of assets
with the Trustee (whether or not in trust) for the payment of principal of or
interest on any Notes shall be subject to the provisions of Sections 4.1, 4.2,
4.3, 4.4 and 4.5.
Section 4.15 CERTAIN CONVERSIONS NOT DEEMED PAYMENT. For the
purposes of this Article only, (1) the issuance and
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delivery of junior securities and payment of cash in lieu of fractional shares
upon conversion of Notes in accordance with Article XIV shall not be deemed to
constitute a payment or distribution on account of the principal of, premium, if
any, and interest on all Notes (including, but not limited to, the Redemption
Price with respect to the Notes called for redemption in accordance with Section
3.2 or the Repurchase Price with respect to Notes submitted for repurchase in
accordance with Section 15.2) or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of principal of such Note. For the
purposes of this Section, the term "JUNIOR SECURITIES" means (a) shares of any
stock of any class of the Company, (b) securities of the Company which are
subordinated in right of payment to all Senior Indebtedness that may be
outstanding at the time of issuance or delivery of such securities to the same
extent as, or to a greater extent than, the Notes are so subordinated as
provided in this Article, and (c) any securities into which the Notes become
convertible pursuant to section 14.6 that are securities of a Person required to
enter into a supplemental indenture and are either (x) shares of any class of
stock of such Person or (y) securities of such Person that are subordinated in
right of payment to all Senior Indebtedness that may be outstanding at the time
of issuance or delivery of such securities to substantially the same extent as,
or to a greater extent than, the Notes are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Notes, the
right, which is absolute and unconditional, of any Noteholder to convert such
Note in accordance with Article XIV.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Principal, interest and other payments shall be considered paid on the
date due if on such date (i) the Trustee or Paying Agent holds in accordance
with this Indenture money sufficient to pay all principal, interest and other
payment then due and (ii) there is no impairment pursuant to the terms of this
Indenture on the Trustee's ability to pay such monies over to the Holders.
Interest on the Notes shall be paid, in accordance with the terms of the Note,
semi-annually on February __ and August___
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of each year (each such date, an "Interest Payment Date"), commencing February
_____, 1998, to Holders of record at the close of business on January ____ or
July ____, as the case may be, immediately preceding each such Interest Payment
Date (each such date, a "Record Date"), except as otherwise provided herein and
in the Note. Interest on the Notes shall be computed on the basis of a 360-day
year comprised of twelve 30-day months. Each installment of interest on the
Notes due on any semi-annual Interest Payment Date may be paid by mailing checks
for the interest payable to, or in such other manner as may be acceptable to the
Company upon the written order of, the Holders entitled thereto as they shall
appear on the Note register.
Section 5.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in the Borough of Manhattan in the City of New York, an office or
agency where the Notes may be surrendered for registration of transfer or
exchange or for presentation for payment or for conversion or redemption and
where notices and deeds to or upon the Company in respect of the Notes and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in The City of New York.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan in
the City of New York, for such purposes. The Company will give prompt written
notice to the holders of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee and the office or agency of the Trustee in The City of New York
(which shall initially be, c/o The Chase Manhattan Bank, 55 Water Street, New
York, New York), as an office or agency of the Company for each of the aforesaid
purposes.
Section 5.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.8, a successor Trustee, so
that
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there shall at all times be a Trustee qualified and acting hereunder.
Section 5.4 CORPORATE EXISTENCE. Subject to Article XI, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate existence of its
Subsidiaries in accordance with the respective organizational documents of each
of them.
Section 5.5 PAYMENT OF TAXES AND OTHER CLAIMS. Except with respect
to immaterial items, the Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to taxes)
levied or imposed upon the Company or any of its Subsidiaries or any of their
respective properties and assets and (ii) all lawful claims, whether for labor,
materials, supplies, services or anything else, which have become due and
payable and which by law have or may become a lien upon the property and assets
of the Company or any of its Subsidiaries; PROVIDED, HOWEVER, that neither the
Company nor any Subsidiary shall be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which such disputed amounts the need for adequate reserves
has been reviewed in accordance with GAAP.
Section 5.6 MAINTENANCE OF PROPERTIES AND INSURANCE. The Company
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Subsidiaries to be maintained and kept
in good condition, repair and working order (reasonable wear and tear excepted)
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in their reasonable judgment may be necessary, so that the business
carried on in connection therewith may be properly conducted at all times;
PROVIDED, HOWEVER, that nothing in this Section 5.6 shall prevent the Company or
any Subsidiary from discontinuing any operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is
(a) in the judgment of the Company, desirable in the conduct of the business of
such entity and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company is adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with (except for self-
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insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Company and adequate and appropriate for the conduct of the
business of the Company and such Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse effect
on the financial condition or results of operations of the Company and such
Subsidiaries considered as a whole.
Section 5.7 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. (a) The
Company shall deliver to the Trustee within 90 days after the end of its fiscal
year an Officers' Certificate complying with Section 314(a)(4) of the Trust
Indenture Act and stating that a review of its activities and the activities of
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this Indenture and,
if such signer does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
(b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, promptly upon becoming aware of any
Default, Event of Default or fact which would prohibit the making of any payment
to or by the Trustee in respect of the Notes, an Officers' Certificate
specifying such Default, Event of Default or fact and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be
deemed to have knowledge of any Default, any Event of Default or any such fact
unless one of its Responsible Officers receives written notice thereof from the
Company or any of the Holders.
Section 5.8 STAY, EXTENSION AND USURY LAWS. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture and the Company (to the extent it may lawfully do so) hereby
expressly
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waives all benefit or advantage of any such law, and covenants that it will not,
by resort to any such law, 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 has been enacted.
Section 5.9 LIMITATION ON STATUS AS INVESTMENT COMPANY. Neither the
Company nor any of its Subsidiaries shall become an "investment company," as
that term is defined in the Investment Company Act of 1940, as amended, or
otherwise become subject to regulation thereunder.
Section 5.10 SEC REPORTS. Whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
shall furnish to the Trustee (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports, and the Trustee shall make any such
reports available to the Noteholders upon request. All such reports shall be
furnished to the Trustee within 15 days after the Company files such reports
with the Commission or, in the event the Company is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
(or any such successor provisions), such reports shall be furnished to the
Trustee at the times the Company would have been required to provide such
reports if it were still subject to such reporting requirements.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. In case one or more of the following
Events of Default (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) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest upon any of
the Notes as and when the same shall become due and payable, and continuance of
such default for a period of thirty (30) days, whether or not such payment is
permitted under Article IV hereof; or
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(b) default in the payment of the principal of or premium, if any, on
any of the Notes as and when the same shall become due and payable either at
maturity or in connection with any redemption pursuant to Article III or
repurchase pursuant to Article XV, by acceleration or otherwise, whether or not
such payment is permitted under Article IV hereof; or
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the Notes or
in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 6.1 specifically dealt
with) continued for a period of thirty (30) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Notes at the
time outstanding; or
(d) default by the Company with respect to any bond, debenture, note
or other evidence of indebtedness for borrowed money of the Company, which
default results in acceleration of any such indebtedness which is in an amount
of in excess of $10 million without such indebtedness having been discharged, or
such acceleration having been rescinded or annulled within a period of ten (10)
days after the date of such acceleration; or
(e) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable,
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the Trustee may, by notice to the Company, or, if requested by the Holders of
not less than 25% in aggregate principal amount of the Notes then outstanding,
after the giving of written notice to the Company and the Trustee by such
Holders, the Trustee shall, declare the principal of all the Notes and the
interest accrued thereon to be due and payable immediately, and upon any such
declaration, the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding. If an Event of Default specified in Section 6.1(e) or (f)
occurs, the principal of all the Notes and the interest accrued thereon shall be
and become immediately and automatically due and payable without any further
action on the part of the Company, the Trustee or the Noteholders. This
provision, however, is subject to the condition that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all Notes and the principal of and premium, if any, on any and all
Notes which shall have become due otherwise than by acceleration (with interest
on overdue installments of interest (to the extent that payments of such
interest is enforceable under applicable law) and on such principal and premium,
if any, at the rate borne by the Notes, to the date of such payment or deposit)
and amounts due to the Trustee pursuant to Section 7.7, and if any and all
Defaults under this Indenture, other than the nonpayment of principal of and
premium, Redemption Price and Repurchase Price, if any, and accrued interest on
Notes which shall have become due by acceleration, shall have been cured or
waived in accordance with Section 6.7, then the Holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all Defaults or Events of Default and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent Default
or Event of Default, or shall impair any right consequent thereon.
Notwithstanding the foregoing sentence, no waiver shall be effective against any
Holder for any Event of Default or event which with notice or lapse of time or
both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Note affected thereby, unless each such affected Holder agrees, in
writing, to waive such Event of Default or other event. The Company shall
notify the Trustee in writing promptly upon becoming aware of any Default or
Event of Default.
If a Default occurs and is continuing, the Trustee shall, within
ninety (90) days after the occurrence of such default, give to the Holders
notice of such default; PROVIDED, that, except in the case of a default in the
payment of principal
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of or interest on any of the Notes, the Trustee may withhold such notice if it
in good faith determines that the withholding of such notice is in the interests
of the Holders in accordance with Section 7.5. In case the Trustee shall have
proceeded to enforce any right under this Indenture and such proceedings shall
have been discontinued or abandoned because of such waiver or rescission and
annulment or for any other reason or shall have been determined adversely to the
Trustee, then the Company, the Noteholders and the Trustee shall continue as
though no such proceeding had been taken.
Section 6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company
covenants that if the Company Defaults pursuant to Sections 6.1(a) or 6.1(b)
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the Holders, the whole amount that then shall have become due and
payable on all such Notes for principal and premium, if any, or interest, or
both, as the case may be, with interest upon the overdue principal and premium,
if any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate borne by
the Notes; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including reasonable compensation
to the Trustee, its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through its negligence
or bad faith. Until such demand by the Trustee, the Company may pay the
principal of and premium, if any, and interest on the Notes to the registered
Holders, whether or not the Notes are overdue.
If the Company fails promptly to pay such amounts upon such demand,
the Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under Title 11
of the United States Code, or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such other
obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of
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whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 6.2, shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
of the Noteholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 7.7.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or 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 Noteholders.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any Noteholders parties to
any such proceedings.
Section 6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VI shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon 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 7.7;
Second: To the holders of Senior Indebtedness to the extent
provided in Article IV;
Third: If the principal of the outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes in
default in the order of the
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maturity of the installments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the
overdue installments of interest at the rate borne by the Notes, such
payments to be made ratably to the persons entitled thereto;
Fourth: If the principal of the outstanding Notes shall have
become due, by declaration or otherwise, and be unpaid to the payment
of the whole amount then owing and unpaid upon the Notes for principal
and premium, if any, and interest, with interest on the overdue
principal and premium, if any, and (to the extent that such interest
has been collected by the Trustee) upon overdue installments of
interest at the rate borne by the Notes; and PROVIDED, that if such
monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Notes, then to the payment of such principal and
premium, if any, and interest without preference or priority of
principal and premium, if any, over interest, or of interest over
principal and premium, if any, or of any installment of interest over
any other installment of interest, or of any Note over any other Note,
ratably to the aggregate of such principal and premium, if any, and
accrued and unpaid interest; and
Fifth: To the payment of the remainder, if any, to the Company
or any other person lawfully entitled thereto.
Section 6.4 PROCEEDINGS BY NOTEHOLDER. No Holder shall have any
right to institute any suit, action or proceeding in equity or at law upon or
under or with respect to this Indenture, or for the appointment of a receiver,
trustee, liquidator, custodian or other similar official, or for any other
remedy hereunder, unless (a) such Holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided; (b) (i) Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder, (ii) such Holders shall have offered to the Trustee such
reasonable indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred therein or thereby, (iii) the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding, and
(iv) no direction inconsistent with such written request shall have been given
to the Trustee during such sixty (60) day period pursuant to Section 6.7. No
one or more Noteholders shall have any right in any manner whatever to affect,
disturb or prejudice
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the rights of any other Holder of Notes, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Noteholders (except as otherwise provided herein). For
the protection and enforcement of this Section 6.4, each and every Noteholder
and the Trustee shall be entitled to such relief as can be given at law or in
equity.
Notwithstanding any other provision of this Indenture and the Notes,
the right of any Holder to receive payment of the principal of and premium, if
any, and interest on such Note, on or after the respective due dates expressed
in such Note, or to institute suit for the enforcement of any such payment on or
after such respective dates against the Company shall not be impaired or
affected without the consent of such Holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, any Holder, without the consent of either the Trustee or the
Holder of any other Note, in his own behalf and for his own benefit, may
enforce, and may institute and maintain any proceeding suitable to enforce, his
rights of conversion as provided herein.
Section 6.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default,
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.
Section 6.6 REMEDIES CUMULATIVE AND CONTINUING. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes pursuant to Section 2.7, all powers and remedies given by
this Article VI to the Trustee or to the Noteholders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any thereof or of
any other powers and remedies available to the Trustee or the Noteholders, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any Noteholder to exercise any right or power
accruing upon any Default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and subject to the
provisions of Section 6.4, every power and remedy given by this Article VI or by
law to the
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Trustee or to the Noteholders may be exercised from time to time, and as often
as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY
MAJORITY OF NOTEHOLDERS. The Holders of a majority in aggregate principal
amount of the Notes at the time outstanding shall have the right, subject to
Section 7.2(e), to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; PROVIDED, HOWEVER, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The Holders of a majority in aggregate
principal amount of the Notes at the time outstanding may, on behalf of the
Holders of all of the Notes, waive any past Default or Event of Default
hereunder and its consequences EXCEPT (i) a Default in the payment of interest
or premium, if any, on, or the principal of, the Notes, (ii) a failure by the
Company to convert any Notes into Common Stock, (iii) a Default in the payment
of the Redemption Price (including accrued and unpaid interest) pursuant to
Article III or Repurchase Price pursuant to Article XV or (iv) a Default in
respect of a covenant or provisions hereof which under Article X cannot be
modified or amended without the consent of the Holders of all Notes then
outstanding. Upon any such waiver the Company, the Trustee and the Holders
shall be restored to their former positions and rights hereunder, but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon. Whenever any Default or Event of Default
hereunder shall have been waived as permitted by this Section 6.7, said Default
or Event of Default shall for all purposes of the Notes and this Indenture be
deemed to have been cured and to be not continuing, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
Section 6.8 UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; PROVIDED that the provisions of this Section 6.8 (to the
extent permitted by law) shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Noteholder, or group of Noteholders, holding in
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the aggregate more than ten percent in principal amount of the Notes at the time
outstanding determined in accordance with Section 8.4, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note on or after the due date expressed in
such Note or to any suit for the enforcement of the right to convert any Note in
accordance with the provisions of Article XIV or to require the Company to
repurchase any Note in accordance with Article XV.
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificate or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible
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Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.7.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) The Trustee (and its directors, officers, employees and agents)
may refuse to perform any duty or exercise any right or power hereunder or
extend or risk its own funds or otherwise incur any financial liability unless
the Trustee (and its directors, officers, employees and agents) receives
indemnity satisfactory to it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder) shall be under no liability for interest on
any money received by it hereunder except as the Trustee may otherwise have
agreed in writing with the Company.
(g) The Trustee shall not be required 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 there is
reasonable ground for believing that the repayment of such funds or indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it.
Section 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent, attorneys, custodians or
nominees, appointed with due care.
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(d) Subject to the provisions of Section 7.1(c), the Trustee shall
not be liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers.
(e) 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 (and its directors, officers, employees and agents)
security or such reasonable indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(f) 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.
(g) The Trustee may consult with counsel (at the expense of the
Company) and any Opinion of Counsel or any advice of such Counsel shall be full
and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel;
(h) In the event that the Trustee is also acting as Paying Agent,
Conversion Agent or Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article VII shall also be afforded to such Paying
Agent, Conversion Agent or Registrar;
(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty unless so specified herein.
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of the Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
Section 7.4 TRUSTEE'S DISCLAIMER. The Trustee makes no
representation as to the validity, adequacy or priority of
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this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes, it shall not be responsible for any statement in
the registration statement for the Notes under the Securities Act or in the
Indenture or the Notes (other than its certificate of authentication), or the
determination as to the Persons entitled to receive any notices hereunder.
Section 7.5 NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is actually known to a Responsible Officer of the Trustee,
the Trustee shall give to each Noteholder notice of the Default within 90 days
after it occurs. Except in the case of a Default described in Section 6.1(a)
or (b), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of Noteholders.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
July 15 beginning with the July 15 following the date of this Indenture, the
Trustee shall mail to each Noteholder such report dated as of such July 15 as
may be required by and in compliance with Section 313(a) of the Trust Indenture
Act. The Trustee also shall comply with Trust Indenture Act Sections 313(b) and
313(c).
A copy of each such report at the time of its mailing to Noteholders
shall be provided to the Company and shall be filed with the Commission and each
stock exchange on which the Notes are listed. The Company agrees promptly to
notify the Trustee whenever the Notes become listed on any stock exchange and of
any delisting thereof.
Section 7.7 COMPENSATION AND INDEMNITY. The Company agrees:
(a) to pay to the Trustee and to the extent the Trustee acts as
Registrar, Paying Agent or Authenticating Agent, from time to time such
compensation as shall have been agreed to in writing between the Company and the
Trustee for all services rendered by it hereunder in its capacity as Trustee,
Registrar, Paying Agent or Authenticating Agent (which compensation shall not
(to the extent permitted by law) be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its written 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, advances and disbursements of its agents and
counsel (who may be in-house counsel)), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
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(c) to indemnify each of the Trustee or any predecessor Trustee (and
its directors, officers, employees and agents) for, and to hold it harmless
against, any and all loss, liability, damage, claim or expense, including taxes
(other than taxes based upon, measured or determined by the income of the
Trustee), incurred without negligence, bad faith or wilful misconduct on its
part (or on the part of its directors, officers, employees and agents), arising
out of or in connection with the acceptance or administration of this trust,
including the reasonable 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.
The Trustee shall give the Company prompt notice of any claim or
liability for which the Trustee might be entitled to indemnification under
subparagraph (c) of this Section 7.7. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel with regard to defense of any
claim and the Company shall pay the reasonable fees and expenses of such
counsel; PROVIDED, that the Company will not be required to pay such fees and
expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any settlement made without its written consent.
The Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct. To secure the Company's payment obligations in
this Section 7.7, the Trustee shall have a lien prior to the Notes on all money
or property held or collected by the Trustee or the earlier resignation or
removal of the Trustee.
The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 7.1(f) or (g), the expenses are
intended to constitute expenses of administration under Federal or State
bankruptcy laws. The provisions of this Section shall survive the termination
of this Indenture.
Section 7.8 REPLACEMENT OF TRUSTEE. The Trustee may resign by so
notifying the Company; PROVIDED, HOWEVER, no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this
Section 7.8. The Holders of a majority in aggregate principal amount of the
Notes at the time outstanding may remove the Trustee by so notifying the Trustee
and may appoint a successor Trustee (subject to the consent of the Company, such
consent not to be unreasonably withheld). The Company may remove the Trustee if
the Trustee increases costs to the Company resulting in fees for services that
are materially higher than commercially available to the
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Company from another entity qualifying under Section 7.10, and at the time of
such removal no Event of Default exists. The Company shall remove the Trustee
if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Upon the appointment and acceptance of a successor Trustee, and the
presentment of reasonable documentation by the resigning or removed Trustee to
the Company, all fees, charges and expenses of the resigning or removed Trustee
shall become immediately due and payable. The resigning or removed Trustee
shall have no liability for the acts or omissions of any successor Trustee
hereunder.
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Section 7.9 SUCCESSOR TRUSTEE BY MERGER. Except as otherwise
provided in Section 7.8(1) or 7.8(4), if the Trustee consolidates with, merges
or converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of Trust Indenture Act Section 310(a)(1), (2) and
(5). The Trustee shall have (or, in the case of a corporation included in a
bank holding company system, the related bank holding company shall have) a
combined capital and surplus of at least $50,000,000 as set forth in its or such
holding company's most recent published annual report of condition. The Trustee
shall comply with Trust Indenture Act Section 310(b), including the optional
provision permitted by the second sentence of Trust Indenture Act
Section 310(b)(9). In determining whether the Trustee has conflicting interests
as defined in Trust Indenture Act Section 310(b)(1), the provisions contained in
the proviso to Trust Indenture Act Section 310(b)(1) shall be deemed
incorporated herein.
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with Trust Indenture Act Section 311(a), excluding any
creditor relationship listed in Trust Indenture Act Section 311(b). A trustee
who has resigned or been removed shall be subject to Trust Indenture Act Section
311(a) to the extent indicated therein.
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.1 ACTION BY HOLDERS. Whenever in this Indenture it is
provided that the Holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the Holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
Holders voting in favor thereof at any meeting of Noteholders duly called and
held in accordance with the provisions of Article IX, or (c) by a combination of
such instrument or instruments and any such record of such a meeting of
Noteholders. Whenever the Company or the Trustee solicits the taking of any
action by the Holders, the Company or the Trustee shall fix in advance of such
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solicitation, a date as the record date for determining Holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.
Section 8.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the
provisions of Sections 7.1, 7.2 and 9.6, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.6.
Section 8.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the
Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and
any Registrar may deem the Person in whose name such Note shall be registered
upon the Note register to be, and may treat such person as, the absolute owner
of such Note (whether or not such Note shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and interest on
such Note, for conversion of such Note and for all other purposes; and neither
the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor
any authenticating agent nor any Registrar shall be affected by any notice to
the contrary. All such payments so made to any Holder for the time being, or
upon his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
Section 8.4 REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.1, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any Noteholder which is shown by the evidence to be
included in the Notes the Holders of which have consented to such action may, by
filing written notice with the Company or with the Trustee at its Corporate
Trust Office and upon proof of holding as provided in Section 8.2, revoke such
action so far as it concerns such Note. Except as aforesaid, any such action
taken by the Holder of any Note shall be conclusive and binding upon such Holder
and upon all future Holders and owners of such Note and of any Notes issued in
exchange or substitution therefor, irrespective of whether any notation in
regard thereto is made upon such Note or any Note issued in exchange or
substitution therefor.
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ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 PURPOSE OF MEETINGS. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article IX for any of the following purposes:
(a) to give any notice to the Company or to the Trustee or to give
any directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Noteholders pursuant to
any of the provisions of Article VI;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VII;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(d) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law.
Section 9.2 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 9.1, to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 8.1, shall be mailed to
Noteholders at their addresses as they shall appear on the Note register. Such
notice shall also be mailed to the Company. Such notices shall be mailed not
less than twenty (20) nor more than ninety (90) days prior to the date fixed for
the meeting.
Any meeting of Noteholders shall be valid without notice if the
Holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the Holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 9.3 CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
Holders of at least
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ten percent in aggregate principal amount of the Notes then outstanding, shall
have requested the Trustee to call a meeting of Noteholders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
twenty (20) days after receipt of such request, then the Company or such
Noteholders may determine the time and the place at any location for such
meeting and may call such meeting to take any action authorized in Section 9.1,
by mailing notice thereof as provided in Section 9.2.
Section 9.4 QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Noteholders a Person shall (a) be a Holder of one or more Notes on
the record date pertaining to such meeting or (b) be appointed by an instrument
in writing as proxy by a Holder of one or more Notes. The only Persons who
shall be entitled to be present or to speak at any meeting of Noteholders shall
be the Persons entitled to vote at such meeting and their counsel and any
representative of the Trustee and its counsel and any representatives of the
Company and its counsel.
Section 9.5 REGULATIONS. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 9.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 8.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by such Noteholder; PROVIDED,
HOWEVER, that no vote shall be cast or counted at any meeting in respect of any
Note challenged as not outstanding and ruled by the chairman of the meeting to
be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Notes held by such chairman or instruments in writing as
aforesaid duly designating him as the proxy to vote on behalf of other
Noteholders. Any meeting of Noteholders duly called pursuant to the provisions
of Section 9.2
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or 9.3 may be adjourned from time to time by the Holders of a majority of the
aggregate principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 9.6 VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the Holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 9.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 9.7 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article
IX contained shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
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(a) to make provision with respect to the conversion rights of the
Noteholders pursuant to the requirements of Section 14.6;
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to Article XI;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Company and the Trustee shall consider to be
for the benefit of the Holders, and to make the occurrence, or the occurrence
and continuance, of a Default in any such additional covenants, restrictions or
conditions a Default or an Event of Default permitting the enforcement of all or
any of the several remedies provided in this Indenture as herein set forth;
PROVIDED, HOWEVER, that in respect of any such additional covenant, restriction
or condition such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not adversely affect the interest of
any Holder of the Notes;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(g) to comply with the Trust Indenture Act.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
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Any supplemental indenture authorized by the provision of this Section
10.1 may be executed by the Company and the Trustee without notice to or consent
of the Holders, notwithstanding any of the provisions of Section 10.2.
Section 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent (evidenced as provided in Article VIII) of the Holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time 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 any supplemental indenture or of modifying in any manner the
rights of the Noteholders; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the Holders of each Note affected
thereby (A) (i) extend the fixed maturity of any Note, (ii) reduce the rate or
extend the time of payment of interest thereon, (iii) reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption thereof, (iv) make any changes that could alter the rights of Holders
to waive defaults or Events of Defaults, or to receive payment of the Notes; (v)
waive a default in the payment of the principal of a premium or interest on any
Note, (vi) make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than cash, (vii) modify the provisions of
this Indenture with respect to the subordination of the Notes in a manner
adverse to the Noteholders in any material respect, (viii) change the obligation
of the Company to repurchase any Note upon the occurrence of a Change in Control
in a manner adverse to the Noteholders, (ix) impair the right to convert the
Notes into Common Stock subject to the terms set forth herein, including Section
14.6, in a manner adverse to the Holders, without the consent of the Holder of
each Note so affected, or (B) reduce the aforesaid percentage of Notes, the
Holders of which are required to consent to any such supplemental indenture.
Upon the request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or an Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of written evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture, unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
After an amendment, supplement or waiver under this Section 10.2
becomes effective, the Company shall mail to the
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Holders affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver.
It shall not be necessary for the consent of the Noteholders under
this Section 10.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 10.3 EFFECT OF SUPPLEMENTAL INDENTURE. Any supplemental
indenture executed pursuant to the provisions of this Article X shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article X, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 10.4 NOTATION ON NOTES. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article X may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.12)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee, subject to the provisions of Sections 7.1 and
7.2 shall be entitled to an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article X.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
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Section 11.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS. Subject
to the provisions of Section 11.2 and Article XV, nothing contained in this
Indenture or in any Note shall prevent any consolidation or merger of the
Company with or into any other corporation or corporations (whether or not
affiliated with the Company), or successive consolidations or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale, transfer, conveyance or lease (or successive sales, transfers,
conveyances or leases) of all or substantially all of the property and assets of
the Company, to any other corporation (whether or not affiliated with the
Company), authorized to acquire and operate the same and which, in each case,
shall be organized under the laws of the United States of America, any state
thereof or the District of Columbia; PROVIDED, that upon any such consolidation,
merger, sale, conveyance or lease, either (a) the Company is the surviving
corporation or (b) the due and punctual payment of the principal of and premium,
if any, and interest on all of the Notes, according to their tenor, and the due
and punctual performance and observance of all of the covenants and conditions
of this Indenture to be performed by the Company, shall be expressly assumed, by
supplemental indenture reasonably satisfactory in form to the Trustee, executed
and delivered to the Trustee by the corporation (if other than the Company)
formed by such consolidation, or into which the Company shall have been merged,
or by the corporation which shall have acquired or leased such property, and
such supplemental indenture shall provide for the applicable conversion rights
set forth in Section 14.6; and PROVIDED FURTHER, that immediately before and
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing.
For purposes of this Section 11.1, a sale, transfer, conveyance or
lease (or successive sales, transfer, conveyances or leases) of all or
substantially all of the Company's property and assets shall include a sale,
transfer, conveyance or lease (for successive sales, transfers, conveyances or
leases) of all or substantially all of any one or more of the Company's
Subsidiaries' properties and assets, which properties and assets, if held by the
Company instead of such Subsidiary or Subsidiaries, would constitute all or
substantially all of the Company's property and assets on a consolidated basis.
Section 11.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be
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substituted for the Company, with the same effect as if it had been named herein
as the party of the first part. Such successor corporation thereupon may cause
to be signed, and may issue either in its own name or in the name of the Company
any or all of the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the Company Order
of such successor corporation instead of the Company and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver, or cause to be authenticated and
delivered, any Notes which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any Notes
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Notes so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution hereof.
In the event of any such consolidation, merger, sale or conveyance (but not in
the event of any such lease), the person named as the "Company" in the first
paragraph of this Indenture or any successor which shall thereafter have become
such in the manner prescribed in this Article XI may be dissolved, wound up and
liquidated at any time thereafter and such person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
Section 11.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee,
subject to Sections 7.1 and 7.2, shall be entitled to receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance or lease and any such assumption
complies with the provisions of this Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 12.1 DISCHARGE OF INDENTURE. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore cancelled, or (b) all the Notes not theretofore
cancelled or delivered to the Trustee for cancellation shall
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have become due and payable, or are by their terms to become due and payable
within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit with the Trustee, in trust, funds sufficient to
pay at maturity or upon redemption of all of the Notes (other than any Notes
which shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, and interest due or to become due to such date of
maturity or redemption date, as the case may be, and if in either case the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) remaining rights of registration of transfer, substitution and exchange
and conversion of Notes, (ii) rights hereunder of Noteholders to receive
payments of principal of and premium, if any, and interest on, the Notes and the
other rights, duties and obligations of Noteholders, as beneficiaries hereof
with respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder, including, without
limitation, the Trustee's right to compensation and indemnity under Section 7.7
hereof), and the Trustee, on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel as required by Section 16.5 and at the
cost and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture; the Company, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee and to compensate the Trustee
for any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Notes.
Section 12.2 DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE.
Subject to Section 12.4, all monies deposited with the Trustee pursuant to
Section 12.1 and not in violation of Article IV shall be held in trust for the
sole benefit of the Noteholders and not to be subject to the subordination
provisions of Article IV, and such monies shall be applied by the Trustee to the
payment, either directly or through any Paying Agent (including the Company if
acting as its own Paying Agent), to the Holders of the particular Notes for the
payment or redemption of which such monies have been deposited with the Trustee,
of all sums due and to become due thereon for principal and interest and
premium, if any.
Section 12.3 PAYING AGENT TO REPAY MONIES HELD. Upon the
satisfaction and discharge of this Indenture, all monies then held by any Paying
Agent (other than the Trustee) shall, upon written request of the Company, be
repaid to the Company or paid
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to the Trustee, and thereupon such Paying Agent shall be released from all
further liability with respect to such monies.
Section 12.4 RETURN OF UNCLAIMED MONIES. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee for payment
of the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the Holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the Holder of any of the Notes shall thereafter look
only to the Company for any payment which such Holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 12.5 REINSTATEMENT. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 12.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 12.1 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 12.2;
PROVIDED, HOWEVER, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, 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 Note, 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
corporations, 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
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expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Notes.
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 RIGHT TO CONVERT. Subject to and upon compliance with
the provisions of this Indenture, a Holder shall have the right, at such
Holder's option, at any time prior to the close of business on August ___, 2002
(except that, with respect to any Note or portion of a Note which shall be
called for redemption, such right shall terminate, except as provided in Section
14.2 or Section 3.4, at the close of business on the Redemption Date of such
Note or portion of a Note, or such earlier date as the Holder presents the Note
for redemption, unless the Company shall default in payment due upon redemption
thereof, in which case, the conversion right shall terminate at the close of
business on the date such default is cured and such Note is redeemed) to convert
the principal amount of any such Note, or any portion of such principal amount
which is $1,000 or an integral multiple thereof, into that number of fully paid
and nonassessable shares of Common Stock (as such shares shall then be
constituted) obtained by dividing the principal amount of the Note or portion
thereof surrendered for conversion by the Conversion Price in effect at such
time, by surrender of the Note so to be converted in whole or in part, together
with any required funds, in the manner provided in Section 14.2. A Holder is
not entitled to any rights of a holder of Common Stock until such Holder has
converted such Holder's Notes to Common Stock, and only to the extent such Notes
are deemed to have been converted to Common Stock under this Article XIV.
Section 14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to
exercise the conversion privilege with respect to any Note, the Holder of such
Note shall surrender such Note, duly endorsed, at an office or agency maintained
by the Company pursuant to Section 5.2, accompanied by the funds, if any,
required by the last paragraph of this Section 14.2, and shall give written
notice of conversion in the form provided on the Notes (or such other notice
which is acceptable to the Company) to the office or agency that the Holder
elects to convert such Note or the portion thereof specified in said notice.
Such notice shall also state the name or names (with address or addresses) in
which the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued, and shall be accompanied by
transfer taxes, if required pursuant to Section 14.7. Each such Note
surrendered for conversion shall, unless the shares issuable on
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conversion are to be issued in the same name as the registration of such Note,
be duly endorsed by, or be accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the Holder or his duly authorized
attorney.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, the Company shall issue and shall deliver to such
Holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article XIV and a check or
cash in respect of any fractional interest in respect of a share of Common Stock
arising upon such conversion, as provided in Section 14.3. In case any Note of
a denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of the Note so surrendered, without
charge to him, a new Note or Notes in authorized denominations in an aggregated
principal amount equal to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 14.2 have been satisfied as to such Note (or portion thereof),
and the Person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares of Common Stock
represented thereby; PROVIDED, HOWEVER, that any such surrender on any date when
the stock transfer books of the Company shall be closed shall constitute the
Person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Note shall be surrendered.
If any Holder surrenders a Note for conversion during the period from
the close of business on the record date for any Interest Payment Date to the
close of business on the Business Day next preceding the following Interest
Payment Date, then notwithstanding such conversion, the interest payable on such
Interest Payment Date will be paid to the Holder of record on such record date.
However, in such event, such Note, when surrendered for conversion, must be
accompanied by delivery of a check or draft payable in an amount equal to the
interest payable on such Interest Payment Date on the portion so converted;
PROVIDED, HOWEVER, that no such payment need be made if there shall exist at the
time of conversion a default in the payment of interest on the Notes.
Notwithstanding the foregoing, if any Note is called for redemption on an
Interest Payment Date and
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such Note is surrendered for conversion at any time during the 10 business days
immediately preceding the date fixed for redemption, interest shall accrue on
such Note through, but not including, the date fixed for redemption and shall be
payable on such Redemption Date to the Person who surrenders such Note for
conversion, and the conversion date of such Note will be deemed to be the
Redemption Date. In such event, no check or draft payable in an amount equal to
the interest payable shall accompany the Note on surrender. Except as provided
above in this Section 14.2, no adjustment shall be made for interest accrued on
any Note converted or for dividends on any shares issued upon the conversion of
such Note as provided in this Article XIV.
Section 14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note 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 Notes (or specified portions thereof to the
extent permitted hereby) so surrendered. If any fractional share of Common
Stock would be issuable upon the conversion of any Note or Notes, the Company
shall make an adjustment and payment therefor in cash at the current market
value thereof to the Holder of Notes. The current market value of a share of
Common Stock shall be the Closing Price on the first Trading Day immediately
preceding the day on which the Notes (or specified portions thereof) are deemed
to have been converted.
Section 14.4 CONVERSION PRICE. The conversion price shall be as
specified in the form of Note (herein called the "CONVERSION PRICE") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XIV.
Section 14.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed
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for such determination. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company. If
any dividend or distribution of the type described in this Section 14.5(a) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its outstanding shares of Common Stock entitling
them (for a period expiring within 45 days after the date fixed for
determination of stockholders entitled to receive such rights or warrants) to
subscribe for or purchase shares of Common Stock (or securities convertible into
shares of Common Stock) at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date fixed for determination of
stockholders entitled to receive such rights or warrants by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for determination of stockholders entitled
to receive such rights and warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the total number
of additional shares of Common Stock offered for subscription or purchase. Such
adjustments shall be successively made whenever any such rights and warrants are
issued, and shall become effective immediately after the opening of business on
the day following the date fixed for determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of Common Stock are
not delivered after the expiration of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in effect
had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Company for such
rights or warrants, the value of such consider-
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ation, if other than cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all or substantially all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions to which
Section 14.5(a) applies) or evidences of its indebtedness or other non-cash
assets (including securities, but excluding any rights or warrants referred to
in Section 14.5(b), and excluding any dividend or distribution paid exclusively
in cash (any of the foregoing hereinafter in this Section 14.5(d) called the
"SECURITIES")), then, in each such case the Conversion Price shall be reduced so
that the same shall be equal to the price determined by multiplying the
Conversion Price in effect on the Record Date with respect to such distribution
by a fraction of which the numerator shall be the Current Market Price per share
of the Common Stock on such Record Date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a resolution of the Board of Directors) on the Record Date of
the portion of the Securities so distributed applicable to one share of Common
Stock and the denominator shall be the Current Market Price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Record Date; PROVIDED, HOWEVER,
that in the event the then fair market value (as so determined) of the portion
of the Securities so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Noteholder shall have the right to receive upon conversion the
amount of Securities such Holder would have received had such Holder converted
each Note on the Record Date. In the event that such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If the Board of Directors determines the fair market
value of any
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distribution for purposes of this Section 14.5(d) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Common Stock.
In the event the Company implements a stockholder rights plan, such
rights plan shall provide that upon conversion of the Notes the Holders will
receive, in addition to the Common Stock issuable upon such conversion, the
rights issued under such rights plan (notwithstanding the occurrence of an event
causing such rights to separate from the Common Stock at or prior to the time of
conversion).
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("TRIGGER EVENT"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 14.5 (and no adjustment to the Conversion Price under
this Section 14.5 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price shall be made under this Section 14.5(d). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 14.5 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all
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holders of Common Stock as of the date of such redemption or repurchase, and (2)
in the case of such rights or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion Price shall
be readjusted as if such rights and warrants had not been issued.
For purposes of this Section 14.5(d) and Sections 14.5(a) and (b), any
dividend or distribution to which this Section 14.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both) referred to in Section 14.5(b), shall
be deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets or shares of capital stock other than such shares of Common
Stock or rights or warrants (and any Conversion Price reduction required by this
Section 14.5(d) with respect to such dividend or distribution shall then be
made) immediately followed by (2) a dividend or distribution of such shares of
Common Stock or such rights or warrants (and any further Conversion Price
reduction required by Sections 14.5(a) and (b) with respect to such dividend or
distribution shall then be made), except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution" and "the
date fixed for such determination" within the meaning of Sections 14.5(a) and
(b) and (B) any shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of Section 14.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any quarterly cash dividend
on the Common Stock to the extent that the aggregate cash dividend per share of
Common Stock in any fiscal quarter does not exceed the greater of (i) the amount
per share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the conversion price pursuant to this clause (e) (as
adjusted to reflect subdivisions or combinations of the Common Stock), and (ii)
3.75% of the average of the daily Closing Prices of the Common Stock for the 10
consecutive Trading Days immediately prior to the date of declaration of such
dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company) the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Record Date for such distribution by a fraction of which the
numerator shall be the Current Market Price of the Common Stock on the Record
Date less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock and the denominator shall be such
Current Market Price of the Common Stock, such
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reduction to be effective immediately prior to the opening of business on the
day following the Record Date. In the event that such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared.
(f) For purposes of this Section 14.5, the following terms shall have
the meaning indicated:
(1) "CLOSING PRICE" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in the case
no such sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in each case on the Nasdaq National
Market, or, if such security is not quoted on such quotation system, on the
principal national security exchange or quotation system on which such
security is quoted or listed or admitted to trading, or, if not quoted or
listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported
by the National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors for that purpose, or a price determined in
good faith by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose determination
shall be conclusive.
(2) "CURRENT MARKET PRICE" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question; PROVIDED, HOWEVER, that (1)
if the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 14.5(a), (b), (c),
(d) or (e) occurs during such ten consecutive Trading Days, the Closing
Price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of
such other event, (2) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 14.5(a), (b), (c),
(d) or (e) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question,
the Closing Price for each Trading Day on and after the "ex" date for such
other event shall be
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adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question,
after taking into account any adjustment required pursuant to clause (1) or
(2) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors or, to
the extent permitted by applicable law, a duly authorized committee thereof
in a manner consistent with any determination of such value for purposes of
Section 14.5(d), whose determination shall be conclusive and described in a
resolution of the Board of Directors or such duly authorized committee
thereof, as the case may be) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date. For
purposes of any computation under Section 14.5(e), the Current Market Price
of the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the next
two succeeding Trading Days; PROVIDED, HOWEVER, that if the "ex" date for
any event (other than the tender or exchange offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant
to Section 14.5(a), (b), (c), (d) or (e) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior
to the day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (1) when used with respect
to any issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant market
from which the Closing Price was obtained without the right to receive such
issuance or distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the
Common Stock trades regular way on such exchange or in such market after
the time at which such subdivision or combination becomes effective, and
(3) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such offer.
(3) "FAIR MARKET VALUE" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
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(4) "RECORD DATE" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common
Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for
or converted into any combination of cash, securities or other property,
the date fixed for determination of shareholders entitled to receive such
cash, securities or other property (whether such date is fixed by the Board
of Directors or by statute, contract or otherwise).
(5) "TRADING DAY" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national security exchange, a day on which the New York Stock Exchange or
another national security exchange is open for business or (y) if the
applicable security is quoted on the Nasdaq National Market, a day on which
trades may be made on thereon or (z) if the applicable security is not so
listed, admitted for trading or quoted, any day other than a Saturday or
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 14.5(a), (b), (c), (d) or (e), as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) Business Days, the reduction is irrevocable
during the period and the Board of Directors shall have made a determination
that such reduction would be in the best interests of the Company, which
determination shall be conclusive. Whenever the Conversion Price is reduced
pursuant to the preceding sentence, the Company shall mail to Holders of record
of the Notes a notice of the reduction at least fifteen (15) days prior to the
date the reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period during which it will be in effect.
(h) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
14.5(h) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article XIV
shall be made by the Company and shall be made
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to the nearest cent or to the nearest one thousandth of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest. To the extent the
Notes become convertible into cash, assets, property or securities (other than
capital stock of the Company), no adjustment need be made thereafter as to the
cash, assets, property or such securities. Interest will not accrue on the
cash.
(i) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the Holder of each Note at his last address appearing on the Note register,
within 20 days after execution thereof. Failure to deliver such notice shall
not affect the legality or validity of any such adjustment.
(j) In any case in which this Section 14.5 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
Holder of any Note converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such Holder any amount in cash in lieu of any fraction pursuant
to Section 14.3.
(k) For purposes of this Section 14.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
Section 14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 14.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including
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cash) with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety to any other corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) providing that such Notes shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock did
not exercise such holder's rights of election, if any, as to the kind or amount
of shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance (provided that, if the kind or amount of shares
of stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purposes of this Section 14.6 the kind and amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance for 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 shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
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If this Section 14.6 applies to any event or occurrence, Section 14.5
shall not apply.
Section 14.7 TAXES ON SHARES ISSUED. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. 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 stock in any name other than that
of the Holder of any Note converted, and, in such event, the Company shall not
be required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax had been paid.
Section 14.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The Company
shall reserve, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of the Notes from time to time as such Notes are presented
for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes, liens and charges with respect to the
issue thereof.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible endeavor to secure such registration
or approval, as the case may be.
The Company further covenants that if at any time the Common Stock
shall be listed on The Nasdaq National Market, the New York Stock Exchange or
any other national securities exchange the Company will, if permitted by the
rules of such exchange, list and keep listed so long as the Common Stock shall
be so listed on such exchange, all Common Stock issuable upon conversion of the
Notes.
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Section 14.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other Conversion Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other Conversion Agent make no representations with respect thereto. Subject to
the provisions of Section 7.1, neither the Trustee nor any Conversion Agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any Conversion Agent shall be under any responsibility
to calculate or determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 14.6 relating either to
the kind or amount of shares of stock or securities or property (including cash)
receivable by Noteholders upon the conversion of their Notes after any event
referred to in such Section 14.6 or to any adjustment to be made with respect
thereto, but, subject to the provisions of Section 7.1, may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers' Certificate (which the Company shall be obligated to
file with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.
Section 14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Conversion Price pursuant to Section 14.5; or
(2) the Company shall authorize the granting to all or
substantially all the holders of its Common Stock of rights or warrants to
subscribe for or purchase any share of any class or any other rights or
warrants; or
(3) of any reclassification or reorganization of the Common
Stock of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to no
par value, or from no par
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value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
Holder of Notes, as promptly as possible but in any event at least fifteen (15)
days prior to the applicable date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution or rights 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, or rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
ARTICLE XV
REPURCHASE OF NOTES AT THE
OPTION OF THE HOLDER UPON CHANGE IN CONTROL
Section 15.1 RIGHT TO REQUIRE REPURCHASE. In the event that a Change
in Control (as hereinafter defined) shall occur, then each Holder shall have the
right, at the Holder's option, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such Holder's
Notes, or any portion of the principal amount thereof that is an integral
multiple of $1,000 (provided that no single Note may be repurchased in part
unless the portion of the principal amount of such Note to be outstanding after
such repurchase is equal to $1,000 or an integral multiple of $1,000), on the
date (the "REPURCHASE DATE") that is 30 days after the date of the Company
Notice (as defined in Section 15.2) for cash at a purchase price equal to 100%
of the principal amount (the "REPURCHASE PRICE"), plus interest accrued and
unpaid to, but excluding, the Repurchase Date; PROVIDED that if the Repurchase
Date is on an Interest Payment Date, then the interest payable on such date
shall be paid to the Holder of record of the Note on the
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next preceding Record Date. Whenever in this Indenture there is a reference, in
any context, to the principal of any Note as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in respect of
such Note to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase Price in any
provision of this Indenture shall not be construed as excluding the Repurchase
Price in those provisions of this Indenture when such express mention is not
made.
Section 15.2 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC. In
the event that, pursuant to Section 15.1, the Company shall be required to
commence an irrevocable and unconditional offer to purchase the Notes, the
following procedures shall apply:
(a) Unless the Company shall have theretofore called for redemption
all of the outstanding Notes pursuant to Article III, on or before the 10th day
after the occurrence of a Change in Control, the Company shall give to all
Holders written notice (the "COMPANY NOTICE") of the occurrence of the Change in
Control and of the repurchase right set forth herein arising as a result
thereof. The Company shall also deliver a copy of such notice of a repurchase
right to the Trustee.
Each Company Notice shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be
exercised,
(iii) the Repurchase Price,
(iv) a description of the procedure which a Holder must
follow to exercise a repurchase right,
(v) that on the Repurchase Date the Repurchase Price will
become due and payable upon each such note designated by the Holder to be
repurchased, and that interest thereon shall cease to accrue on and after
said date,
(vi) the Conversion Price, the date on which the right to
convert the Notes to be repurchased will terminate and the places where
such Notes may be surrendered for conversion, and
(vii) the place or places where such Notes are to be
surrendered for payment of the Repurchase Price and accrued interest, if
any.
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No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the Repurchase Date (i) written notice
of the Holder's exercise of such right, which notice shall set forth the name of
the Holder, the principal amount of the Notes to be repurchased (and, if any
Note is to be repurchased in part, the serial number thereof, the portion of the
principal amount thereof to be repurchased and the name of the Person in which
the portion thereof to remain outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right is
being made thereby, and (ii) the Notes with respect to which the repurchase is
being exercised.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
or the Paying Agent the Repurchase Price in cash, together with accrued and
unpaid interest to, but excluding, the Repurchase Date payable with respect to
the Notes as to which the purchase right has been exercised. On the Repurchase
Date and upon deposit of the Repurchase Price in cash with the Trustee or Paying
Agent, the Trustee or Paying Agent will make payment to the Noteholder on the
Repurchase Date in the manner specified pursuant to Section 15.2.
(d) If any Note (or portion thereof) is surrendered for repurchase to
be paid on the Repurchase Date, the principal amount of such Note (or portion
thereof, as the case may be) shall, until paid, bear interest from the
Repurchase Date at the rate borne by the Notes, and each Note shall remain
convertible into Common Stock until the principal of such Note (or portion
thereof, as the case may be) shall have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
authenticate and deliver to the Holder of such Note without service charge, a
new Note or Notes, containing identical terms and conditions, each in an
authorized denomination in aggregate
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principal amount equal to and in exchange for the portion of the principal of
the Note so surrendered that was not repurchased.
(f) Any Holder that has delivered to the Trustee its written notice
exercising its right to require the Company to repurchase its Notes upon a
Change in Control shall have the right to withdraw such notice at any time prior
to the close of business on the Repurchase Date by delivery of a written notice
of withdrawal to the Trustee prior to the close of business on such date. A
Note in respect of which a Holder is exercising its option to require repurchase
upon a Change in Control may be converted into Common Stock in accordance with
Article XIV only if such Holder withdraws its notice in accordance with the
preceding sentence.
Section 15.3 CERTAIN DEFINITIONS. For purposes of this Article XV
only,
(1) the term "BENEFICIAL OWNER" shall be determined in
accordance with Rule 13d-3 promulgated by the Commission pursuant to the
Exchange Act; and
(2) the term "PERSON" shall include any syndicate or group which
would be deemed to be a "person" under Section 13(d)(3) of the Exchange
Act.
Section 15.4 CHANGE IN CONTROL. A "CHANGE IN CONTROL" shall be
deemed to have occurred at such time after the original issuance of the Notes
as:
(i) the acquisition by any Person (including any syndicate
or group deemed to be a "person" under Section 13(d)(3) or 14(d)(2) of the
Exchange Act or any successor provision) of beneficial ownership, directly or
indirectly, through a purchase, merger, or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling such
Person to exercise more than 50% of the total voting power of all shares of
capital stock of the Company entitling the holders thereof to vote generally in
elections of directors; or
(ii) any consolidation of the Company, with, or merger of
the Company into, any other Person, any merger of another Person into the
Company, or any sale, lease, or exchange, in one transaction or a series of
related transactions, of all or substantially all of the property and assets of
the Company to another Person (other than (a) any such transaction pursuant to
which the holders of 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the election of
directors
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immediately prior to such transaction has, directly or indirectly, at least
50% or more of the total voting power of all shares of capital stock of the
continuing or surviving corporation entitled to vote generally in elections
of directors of the continuing or surviving corporation immediately after
such transaction, and (b) a merger which (1) does not result in any
reclassification, conversion, exchange, or cancellation of outstanding
shares of capital stock of the Company or (2) is effected primarily to
change the jurisdiction of incorporation of the Company and results in
reclassification, conversion, or exchange of outstanding shares of Common
Stock solely into shares of Common Stock of the surviving entity);
provided, however, that a Change in Control shall not be deemed to have occurred
if the Closing Price per share of the Common Stock for any 10 Trading Days
within the period of 20 consecutive Trading Days ending immediately before the
occurrence of the event that would otherwise constitute a Change in Control
shall equal or exceed 105% of the conversion price of the Notes in effect on
each such Trading Day.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successor.
Section 16.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 16.3 NOTICES. Any notice or communication shall be in
writing and delivered in person, by overnight delivery service or mailed by
first-class mail, postage prepaid, addressed as follows:
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if to the Company:
Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
San Diego, California 92121
Attention: General Counsel
if to the Trustee:
Chase Trust Company of California
101 California Street
Suite 2725
San Francisco, California 94111
Attn: Corporate Trust Administration
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
such Holder by overnight delivery service or by first class mail, postage
prepaid, at his address as it appears on the Note register and shall be
sufficiently given to such Holder if so delivered or mailed with the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4 GOVERNING LAW. This Indenture and the Notes shall be
governed by and construed in accordance with the laws of the state of New York,
as applied to contracts made and performed within the state of New York, without
regard to principles of conflict of laws.
Section 16.5 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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Section 16.6 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each person making such Officers'
Certificate or Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement that, in the opinion of such person, such
covenant or condition has been complied with.
Section 16.7 LEGAL HOLIDAYS. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including a date for giving notice)
is a Legal Holiday, the action shall be taken on the next succeeding day that is
not a Legal Holiday, and to the extent applicable no interest, if any, shall
accrue for the intervening period.
Section 16.8 TRUST INDENTURE ACT CONTROLS. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in an indenture qualified under the Trust Indenture Act, such
required provision shall control.
Section 16.9 NO SECURITY INTEREST CREATED. Nothing in this
Indenture or in the Notes, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect, in any jurisdiction
where property of the Company or its subsidiaries is located.
Section 16.10 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any Person, other than the
parties hereto, any Paying Agent, any authenticating agent, any Note registrar
and their successors hereunder, the Holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal for equitable right, remedy or claim
under this Indenture.
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Section 16.11 TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 16.12 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authenticating and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.2, 2.6, 2.7, 2.9, 3.3, 14.2 and 15.2, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 7.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticated agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.12, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination 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
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor authenticating agent or itself
assume the duties and obligations of the former authenticating agent under this
Indenture, and upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all Holders of Notes as the names and
addresses of such Holders appear on the Note register.
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The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 7.6.
The provisions of Sections 7.2, 7.3, 7.4, 8.3 and this Section 16.12
shall be applicable to any authenticating agent.
Section 16.13 SEVERABILITY. In case any provision in this Indenture
or in the Notes 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 16.14 RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND
REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of
the Noteholders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
Section 16.15 NO RECOURSE AGAINST OTHERS. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Note, each Noteholder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Notes.
Section 16.16 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same
instrument.
Section 16.17 QUALIFICATION OF INDENTURE. The Company shall
qualify this Indenture under the Trust Indenture Act and shall pay all
reasonable costs and expenses (including reasonable attorneys' fees for the
Company and the Trustee) incurred in connection therewith, including, but not
limited to, reasonable costs and expenses of qualification of the Indenture
and the Securities and printing this Indenture and the Securities. The
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.
Chase Trust Company of California hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed, all as of the date first written above.
DURA PHARMACEUTICALS, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
----------------------------
CHASE TRUST COMPANY OF CALIFORNIA
not in its individual capacity
but solely as Trustee
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
<PAGE>
EXHIBIT A
DURA PHARMACEUTICALS, INC.
____% CONVERTIBLE SUBORDINATED NOTE DUE 2002
No. __ CUSIP 26632S AA 7
Dura Pharmaceuticals, Inc., a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company"),
which term includes any successor corporation under the Indenture referred to on
the reverse hereof, for value received hereby promises to pay to
_____________________ or registered assigns, the principal sum of __________
($__________) on August ___, 2002, at the office or agency of the Company
maintained for that purpose in The City of New York, or, at the option of the
holder of this Note, at the Corporate Trust Office, in such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest, semi-annually on
February __ and August __ of each year, commencing February __, 1998, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum of ____%, from February __ or August __, as the case may be, next
preceding the date of this Note to which interest has been paid or duly provided
for, unless the date hereof is a date to which interest has been paid or duly
provided for, in which case from the date of this Note, or unless no interest
has been paid or duly provided for on the Notes, in which case from July __,
1997, until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any January __ or
July __, as the case may be, and before the following February __ or August __,
this Note shall bear interest from such February __ or August __; PROVIDED,
HOWEVER, that if the Company shall default in the payment of interest due on
such February __ or August __, then this Note shall bear interest from the next
preceding February __ or August __ to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on such Note,
from July __, 1997. The interest payable on the Note pursuant to the Indenture
on any February __ or August __ will be paid to the person in whose name this
Note (or one or more Predecessor Notes) is registered at the close of business
on the record date, which shall be the January __ or July __ (whether or not a
Business Day) next preceding such February __ or August __, as provided in the
Indenture; PROVIDED that any such interest not punctually paid or duly provided
for shall be payable as provided in the Indenture. Interest may, at
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the option of the Company, be paid by check mailed to the registered address of
such person.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated: DURA PHARMACEUTICALS, INC.
By:
----------------------------
[SEAL] Attest:
------------------------
RUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in
the within-named Indenture.
CHASE TRUST COMPANY OF CALIFORNIA, not in its individual
capacity but solely as Trustee
By:
---------------------------
Authorized Signatory
By:
---------------------------
As Authenticating Agent
(if different from Trustee)
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[FORM OF REVERSE OF NOTE]
DURA PHARMACEUTICALS, INC.
___% CONVERTIBLE SUBORDINATED NOTE DUE 2002
This Note is one of a duly authorized issue of Notes of the Company,
designated as its ___% Convertible Subordinated Notes due 2002 (the "Notes"),
issued pursuant to an indenture, dated as of July ___, 1997 (the "Indenture"),
between the Company and Chase Trust Company of California, not in its individual
capacity but solely as trustee (the "Trustee"). Reference is hereby made to the
Indenture for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the holders of all of the Notes then
outstanding (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or make any changes that could alter the rights of Holders to waive
defaults or Events of Default or to receive payment of the Notes, or waive a
default in the payment of the principal of or premium or interest on any Note,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Note, or modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to repurchase any Note upon the occurrence of a Change
in Control in a manner adverse to the holder of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of
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which are required to consent to any such supplemental indenture. It is also
provided in the Indenture that the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all
of the Notes waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of interest or any premium on
or the principal of any of the Notes, a default in the payment of the redemption
price (including accrued and unpaid interest) pursuant to Article III or
repurchase price pursuant to Article XV, a failure by the Company to convert any
Notes into Common Stock of the Company or a default in respect of a covenant or
provisions of the Indenture which under Article X cannot be modified or amended
without the consent of the holders of all the Notes then outstanding. Any such
consent or waiver by the holder of this Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Note and any Notes which may be issued in exchange or
substitute hereof, irrespective of whether or not any notation thereof is made
upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on such holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee such holder's attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note 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 Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
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registration or exchange of Notes, Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
August ____, 2000. At any time thereafter, and prior to maturity, the Notes may
be redeemed at the option of the Company as a whole, or from time to time in
part, upon mailing a notice of such redemption not less than 15 nor more than 60
days before the date fixed for redemption to the holders of Notes at their last
registered addresses, all as provided in the Indenture, at the following
optional redemption prices (expressed as a percentage of the principal amount),
together in each case with accrued and unpaid interest to, but excluding, the
date fixed for redemption.
If redeemed during the 12-month period beginning August ___:
Redemption
Year Price
---- -----
2000 . . . . . . . . . . . . . %
2001 . . . . . . . . . . . . . %
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Change in Control (as defined in the Indenture) occurs, the
holder of this Note shall have the right, in accordance with the provisions of
the Indenture, to require the Company to repurchase this Note or any portion of
the principal amount hereof that is an integral multiple of $1,000 for cash at a
Repurchase Price equal to 100% of the principal amount plus accrued and unpaid
interest to, but excluding, the Repurchase Date; PROVIDED that if such
Repurchase Date is February __ or August __, then the interest payable on such
date shall be paid to the holder of record of the Note on the next preceding
January __ or July __, respectively. Unless the Company shall have theretofore
called for redemption all of the outstanding Notes pursuant to Article III of
the Indenture, on or before the 10th day after the occurrence of a Change in
Control, the Company shall give to all holders of Notes written notice of the
occurrence of the Change in Control and of the repurchase right set forth in the
Indenture arising as a result thereof.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time prior to the close of business on August ___,
2002, or, as to all or any portion hereof called for redemption, prior to the
close of business on the Business Day immediately preceding the date fixed for
redemption or such earlier date as the Holder presents the
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Note for redemption (unless the Company shall default in payment due upon
redemption thereof), to convert the principal amount hereof or any portion of
such principal amount which is $1,000 or an integral multiple thereof, into that
number of shares of Company's Common Stock, as said shares shall be constituted
at the date of conversion, obtained by dividing the principal amount of this
Note or portion thereof to be converted by the Conversion Price of $_____ or
such Conversion Price as adjusted from time to time as provided in the
Indenture, upon surrender of this Note, together with a conversion notice as
provided in the Indenture, to the Company at the office or agency of the Company
maintained for that purpose in The City of New York, or at the option of such
holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or by such holder's duly authorized attorney. No
adjustment in respect of interest or dividends will be made upon any conversion;
PROVIDED, HOWEVER, that if this Note shall be surrendered for conversion during
the period from the close of business on any record date for the payment of
interest to the close of business on the Business Day preceding the interest
payment date, notwithstanding such conversion, the interest payable on such
interest payment date will be paid to the holder of record on such record date.
However, in such event, such Note, when surrendered for conversion, must be
accompanied by delivery of a check or draft payable in an amount equal to the
interest payable on such interest payment date on the portion so converted;
PROVIDED, HOWEVER, that no such payment need be made if there shall exist at the
time of conversion a default in the payment of interest on the Notes.
Notwithstanding the foregoing, if any Note is called for redemption on an
interest payment date and such Note is surrendered for conversion at any time
during the 10 Business Days immediately preceding the date fixed for redemption,
interest shall accrue on such Note through, but not including, the date fixed
for redemption and shall be payable on such Redemption Date to the Person who
surrenders such Note for conversion, and the conversion date of such Note will
be deemed to be the Redemption Date. In such event, no check or draft payable
in an amount equal to the interest payable shall accompany the Note on
surrender. No fractional shares will be issued upon any conversion, but an
adjustment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount equal to the
applicable redemption price, together with accrued interest to but not including
the date fixed for redemption, by one or more investment bankers or other
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<PAGE>
purchasers who may agree with the Company to purchase such Notes from the
holders thereof and convert them into Common Stock of the Company and to make
payment for such Notes as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in The City of New York, or at the option of the
holder of this Note, at the Corporate Trust Office, a new Note or Notes of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange therefor, subject to the limitations provided in
the Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any Paying Agent,
any Conversion Agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing
hereon), for the purpose of receiving payment hereof, or on account hereof, for
the conversion hereof and for all other purposes, and neither the Company nor
the Trustee nor any other authenticating agent nor any Paying Agent nor any
other Conversion Agent nor any Note registrar shall be affected by any notice to
the contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, satisfy and discharge liability
for monies payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein
as therein defined.
A-8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in com- UNIF GIFT MIN ACT-- _____ Custodian _____
mon (Cust.) Minor)
TEN ENT - as tenants by the under Uniform Gifts to Minors Act
entireties
JT TEN - as joint tenants -----------------------------------
with right of sur- (State)
vivorship and not
as tenants in com-
mon
Additional abbreviations may also be used
though not in the above list.
A-9
<PAGE>
CONVERSION NOTICE
To: DURA PHARMACEUTICALS, INC.
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of Dura
Pharmaceuticals, Inc. in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated:
-------------
------------------------------------------------------
------------------------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stockbrokers, 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 issued, or
Notes to be delivered, other than to and in the name of
the registered holder.
------------------------------------------------------
Signature Guarantee
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<PAGE>
Fill in for registration of
shares of Common Stock if
to be issued, and Notes if
to be delivered, other than
to and in the name of the
registered holder:
- -------------------------
(Name)
- -------------------------
(Street Address)
- -------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $________
-----------------------------------
Social Security or Other Taxpayer
Identification Number
A-11
<PAGE>
OPTION TO ELECT REPURCHASE
UPON A CHANGE IN CONTROL
To: DURA PHARMACEUTICALS, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Dura Pharmaceuticals, Inc. (the "Company")
as to the occurrence of a Change in Control with respect to the Company and
requests and instructs the Company to repay the entire principal amount of this
Note, or the portion thereof (which is $1,000 or an integral multiple thereof)
below designated, in accordance with the terms of the Indenture referred to in
this Note at the repurchase price, together with accrued interest to, but
excluding, such date, to the registered holder hereof.
Dated:
------------------ --------------------------------------------
--------------------------------------------
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note in
every particular without alteration or
enlargement or any change whatever.
Principal amount to be repurchased
(if less than all):
$________
--------------------------------------------
Social Security or Other Taxpayer
Identification Number
A-12
