<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---- ----
------------
Commission file number 0-23012
NEXSTAR PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
------------
Delaware 84-1173453
(State of incorporation) (I.R.S. Employer Identification No.)
2860 Wilderness Place
Boulder, Colorado 80301
(Address of principal executive offices)
Registrant's telephone number: (303) 444-5893
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the registrant's Common Stock, par value $.01 per
share, outstanding as of July 31, 1997 was 26,512,966.
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<PAGE> 2
NEXSTAR PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -- June 30, 1997
and December 31, 1996 ..............................................3
Condensed Consolidated Statements of Operations -- Three
Months and Six Months Ended June 30, 1997 and 1996..................4
Condensed Consolidated Statements of Cash Flows -- Six
Months Ended June 30, 1997 and 1996.................................5
Notes to Condensed Consolidated Financial Statements....................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................16
Item 2. Changes in Securities...........................................16
Item 4. Submission of Matters to a Vote of Security Holders.............16
Item 6. Exhibits and Reports on Form 8-K................................17
SIGNATURES ................................................................18
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEXSTAR PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,143,000 $ 21,542,000
Marketable securities 9,937,000 20,423,000
Accounts receivable 35,702,000 30,001,000
Inventories 15,643,000 15,629,000
Prepaid expenses and other 2,727,000 2,276,000
------------- -------------
Total current assets 87,152,000 89,871,000
Equipment and leasehold improvements, net of
accumulated depreciation and amortization 43,621,000 43,960,000
Investment in life science enterprise -- 2,709,000
Patent and trademark costs, net of accumulated amortization 5,086,000 4,633,000
Purchased technology, net of accumulated amortization 1,507,000 2,010,000
Other noncurrent assets 1,898,000 1,317,000
------------- -------------
Total assets $ 139,264,000 $ 144,500,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 14,701,000 $ 12,936,000
Accounts payable 5,884,000 10,483,000
Accrued compensation and employee benefits 3,467,000 3,544,000
Other accrued expenses 7,273,000 7,174,000
Long-term obligations due within one year 8,041,000 7,535,000
------------- -------------
Total current liabilities 39,366,000 41,672,000
Long-term obligations due after one year 29,236,000 15,206,000
Commitments and contingencies
Stockholders' equity:
Common stock 265,000 264,000
Additional paid-in capital 214,969,000 213,931,000
Deferred compensation (274,000) (367,000)
Cumulative translation adjustment (338,000) (230,000)
Accumulated deficit (143,960,000) (125,976,000)
------------- -------------
Total stockholders' equity 70,662,000 87,622,000
------------- -------------
Total liabilities and stockholders' equity $ 139,264,000 $ 144,500,000
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
NEXSTAR PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $ 22,088,000 $ 20,380,000 $ 42,096,000 $ 37,925,000
Collaborative agreements and contracts 638,000 357,000 1,159,000 936,000
Interest income 491,000 413,000 829,000 846,000
------------ ------------ ------------ ------------
Total revenues 23,217,000 21,150,000 44,084,000 39,707,000
------------ ------------ ------------ ------------
Expenses:
Cost of goods sold 5,520,000 4,435,000 9,976,000 8,254,000
Research and development 12,580,000 9,493,000 25,337,000 20,669,000
Selling, general and administrative 12,281,000 10,932,000 25,108,000 20,395,000
Interest expense 1,004,000 271,000 1,528,000 556,000
------------ ------------ ------------ ------------
Total expenses 31,385,000 25,131,000 61,949,000 49,874,000
------------ ------------ ------------ ------------
Loss before provision for income taxes (8,168,000) (3,981,000) (17,865,000) (10,167,000)
Provision for income taxes 95,000 59,000 119,000 166,000
------------ ------------ ------------ ------------
Net loss $ (8,263,000) $ (4,040,000) $(17,984,000) $(10,333,000)
============ ============ ============ ============
Net loss per share $ (0.31) $ (0.15) $ (0.68) $ (0.40)
============ ============ ============ ============
Shares used in computing net loss per share 26,447,000 26,132,000 26,436,000 25,686,000
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
NEXSTAR PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(17,984,000) $(10,333,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of equipment and leasehold improvements 4,824,000 5,044,000
Amortization of intangible assets 882,000 771,000
Compensation expense related to grant of options and sales of stock,
including amortization of deferred compensation 137,000 58,000
Other (99,000) (154,000)
Changes in operating assets and liabilities:
Accounts receivable (5,883,000) (6,753,000)
Inventories (14,000) (3,781,000)
Prepaid expenses and other (451,000) 365,000
Other noncurrent assets (13,000) (177,000)
Accounts payable (5,699,000) (351,000)
Accrued compensation and employee benefits (77,000) 15,000
Other accrued expenses 298,000 702,000
------------ ------------
Net cash used in operating activities (24,079,000) (14,594,000)
INVESTING ACTIVITIES
Maturities (purchases) of marketable securities, net 10,486,000 (13,657,000)
Additions to equipment and leasehold improvements (3,385,000) (4,554,000)
Proceeds from sale of investment in life science enterprise 2,683,000 --
Additions to patent costs (729,000) (719,000)
Additions to other noncurrent assets (318,000) 700,000
------------ ------------
Net cash provided by (used in) investing activities 8,737,000 (18,230,000)
FINANCING ACTIVITIES
Proceeds from short-term borrowings, net 1,765,000 3,833,000
Proceeds from sale-leaseback transactions 1,997,000 1,640,000
Payments on capital lease obligations (2,279,000) (2,198,000)
Proceeds from issuance of long-term debt 16,404,000 10,000,000
Repayments on long-term debt (1,586,000) --
Proceeds from sale of common stock, net of offering costs 642,000 28,834,000
------------ ------------
Net cash provided by financing activities 16,943,000 42,109,000
------------ ------------
Net increase in cash and cash equivalents 1,601,000 9,285,000
Cash and cash equivalents at beginning of period 21,542,000 20,893,000
------------ ------------
Cash and cash equivalents at end of period $ 23,143,000 $ 30,178,000
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
NEXSTAR PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
NOTE 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the
three-month and six-month periods ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December
31, 1996.
Certain reclassifications have been made to prior year amounts to
agree with the current year presentation.
NOTE 2: Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Finished Goods $ 4,235,000 $ 4,092,000
Work in Process 8,563,000 8,358,000
Raw Materials 2,845,000 3,179,000
------------- ------------
$ 15,643,000 $ 15,629,000
============= ============
</TABLE>
NOTE 3: Patent Matters
On August 11, 1997, the Company and The Liposome Company ("TLC")
reached a settlement in which the two companies agreed to dismiss all
legal proceedings involving TLC's reexamined U.S. Patent No. 4,880,635
(the "TLC `635 Patent") and U.S. Patent No. 5,578,320 (the "TLC `320
Patent") and their international counterparts. The legal proceedings
related to whether AmBisome, the Company's liposomal formulation of
amphotericin B, infringed TLC's patents because of the manner in which
it is freeze dried (lyophilized). In the settlement agreement between
the parties (the "Settlement Agreement"), TLC granted the Company
immunity from suit in connection with the worldwide production and
sales of AmBisome and a worldwide right to use the TLC `635 Patent and
the TLC `320 Patent.
The Company originally initiated legal proceedings on May 17, 1993,
when it filed a complaint in the United States District Court for the
District of Delaware against TLC asking the court to declare the TLC
`635 Patent invalid, unenforceable and not infringed, following
allegations by TLC that AmBisome infringed the TLC `635 Patent because
of the manner in which it is freeze dried. The United States District
Court for the District of Delaware stayed the lawsuit pending the
outcome of a reexamination of the TLC `635 Patent instituted by TLC in
the U.S. Patent and Trademark Office ("USPTO"). On July 2, 1996,
certain amended claims were allowed by the USPTO. The stay was lifted
on July 11, 1996 and an amended complaint was filed by the Company on
July 29, 1996. On August 16, 1996, TLC answered the amended complaint
and filed a counterclaim against the Company for damages and an
injunction based on infringement of the reexamined patent. On January
17, 1997, TLC filed an amended complaint asserting that the Company's
method of lyophilizing AmBisome also infringed the TLC `320 Patent
which was granted by the USPTO to TLC on November 26, 1996. The TLC
`635 Patent and the TLC `320 Patent (collectively, the "TLC Patents")
cover essentially the same subject matter. On February 26, 1997, the
Company filed an amended and supplemental complaint asserting
antitrust and business tort actions against TLC. The amended complaint
stated that TLC had fraudulently obtained the TLC Patents by
withholding information from, and intentionally misleading, the USPTO
and had attempted to use the TLC Patents in order to injure NeXstar
Pharmaceuticals and competition generally, including attempting to
affect the Company's proposed stock offering in June 1996. In
connection with the Settlement Agreement, the parties agreed to
dismiss all claims.
6
<PAGE> 7
In addition, the Company had opposed the grant to TLC of the European
and Japanese patents that are counterparts of the TLC Patents. TLC
initiated legal actions against the Company on October 18, 1996 in the
Chancery Division of the Patents Court in the United Kingdom, on
November 4, 1996 in the Regional Court of The Hague, The Netherlands
and on October 18, 1996 in the Regional Court -- Dusseldorf in Germany
for alleged infringement of the respective national counterparts to
the TLC Patents. In connection with each suit, TLC sought an
injunction and damages. In connection with the Settlement Agreement,
the three European lawsuits are required to be dismissed and the
Company agreed to withdraw its opposition in the European and Japanese
patent offices to the grant of the TLC Patents.
NOTE 4: Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" ("Statement No. 128"), which
the Company is required to adopt on December 31, 1997. At that time,
the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under
the new requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact of
Statement No. 128 on the calculations of primary earnings per share
and fully diluted earnings per share for the three months and six
months ended June 30, 1997 and 1996, respectively, is not expected to
be material.
NOTE 5: Commitments and Contingencies and Sales of Unregistered Securities
On July 31, 1997, the Company completed the sale of $75 million of
6 1/4% Convertible Subordinated Debentures due 2004 (the "Debentures")
in a private offering to SBC Warburg Inc. and Oppenheimer & Co., Inc.
(the "Initial Purchasers"). The sale to the Initial Purchasers was
made pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Act"). The Initial Purchasers resold the Debentures in
reliance on Rule 144A under
7
<PAGE> 8
the Act and outside the United States to certain persons in offshore
transactions in reliance on Regulation S under the Act. The
Debentures were issued pursuant to an indenture and are convertible
into a total of up to 4,444,444 shares of the Company's common stock,
$.01 par value (the "Common Stock"), at $16.875 per share. In
connection with the sale of the Debentures, the Initial Purchasers
were granted a right, which expires on August 30, 1997, to acquire up
to an additional $5 million of the Debentures. Under the terms of a
Registration Rights Agreement, the Company is required to file a
"shelf" registration statement registering for resale the Debentures
and the shares of Common Stock into which the Debentures may be
converted. Pursuant to the Registration Rights Agreement, the Company
is required to keep the "resale" registration statement effective for
up to two years.
The Company used the net proceeds of $72,350,000 (after deducting a
3% commission of $2,250,000 received by the Initial Purchasers and
estimated transaction expenses of $400,000) from the sale of the
Debentures on July 31, 1997, in part, to repay outstanding bank
borrowings of the Company in the principal amount of $28.6 million,
including repaying (a) the outstanding principal amount of $7.5
million under a term loan (the "Term Loan"); (b) the outstanding
principal balance of $10.0 million under a revolving line of credit
(the "Credit Line") pursuant to which the Company was permitted to
borrow up to $15 million; and (c) the outstanding principal amount of
$11.1 million under a credit agreement (the "Accounts Receivable
Loan") pursuant to which the Company and certain of its subsidiaries
may borrow up to $15 million, with the borrowings being
collateralized by certain of the non-U.S. accounts receivable of the
Company and the subsidiaries. Following the repayment of the bank
borrowings, the Term Loan and the Credit Line were terminated.
However, the Company and its subsidiaries retain the right to borrow
up to $15 million under the Accounts Receivable Loan. As a result of
the termination of the Credit Line, the Company will be required to
incur a non-cash charge to earnings of $309,000 in connection with a
warrant for 125,000 shares of Common Stock issued to Warburg, Pincus
Investors, L.P. ("WPI"), a beneficial owner of more than 5% of the
Common Stock, in return for an affiliate of WPI having guaranteed the
Credit Line.
During the first quarter of 1997, the Company entered into an
agreement with its European toll manufacturer to acquire for one
million Irish Punts (approximately $1.5 million on June 30, 1997) the
Dublin, Ireland facilities at which the toll manufacturer is
providing quality control testing, final labeling and packaging for
the Company's products in Europe. The Company anticipates acquiring
the facilities in the third quarter of 1997 at which time the Company
will be required to make a final payment of 800,000 Irish Punts
(approximately $1.2 million on June 30, 1997).
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, risks associated with the
following: reliance on a single product for a substantial portion of the
Company's revenues; general economic and business conditions, including
fluctuations in currency exchange rates; competition; technological advances;
ability to obtain rights to technology; ability to obtain and enforce patents;
ability to commercialize and manufacture products; results of clinical studies;
results of research and development activities; availability of qualified
personnel; changes in, or failure to comply with, governmental regulations;
ability to obtain adequate financing in the future; and other factors
referenced under "Risk Factors" in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.
NeXstar Pharmaceuticals is a fully integrated biopharmaceutical company
engaged in the discovery, development, manufacture and marketing of proprietary
pharmaceutical products to treat life-threatening and other serious
oncological, immunological, hematological and infectious diseases.
The Company markets AmBisome, a liposomal formulation of amphotericin B,
for the treatment of life-threatening fungal infections and DaunoXome, a
liposomal formulation of the anticancer agent daunorubicin, which is used as a
first line therapy for the treatment of advanced, HIV-associated Kaposi's
sarcoma ("KS"). The Company currently relies on sales of AmBisome in Europe for
a substantial majority of its product revenues and expects sales of AmBisome in
Europe to account for a majority of its revenues in 1997. On August 11, 1997,
the U.S. Food and Drug Administration (the "FDA") approved AmBisome for use as
a primary therapy for patients with a low blood cell count (febrile
neutropenia) who have a presumed fungal infection, also known as fever of
unknown origin or FUO, and with visceral leishmaniasis and as a secondary
treatment for fungal infections refractory (that do not respond) to
amphotericin B treatment. Besides being approved in the United States, AmBisome
has been approved for sale by the regulatory authorities in 29 countries for
the treatment of life-threatening fungal infections, including thirteen
countries in which it has been approved as a primary therapy for some form of
fungal infection. DaunoXome has been approved for sale as a primary therapy for
KS in the U.S., Canada and 16 European countries. The Company's revenue growth
will be substantially dependent upon increased penetration of existing markets,
establishing new markets, approval of additional indications for AmBisome and
DaunoXome and introduction of new products.
The Company is currently conducting Phase I clinical trials in the U.S.
for MiKasome, the Company's liposomal formulation of amikacin, a potent
aminoglycoside antibiotic. In addition, several of the Company's SELEX
process-derived compounds (including aptamer antagonists to vascular
endothelial growth factor (VEGF) and platelet-derived growth factor (PDGF) and
aptamers which inhibit the activity of L-selectin and P-selectin) are in
preclinical or early preclinical development.
In connection with most of its European sales, the Company prices its
products in the currencies of the countries into which they are sold (the
"Payment Currencies"), and revenues in the past have been and in the future
could be adversely affected by currency fluctuations. A significant majority of
the Company's manufacturing costs are in U.S. Dollars. Therefore, any fall in
the value of the Payment Currencies relative to the U.S. Dollar is likely to
negatively impact gross margins for the Company's products since the Company's
manufacturing costs would stay approximately the same while its revenue in
terms of U.S. Dollars would decline. Sales in Germany, the U.K., Italy and
Spain together accounted for 56% of the Company's product revenues for the
three months and six months ended June 30, 1997. The Company prices its
products in each of these four countries in the local currency. Between January
1, 1997 and June 30, 1997, the value of the U.S. Dollar increased 13%, 3%, 12%
and 14%, respectively, against the German Mark, the British Pound, the Italian
Lira and the Spanish Peseta. Absent an increase in the price of the Company's
products throughout Europe or a general decline in the value of the U.S. Dollar
versus most leading European currencies, the continued strength of the U.S.
Dollar may significantly impact the Company's revenues as denominated in U.S.
Dollars.
9
<PAGE> 10
NeXstar Pharmaceuticals hedges certain of its foreign currency
exposures, with respect to its outstanding trade accounts receivable and
accounts payable, through the use of forward contracts. NeXstar Pharmaceuticals
does not currently enter into speculative foreign currency transactions and
does not write speculative options. In the future, the Company may begin
currency hedging in connection with anticipated revenues and expenses and may
use options in addition to forward contracts. Such hedging will be done solely
for the purpose of protecting the Company from foreign currency fluctuations.
The Company recognizes a gain or loss for each forward contract for the
difference between the contract rate and the market rate on each balance sheet
date which is recorded as a selling, general and administrative expense. At
present, no deferred accounting is used in connection with the Company's
hedging activities. Notwithstanding its hedging activities (which have not
always included fully hedging against potential gains or losses), the Company
has in the past recognized foreign exchange gains and losses. There can be no
assurance that significant gains or losses will not be incurred in the future.
RESULTS OF OPERATIONS
Three months and six months ended June 30, 1997
Product revenues increased 8% and 11% to $22.1 million and $42.1 million
for the three months and six months ended June 30, 1997, respectively, from
$20.4 million and $37.9 million, for the corresponding periods in 1996,
respectively, primarily due to an increase in unit sales of AmBisome in
non-U.S. markets. Gains from increased unit sales were offset by a reduction in
the average selling price (as calculated in U.S. Dollars) compared to the
corresponding periods of 1996 due, in significant part, to a substantial
appreciation in the value of the U.S. Dollar compared to the leading European
currencies. A significant majority of the Company's product sales are in
European currencies. Absent an increase in the price of the Company's products
throughout Europe or a general decline in the value of the U.S. Dollar versus
most leading European currencies, the continued strength of the U.S. Dollar may
significantly impact the Company's revenues as denominated in U.S. Dollars.
Collaborative agreement and contract revenues increased to $638,000 and
$1,159,000 for the three months and six months ended June 30, 1997,
respectively, compared to $357,000 and $936,000 for the corresponding periods
of 1996, respectively. The increases were primarily due to Schering A.G., in
February 1997, agreeing to increase its annual funding to the Company to $2.4
million from $1.0 million in connection with a collaborative research agreement
first entered into in 1993. Collaborative agreement and contract revenue
fluctuations are generally the result of changes in the number of funded
research projects as well as the timing and performance of contract benchmarks.
Interest income increased to $491,000 and decreased to $829,000 for the
three months and six months ended June 30, 1997, respectively, compared to
$413,000 and $846,000 for the corresponding periods of 1996, respectively.
Interest income generally fluctuates as a result of the average amount of cash
available for investment and prevailing interest rates.
Cost of goods sold was $5.5 million and $10.0 million, or 25% and 24% of
product revenues, for the three months and six months ended June 30, 1997,
respectively, compared to $4.4 million and $8.3 million, or 22% of product
revenues, for the corresponding periods of 1996, respectively. The increase in
cost of goods sold was primarily due to increased sales of the Company's
products. The increase in cost of goods sold as a percentage of product revenues
was primarily the result of (i) a reduction in the average revenue per vial of
product produced due, in significant part, to a substantial appreciation of the
U.S. Dollar compared to leading European currencies and (ii) a charge in the
second quarter of 1997 of $367,000 for certain AmBisome lots that failed to pass
certain of the Company's stringent internal quality control specifications. Cost
of goods sold consists primarily of raw materials, allocations of overhead,
labor and equipment costs and charges associated with lyophilization services
provided by outside vendors. Cost of goods sold as a percentage of revenues is
expected to increase in the future as a result of the approval of AmBisome in
the United States. Pursuant to an agreement between the Company and Fujisawa
USA, Inc. ("Fujisawa"), the Company and Fujisawa will co-promote AmBisome in the
United States and the Company will sell AmBisome to Fujisawa at cost for sale in
the U.S. In addition, the Company will receive 20% of the gross profits from all
U.S. sales. As the Company's sales of AmBisome to Fujisawa increase as a
percentage of total AmBisome sales, the cost of goods sold as a percentage of
revenues is expected to increase.
10
<PAGE> 11
Research and development expenses increased 33% and 22% to $12.6 million
and $25.3 million for the three months and six months ended June 30, 1997,
respectively, compared to $9.5 million and $20.7 million for the corresponding
periods of 1996, respectively. The increase in research and development
expenses is primarily attributable to (i) expanded clinical trial activity for
both DaunoXome and MiKasome; (ii) additional preclinical spending on aptamer
drug candidates developed using the SELEX process, the Company's proprietary
combinatorial chemistry technology; and (iii) costs associated with developing
alternative presentations of AmBisome. For the three months and six months
ended June 30, 1997, $584,000 and $1.1 million, respectively, of research and
development expenses were sponsored by third parties compared to $216,000 and
$576,000 for the corresponding periods in 1996, respectively. Research and
development expenses consist primarily of salaries and benefits for scientific,
regulatory, quality control and pilot manufacturing personnel, consultants,
supplies, occupancy costs and depreciation of laboratory equipment and
facilities.
Selling, general and administrative expenses increased 13% and 23% to
$12.3 million and $25.1 million for the three months and six months ended June
30, 1997, respectively, compared to $10.9 million and $20.4 million for the
corresponding periods of 1996, respectively. The increase was primarily related
to (i) litigation costs of $1.5 million and $3.7 million during the three
months and six months ended June 30, 1997, respectively, in connection with two
U.S. patents and their European and Japanese counterparts held by The Liposome
Company and (ii) increased expenses in connection with the continued expansion
of the Company's domestic and international marketing operations. The Company
recognized a foreign exchange loss of $51,000 and $89,000 for the three months
and six months ended June 30, 1997, respectively, compared to a loss of
$153,000 and $227,000 for the corresponding periods in 1996, respectively.
Interest expense increased to $1.0 million and $1.5 million for the
three months and six months ended June 30, 1997, respectively, from $271,000
and $556,000 for the corresponding periods of 1996, respectively. The increase
was primarily due to interest payable under (i) the term loan agreement for $10
million entered into by the Company in June 1996, (ii) the credit agreement
entered into by the Company in March 1997, (iii) the accounts receivable loan
entered into by the Company in March 1997 and (iv) additional borrowings in
connection with several equipment lease arrangements. As a result of the
Company's sale of $75 million of 6 1/4% Convertible Subordinated Debentures due
2004 (the "Debentures") and the repayment by the Company of its bank borrowings
on July 31, 1997 ( see "Recent Events" below), the Company anticipates an
increase in its quarterly interest expense compared to the three
months ended June 30, 1997.
The Company reported a net loss of $8.3 million and $18.0 million, or
$0.31 and $0.68 per share, for the three months and six months ended June 30,
1997, respectively, compared to a net loss of $4.0 million and $10.3 million,
or $0.15 and $0.40 per share, for the corresponding periods of 1996,
respectively.
Patent Matters
The Company believes that there will continue to be significant
litigation in the pharmaceutical industry regarding patents and other
intellectual property rights, but cannot predict the likelihood of it being
involved in any disputes. Any new litigation could consume a substantial portion
of the Company's resources regardless of the outcome of such litigation.
On August 11, 1997, the Company and The Liposome Company ("TLC") reached
a settlement in which the two companies agreed to dismiss all legal proceedings
involving TLC's reexamined U.S. Patent No. 4,880,635 (the "TLC `635 Patent") and
U.S. Patent No. 5,578,320 (the "TLC `320 Patent") and their international
counterparts. The legal proceedings related to whether AmBisome, the Company's
liposomal formulation of amphotericin B, infringed TLC's patents because of the
manner in which it is freeze dried (lyophilized). In the settlement agreement
between the parties (the "Settlement Agreement"), TLC granted the Company
immunity from suit in connection with the worldwide production and sales of
AmBisome and a worldwide right to use the TLC `635 Patent and the TLC `320
Patent.
The Company originally initiated legal proceedings on May 17, 1993, when
it filed a complaint in the United States District Court for the District of
Delaware against TLC asking the court to declare the TLC `635 Patent invalid,
unenforceable and not infringed, following allegations by TLC that AmBisome
infringed the TLC `635 Patent because of the manner in which it is freeze dried.
The United States District Court for the District of Delaware stayed the lawsuit
pending the outcome of a reexamination of the TLC `635 Patent instituted by TLC
in the U.S. Patent and Trademark Office ("USPTO"). On July 2, 1996, certain
amended claims were allowed by the USPTO. The stay was lifted on July 11, 1996
and an amended complaint was filed by the Company on July 29, 1996. On August
16, 1996, TLC answered the amended complaint and filed a counterclaim against
the Company for damages and an injunction based on infringement of the
reexamined patent. On January 17, 1997, TLC filed an amended complaint asserting
that the Company's method of lyophilizing AmBisome also infringed the TLC `320
Patent which was granted by the USPTO to TLC on November 26, 1996. The TLC `635
Patent and the TLC `320 Patent (collectively, the "TLC Patents") cover
essentially the same subject matter. On February 26, 1997, the Company filed an
amended and supplemental complaint
11
<PAGE> 12
asserting antitrust and business tort actions against TLC. The amended
complaint stated that TLC had fraudulently obtained the TLC Patents by
withholding information from, and intentionally misleading, the USPTO and had
attempted to use the TLC Patents in order to injure NeXstar Pharmaceuticals and
competition generally, including attempting to affect the Company's proposed
stock offering in June 1996. In connection with the Settlement Agreement, the
parties agreed to dismiss all claims.
In addition, the Company had opposed the grant to TLC of the European
and Japanese patents that are counterparts of the TLC Patents. TLC initiated
legal actions against the Company on October 18, 1996 in the Chancery Division
of the Patents Court in the United Kingdom, on November 4, 1996 in the Regional
Court of The Hague, The Netherlands and on October 18, 1996 in the Regional
Court -- Dusseldorf in Germany for alleged infringement of the respective
national counterparts to the TLC Patents. In connection with each suit, TLC
sought an injunction and damages. In connection with the Settlement Agreement,
the three European lawsuits are required to be dismissed and the Company agreed
to withdraw its opposition in the European and Japanese patent offices to the
grant of the TLC Patents.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents and marketable securities
position at June 30, 1997 was $33.1 million compared to $42.0 million on
December 31, 1996. The $8.9 million decrease in cash and marketable securities
position was primarily the result of the following:
<TABLE>
<S> <C>
Net cash used in operating activities $(24,079,000)
Investment in equipment and leasehold improvements (3,385,000)
Proceeds from sale of investment in life science enterprise 2,683,000
Proceeds from short-term borrowings 1,765,000
Proceeds from sale-leaseback transactions 1,997,000
Payments on capital lease obligations (2,279,000)
Proceeds from issuance of long-term debt 16,404,000
Repayments of long-term debt (1,586,000)
Proceeds from sale of common stock, net 642,000
Other (1,047,000)
------------
$ (8,885,000)
============
</TABLE>
The Company invests its cash and cash equivalents and marketable
securities in interest-bearing investment grade securities.
The Company's accounts receivable balance at June 30, 1997 was $35.7
million as compared to $30.0 million on December 31, 1996. The growth in
accounts receivable was primarily due to increased sales of AmBisome over the
past year and proportionately increased sales of the Company's products in
countries in which payments tend to be slower than the average payment periods
historically experienced by the Company. Payment practices vary significantly
between countries and increased sales in countries in which payments tend to be
slower, often as a result of the slowness by governmental entities in
reimbursing the Company's customers, have in the past increased and in the
future may increase the average length that accounts receivable are outstanding
and may increase the financial risk of certain of the Company's customers. In
particular, the Company's Greek distributor, which owes a significant portion
of the accounts receivable to the Company, has been slow in making payments to
the Company because of the slowness of government-funded institutions in making
payments to it. During 1996, the Greek distributor granted the Company a
security interest in accounts receivable owed to the distributor by the
institutions to which it sells the Company's products. Additionally, the Greek
government has indicated that it is considering procedures which would expedite
payments by Greek hospitals. The Company continually seeks improvements in its
collection process to maximize its cash flow from product sales in a timely
manner.
As of June 30, 1997 and December 31, 1996 the Company's inventory value
was $15.6 million. If the Company is successful in increasing its product
revenues, the Company expects to gain manufacturing efficiencies from increased
production thereby decreasing cost of goods sold per unit of product.
For the six months ended June 30, 1997, the Company had proceeds from
sales and leaseback transactions of $2.0 million related to the purchase of
capital equipment and $1.4 million in proceeds from facilities improvement
financing transactions. As of June 30, 1997, $7.0 million was available under
agreements relating to the financing of manufacturing equipment, general
laboratory and scientific equipment, office equipment, furniture and fixtures
and facilities improvements.
In June 1997, the Company sold all of its holdings in a life science
enterprise for $2.7 million following that company's initial public offering.
As a result of the sale, the Company recorded a loss of $26,000.
In March 1997, the Company substantially restructured its bank financing
by (a) terminating an unsecured line of credit pursuant to which it had a right
to borrow up to $10 million, (b) entering into a credit agreement (the
"Accounts Receivable Loan") pursuant to which the Company and certain of its
subsidiaries were permitted to borrow up to $15 million, with the borrowings
being collateralized by certain of the non-U.S. accounts receivable of the
Company and the subsidiaries and (c) entering into a revolving line of credit
(the "Credit Line") pursuant to which the Company was permitted to borrow up to
$15 million. An affiliate of Warburg, Pincus Investors, L.P. ("WPI"), a
beneficial owner of more than 5% of the Company's common stock, was a guarantor
of the Credit Line in return for WPI's receipt of a warrant to acquire 125,000
13
<PAGE> 14
shares of the Company's common stock at a purchase price of $12.50 per share.
As of June 30, 1997, the Company had borrowings of $11.3 million under the
Accounts Receivable Loan and $15.0 million under the Credit Line and the
average interest rates on the Accounts Receivable Loan and the Credit Line were
7.8% and 7.7%, respectively. On July 31, 1997, the Company repaid all
outstanding amounts under the Accounts Receivable Loan and the Credit Line
following the sale by the Company of the Debentures. Following the repayment,
the Credit Line was terminated; however, the Company and certain of its
subsidiaries retain the right to borrow up to $15 million under the Accounts
Receivable Loan. See "Recent Events" below.
In June 1996, the Company entered into a term loan agreement for $10
million (the "Term Loan") which provided for repayment in 48 monthly
installments. As of June 30, 1997, the Company had borrowings of $7.5 million
under the Term Loan with an average interest rate of 7.5%. The Term Loan
required the Company to meet certain financial covenants, including maintaining
net cash, cash equivalents and/or investment grade securities equal to the
outstanding principal loan balance plus $10 million of which an amount of cash,
cash equivalents and/or investment grade securities equal to the outstanding
principal loan balance plus three months' interest thereon must be maintained
in an unrestricted account. On July 31, 1997, the Company repaid all
outstanding amounts under, and terminated, the Term Loan following the sale of
the Debentures. See "Recent Events" below.
In May 1996, the Company's Spanish subsidiary entered into an agreement
to borrow up to 500 million Spanish Pesetas (approximately $3.4 million on June
30, 1997) with such borrowing being secured by the subsidiary's accounts
receivable in Spain. In February 1997, the agreement was amended to increase
the amount that the subsidiary may borrow to 750 million Spanish Pesetas
(approximately $5.1 million on June 30, 1997). In connection with the
agreement, the Company is maintaining $2.0 million in an unrestricted account.
As of June 30, 1997, the subsidiary had borrowings of 498 million Spanish
Pesetas (approximately $3.4 million on June 30, 1997) under the agreement. The
Company's Spanish subsidiary is required to repay the borrowings under the
agreement in May 1998.
The Company anticipates significant expenses during 1997 in connection
with developing and equipping additional laboratory space in Boulder, Colorado.
In addition, the Company has entered into an agreement with its European toll
manufacturer to acquire for one million Irish Punts (approximately $1.5 million
on June 30, 1997) the Dublin, Ireland facilities at which the toll manufacturer
is providing quality control testing, final labeling and packaging for the
Company's products in Europe. The Company anticipates acquiring the facilities
in the third quarter of 1997 at which time the Company will be required to make
a final payment of 800,000 Irish Punts (approximately $1.2 million on June 30,
1997).
The Company believes that in the future it may be advisable to augment
its cash in order to fund all of its activities, including potential product
acquisitions. Therefore, the Company will consider raising cash whenever market
conditions are favorable. Such capital may be raised through additional public
or private financing, as well as collaborative relationships, borrowings and
other available sources. In addition, in the course of its business, the
Company evaluates products and technologies held by third parties which, if
acquired, could result in the development of product candidates by the Company
or which complement technologies currently being developed by the Company. The
Company expects from time to time to be involved in discussions with other
entities concerning the Company's potential acquisition of rights to additional
pharmaceutical products. In the event that the Company acquires such products
or third-party technologies, the Company may find it necessary or advisable to
obtain additional funding.
The Company's future capital requirements will be substantial and will
depend on, and could increase as a result of, many factors, including progress
of the Company's research, drug discovery and development programs; whether the
Company acquires interests in products currently held by third parties; the
results and costs of preclinical and clinical testing of the Company's
products, if developed; the time and costs involved in obtaining regulatory
approvals; the costs involved in filing, prosecuting and enforcing patent
claims; competing technological and market developments; the Company's success
in entering into collaborative agreements; changes in collaborative research
relationships; the costs associated with potential commercialization of its
products, if any, including the development of additional manufacturing,
marketing and sales capabilities; the cost and availability of third-party
financing for capital expenditures; and administrative and legal expenses. In
particular, the Company expects to have significant cash requirements in the
near future as a result of, but not limited to, increased clinical studies
which are required in order to obtain approvals and expand the indications and
markets for the Company's products and the cost of equipping new facilities.
There can be no assurance that additional or sufficient financing will be
available, or, if available, that it will be available on acceptable terms. If
additional funds are raised by issuing equity securities of the Company,
dilution to then existing stockholders may result. If adequate funds are
14
<PAGE> 15
not available, the Company may be required to significantly curtail one or more
of its research and development programs or commercialization efforts or obtain
funds through arrangements with collaborative partners or others on less
favorable terms than might otherwise be available.
RECENT EVENTS
On August 11, 1997, the FDA approved AmBisome for use in the United
States as a primary therapy for patients with a low white blood cell count
(febrile neutropenia) who have a presumed fungal infection, also known as fever
of unknown origin or FUO, and with visceral leishmaniasis and as a secondary
treatment for fungal infections refractory (that do not respond) to
amphotericin B treatment.
On August 11, 1997, the Company and The Liposome Company ("TLC") reached
a settlement in which the two companies agreed to dismiss all legal proceedings
involving TLC's reexamined U.S. Patent No. 4,880,635 (the "TLC `635 Patent")
and U.S. Patent No. 5,578,320 (the "TLC `320 Patent") and their international
counterparts. The legal proceedings related to whether AmBisome, the Company's
liposomal formulation of amphotericin B, infringed TLC's patents because of the
manner in which it is freeze dried (lyophilized). In the settlement agreement
between the parties (the "Settlement Agreement"), TLC granted the Company
immunity from suit in connection with the worldwide production and sales of
AmBisome and a worldwide right to use the TLC `635 Patent and the TLC `320
Patent. Under the terms of the Settlement Agreement, the Company is required to
make an initial payment to TLC and future payments based on AmBisome sales.
Because the payments are subject to certain minimum and maximum payments, the
Company will record a one-time accounting charge in the third quarter of 1997
of $11.5 million, of which $9.7 million represents the net present value of all
future minimum payments required to be made by it and $1.75 million represents
a cash payment in the third quarter of 1997. The Company does not expect the
difference between the annual minimum and maximum payments to be material.
On July 31, 1997, the Company completed the sale of $75 million of 6 1/4%
Convertible Subordinated Debentures due 2004 (the "Debentures") in a private
offering to SBC Warburg Inc. and Oppenheimer & Co., Inc. (the "Initial
Purchasers"). The sale to the Initial Purchasers was made pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Act"). The Initial
Purchasers resold the Debentures in reliance on Rule 144A under the Act and
outside the United States to certain persons in offshore transactions in
reliance on Regulation S under the Act. The Debentures were issued pursuant to
an indenture and are convertible into a total of up to 4,444,444 shares of the
Company's common stock, $.01 par value (the "Common Stock"), at $16.875 per
share. Under the terms of a Registration Rights Agreement, the Company is
required to file a "shelf" registration statement registering for resale the
Debentures and the shares of Common Stock into which the Debentures may be
converted. Pursuant to the Registration Rights Agreement, the Company is
required to keep the "resale" registration statement effective for up to two
years.
The Company used the net proceeds of $72,350,000 (after deducting a 3%
commission of $2,250,000 received by the Initial Purchasers and estimated
transaction expenses of $400,000) from the sale of the Debentures on July 31,
1997, in part, to repay outstanding bank borrowings of the Company in the
principal amount of $28.6 million, including repaying (a) the outstanding
principal amount of $7.5 million under the Term Loan, (b) the outstanding
principal balance of $10.0 million under the Credit Line and (c) the
outstanding principal amount of $11.1 million under the Accounts Receivable
Loan. Following the repayment of the bank borrowings, the Term Loan and the
Credit Line were terminated. However, the Company and its subsidiaries retain
the right to borrow up to $15 million under the Accounts Receivable Loan. As a
result of the termination of the Credit Line, the Company will be required to
incur a non-cash charge to earnings of $309,000 in connection with a warrant
for 125,000 shares of Common Stock issued to WPI in return for an affiliate of
WPI having guaranteed the Credit Line.
15
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Management's Discussion and Analysis of Financial Condition and
Results Of Operations--Patent Matters.
ITEM 2. CHANGES IN SECURITIES
See Note 5 to the Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to the stockholders for approval at
the Company's Annual Meeting of Stockholders held on May 28, 1997. The total
number of shares present, in person or by proxy, and entitled to vote at the
annual meeting was 22,694,927. For each proposal, the number of shares voting
for and against, the number of shares abstaining, if any, and the number of
broker non-votes, if any, are set forth below:
1. The election of seven directors to serve until the next annual meeting
and until their successors have been elected and qualified. The
following persons were elected as directors of the Company and received
the number of votes set forth below:
<TABLE>
<CAPTION>
Directors For Against
- --------- --- -------
<S> <C> <C>
Lawrence M. Gold, Ph.D 22,282,791 412,136
John D. Baldeschwieler, Ph.D 22,295,688 399,239
Judith A. Hemberger, Ph.D 22,291,999 402,928
David I. Hirsh, Ph.D 22,301,797 393,130
Roger G. Kennedy 22,299,653 395,274
Patrick J. Mahaffy 22,302,422 392,505
Rodman W. Moorhead, III 22,287,229 407,698
</TABLE>
2. The amendment of the Company's 1993 Incentive Stock Plan to increase
the number of shares of the Company's common stock reserved for issuance
by 1,500,000:
<TABLE>
<S> <C>
For: 15,256,036
Against: 3,656,633
Abstain: 143,329
Non-vote: 3,638,929
</TABLE>
3. Ratification of the appointment of Ernst & Young LLP as Independent
Auditors of the Company for the fiscal year ending December 31, 1997:
<TABLE>
<S> <C>
For: 22,637,763
Against: 36,325
Abstain: 20,839
</TABLE>
16
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 Indenture, dated as of July 31, 1997, between the Registrant
and IBJ Schroder Bank & Trust Company as Trustee, for the
Registrant's 6 1/4% Convertible Subordinated Debentures due
2004.
10.2 Registration Rights Agreement, dated July 31, 1997, among
the Registrant and SBC Warburg Inc. and Oppenheimer & Co.,
Inc.
10.3 Master Lease Agreement, dated as of September 9, 1996, between
General Electric Capital Corporation and the Registrant.
10.4 Master Security Agreement, dated as of March 27, 1997, between
General Electric Capital Corporation and the Registrant.
10.5 The Registrant's 1993 Stock Incentive Plan, as amended.
10.6 Purchase Agreement, dated July 28, 1997, between the
Registrant and SBC Warburg Inc. and Oppenheimer & Co., Inc.
11.1 Statement Re: Computation of Net Loss Per Share.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
1. On July 29, 1997, the Company filed a report on Form 8-K with
regard to the entering into of a Purchase Agreement by the
Company on July 28, 1997 to sell $75 million of 6 1/4%
Convertible Subordinated Debentures due 2004.
2. On August 11, 1997, the Company filed a report on Form 8-K with
regard to the settlement of its litigation proceedings with The
Liposome Company.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEXSTAR PHARMACEUTICALS, INC.
Dated: August 13, 1997 By: /s/PATRICK J. MAHAFFY
---------------------------
Patrick J. Mahaffy
President and Chief
Executive Officer
Dated: August 13, 1997 By: /s/MICHAEL E. HART
---------------------------
Michael E. Hart
Vice President and Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
18
<PAGE> 19
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.1 Indenture, dated as of July 31, 1997, between the Registrant and IBJ
Schroder Bank & Trust Company as Trustee, for the Registrant's
6 1/4% Convertible Subordinated Debentures due 2004.
10.2 Registration Rights Agreement, dated July 31, 1997, among the
Registrant and SBC Warburg Inc. and Oppenheimer & Co., Inc.
10.3 Master Lease Agreement, dated as of September 9, 1996, between
General Electric Capital Corporation and the Registrant.
10.4 Master Security Agreement, dated as of March 27, 1997, between
General Electric Capital Corporation and the Registrant.
10.5 The Registrant's 1993 Stock Incentive Plan, as amended.
10.6 Purchase Agreement, dated July 28, 1997, between the Registrant and
SBC Warburg Inc. and Oppenheimer & Co., Inc.
11.1 Statement Re: Computation of Net Loss Per Share.
27.1 Financial Data Schedule.
<PAGE> 1
================================================================================
NEXSTAR PHARMACEUTICALS, INC.
and
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
---------------------
INDENTURE
Dated as of July 31, 1997
---------------------
$80,000,000
6 1/4% Convertible Subordinated Debentures Due 2004
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 114. No Security Interest Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 115. Limitation on Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 203. Form of Reverse of Global Securities and Definitive Security . . . . . . . . . . . . . . . . . . . . 18
SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE THREE
The Securities
SECTION 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 311. Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 403. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 404. Return of Unclaimed Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE FIVE
Remedies
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . 41
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 505. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . . . . . 43
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<TABLE>
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SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . 53
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . . 56
SECTION 702. Preservation of Information; Communication to Holders . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 705. Rule 144A Information Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 907. Notice of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1003. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1006. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1102. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1103. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1104. Selection by Trustee of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
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SECTION 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1106. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1107. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1108. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of Securities . . . . . . . . . . . . . . . . 69
SECTION 1204. No Payment When Senior Indebtedness in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1205. Payment Permitted if No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1207. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1208. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1209. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1210. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . 72
SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1214. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1215. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1216. No Suspension of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Privilege and Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1302. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1303. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1304. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1305. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1306. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1307. Company to Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1308. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1309. Covenant as to Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1310. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
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SECTION 1311. Provisions on Consolidation, Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1312. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE FOURTEEN
Right to Require Repurchase
SECTION 1401. Right to Require Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 1402. Notice; Method of Exercising Repurchase Right . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1403. Deposit of Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1404. Securities Not Repurchased on Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1405. Securities Repurchased in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1406. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
ANNEX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
ANNEX C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
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<PAGE> 8
INDENTURE, dated as of July 31, 1997 between NEXSTAR PHARMACEUTICALS,
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal executive offices
at 2860 Wilderness Place, Boulder, Colorado 80301, and IBJ SCHRODER BANK &
TRUST COMPANY, a New York banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 6
1/4% Convertible Subordinated Debentures Due 2004 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duty authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect
<PAGE> 9
to any computation required and permitted hereunder shall mean such
accounting principles as are generally accepted and accepted and adopted
by the Company at the date of this Indenture; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms used in Articles Twelve, Thirteen and Fourteen are
defined in such Articles.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" has the meaning specified in Section 305.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
The term "Beneficial Owner" is determined in accordance with Rule
13d-3, promulgated by the Commission under the Exchange Act.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
or the city in which the Corporate Trust Office is located are authorized or
obligated to close by law or executive order.
"Cedel" means Cedel Bank societe anonyme.
"Change in Control" has the meaning specified in Section 1406.
2
<PAGE> 10
"Commission" means the Securities and Exchange Commission as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 1311, shares issuable on conversion of Securities
shall include only shares of the class designated as Common Stock of the
Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, that if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in New York,
New York, which initially shall be One State Street Plaza, New York, New York
10004, Attention: Corporate and Institutional Trust, at which at any particular
time its corporate trust business shall principally be administered.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Current Market Price" has the meaning specified in Section 1304.
"DTC" has the meaning specified in Section 305.
"Defaulted Interest" has the meaning specified in Section 307.
3
<PAGE> 11
"Definitive Security" or "Definitive Securities" means a Security or
Securities that are in the form of the Security set forth in Sections 202 and
203 hereof, and not including the legend specified for a Global Security or the
additional language referred to in footnote 1 or the additional schedule
referred to in footnote 2.
"Depositary" has the meaning specified in Section 305.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" or "Global Securities" means a Security or
Securities in the form of the Security set forth in Sections 202 and 203
hereof, containing the legend specified for a Global Security, the additional
language referred to in footnote 1 and the additional schedule referred to in
footnote 2.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means SBC Warburg Inc. and Oppenheimer & Co.,
Inc.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Material Subsidiary" means a Subsidiary meeting the definition of
"significant subsidiary" set forth in Section 1-02(w) of Regulation S-X under
the Securities Act.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity thereof or by declaration of
acceleration, redemption or otherwise.
"Officers' Certificate" means a certificate, in form reasonably
satisfactory to the Trustee, signed by the Chairman of the Board, the Chief
Executive Officer, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. Any such certificate shall be
4
<PAGE> 12
delivered in such officer's corporate, and not individual, capacity. One of
the officers signing an Officers' Certificate given pursuant to Section 1004
shall be the principal executive, financial or accounting officer of the
Company.
"144A Global Security" has the meaning specified in Section 201.
"144A Securities Certificate" means a certificate substantially in
the form set forth as Annex B.
"Opinion of Counsel" means a written opinion of counsel, in form
reasonably satisfactory to the Trustee, who may be counsel for or an employee
of the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount have been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities; provided,
that if such Securities, or portions thereof, are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Company; provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor shall
be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Securities which the Trustee has received written notice of ownership
by the Company or any other obligor upon the Securities or any Affiliate
of Company shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
provides written evidence to the satisfaction of the Trustee the pledgee's
right
5
<PAGE> 13
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of and premium, if any, or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Purchase Agreement" means that certain Purchase Agreement dated July
28, 1997 between the Company and the Initial Purchasers.
"Record Date" means either a Regular Record Date or a Special Record
Date, as applicable.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture on the applicable Redemption Date.
"Registration Rights Agreement" means that certain Registration
Rights Agreement dated as of July 31, 1997 between the Company and the Initial
Purchasers.
"Regular Record Date", for the interest payable on any Interest
Payment Date, means the January 15 or July 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act of 1933,
as amended.
"Regulation S Certificate" means a certificate substantially in the
form set forth as Annex A.
"Regulation S Global Security" has the meaning specified in Section
201.
6
<PAGE> 14
"Repurchase Date" has the meaning specified in Section 1401.
"Repurchase Event" has the meaning specified in Section 1406. "Repurchase
Price" has the meaning specified in Section 1401.
"Resale Restriction Termination Date" means, with respect to any
Security, the date which is two years after the later of (i) the original issue
date of such Security and (ii) the last date on which the Company or any
Affiliate of the Company was the owner of such Security (or any Predecessor
Security).
"Responsible Officer" means, when used with respect to the Trustee,
any vice president (whether or not designated by numbers or words added before
or after the title "vice president"), secretary, treasurer, trust officer, any
assistant trust officer, any assistant cashier, any assistant secretary, any
assistant treasurer, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity
with the particular subject.
"Restricted Period" has the meaning specified in Section 201.
"Securities Custodian" means the Trustee, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (a) all indebtedness of the Company for money borrowed, whether
outstanding on the date of execution of the Indenture or thereafter created,
incurred or assumed, except any such indebtedness that by the term of the
instrument or instruments by which such indebtedness was created or incurred
expressly provides that it (i) is junior in right of payment to the Debentures
or (ii) ranks pari passu in right of payment with the Debentures, and (b) any
amendments, renewals, extensions, modifications, refinancings and refundings of
the foregoing. For the purposes of this definition, "indebtedness for money
borrowed" when used with respect to the Company means (i) any obligation of, or
any obligation guaranteed by, the Company for the repayment of borrowed money
including without limitation fees, penalties or other obligations in respect
thereof), whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) any deferred payment obligation of, or any such obligation
guaranteed by, the Company for the payment of the purchase price of property or
assets evidenced by a note or similar instrument, and (iii) any obligation of,
or any such obligation guaranteed by, the Company for the payment of rent or
other amounts under a lease of property or assets which obligation is required
to be classified and accounted for as a capitalized lease on the balance sheet
of the Company under generally accepted accounting principles.
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"Shelf Registration Statement" means the Registration Statement with
respect to the Common Stock the Issuer is required to file pursuant to the
Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such instalment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Termination of Trading" has the meaning specified in Section 1406.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the Securities Act legend set forth in Section 202 hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth as Annex C.
"Vice President", when used with respect to the Company means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act or as it may reasonably request. Each
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<PAGE> 16
such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual or firm signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual or such
firm, he has or they have made such examination or investigation as is
necessary to enable him or them to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied
with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any Person may certify to
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certification or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate of public officials or upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
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<PAGE> 17
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action, or to vote on any action,
authorized or permitted to be given or taken by Holders. If not set by the
Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be. With regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action. Notwithstanding the foregoing, the Company shall not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, any Act by the Holders pursuant to Section 501, 502 or 512.
(d) The ownership of Securities shall be proved by the Security
Register.
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(e) Any Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer therefor or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action hereunder with regard to any particular Security may do
so with regard to all or any part of the principal amount of such Security or
by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any Act of Holders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or at any other address previously furnished in
writing to the Holders and the Company by the Trustee; or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company,
addressed to it at the address of its principal executive offices
specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; upon receipt by a Trust
Officer if deposited in the mail, with postage prepaid, if mailed; when receipt
acknowledged in writing or by telephone by a Trust Officer, if telecopied; upon
receipt by a Trust Officer after timely delivery to the courier, if sent by
nationally recognized overnight air courier guaranteeing next day delivery.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall
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be filed with the Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver. All such
notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, with postage prepaid, if mailed; when answered back if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by nationally recognized
overnight air courier guaranteeing next day delivery.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act or another provision that would be
required or deemed under such Act to be a part of and govern this Indenture if
this Indenture were subject thereto, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Trustee shall bind each of their respective successors and assigns, whether so
expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the Holders of Securities and, with respect to Article Twelve, the
holders of Senior Indebtedness, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
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SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, but without regard to the
principles of conflicts of laws thereof.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal and premium if any, or conversion of the
Securities need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, or on such
last day for conversion; provided, that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, to the next succeeding Business Day.
SECTION 114. No Security Interest Created.
Nothing in this Indenture or in the Securities, express 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
or may be located.
SECTION 115. Limitation on Individual Liability.
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or any successor Person, either directly or through the Company,
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 this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators, shareholders,
officers or directors, as such, of the Company or any successor Person, or any
of them, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any Security or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, shareholder, officer or director, as
such, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
Indenture or in any Security or implied therefrom, are hereby expressly waived
and released as a
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condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Security.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any organizational document, any applicable law or with
the rules of any securities exchange on which the Securities are listed or as
may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
The Securities issued in definitive form shall be substantially in
the form set forth in Section 202 hereof.
Unless issued in definitive form, Securities issued and sold in
reliance on Rule 144A shall be issued in the form of one or more global
securities (the "144A Global Security"), the face of which shall be
substantially in the form set forth in Section 202 hereof and the reverse of
which shall be substantially in the form set forth in Section 203 hereof, which
144A Global Security shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the nominee of the Depositary, duly
executed by the Company and authenticated as provided for herein.
Securities offered and sold outside the United States in reliance on
Regulation S may be evidenced in the form of one or more permanent Global
Securities (the "Regulation S Global Security"), the face of which shall be
substantially in the form set forth in Section 202 hereof and the reverse of
which shall be substantially in the form set forth in Section 203 hereof, which
Regulation S Global Security shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee or an authenticating
agent as provided herein, for credit to the accounts of the respective
depositories for Euroclear and Cedel (or such other accounts as they may
direct). Prior to or on the 40th day after the later of the commencement of the
offering of the Securities and the last original issuance date of the
Securities (the "Restricted Period"), beneficial interests in the Regulation S
Global Security may only be held through Morgan Guaranty Trust Company of New
York, Brussels office, as operator of Euroclear or Cedel or another agent
member of Euroclear and Cedel acting for and on behalf of them unless delivery
is made through the 144A Global
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<PAGE> 22
Security in accordance with the certification requirements hereof. During the
Restricted Period, interests in the Regulation S Global Security may be
exchanged for interests in the Restricted Global Security or for Definitive
Securities only in accordance with the certification requirements described in
Section 305 below.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof.
The Definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or
may be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security.
[If a Global Security -- UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & Co., HAS AN INTEREST
HEREIN.]
[If a Transfer Restricted Security -- THIS SECURITY AND THE COMMON
STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
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<PAGE> 23
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.]
NEXSTAR PHARMACEUTICALS, INC.
6 1/4% Convertible Subordinated Debentures due 2004
No. __________ $__________
NEXSTAR PHARMACEUTICALS, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ________________ Dollars [OR SUCH
GREATER OR LESSER AMOUNT AS INDICATED ON THE SCHEDULE OF EXCHANGES OF
SECURITIES ON THE REVERSE HEREOF](1) on August 1, 2004, and to pay interest
thereon from the date of original issuance of Securities pursuant to the
Indenture or from and including the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on February 1 and
August 1 in each year, commencing February 1, 1998, at the rate of 6 1/4% per
annum, until the principal hereof is paid or made available for payment and
promises to pay any liquidated damages which may be payable pursuant to Section
4 of the Registration Rights Agreement on the Interest Payment Dates. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be January 15 or July 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is
____________________
(1) This phrase should be included only if the Security is issued in global
form.
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registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee or be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture. Notice of a Special Record Date shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date. Payment of
the principal of and premium, if any, and interest on this Security will be
made (i) in respect of Securities held of record by the Depositary or its
nominee in same day funds on or prior to the respective payment dates and (ii)
in respect of Securities held of record by Holders other than the Depositary or
its nominee at the office or agency of the Company maintained for that purpose
pursuant to Section 1002 of the Indenture, in each case in such coin or
currency of the United States of America as of the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment in respect of Securities held of record by
Holders other than the Depositary or its nominee may be made by check mailed on
or prior to the respective payment date to the address of the Person entitled
thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _______________________ NEXSTAR PHARMACEUTICALS, INC.
By _________________________________
Attest:
_____________________________
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SECTION 203. Form of Reverse of Global Securities and Definitive Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 6 1/4% Convertible Subordinated Debentures due 2004
(herein called the "Securities"), limited in aggregate principal amount to
$80,000,000 (including Securities issuable pursuant to the Initial Purchasers'
overallotment option, as provided for in the Purchase Agreement dated July 28,
1997 between the Company and the Initial Purchasers), issued and to be issued
under an indenture, dated as of July 31, 1997 (herein called the "Indenture"),
between the Company and IBJ Schroder Bank & Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or
before the close of business on August 1, 2004, or in case this Security or a
portion hereof is called for redemption, then in respect of this Security or
such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
second business day preceding the Redemption Date, to convert this Security (or
any portion of the principal amount hereof which is $1,000 or an integral
multiple thereof), at the principal amount hereof, or of such portion, into
fully paid and non-assessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of Common Stock at a conversion price equal to $16
7/8 principal amount for each share of Common Stock (or at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture)
by surrender of this Security, duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency maintained for that purpose
pursuant to Section 1002 of the Indenture, accompanied by written notice to the
Company in the form provided in this Security (or such other notice as is
acceptable to the Company) that the Holder hereof elects to convert this
Security, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, and, in case such surrender
shall be made during the period from the opening of business on any Regular
Record Date next preceding any Interest Payment Date to the close of business
on such Interest Payment Date (unless this Security or the portion thereof
being converted has been called for redemption), also accompanied by payment in
next day funds, or other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted. Subject to the aforesaid requirement for
payment and, in the case of a conversion after the Regular Record Date next
preceding any Interest Payment Date and on or before such Interest Payment
Date, to the right of the Holder of this Security (or any Predecessor Security)
of record at such Regular Record Date to receive an instalment of interest
(with certain exceptions provided in the Indenture), no payment or adjustment
is to be made upon conversion on account of any interest accrued hereon or on
account of any dividends on the Common Stock issued upon conversion. No
fractional shares or scrip representing fractions of shares will be issued on
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<PAGE> 26
conversion, but instead of any fractional share the Company shall pay a cash
adjustment as provided in the Indenture. The conversion price is subject to
adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party or the sale or transfer of all or substantially all of the assets of
Company, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger, sale or transfer
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares).
The Securities are subject to redemption upon not less than 15 (or
such longer period or time required by the Depositary)30 and not more than 60
days' notice by mail, at any time on or after August 10, 2000, as a whole or in
part, at the election of the Company, at the Redemption Prices set forth below
(expressed as percentages of the principal amount), plus accrued interest to
the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date).
If redeemed during the 12-month period beginning August 1 in the year
indicated (August 10, in the case of 2000), the redemption price shall be:
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
<S> <C> <C> <C>
2000 103.00% 2001 101.50%
2002 100.00% 2003 100.00%
</TABLE>
In certain circumstances involving the occurrence of a Repurchase
Event (as defined in the Indenture), the Holder hereof shall have the right to
require the Company to repurchase this Security at 100% of the principal amount
hereof, together with accrued interest to the Repurchase Date, but interest
installments whose Stated Maturity is on or prior to such Repurchase Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
In the event of redemption or conversion of this Security in part
only, a new Security or Securities for the unredeemed or unconverted portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
19
<PAGE> 27
The indebtedness evidenced by this Security is, in all respects,
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to effectuate the subordination so provided, and (c) appoints
the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with
the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the Securities at the
time Outstanding, and, under certain limited circumstances, by the Company and
the Trustee without the consent of the Holders. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the times, place and rate,
and in the coin or currency, herein prescribed or to convert this Security as
provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Securities are issuable only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate
20
<PAGE> 28
principal amount of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange except as provided in the Indenture, and the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, except as provided in this Security, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Company will
furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.
[FORM OF CONVERSION NOTICE]
TO NEXSTAR PHARMACEUTICALS, INC.
The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which is
$1,000 or a multiple thereof) designated below, into shares of Common Stock in
accordance with the terms of the Indenture referred to in this Security, and
directs that the shares issuable and deliverable upon the conversion, together
with any check in payment for a fractional share and any Security representing
any unconverted principal amount hereof, be issued and delivered to the
registered owner hereof unless a different name has been provided below if this
Notice is being delivered on a date after the close of business on a Regular
Record Date and prior to the close of business on the related Interest Payment
Date, this Notice is accompanied by payment in next day funds, or other funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date on the principal of this Security to be converted (unless
this Security has been called for redemption). If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated: ______________________________
______________________________
Signature(s)
21
<PAGE> 29
Signature(s) must be guaranteed by a commercial
bank or trust company or a member firm of a
national stock exchange if shares of Common Stock
are to be delivered, or Securities to be issued, other
than to and in the name of the registered owner.
______________________________________
Medallion Guarantee
Fill in for registration of shares of Common Stock if they are to be delivered,
or Securities if they are to be issued, other than to and in the name of the
registered owner:
_______________________________________
(Name)
_______________________________________
(Street Address)
_______________________________________
(City, State and zip code)
(Please print name and address)
Register: _____ Common Stock
_____ Securities
(Check appropriate line(s)).
Principal amount to be converted (if less than all):
$ ______,000
Social Security or other Taxpayer Identification Number of owner:
_____________________________________________________
22
<PAGE> 30
[ASSIGNMENT FORM]
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
______________________________________________________________________________
(Insert assignee's social security or tax ID number)__________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
______________________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
______________________________________________________________________________
Date: _________________ Your signature: ____________________________________
(sign exactly as your name appears on the face of this Security)
Medallion Guarantee: _________________________________________________________
23
<PAGE> 31
[OPTION OF HOLDER TO ELECT PURCHASE]
If you wish to have this Security purchased by the Company pursuant
to Section 1401 of the Indenture, check the Box: [__]
If you wish to have a portion of this Security (which is $1,000 or an
integral multiple thereof) purchased by the Company pursuant to Section 1401 of
the Indenture, state the amount you wish to have purchased:
$____________________
Date: __________________ Your Signature(s): _______________________________
Tax Identification No.: _____________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee: __________________________________
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES](2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Signature of
Principal Amount of authorized
Amount of decrease Amount of increase this Global signatory of
in Principal Amount in Principal Amount Security following Trustee or
of this Global of this Global such decrease (or Securities
Date of Exchange Security Security increase) Custodian
---------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
____________________
(2) This Schedule should be included only if the Security is issued in
global form.
24
<PAGE> 32
SECTION 204. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned Indenture.
________________________________,
as Trustee
By _________________________________
Authorized Signatory
Dated: __________________
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $80,000,000
(including $5,000,000 aggregate principal amount of Securities that may be sold
to the Initial Purchasers by the Company upon exercise of the overallotment
option granted pursuant to the Purchase Agreement), except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906,
1108, 1302 or 1405.
The Securities shall be known and designated as the "6 1/4 %
Convertible Subordinated Debentures due 2004" of the Company. Their Stated
Maturity shall be August 1, 2004 and they shall bear interest at the rate of 6
1/4% per annum, from the date of original issuance of Securities pursuant to
this Indenture or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, payable semi-annually
on February 1 and August 1, commencing February 1, 1998, until the principal
thereof is paid or made available for payment.
The principal of and premium, if any, and interest on the Securities
shall be payable (i) in respect of Securities held of record by the Depositary
or its nominee in same day funds on or prior to the respective payment dates
and (ii) in respect of Securities held of record by Holders other than the
Depositary or its nominee at the office or agency of the Company maintained for
such purpose pursuant to Section 1002; provided, however, that at the option of
the Company payment to Holders of record other than the Depositary may be made
by check mailed no later than the
25
<PAGE> 33
applicable payment date to the address of the Person entitled thereto as such
address shall appear in the Security Register.
The Securities shall be subject to the transfer restrictions set
forth in Section 305.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
The Securities shall be convertible as provided in Article Thirteen.
The Securities shall be subject to repurchase at the option of the
Holder as provided in Article Fourteen.
SECTION 302. Denominations.
The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President or one of its
Vice Presidents, under its corporate seal or a facsimile thereof reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall either at one time or from time to time pursuant
to such instructions as may be described therein authenticate and deliver such
Securities as in this Indenture provided and not otherwise. Such Company Order
shall specify the amount of Securities to be authenticated and the date on
which the original issue of securities is to be authenticated, and shall
certify that all conditions precedent to the issuance of such Securities
contained in this Indenture have been complied with. The aggregate principal
amount of Securities outstanding at any time may not exceed the amount set
forth above except as provided in Section 306.
26
<PAGE> 34
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of the Indenture. The Trustee may appoint an Authenticating Agent
pursuant to the terms of Section 614.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the Definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities. Every such temporary Security shall be executed
by the Company and shall be authenticated and delivered by the Trustee upon the
same conditions and in substantially the same manner, and with the same effect,
as the Definitive Security or Securities in lieu of which it is issued.
If temporary Securities are issued, the Company will cause Definitive
Securities to be prepared without unreasonable delay. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more Definitive Securities of a like
principal amount of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
(a) General. The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002 being
herein sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. At all reasonable
times the Security Register shall be open for inspection by the Company.
27
<PAGE> 35
The Company initially appoints The Depository Trust Company ("DTC")
to act as depositary (the "Depositary") with respect to the Global
Security(ies).
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Security(ies).
Subject to the other provisions of this Indenture regarding
restrictions on transfer, upon surrender for registration of transfer of any
Security at an office or agency of the Company designated pursuant to Section
1002 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of
a like aggregate principal amount and bearing such restrictive legends as may
be required by this Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 305 Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at any such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge to a Holder shall be made for any registration of
transfer or exchange of Securities except as provided in Section 306. The
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 905, 1108 or 1302 not involving any transfer.
The Company or the Security Registrar shall not be required (i) to
issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities selected for redemption under Section 1104
and ending at the close of business on the day of such mailing, or (ii) to
28
<PAGE> 36
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 305(b) shall be made only in accordance with this Section
305(b).
(i) 144A Global Security to Regulation S Global Security. If the
owner of a beneficial interest in the 144A Global Security wishes at any
time to transfer such interest to a Person who wishes to acquire the same
in the form of a beneficial interest in the Regulation S Global Security,
such transfer may be effected only in accordance with the provisions of
this Clause (b)(i) and Clause (b)(v) below and subject to any applicable
procedures of the Depositary, Euroclear and Cedel (the "Applicable
Procedures"). Upon receipt by the Trustee, as Security Registrar, of (A)
an order given by the Depositary or its authorized representative
directing that a beneficial interest in the Regulation S Global Security
in a specified principal amount be credited to a specified Depositary
participant's account and that a beneficial interest in the 144A Global
Security in an equal principal amount be debited from another specified
Depositary participant's account and (B) delivery to the Trustee of a
Regulation S Certificate in the form attached hereto as Annex A and duly
executed by the owner of such beneficial interest in the 144A Global
Security or his attorney duly authorized in writing, then the Trustee, as
Security Registrar but subject to Clause (b)(iv) below, shall reduce the
principal amount of the 144A Global Security and increase the principal
amount of the Regulation S Global Security by such specified principal
amount as provided in Section 311.
(ii) Regulation S Global Security to 144A Global Security. If the
owner of a beneficial interest in the Regulation S Global Security wishes
at any time to transfer such interest to a Person who wishes to acquire
the same in the form of a beneficial interest in the 144A Global Security,
such transfer may be effected only in accordance with this Clause (b)(ii)
and subject to the Applicable Procedures. Upon receipt by the Trustee, as
Security Registrar, of (A) an order given by the Depositary or its
authorized representative directing that a beneficial interest in the 144A
Global Security in a specified principal amount be credited to a specified
Depositary participant's account and that a beneficial interest in the
Regulation S Global Security in an equal principal amount be debited from
another specified Depositary participant's account and (B) if such
transfer is to occur during the Restricted Period, a 144A Securities
Certificate in the form attached hereto as Annex B shall be delivered to
the Security Registrar satisfactory to the Trustee and duly executed by
the owner of such beneficial interest in the Regulation S Global Security
or his attorney duly authorized in writing, then the Trustee, as Security
Registrar, shall reduce the principal amount of the Regulation S Global
Security and increase the principal amount of the 144A Global Security by
such specified principal amount as provided in Section 311.
29
<PAGE> 37
(iii) Definitive Security to Definitive Security. A Definitive
Security may be transferred, in whole or in part, to a Person who takes
delivery in the form of another Definitive Security as provided in Section
305(a), provided that, if the Security to be transferred in whole or in
part is a Transfer Restricted Security, then the Trustee shall have
received a 144A Securities Certificate or a Regulation S Certificate in
the form attached hereto as Annex A and duly executed by the transferor
Holder or his attorney duly authorized in writing (subject in every case
to Section 305(c)).
(iv) Exchanges between Global Security and Definitive Security. A
beneficial interest in a Global Security may be exchanged for a Definitive
Security that is not a Global Security as provided in Section 311,
provided that, if such interest is a beneficial interest in the 144A
Global Security, or if such interest is a beneficial interest in the
Regulation S Global Security and such exchange is to occur during the
Restricted Period, then such interest shall be exchanged for a Transfer
Restricted Security (subject in each case to Section 305(c)). A
Definitive Security may not be exchanged for a beneficial interest in a
Global Security.
(v) Regulation S Global Security to be Held Through Euroclear or
Cedel during Restricted Period. The Company shall use its best efforts to
cause the Depositary to ensure that, until the expiration of the
Restricted Period, beneficial interests in the Regulation S Global
Security may be held only in or through accounts maintained at the
Depositary by Euroclear or Cedel (or by Depositary participants acting for
the account thereof), and no Person shall be entitled to effect any
transfer or exchange that would result in any such interest being held
otherwise than in or through such an account; provided that this Clause
(b)(v) shall not prohibit any transfer or exchange of such an interest in
accordance with Clause (b)(ii) above.
(c) Securities Act Legends. All Securities shall bear the legend
specified for Transfer Restricted Securities in Section 202, subject to the
following:
(i) Any Securities which are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act,
together with any Securities issued in exchange therefor, shall not bear a
Securities Act legend; the Company shall inform the Trustee in writing of
the effective date of any such registration statement registering the
Securities under the Securities Act and shall notify the Trustee at any
time when prospectuses may not be delivered with respect to Securities to
be sold pursuant to such registration statement. The Trustee shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned registration statement;
(ii) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which
does not bear a Securities Act legend may be issued in exchange for or in
lieu of a Security (other than a Global Security) or any portion thereof
which bears such a legend if the Trustee has received an Unrestricted
Securities Certificate in
30
<PAGE> 38
the form attached hereto as Annex C and duly executed by the Holder of
such legended Security or his attorney duly authorized in writing, and
after such date and receipt of such certificate, the Trustee shall
authenticate and deliver such a new Security in exchange for or in lieu of
such other Security as provided in this Article Three; and
(iii) a new Security which does not bear a Securities Act legend
may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if the
Company notifies the Trustee in writing in the form of an Officer's
Certificate that placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Company, shall
authenticate and deliver such a new Security as provided in this Article
Three.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding. The Trustee may charge the Company
for the Trustee's expenses in replacing such Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
31
<PAGE> 39
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 or mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest. Payment
of interest will be made (i) in respect of Securities held by the Depositary or
its nominee, in same day funds on or prior to the respective Interest Payment
Dates and (ii) in respect of Securities held of record by Holders other than
the Depositary or its nominee, at the office of the Trustee in New York, New
York or at such other office or agency of the Company as it shall maintain for
that purpose pursuant to Section 1002, provided, however, that, at the option
of the Company, interest on any Security held of record by Holders other than
the Depositary or its nominee may be paid by mailing checks no later than the
applicable interest Payment Date to the addresses of the Holders thereof as
such addresses appear in the Securities Register.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Company shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Company shall promptly
notify the Trustee of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears
in the Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed
32
<PAGE> 40
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on such Regular Record Date, provided,
however, that Securities so surrendered for conversion shall (except in the
case of Securities or portions thereof called for redemption) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount being surrendered for conversion. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
If the Company is required to increase its rate of interest pursuant
to the terms of the Registration Rights Agreement the Company shall deliver an
Officer's Certificate to the Trustee setting forth the increased rate and the
period for which such rate is applicable.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer, exchange or conversion shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 311. Global Securities.
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary or a nominee thereof and delivered to
the Depositary or a nominee thereof or custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
(B) has ceased to be a clearing agency registered as such under the Exchange
Act, and in either case the Company thereupon fails to appoint a successor
Depositary, (ii) there shall have occurred and be continuing an Event of
Default with respect to such Global Security or (iii) the Company executes and
delivers to the Trustee a Company Order stating that all Global Securities
shall be exchanged in whole for Securities that are not Global Securities (in
which case such exchange shall be effected by the Trustee).
(c) If any Global Security is to be exchanged for other Securities
or canceled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to
be exchanged for other Securities or cancelled in part, or if another Security
is to be exchanged in whole or in part for a beneficial interest in any Global
Security, in each case, as provided in Section 305, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided in
this Article Three or (ii) the principal
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amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or cancelled, or equal to the principal amount of
such other Security to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of
the Trustee, as Security Registrar, whereupon the Trustee, in accordance with
the Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any
such surrender or adjustment of a Global Security, the Trustee shall, subject
to Section 305(c) and as otherwise provided in this Article Three, authenticate
and deliver any Securities issuable in exchange for such Global Security (or
any portion thereof) to or upon the order of, and registered in such names as
may be directed by, the Depositary or its authorized representative. Upon the
request of the Trustee in connection with the occurrence of any of the events
specified in the preceding paragraph, the Company shall promptly make available
to the Trustee a reasonable supply of Securities that are not in the form of
Global Securities. The Trustee shall be entitled to rely upon any order,
direction or request of the Depositary or its authorized representative which
is given or made pursuant to this Article Three if such order, direction or
request is given or made in accordance with the Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
the Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Security will be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its participants and such owners of beneficial interests in a Global Security
will not be considered the owners or holders of such Global Security for any
purpose of this Indenture or the Securities.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as expressly provided for in this Article Four), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
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(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company, or
(iv) are delivered to the Trustee for conversion in
accordance with Article Thirteen,
and the Company, in the case of (i), (ii), (iii) or (iv) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount in cash sufficient
(without consideration of any investment of such cash) to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation for principal and premium,
if any, and interest to the date of such deposit (in the case of
securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be; provided that the
Trustee shall have been irrevocably instructed to apply such amount
to said payments with respect to the Securities;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
following rights or obligations under the Securities and this Indenture shall
survive until otherwise terminated or discharged hereunder: (a) Article
Thirteen, Article Fourteen and the Company's obligations under Sections 304,
305, 306, 1002 and 1003, in each case with respect to any Securities
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described in subclause (B) of Clause (1) of this Section, (b) this Article
Four, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including the obligations of the Company to the Trustee under
Section 607, and the obligations of the Trustee to any Authenticating Agent
under Section 614 and (d) if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the rights of Holders
of any Securities described in subclause (B) of Clause (1) of this Section to
receive, solely from the trust fund described in such subclause (B), payments
in respect of the principal of, and premium (if any) and interest on, such
Securities when such payment are due.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and premium, if
any, and interest for whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and
held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
SECTION 403. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Four by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Four until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust with respect to the Securities;
provided, however, that if the Company makes any payment of principal of or any
premium or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
the Securities to receive such payment from the money so held in trust.
SECTION 404. 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 any Security and not applied but remaining unclaimed by the
Holders of such Securities for two years after the date upon which the
principal of, premium, if any, or interest on such Securities, as the case may
be, shall have become due and payable, shall be repaid to the Company by the
Trustee on written demand and all liability of the Trustee shall thereupon
cease with respect to such monies; and the Holder of any of the Securities
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.
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ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body);
(1) default in the payment of the principal of or premium, if any,
on any Security at its Maturity, whether or not such payment is prohibited
by the provisions of Article Twelve; or
(2) default in the payment of any interest upon any Security when it
becomes due and payable, whether or not such payment is prohibited by the
provisions of Article Twelve, and continuance of such default for a period
of 30 days; or
(3) failure to provide timely notice of a Repurchase Event as
required in accordance with the provisions of Article Fourteen; or
(4) default in the payment of the Repurchase Price in respect of any
Security on the Repurchase Date therefor in accordance with the provisions
of Article Fourteen, whether or not such payment is prohibited by the
provisions of Article Twelve; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(6) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any Subsidiary or under
any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or any Subsidiary, whether such indebtedness now
exists or shall hereafter be created, which default shall constitute a
failure to pay the principal of indebtedness in excess of $5,000,000 when
due and payable after the expiration of any applicable grace period with
respect thereto or shall have resulted in indebtedness in excess of
$5,000,000 becoming or being declared due and payable prior to
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the date on which it would otherwise have become due and payable, without
such indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 30 days after there shall have
been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying
such default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; or
(7) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company or any Material
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any Material
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company or any Material Subsidiary under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Material Subsidiary or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive
days; or
(8) the commencement by the Company or any Material Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of
the Company or any Material Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by
it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Material Subsidiary or of any
substantial part of its property, or the making by it of a general
assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company or any Material Subsidiary in
furtherance of any such action.
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 501, a record date shall automatically and without any other action by
any Person be set for the purpose of determining the Holders of Outstanding
Securities entitled to join in such Notice of Default, which record date shall
be the close of business on the day the Trustee receives such Notice of
Default. The Holders of Outstanding Securities on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to join in
such Notice of Default, whether or not
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such Holders remain Holders after such record date: provided, that unless such
Notice of Default shall have become effective by virtue of the Holders of the
requisite principal amount of Outstanding Securities on such record date (or
their duly appointed agents) having joined therein on or prior to the 90th day
after such record date, such Notice of Default shall automatically and without
any action by any Person be canceled and of no further force or effect.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than as specified in subparagraph (7)
or (8) of Section 501) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal plus
any interest accrued on the Securities to the date of declaration shall become
immediately due and payable. If an Event of Default specified in subparagraph
(7) or (8) of Section 501 occurs and is continuing, then the principal of,
premium, if any, and accrued and unpaid interest, if any, on all of the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder of
Securities.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee and each
predecessor Trustee, their respective agents and counsel hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee and each predecessor Trustee, their respective agents
and counsel;
and
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(2) all Events of Default, other than the nonpayment of the
principal of, premium, if any, and interest on the Securities that has
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or
any rescission and annulment of any such declaration, pursuant to this Section
502, a record date shall automatically and without any other action by any
Person be set for the purpose of determining the Holders of Outstanding
Securities entitled to join in such declaration, or rescission and annulment,
as the case may be, which record date shall be the close of business on the day
the Trustee receives such declaration, or rescission and annulment, as the case
may be. The Holders of Outstanding Securities on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to join in
such declaration, or rescission and annulment, as the case may be, whether or
not such Holders remain Holders after such record date; provided, that unless
such declaration, or rescission and annulment, as the case may be, shall have
become effective by virtue of Holders of the requisite principal amount of
Outstanding Securities on such record date (or their duly appointed agents)
having joined therein on or prior to the 90th day after such record date, such
declaration, or rescission and annulment, as the case may be, shall
automatically and without any action by any Person be canceled and of no
further force or effect.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of or premium,
if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and premium, if any, and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal and premium, if any, and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee
and each predecessor Trustee, their respective agents and counsel, and any
other amounts due the Trustee or any predecessor Trustee under Section 607.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid and may
prosecute any such proceeding to judgment or final decree, and may enforce the
same against the Company (or any other obligor upon the Securities) and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company (or any other obligor upon the Securities),
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have the claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it and
each predecessor Trustee for the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and
their respective agents and counsel, and any other amounts due the Trustee
under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and may be a member of the
Creditors' Committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall,
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after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and
their respective agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium,
if any, or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To payment of all amounts due the Trustee under Section 607;
SECOND: Subject to Article 12, to the holders of Senior
Indebtedness;
THIRD: To the payment of the amounts then due and unpaid for
principal of and premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal and
premium, if any, and interest, respectively; and
FOURTH: The balance, if any, to the Company or any other Person or
Persons determined to be entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity satisfactory to it against the costs, expenses and liabilities
to be incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of a repurchase pursuant to Article Fourteen, on the
Repurchase Date) and to convert such Security in accordance with Article
Thirteen and to institute suit for the enforcement of any such payment and
right to convert, and such rights shall not be impaired without the consent of
such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or
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otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall determine that the action so directed would involve the
Trustee in personal liability or would be unduly prejudicial to Holders
not joining in such direction.
Upon receipt by the Trustee of any such direction, a record date
shall automatically and without any other action by any Person be set for the
purpose of determining the Holders of Outstanding Securities entitled to join
in such direction, which record date shall be the close of business on the day
the Trustee receives such direction. The Holders of Outstanding Securities on
such record date (or their duly appointed agents), and only such Persons, shall
be entitled to join in such direction, whether or not such Holders remain
Holders after such record date; provided, that unless such direction shall have
become effective by virtue of Holders of the requisite principal amount of
Outstanding Securities on such record date (or their duly appointed agents)
having joined therein on or prior to the 90th day after such record date, such
direction shall automatically and without any action by any Person be canceled
and of no further force or effect.
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SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or premium, if any, or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such litigant, in the manner and to the extent provided in the
Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Company, in any suit instituted by the Trustee, a suit by a Holder pursuant to
Section 508, or a suit by a Holder or Holders of more than 10% in principal
amount of the Outstanding Securities.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided
by this Indenture and the Trust Indenture Act for securities issued pursuant to
indentures qualified thereunder. Except as otherwise provided herein,
notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability or risk in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity satisfactory
to it against such risk or liability is not reasonably assured to it. Whether
or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of
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this Section. The Trustee shall not be liable (x) for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts or (y) with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding relating to the time, method and place of
conducting any proceeding or any remedy available to the Trustee or exercising
any trust or power conferred upon the Trustee, under this Indenture. Prior to
the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred: (i) the duties and obligations of
the Trustee shall be determined solely by the express provisions of this
Indenture and in the Trust Indenture Act, and the Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Indenture and in the Trust Indenture Act, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and (ii) in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions therein, upon any statements, certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture and
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties; but in the case of any such statements,
certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform on their face to the
requirements of this Indenture. If a default or 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 thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default of which a
Responsible Officer of the Trustee receives written notice and to the extent
provided by the Trust Indenture Act; provided, however, that in the case of any
default other than a default in the payment of the principal of (or premium, if
any) or interest on any Debenture, with respect to which the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of Debentures; and provided, further,
that in the case of any default of the character specified in Section 501(5),
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
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(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate and an Opinion
of Counsel;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(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 reasonable security or indemnity
satisfactory to it against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction;
(f) before the Trustee acts or refrains from acting with respect to
any matter contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to the
provisions of Section 102, and the Trustee shall be protected and shall
not be liable for any action it takes or omits to take in good faith and
without gross negligence in reliance on such certificate or opinion;
(g) the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder;
(h) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
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(i) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of
the Company, and the Trustee and any Authenticating Agent assume no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. The
Trustee and any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. The
Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (including its services as
Security Registrar or Paying Agent, if so appointed by the Company) and in
connection with entering into the Indenture as may be mutually agreed upon
in writing by the Company and the Trustee (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein and subject to the
terms of any written agreement between the Company and the Trustee, to
reimburse the Trustee and each predecessor. Trustee upon its request for
all reasonable expenses, disbursements and advances
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incurred or made by or on behalf of it in connection with the performance
of its duties under any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel and all other persons not regularly in its employ) except to
the extent any such expense, disbursement or advance may be attributable
to its negligence or bad faith; and
(3) to indemnify the Trustee and each predecessor Trustee (each an
"indemnitee") for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder (including its
services as Security Registrar or Paying Agent, if so appointed by the
Company) including enforcement of this Section 607 (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel and all other persons not regularly in its employ) and
including the costs and expenses of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Company shall
defend any claim or threatened claim asserted against an indemnitee for
which it may seek indemnity, and the indemnitee shall cooperate in the
defense unless, in the reasonable opinion of the indemnitee's counsel, the
indemnitee has an interest adverse to the Issuer or a potential conflict
of interest exists between the indemnitee and the Company, in which case
the indemnitee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company
shall only be responsible for the reasonable fees and expenses of one law
firm (in addition to local counsel) in any one action or separate
substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, such law firm to be designated
by the indemnitee.
As security for the performance of the obligations of the Company
under this Section 607, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the Holders of particular Securities,
and the Securities are hereby subordinated to such prior Lien. The obligations
of the Company under this Section to compensate and indemnify the Trustee and
any predecessor Trustee and to pay or reimburse the Trustee and any predecessor
Trustee for expenses, disbursements and advances, and any other amounts due the
Trustee or any predecessor Trustee under Section 607, shall constitute an
additional obligation hereunder and shall survive the satisfaction and
discharge of this Indenture and any other termination of this Indenture
including any termination under any bankruptcy law.
When the Trustee or any predecessor Trustee incurs expenses or
renders services in connection with the performance of its obligations
hereunder (including its services as Security Registrar or Paying Agent, if so
appointed by the Company) after an Event of Default specified in Section 501(7)
or (8) occurs, the expenses and the compensation for the services are intended
to constitute expenses of administration under any applicable bankruptcy,
insolvency or other similar
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federal or state law to the extent provided in Section 503(b)(5) of Title 11 of
the United States Code, as now or hereafter in effect.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that (i) is eligible pursuant to the Trust Indenture Act to act as such,
(ii) has (or, in the case of a corporation included in a bank holding company
system, whose related bank holding company has) a combined capital and surplus
of at least $50,000,000 and (iii) has a Corporate Trust Office, or a designated
agent, in the Borough of Manhattan, The City of New York. If such Person
publishes reports of conditions at least annually, pursuant to law or to the
requirements of a Federal or state supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the resigning Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Securities delivered to
the Trustee and to the Company.
(d) If at any time:
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(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for the last six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
such successor Trustee shall comply with the applicable requirements of Section
611. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611 become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner required by Section 611, any Holder who
has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the
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successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents acceptable
to and at the expense of the Company which shall be authorized to act on behalf
of the Trustee to authenticate Securities issued upon original issue and upon
exchange, registration of transfer, partial conversion or partial redemption or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Person organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such
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laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue o be an
Authenticating Agent, provided such Person shall be otherwise eligible under
this Section, without the execution or filing of any paper or any further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail notice of such
appointment by first-class mail, postage prepaid, to all Holders as their names
and addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment under this Section shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible to act as such under
the provisions of this Section.
Any Authenticating Agent by the acceptance of its appointment shall
be deemed to have represented to the Trustee that it is eligible for
appointment as Authenticating Agent under this Section and to have agreed with
the Trustee that it will perform and carry out the duties of an Authenticating
Agent as herein set forth, including among other things the duties to
authenticate Securities when presented to it in connection with the original
issuance and with exchanges, registrations of transfer or redemptions or
conversions thereof or pursuant to Section 306; it wilt keep and maintain, and
furnish to the Trustee from time to time as requested by the Trustee,
appropriate records of all transactions carried out by it as Authenticating
Agent and will furnish the Trustee such other information and reports as the
Trustee may reasonably require; and it will notify the Trustee promptly if it
shall cease to be eligible to act as Authenticating Agent in accordance with
the provisions of this Section. Any Authenticating Agent by the acceptance of
its appointment shall be deemed to have agreed with the Trustee to indemnify
the Trustee against any
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loss, liability or expense incurred by the Trustee and to defend any claim
asserted against the Trustee by reason of any acts or failures to act of such
Authenticating Agent, but such Authenticating Agent shall have no liability for
any action taken by it in accordance with the specific written direction of the
Trustee.
The Trustee shall not be liable for any act or any failure of the
Authenticating Agent to perform any duty either required herein or authorized
herein to be performed by such person in accordance with this Indenture.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
IBJ Schroder Bank & Trust Company,
As Trustee
By ________________________________
As Authenticating Agent
By ________________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 days after each Regular Record
Date, a List, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
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(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished.
Notwithstanding the foregoing, so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
SECTION 702. Preservation of Information; Communication to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 701
and the names and addresses of Holders received by the Trustee in its
capacity as Security Registrar. The Trustee may destroy any list furnished
to it as provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided
by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act or otherwise in
accordance with this Indenture.
SECTION 703. Reports by Trustee.
(a) Not later than 60 days following each May 15, the Trustee shall
transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are
listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided, that any
such information, documents or reports required to be filed with the
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Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
SECTION 705. Rule 144A Information Requirement.
If at any time prior to the Resale Restriction Termination Date the
Company is no longer subject to Section 13 or 15(d) of the Exchange Act, the
Company will furnish to the Holders or beneficial holders of the Securities and
prospective purchasers of the Securities designated by the Holders of the
Securities, upon their request, information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act until the earlier of (i) the date
on which the Securities and the underlying Common Stock are registered under
the Securities Act or (ii) the Resale Restriction Termination Date.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, all or substantially
all of the properties and assets of the Company shall be a corporation,
partnership or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and premium, if
any, and interest on all the Securities and the performance or observance
of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Section 1311;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) such consolidation, merger, conveyance, transfer or lease does
not adversely affect the validity or enforceability of the Securities; and
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(4) the Company or the successor Person has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with and that such supplemental indenture constitutes the
legal valid and binding obligation of the successor Person (subject to the
customary exceptions).
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a transfer by lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cause this Indenture to be qualified under the Trust
Indenture Act; or
(2) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(3) to add to the covenants of the Company for the benefit of the
Holders or an additional Event of Default, or to surrender any right or
power conferred herein or in the Securities upon the Company; or
(4) to secure the Securities; or
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(5) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1311; or
(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or
(7) to cure any ambiguity, to correct or supplement any provision
herein or in the Securities which may be defective or inconsistent with
any other provision herein or in the Securities, or to make any other
provisions with respect to matters or questions arising under this
indenture which shall not be inconsistent with the provisions of this
Indenture; provided, that such action pursuant to this Clause (7) shall
not adversely affect the interests of the Holders in any material respect
and the Trustee may rely upon an opinion of counsel to that effect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect the
right to convert any Security as provided in Article Thirteen (except as
permitted by Section 901(5)), or modify the provisions of Article
Fourteen, or the provisions of this Indenture with respect to the
subordination of the Securities, in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding
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Security affected thereby; provided, however, that this Clause shall not
be deemed to require the consent of any Holder with respect to changes in
the references to "the Trustee" and concomitant changes in this Section
and Section 1006, or the deletion of this proviso, in accordance with the
requirements of Section 901(6).
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture,
all precedent to its execution and delivery have been complied with and that it
constitutes the legal, valid and binding obligation of the Company (subject to
customary exceptions). The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which adversely affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and (at the specific direction of the Company) authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
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SECTION 907. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to Section 902, the Company shall transmit to
the Holders a notice setting forth the substance of such supplemental
indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of and
premium, if any, and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in New York, New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, where Securities may be
surrendered for exchange or conversion and where notices and demands to or upon
the Company in respect of the Securities 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 any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, or the offices of its Agent, DTC, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligations to maintain an office or agency in New
York, New York for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will
on or before each due date of the principal of and premium, if any, or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and
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premium, if any, or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
on prior to 11:00 a.m. (New York City time) on each due date of the principal
of and premium, if any, or interest on any Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal and any premium
and interest so becoming due, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee or
the Company to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act and this indenture applicable to it as a Paying Agent and
hold all sums held by it for the payment of principal of or any premium or
interest on the Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (ii) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any payment in
respect of the Securities; and (iii) at any time during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities, and account for any funds
disbursed.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of and premium,
if any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York,
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New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate which shall comply with the requirements of Section 102
stating whether or not to the best knowledge of the signers thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises and the existence, rights
(charter and statutory) and franchises of each Material Subsidiary; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1005, if before the time for such
compliance the Holders of at least a majority in principal amount of the
outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee in respect of any such covenant or condition shall remain in full force
and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities may be redeemed at the election of the Company, in
whole or from time to time in part, at any time on or after August 10, 2000, at
the Redemption Prices specified in the form of Security hereinbefore set forth,
together with accrued interest to the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company as permitted
by any provision of this Indenture shall be made in accordance with such
provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter period shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities
to be redeemed. In case of any redemption at the election of the Company of all
of the Securities, the Company shall, at least 45 days prior to the Redemption
Date fixed by the Company (unless a shorter period shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date.
SECTION 1104. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot or pro rata or by such other method as the
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to $1,000 or any integral multiple thereof)
of the principal amount of Securities of a denomination larger than $1,000.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed shall be
treated by the Trustee as Outstanding for the purpose of such selection. In any
case where more than one Security is registered in the same name, the Trustee
in its discretion may treat the aggregate principal amount so registered as if
it were represented by one Security.
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The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 15 (or such longer period as is required by the
Depositary) nor more than 60 days prior to the Redemption Date, to the Trustee
and to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that (unless the
Company shall default in payment of the Redemption Price) interest thereon
will cease to accrue on and after said date,
(e) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate and the place or places where
such Securities may be surrendered for conversion, and
(f) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request received
by the Trustee at least 25 days prior to the Redemption Date, by the Trustee in
the name and at the expense of the Company.
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SECTION 1106. Deposit of Redemption Price.
At or prior to 9:00 a.m. (New York City time) on any Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in same day funds sufficient to
pay the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on that date other than any Securities called
for redemption on that date which have been converted prior to the date of such
deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that installments of
interest whose Maturity is on or prior to the Redemption Date shall be payable
to the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company maintained for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal
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amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SUBORDINATION OF SECURITIES
SECTION 1201. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, at all times and
in all respects, the indebtedness represented by the Securities and the payment
of the principal of and premium, if any, and interest on each and all of the
Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding, relative to the Company or to its creditors, as such, or to a
substantial part of its assets, or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefits of creditors or any other marshaling 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
Holders of the Securities are entitled to receive any payment or distribution
of any kind or character, whether in cash, property or securities, on account
of principal of or premium, if any, or interest on the Securities, 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, 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
Securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up or
event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, 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
Securities, 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 the Trustee or such
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Holder, as the case may be, then and in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company for application to the
payment of all Senior 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.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which are
subordinated in right of payment to all Senior Indebtedness which may at the
time be outstanding to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the term and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, general assignment for the benefit of creditors or marshaling
of assets and liabilities of the Company for the purposes of this Section if
the Person formed by such consolidation or into which the Company is merged or
which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of
Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full in cash of all amounts due on or
in respect of such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holders of the Securities are
entitled to receive any 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 Securities) by the Company on account of the
principal of or premium, if any, or interest on the Securities or on account of
the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or such Holder,
as the case may be, 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 and
with respect to which Section 1202 would be applicable.
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SECTION 1204. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal of or premium, if any, or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Senior Indebtedness shall
have occurred and be continuing and shall have resulted in such Senior
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, unless and until such
event of default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or (b) in the
event any judicial proceeding shall be pending with respect to any such default
in payment or event of default, then 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 Securities) shall be made by
the Company on account of the principal of or premium, if any, or interest on
the Securities or on account of the purchase or other acquisition of
Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or such Holder,
as the case may be, 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 1202 would be applicable.
SECTION 1205. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, general assignment for the benefit of creditors or other marshaling
of assets and liabilities of the Company referred to in Section 1202 or under
the conditions described in Section 1203 or 1204, from making payments at any
time of principal of and premium, if any, or interest on the Securities, or (b)
the application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of and premium, if any, or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due on or in respect of
Senior Indebtedness, the Holders of the Securities 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 (equally
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and ratably with the holders of all indebtedness of the Company which by its
express terms is subordinated to other indebtedness of the Company to
substantially the same extent as the Securities are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
premium, if any, and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
SECTION 1207. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and premium, if any, and interest on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company or the
Holders of the Securities and creditors of the Company other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1208. Trustee to Effectuate Subordination.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his 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 1209. 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
noncompliance by the Company with the terms, provisions and covenants
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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 Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior 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 outstanding; (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 1210. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least four Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of
and premium, if any, or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for
which such money was received and shall not be affected by any notice to the
contrary which may be received by it within four Business Days prior to such
date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior 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
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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 1211. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior 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 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other Person cash, property or
securities to which holders of Senior Indebtedness shall be entitled by virtue
of this Article or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Article against the Trustee.
SECTION 1213. 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 607.
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SECTION 1214. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 1213 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
SECTION 1215. Certain Conversions Deemed Payment.
For the purposes of this Article only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Thirteen shall not be deemed to constitute a payment or distribution on account
of the principal of or premium or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of
the principal of such Security. For the purposes of this Section, the term
"junior securities" means (a) shares of any class of capital stock of the
Company and (b) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in
this Article. Nothing contained in this Article or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of
any Security to convert such Security in accordance with Article Thirteen.
SECTION 1216. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of the Securities to take any action to accelerate the
maturity of the Securities pursuant to the provisions of Article Five and as
set forth in this Indenture or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article of the
holders, from time to time, of Senior Indebtedness to receive the cash,
property or securities receivable upon the exercise of such rights or remedies.
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ARTICLE THIRTEEN
CONVERSION OF SECURITIES
SECTION 1301. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article,
at the option of the Holder thereof, any Security or any portion of the
principal amount thereof which equals $1,000 or any integral multiple thereof
may be converted at any time at the principal amount thereof, or of such
portion thereof, into fully paid and nonassessable shares (calculated as to
each conversion to the nearest 1/100 of a share) of Common Stock, at the
conversion price, determined as hereinafter provided, in effect at the time of
conversion. Such conversion right shall expire at the close of business on
August 1, 2004. In case a Security or portion thereof is called for redemption,
such conversion right in respect of the security or portion so called shall
expire at the close of business on the second business day preceding the
applicable Redemption Date, unless the Company defaults in making the payment
due upon redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $16 7/8
per share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i) of
Section 1304.
SECTION 1302. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Security shall surrender such security, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained pursuant
to Section 1002, accompanied by written notice to the Company in the form
provided in the Security (or such other notice as is acceptable to the Company)
at such office or agency that the Holder elects to convert such Security or, if
less than the entire principal amount thereof is to be converted, the portion
thereof to be converted. Securities surrendered for conversion during the
period from the opening of business on any Regular Record Date next preceding
any Interest Payment Date to the close of business on such Interest Payment
Date shall (except in the case of Securities or portions thereof which have
been called for redemption) be accompanied by payment in next day funds or
other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount being surrendered
for conversion. Except as provided in the immediately preceding sentence and
subject to the fourth paragraph of Section 307, no payment or adjustment shall
be made upon any conversion on account of any interest accrued on the
Securities surrendered for conversion or on account of any dividends on the
Common Stock issued upon conversion.
Securities shall be deemed to have been converted immediately prior
to the close of business on the day of surrender of such Securities for
conversion in accordance with the
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foregoing provisions, and at such time the rights of the Holders of such
Securities as Holders shall cease, and the Person or Persons entitled to
receive the Common Stock issuable upon conversion shall be treated for all
purposes of the record holder or holders of such Common Stock as and after such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1303.
In the case of any Security which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate
and deliver to the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security.
SECTION 1303. Fractions of Shares.
No fractional share of Common Stock shall be issued upon conversion
of Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Closing Price
(as hereinafter defined) at the close of business on the day of conversion (or,
if such day is not a Trading Day (as hereafter defined), on the Trading Day
immediately preceding such day).
SECTION 1304. Adjustment of Conversion Price.
(a) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of
the Company which dividend or distribution includes Common Stock, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose of
this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company. The
Company shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
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(b) Subject to paragraph (g) of this Section, in case the Company
shall pay or make a dividend or other distribution on the Common Stock
consisting exclusively of, or shall otherwise issue to all holders of the
Common Stock, rights or warrants entitling the holders thereof to subscribe for
or purchase shares of Common Stock at a price per share less than the Current
Market Price (determined as provided in paragraph (h) of this Section) on the
date fixed for the determination of shareholders entitled to receive such
rights or warrants, the conversion price in effect at the opening of business
on the day following the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(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 subdivision or combination
becomes effective.
(d) Subject to the last sentence of this paragraph (d) and to
paragraph (g) of this Section, in case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock evidences of its
indebtedness, shares of any class of its capital stock, cash or other assets
(including securities, but excluding any rights or warrants referred to in
paragraph (b) of this Section, excluding any dividend or distribution paid
exclusively in cash and excluding any dividend or distribution referred to in
paragraph (a) of this Section), the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section) on such
date less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board Resolution) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets to be distributed applicable to one share of Common Stock
and the denominator shall be such Current
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Market Price, such reduction to become effective immediately prior to the
opening of business on the day following such date. If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (d) by reference to the actual or when-issued trading market for any
securities comprising part or all of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to paragraph (h) of this Section, to the extent
possible. For purposes of this paragraph (d), any dividend or distribution that
includes shares of Common Stock, rights or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock shall be deemed to be (x) a dividend or distribution
of the evidences of indebtedness, cash, assets or shares of capital stock other
than such shares of Common Stock, such rights or warrants or such convertible
or exchangeable securities (making any conversion price reduction required by
this paragraph (d)) immediately followed by (y) in the case of such shares of
Common Stock or such rights or warrants, a dividend or distribution thereof
(making any further conversion price reduction required by paragraph (a) and
(b) of this Section, except 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
paragraph (a) of this Section), or (z) in the case of such convertible or
exchangeable securities, a dividend or distribution of the number of shares of
Common Stock as would then be issuable upon the conversion or exchange thereof,
whether or not the conversion or exchange of such securities is subject to any
conditions (making any further conversion price reduction required by paragraph
(a) of this Section, except the shares deemed to constitute 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 paragraph (a) of this
Section).
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Stock cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) of this
Section or in connection with a transaction to which Section 1311 applies) in
an aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in cash
within the 12 months preceding the date fixed for the determination of
shareholders entitled to such distribution and in respect of which no
conversion price adjustment pursuant to this paragraph (a) has been made
previously and (ii) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of such date of determination of
consideration payable in respect of any tender offer by the Company or a
Subsidiary for all or any portion of the Common Stock consummated within the 12
months preceding such date of determination and in respect of which no
conversion price adjustment pursuant to paragraph (f) of this Section has been
made previously, exceeds 10% of the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date of
determination times the number of shares of Common Stock outstanding on such
date, the conversion price shall be reduced by multiplying the conversion price
in effect immediately prior to the close of business on such date of
determination by a fraction of which the numerator shall be the Current Market
Price (determined as provided in paragraph (h) of this Section) on such date
less the amount of cash to be distributed at such time applicable to one
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share of Common Stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of business
on the day after such date.
(f) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of the last time (the "Expiration
Time") that tenders may be made pursuant to such tender offer (as it shall have
been amended) that, together with (i) the aggregate of the cash plus the fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) as of the Expiration
Time of the other consideration paid in respect of any other tender offer by
the Company or a Subsidiary for all or any portion of the Common Stock
consummated within the 12 months preceding the Expiration Time and in respect
of which no conversion price adjustment pursuant to this paragraph (f) has been
made previously and (ii) the aggregate amount of any distributions to all
holders of the Common Stock made exclusively in cash within the 12 months
preceding the Expiration Time and in respect of which no conversion price
adjustment pursuant to paragraph (e) of this Section has been made previously,
exceeds 10% of the product of the Current Market Price (determined as provided
in paragraph (h) of this Section) immediately prior to the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
shares) at the Expiration Time, the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the Expiration
Time by a fraction of which the numerator shall be (x) the product of the
Current Market Price (determined as provided in paragraph (h) of this Section)
immediately prior to the Expiration Time times the number of shares of Common
Stock outstanding (including any tendered shares at the Expiration Time) minus
(y) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders upon consummation of such tender offer
and the denominator shall be the product of (A) such Current Market Price times
(B) such number of outstanding shares at the Expiration Time minus the number
of shares accepted for payment in such tender offer (the "Purchased Shares"),
such reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time; provided, that if the number of
Purchased Shares or the aggregate consideration payable therefor have not been
finally determined by such opening of business, the adjustment required by this
paragraph (f) shall, pending such final determination, be made based upon the
preliminarily announced results of such tender offer, and, after such final
determination shall have been made, the adjustment required by this paragraph
(f) shall be made based upon the number of Purchased Shares and the aggregate
consideration payable therefor as so finally determined.
(g) The reclassification of Common Stock into securities which
include securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which Section 1311 applies) shall be deemed
to involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to such distribution" within the meaning of paragraph (d) of this Section), and
(ii) a subdivision or
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combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph (c) of this
Section).
Rights or warrants issued by the Company to all holders of the Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock (either initially or under certain circumstances), which rights or
warrants (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, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 1304 not be deemed issued until the occurrence of the earliest
Trigger Event. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date of this Indenture are subject
to subsequent events, upon the occurrence of each of which such rights or
warrants shall become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the occurrence of each such event shall
be deemed to be such date of issuance and record date with respect to new
rights or warrants (and a termination or expiration of the existing rights or
warrants without exercise by the holder thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event with respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 1304 was made, (1) in the case of any such rights or warrant 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 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.
Notwithstanding any other provision of this Section 1304 to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash
or other assets (including, without limitation, any rights distributed pursuant
to any stockholder rights plan) shall be deemed not to have been distributed
for purposes of this Section 1304 if the Company makes proper provision so that
each holder of Securities who converts a Security (or any portion thereof)
after the date fixed for determination of stockholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversions, the amount and kind
of such distributions that such holder would have been entitled to receive if
such holder had, immediately prior to such determination date, converted such
Security into Common Stock.
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(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Stock (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the date in question; provided, however, that (i) 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
paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the 20th
Trading Day prior to the date in question and prior to the "ex" date for the
issuance or distribution requiring such computation, 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, (ii) 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 paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the "ex"
date for the issuance or distribution requiring such computation and on or
prior to the date 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, and (iii) if the
"ex" date for the issuance or distribution requiring such computation is on or
prior to the date in question, after taking into account any adjustment
required pursuant to clause (ii) 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 on the date in question (as
determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of paragraph (d) or (e) of this
Section, whose determination shall be conclusive and set forth in a Board
Resolution) 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 the purpose of any computation
under paragraph (f) of this Section, the Current Market Price on any date shall
be deemed to be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender offer requiring such
computation and (iii) the date of the last amendment, if any, of such tender
offer involving a change in the maximum number of shares for which tenders are
sought or a change in the consideration offered, and ending not later than the
Expiration Time of such tender offer; provided, however, that if the "ex" date
for any event (other than the tender offer requiring such computation) that
requires an adjustment to the conversion price pursuant to paragraph (a), (b),
(c), (d), (e) or (f) above occurs on or after the Commencement Date and prior
to the Expiration Time for the tender offer requiring such computation, 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. The closing price for any Trading Day (the "Closing Price") shall
be the last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange or, if the
Common Stock is
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not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange,
on the Nasdaq Stock Market's National Market or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such National Market, the average of the closing bid and asked prices in the
over-the- counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose. For purposes
of this paragraph, the term "Trading Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are
generally not traded on the applicable securities exchange or in the applicable
securities market and the term "'ex' date," (i) 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 Prices were obtained without the right to receive such issuance or
distribution, (ii) 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 (iii) when used with respect
to any tender offer means the first date on which the Common Stock trades
regular way on such exchange or in such market after the last time that tenders
may be made pursuant to such tender offer (as it shall have been amended).
(i) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (a), (b), (c), (d), (e) and (f) of
this Section, as it considers to be advisable (as evidenced by a Board
Resolution) in order that any event treated for federal income tax purposes as
a dividend of stock or stock rights shall not be taxable to the recipients or,
if that is not possible, to diminish any income taxes that are otherwise
payable because of such event.
(j) No adjustment in the conversion price shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (j)) would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 1304, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company hereby
covenants not to take any action to increase the par value per share of the
Common Stock.
SECTION 1305. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 1304 and shall prepare an Officers' Certificate
which shall include the signature of
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the Treasurer of the Company setting forth the adjusted conversion price
and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed (with a copy to the
Trustee) at each office or agency maintained for the purpose of conversion
of Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be prepared,
and as soon as practicable after it is prepared, such notice shall be
mailed by the Company or by the Trustee at the Company's expense to all
Holders at their last addresses as they shall appear in the Security
Register.
SECTION 1306. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require a conversion price
adjustment pursuant to paragraph (e) of Section 1304; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any other rights (excluding shares of
capital stock or option for capital stock issued pursuant to a benefit
plan for employees, officers or directors of the Company); or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock), or
of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the outstanding shares of Common Stock (or shall amend
any such tender offer to change the maximum number of shares being sought
or the amount or type of consideration being offered therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 1002, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Security Register, at least 21 days
(or 11 days in any case specified in clause (a), (b) or (e) above) prior to the
applicable record, effective or expiration 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 granting
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of rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record who will be entitled to such dividend,
distribution, rights or warrants are to be determined, (y) the date on which
such reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto).
Neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of any action described in clauses (a) through (e) of
this Section 1306.
SECTION 1307. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Stock or out of
the Common Stock held in treasury, for the purpose of effecting the conversion
of Securities, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding Securities. Shares of Common Stock issuable upon
conversion of outstanding Securities shall be issued out of the Common Stock
held in treasury to the extent available.
SECTION 1308. Taxes on Conversions.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
SECTION 1309. Covenant as to Common Stock.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1308, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
SECTION 1310. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
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SECTION 1311. Provisions on Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or any sale or
transfer of all or substantially all of the assets of the Company, the Person
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 1301, to convert such Security
only into the kind and amount of securities, cash and other property, if any,
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer,
assuming such holder of Common Stock (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer is not the same
for each share of Common Stock held immediately prior to such consolidation,
merger, sale or transfer by other than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("nonelecting share"), then for the purpose of this Section the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares. Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions of this Section
shall similarly apply to successive consolidations, mergers, sales or
transfers.
SECTION 1312. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this
Article 13 should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 1305. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article 13.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 1311, but may
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accept as conclusive evidence of the correctness thereof, and shall be
protected in relying upon, the Officers' Certificate with respect thereto which
the Company is obligated to file with the Trustee pursuant to Section 1311.
ARTICLE FOURTEEN
RIGHT TO REQUIRE REPURCHASE
SECTION 1401. Right to Require Repurchase.
In the event that there shall occur a Repurchase Event (as defined in
Section 1406), then each Holder shall have the right, at such Holder's option,
to require the Company to purchase, and upon the exercise of such right, the
Company shall, subject to the provisions of Section 1203, purchase, all or any
part of such Holder's Securities on the date (the "Repurchase Date") that is 30
days after the date the Company gives notice of the Repurchase Event as
contemplated in Section 1402(a) at a price (the "Repurchase Price") equal to
100% of the principal amount thereof, together with accrued and unpaid interest
to the Repurchase Date.
SECTION 1402. Notice; Method of Exercising Repurchase Right.
(a) On or before the 15th day after the occurrence of a Repurchase
Event, the Company, or at the request of the Company received by the
Trustee at least 40 days prior to the Repurchase Date, the Trustee (in the
name and at the expense of the Company), shall give notice of the
occurrence of the Repurchase Event and of the repurchase right set forth
herein arising as a result thereof by first-class mail, postage prepaid,
to the Trustee and to each Holder of the Securities at such Holder's
address appearing in the Security Register. The Company shall also deliver
a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the event constituting the Repurchase Event and the date
thereof,
(2) the Repurchase Date,
(3) the date by which the repurchase right must be exercised,
(4) the Repurchase Price, and
(5) the instructions a Holder must follow to exercise a
repurchase right.
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No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Repurchase
Event.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (a) above) and to the Trustee on or before the close of business
on 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 Security or Securities (or portion of a Security) to be
repurchased, and a statement that an election to exercise the repurchased right
is being made thereby, and (ii) the Security or Securities with respect to
which the repurchase right is being exercised, duly endorsed for transfer to
the Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the next succeeding Interest Payment
Date, Securities to be repurchased must be accompanied by payment from the
Holder of an amount equal to the interest thereon which the registered Holder
thereof is to receive on such Interest Payment Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall on the Repurchase Date pay or cause to
be paid in cash to the Holder thereof the Repurchase Price of the Security or
Securities as to which the repurchase right had been exercised. In the event
that a repurchase right is exercised with respect to less than the entire
principal amount of a surrendered Security, the Company shall execute and
deliver to the Trustee and the Trustee shall authenticate for issuance in the
name of the Holder a new Security or Securities in the aggregate principal
amount of the unrepurchased portion of such surrendered security.
SECTION 1403. Deposit of Repurchase Price.
On or prior to the Repurchase Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money in same day funds sufficient to pay the Repurchase Price of the
Securities which are to be repaid on or promptly following the Repurchase Date.
SECTION 1404. Securities Not Repurchased on Repurchase Date.
If any Security surrendered for repurchase shall not be so paid on
the Repurchase Date, the principal shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate per
annum borne by such Security.
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SECTION 1405. Securities Repurchased in Part.
Any Security which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duty authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the Security so
surrendered.
SECTION 1406. Certain Definitions.
For purposes of this Article:
(a) A "Repurchase Event" shall have occurred upon the occurrence of
a Change in Control or Termination of Trading after the date of this
Indenture and on or prior to August 1, 2004.
(b) A "Change in Control" shall occur when:
(i) all or substantially all of the Company's assets are sold
as an entirety to any person or related group of persons;
(ii) there shall be consummated any consolidation or merger of
the Company (A) in which the Company is not the continuing or
surviving corporation (other than a consolidation or merger with a
wholly owned subsidiary of the Company in which all shares of Common
Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant
to which the Common Stock would be converted into cash, securities or
other property, in each case, other than a consolidation or merger of
the Company in which the holders of the Common Stock immediately
prior to the consolidation or merger have, directly or indirectly, in
consideration of such Common Stock, capital stock having at least a
majority of the total voting power of all classes of capital stock
entitled to vote generally in the election of directors of the
continuing or surviving corporation immediately after such
consolidation or merger receives in substantially the same proportion
as their ownership of Common Stock immediately before such
transaction;
(iii) any person, or any persons acting together which
would constitute a "group" for purposes of Section 13(d) of the
Exchange Act (a "Group"), together with any Affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Exchange
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Act) at least 50% of the total voting power of all classes of capital
stock of the Company entitled to vote generally in the election of
directors of the Company; or
(iv) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the
Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election
by the stockholders of the Company was approved by a vote of 66 2/3%
of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then
in office; or
(v) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
(c) A "Termination of Trading" shall occur if the Common Stock (or
other common stock into which the Securities are then convertible) is
neither listed for trading on a U.S. national securities exchange nor
approved for trading on an established automated over-the-counter trading
market in the United States.
This instrument may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
NEXSTAR PHARMACEUTICALS, INC.
By: /s/ LARRY W. SMITH
-------------------------------------
Name: Larry W. Smith
Title: Secretary
Attest: Larry W. Smith
IBJ Schroder Bank & Trust Company
as Trustee
By: /s/ LUIS PEREZ
-------------------------------------
Name: Luis Perez
Title: Asst. Vice President
Attest: Anthony Lieggi
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)
) ss.
)
On the day of July, 1997, before me personally came
Larry W. Smith, to me known, who, being by me duly sworn, did depose and say
that he is Secretary of NeXstar Pharmaceuticals, Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
/s/ THERESA M. CEGLECKI
-----------------------
)
) ss.:
)
On the day of July, 1997, before me personally came
Luis Perez, to me known, who, being by me duly sworn, did depose and say that he
is AVP of IBJ Schroder B&T, a New York banking corp. described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/ NORMA PACIFICEO
--------------------
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ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 305(i) or (iii)
of the Indenture)
Re: 6 1/4% Convertible Subordinated Debentures due August 1, 2004
of NeXstar Pharmaceuticals, Inc. (the "Securities")
Reference is made to the Indenture, dated as of July 31, 1997 (the
"Indenture"), between NeXstar Pharmaceuticals, Inc. (the "Company") and IBJ
Schroder Bank & Trust Company, as Trustee. Terms used herein and defined in
the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to U.S. $____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Global Security,
they are held through the Depositary or one of its participants in the name of
the Undersigned, as or on behalf of the Owner. If the Specified Securities are
not represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of an
interest in the Regulation S Global Security or a Definitive Security. In
connection with such transfer, the Owner hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement
under the Securities Act, it is being effected in accordance with Rule 904 or
Rule 144 under the Securities Act and with all applicable securities laws of
the states of the United States and other jurisdictions. Accordingly, the
Owner hereby further certifies as follows:
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(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting
on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been
satisfied; and
(F) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
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<PAGE> 100
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated: _______________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:____________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf
of the Undersigned must be stated.)
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<PAGE> 101
ANNEX B -- Form of 144A
Securities Certificate
144A SECURITIES CERTIFICATE
(For transfers pursuant to Section 305(i) or (ii)
of the Indenture)
Re: 6 1/4% Convertible Subordinated Debentures due August 1, 2004
of NeXstar Pharmaceuticals, Inc. (the "Securities")
Reference is made to the Indenture, dated as of July 31, 1997 (the
"Indenture"), between NeXstar Pharmaceuticals, Inc. (the "Company") and IBJ
Schroder Bank & Trust Company, as Trustee. Terms used herein and defined in
the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Global Security,
they are held through the Depositary or one of its participants in the name of
the Undersigned, as or on behalf of the Owner. If the Specified Securities are
not represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of an
interest in the 144A Global Security or a Definitive Security. In connection
with such transfer, the Owner hereby certifies that, unless such transfer is
being effected pursuant to an effective registration statement under the
Securities Act, it is being effected in accordance with Rule 144A or Rule 144
under the Securities Act and all applicable securities laws of the states of
the United States and other jurisdictions. Accordingly, the Owner hereby
further certifies as:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
B-1
<PAGE> 102
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
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<PAGE> 103
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ___________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf
of the Undersigned must be stated.)
B-3
<PAGE> 104
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 305(c))
Re: 6 1/4% Convertible Subordinated Debentures due August 1, 2004
of NeXstar Pharmaceuticals, Inc. (the "Securities")
Reference is made to the Indenture, dated as of July 31, 1997 (the
"Indenture"), between NeXstar Pharmaceuticals, Inc. (the "Company") and IBJ
Schroder Bank & Trust Company, as Trustee. Terms used herein and defined in
the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Global Security,
they are held through the Depositary or one of its participants in the name of
the Undersigned, as or on behalf of the Owner. If the Specified Securities are
not represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged
for Securities bearing no Securities Act legend pursuant to Section 305(c) of
the Indenture. In connection with such exchange, the Owner hereby certifies
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Company or from an affiliate
of the Company, whichever is later, and the Owner is not, and during the
preceding three months has not been, an affiliate of the Company. The Owner
also acknowledges that any future transfers of the Specified Securities must
comply with all applicable securities laws of the states of the United States
and other jurisdictions.
C-1
<PAGE> 105
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial
Purchasers.
Dated: ___________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf
of the Undersigned must be stated.)
C-2
<PAGE> 1
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of July 31, 1997
relating to
$75,000,000 in Aggregate Principal Amount
of 6 1/4% Convertible Subordinated
Debentures Due 2004
by and among
NeXstar Pharmaceuticals, Inc.
and
SBC Warburg Inc.
and
Oppenheimer & Co., Inc.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of July 31, 1997 by and between NeXstar Pharmaceuticals, Inc. a
Delaware corporation (the "Company"), and SBC Warburg Inc. and Oppenheimer &
Co. Inc. (the "Initial Purchasers"), who will purchase $75,000,000 in aggregate
principal amount of 6 1/4% Convertible Subordinated Debentures Due 2004 (the
"Debentures") of the Company (excluding up to an additional $5,000,000
aggregate principal that may be purchased by the Initial Purchasers pursuant to
their over-allotment option) pursuant to the Purchase Agreement dated July 28,
1997 (the "Purchase Agreement") between the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in the Purchase Agreement. All
defined terms used but not defined herein shall have the meanings ascribed to
them in the Indenture (as defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which the Debentures are first sold by the
Company to the Initial Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The Common Stock, par value $.01 per share, of the
Company.
Damages Payment Date: With respect to the Debentures or the Common
Stock, as applicable, each Interest Payment Date as defined in the Indenture.
Effectiveness Date: The date on which the Shelf Registration Statement
is declared effective by the Commission under the Act.
<PAGE> 3
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Debentures to (i) certain "qualified institutional buyers"
(as such term is defined in Rule 144A under the Act) and (ii) to certain
persons in offshore transactions in reliance on Regulation S under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, to be dated as of July 31, 1997, among the
Company and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"),
pursuant to which the Debentures are to be issued, as such Indenture is amended
or supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture.
Latest Issuance Date: The latest date on which any of the Debentures
are originally issued by the Company pursuant to the terms of the Purchase
Agreement.
NASD: The National Association of Securities Dealers, Inc.
Offering Memorandum: The Offering Memorandum, dated July 28, 1997, and
all amendments and supplements thereto, relating to the Debentures and prepared
by the Company pursuant to the Purchase Agreement.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Preliminary Prospectus: As defined in Section 3(f).
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
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<PAGE> 4
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including post-
effective amendments, and all material which may be incorporated by reference
into such prospectus.
Prospectus Supplement: As defined in Section 5(b).
Record Holder: (i) With respect to any Damages Payment Date relating
to the Debentures, each Person who is registered on the books of the Registrar
as the holder of Debentures on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur and (ii) with
respect to any Damages Payment Date relating to the Common Stock constituting
Transfer Restricted Securities, each Person who is a holder of record of such
Common Stock fifteen days prior to the Damages Payment Date.
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a) hereof.
Suspension Period: As defined in Section 3(a).
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C.
Section 77aaa-77bbbb), as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Debenture and underlying share of
Common Stock of the Company issuable upon conversion of a Debenture, until the
date on which each such Debenture or underlying share of Common Stock (i) has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement covering it, (ii) is
distributed to the public pursuant to Rule 144 or (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force).
Underwriter: Any underwriter, placement agent, selling broker, dealer
manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Registration or Underwritten Offering: An offering in
which securities of the Company
-3-
<PAGE> 5
are sold to an Underwriter or with the assistance of such Underwriter for
reoffering to the public on a firm commitment or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed
to be a holder of Transfer Restricted Securities (each, a "Holder") whenever
such Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) The Company shall cause to be filed with the Commission on or
prior to 60 days after the Closing Date, a shelf registration statement
pursuant to Rule 415 under the Act (as may then be amended) (the "Shelf
Registration Statement") on Form S-1 or Form S-3, if the use of such form is
then available and as determined by the Company, to cover resales of Transfer
Restricted Securities by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. The Holders of such Transfer Restricted Securities
shall have provided the information required pursuant to Section 3(f) hereof.
The Company shall use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or prior to 90 days
from the Closing Date. The Company shall use its best efforts to keep such
Shelf Registration Statement continuously effective for a period ending two
years from the Effectiveness Date or such shorter period that will terminate
when each of the Transfer Restricted Securities covered by the Shelf
Registration Statement ceases to be a Transfer Restricted Security. The
Company further agrees to use its best efforts to prevent the happening of any
event that would cause the Shelf Registration Statement to contain any 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 or to
be not effective and usable for resale of the Transfer Restricted Securities
during the
-4-
<PAGE> 6
period that such Shelf Registration Statement is required to be effective and
usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any 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 or (ii) to be not effective and
usable for resale of Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable, the
Company shall as promptly as practicable take such action, including, if
necessary, filing an amendment to the Shelf Registration Statement, correcting
any such misstatement or omission, and using its best efforts to cause any such
amendment to be declared effective and/or such Shelf Registration Statement to
become usable as soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3,
subject to compliance with Sections 4 and 5(b), if applicable, the Company may
prohibit offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement at any time if (A) (i) it is in possession of
material non-public information, (ii) the Board of Directors of the Company
determines (based on advice of counsel) that such prohibition is necessary in
order to avoid a requirement to disclose such material non-public information
and (iii) the Board of Directors of the Company determines in good faith that
disclosure of such material non-public information would not be in the best
interests of the Company and its shareholders or (B) the Company has made a
public announcement relating to an acquisition or business combination
transaction including the Company and/or one or more of its subsidiaries (i)
that is material to the Company and its subsidiaries taken as a whole and (ii)
the Board of Directors of the Company determines in good faith that offers and
sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement prior to the consummation of such transaction (or such earlier date
as the Board of Directors shall determine) is not in the best interests of the
Company and its shareholders (the period during which any such prohibition of
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement is in effect pursuant to clause (A) or (B) of this
subparagraph (a) is referred to herein as a "Suspension Period"). A Suspension
Period shall commence on and include the date on which the Company provides
written notice to Holders of Transfer Restricted Securities covered
-5-
<PAGE> 7
by the Shelf Registration Statement that offers and sales of Transfer
Restricted Securities cannot be made thereunder in accordance with this Section
3 and shall end on the date on which each Holder of Transfer Restricted
Securities covered by the Shelf Registration Statement either receives copies
of a Prospectus Supplement contemplated by Section 5(b) or is advised in
writing by the Company that offers and sales of Transfer Restricted Securities
pursuant to the Shelf Registration Statement and use of the Prospectus may be
resumed.
(b) None of the Company nor any of its security holders
(other than (i) the Holders of Transfer Restricted Securities in such capacity
and (ii) other shareholders or warrantholders listed on Schedule I hereto
having registration rights permitting them to participate therein, as described
on Schedule I hereto) shall have the right to include any of the Company's
securities in the Shelf Registration Statement.
(c) If the Holders of a majority of the outstanding
Transfer Restricted Securities so elect (with holders of Common Stock
constituting Transfer Restricted Securities being deemed to be Holders of the
aggregate principal amount of Debentures converted into such Common Stock for
purposes of such calculation), an offering of Transfer Restricted Securities
pursuant to the Shelf Registration Statement may be effected in the form of an
Underwritten Offering, provided, however, that notwithstanding anything
contained in this Agreement to the contrary, the Company shall not be required
to undertake more than one such Underwritten Offering during any consecutive 12
month period. The Holders of the Transfer Restricted Securities to be
registered shall pay all underwriting discounts and commissions of such
Underwriters and the fees and expenses of any counsel for the Holders.
(d) If any of the Transfer Restricted Securities covered
by the Shelf Registration Statement are to be sold in an Underwritten Offering,
the Underwriter(s) that will administer the offering will be selected by the
Holders of a majority of the outstanding Transfer Restricted Securities (with
holders of Common Stock constituting Transfer Restricted Securities being
deemed to be Holders of the aggregate principal amount of Debentures converted
into such Common Stock for purposes of such calculation); provided, however,
that such Underwriter(s) shall be reasonably satisfactory to the Company.
-6-
<PAGE> 8
(e) Each Holder whose Transfer Restricted Securities are covered
by a Shelf Registration Statement filed pursuant to this Section 3 agrees, upon
the request of the Underwriter(s) in any Underwritten Offering, not to effect
any sale or distribution of securities of the Company of the same class as the
securities included in such Shelf Registration Statement for a period of up to
90 days beginning on the date any such Underwritten Offering made pursuant to
such Shelf Registration Statement commences, to the extent timely notified in
writing by such Underwriter(s).
(f) The Company shall include in the Registration Statement as of
the Effective Date all Transfer Restricted Securities which any Holder shall
have elected (each, an "Electing Holder") to include in the Registration
Statement as specified in a completed questionnaire substantially in the form
attached hereto as Exhibit A (a "Selling Securityholder's Questionnaire"),
received by the Company on or prior to the date 30 calendar days after the
Closing Date (the "Initial Questionnaire Deadline"). As used herein, the term
"Specified Registrable Securities" shall mean all Transfer Restricted
Securities that the Electing Holders have elected to include in the
Registration Statement as provided in the preceding sentence on or prior to the
Initial Questionnaire Deadline. Each person acquiring Specified Registrable
Securities from an Electing Holder after the date on which such Electing Holder
provided the Company its Selling Securityholder's Questionnaire shall also be
entitled to have such Specified Registrable Securities included in the
Registration Statement so long as such person provides the Company with an
updated Selling Securityholder's Questionnaire. Any such transferee shall be
entitled to have its Specified Registrable Securities included in the
Registration Statement (i) at the Effective Date, if the updated Selling
Securityholder's Questionnaire is received by the Company on or prior to the
date 10 calendar days prior to the Effectiveness Date and (ii) in all other
cases, reasonably promptly after the Company receives the updated Selling
Securityholder's Questionnaire. In the case of any Specified Registrable
Securities which are not included in the Registration Statement at the
Effectiveness Date and as to which an updated Selling Securityholder's
Questionnaire has been furnished to the Company, the Company shall include such
Transfer Restricted Securities in the Registration Statement reasonably
promptly and in connection therewith shall file such post-effective amendments
to the Registration Statement or supplements to
-7-
<PAGE> 9
the Prospectus as may be required by the Act to permit the resale of such
Specified Registrable Securities. The Company may include information contained
in any Selling Securityholder's Questionnaire to the extent reasonably required
in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus (a "Preliminary Prospectus") included therein and each
Electing Holder shall provide the Company promptly after written request with
such additional or updated information as the Company shall reasonably request
in connection therewith.
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement is not filed with the
Commission on or prior to 60 days after the Closing Date, or the Shelf
Registration Statement has not been declared effective by the Commission within
90 days after the Closing Date (the "Effectiveness Target Date"), or (ii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or useable for
the offer and sale of Transfer Restricted Securities for a period of time
(including any Suspension Period) which shall exceed 60 days in the aggregate
in any of the one-year periods ending on the first or second anniversaries of
the Closing Date, or which shall exceed 30 days in any calendar quarter within
any of such one-year periods (each such event referred to in clauses (i) and
(ii), a "Registration Default"), the Company will pay liquidated damages to
each Holder of Transfer Restricted Securities. The amount of liquidated
damages payable during any period during which a Registration Default shall
have occurred and be continuing is that amount which is equal to $0.05 per week
per $1,000 principal amount of Debentures, or $0.001 per week per share of
Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities, for each 90-day period or part thereof until the applicable
registration statement covering such Transfer Restricted Securities is filed
and the applicable registration statement is declared effective, or the Shelf
Registration Statement again becomes effective or usable, as the case may be,
up to a maximum amount of liquidated damages of $0.25 per week per $1,000
principal amount of Debentures or $0.05 per week per share (subject to
adjustment as set forth above) of Common Stock constituting
-8-
<PAGE> 10
Transfer Restricted Securities. The Company shall notify the Trustee and the
Initial Purchasers within one business day after each and every date on which a
Registration Default occurs. All accrued liquidated damages shall be paid to
Record Holders by wire transfer of immediately available funds or by federal
funds check by the Company on each Damages Payment Date. Following the cure
of a Registration Default, liquidated damages will cease to accrue with respect
to such Registration Default.
All of the Company's obligations set forth in the preceding
paragraph which are outstanding with respect to any Transfer Restricted
Security shall cease at the time such security ceases to be a Transfer
Restricted Security.
The parties hereto agree that the liquidated damages provided
in this Section 4 constitute a reasonable estimate of the damages that will be
incurred by Holders of Transfer Restricted Securities by reason of the failure
of the Shelf Registration Statement to be filed, declared effective or to
remain effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the
Company will use its best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution or disposition thereof, and pursuant
thereto the Company will:
(a) on or prior to the date 60 days after the Closing Date,
prepare and file with the Commission a Shelf Registration Statement relating to
the registration on Form S-1 or Form S-3, if the use of such form is then
available and as determined by the Company, for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements required to be
included or incorporated by reference therein; cooperate and assist in any
filings required to be made with the NASD and use its best efforts to cause
such Shelf Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the selling
Holders to consummate the disposition of such Transfer Restricted Securities;
provided, however, that before filing a Shelf Registration Statement or any
Prospectus, or any amendments or supplements thereto, the Company will furnish
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<PAGE> 11
to the Holders and the Underwriter(s), if any, copies of all such documents
proposed to be filed (except that the Company shall not be required to furnish
any exhibits to such documents, including those incorporated by reference,
unless so requested by a Holder or Underwriter in writing), and the Company
will not file any Shelf Registration Statement or amendment thereto or any
Prospectus or any supplement thereto to which (i) the Underwriter(s), if any,
shall reasonably object or (ii) if there are no Underwriters, the Holders of a
majority of the outstanding Transfer Restricted Securities shall reasonably
object (with holders of Common Stock constituting Transfer Restricted
Securities being deemed to be Holders of the aggregate principal amount of
Debentures converted into such Common Stock for purposes of such calculation),
in each such case within five business days after the receipt thereof. A
Holder or Underwriter, if any, shall be deemed to have reasonably objected to
such filing if the Shelf Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading which
misstatement or omission is specifically identified to the Company in writing
within such five business days;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be
supplemented by any required supplement thereto (a "Prospectus Supplement"),
and as so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under the Act
in a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
(c) if requested by the Holders of Transfer Restricted Securities,
or, if the Transfer Restricted Securities are being sold in an Underwritten
Offering, the Underwriter(s) of such Underwritten Offering, promptly
incorporate in the Prospectus, any Prospectus Supplement or post- effective
amendment to the Shelf Registration Statement
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<PAGE> 12
such information as the Underwriters and/or the Holders of Transfer Restricted
Securities being sold agree should be included therein relating solely to the
plan of distribution of the Transfer Restricted Securities, including, without
limitation, information with respect to the principal amount of Debentures
and/or the number of shares of Common Stock being sold to such Underwriter(s),
the purchase price being paid therefor and any other customary terms with
respect to the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus, Prospectus
Supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be incorporated in such Prospectus, Prospectus
Supplement or post-effective amendment;
(d) advise the Underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in writing,
(i) when the Prospectus or any Prospectus Supplement or post-effective
amendment to the Shelf Registration Statement has been filed, and, with respect
to the Shelf Registration Statement or any post-effective amendment thereto,
when the same has become effective, (ii) of any request by the Commission for
amendments to the Shelf Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Shelf Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (iv) if at any time the
representations and warranties of the Company contemplated by paragraph (m)(i)
below cease to be true and correct, and (v) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the
Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted
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<PAGE> 13
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(e) furnish to each Holder and each of the Underwriter(s), if any,
without charge, at least one copy of the Shelf Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits to the Shelf
Registration Statement (excluding exhibits to documents incorporated by
reference therein unless requested by such Holder or Underwriter);
(f) deliver to each selling Holder and each of the Underwriter(s),
if any, without charge, as many copies of any Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto as such Persons may
reasonably request; the Company consents to the use of any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto by each
of the selling Holders and each of the Underwriter(s), if any, in connection
with the public offering and the sale of the Transfer Restricted Securities
covered by any Preliminary Prospectus and the Prospectus or any amendments or
supplements thereto;
(g) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the Underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or Underwriter(s) may reasonably
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdiction of the Transfer Restricted
Securities covered by the Shelf Registration Statement; provided, however, that
the Company shall not be required (i) to register or qualify as a foreign
corporation where it is not now so qualified or (ii) to take any action that
would subject it to the service of process in suits, other than as to matters
and transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(h) cooperate with the selling Holders and the Underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted
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<PAGE> 14
Securities to be in such denominations and registered in such names as the
Holders or the Underwriter(s), if any, may request at least two business days
prior to any sale of Transfer Restricted Securities;
(i) use its best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
reasonably necessary to enable the seller or sellers thereof or the
Underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the provisos contained in clause (h) above;
(j) if any fact or event contemplated by clause (d)(v) above shall
exist or have occurred, prepare a post-effective amendment or supplement to the
Shelf Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(k) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Shelf Registration Statement and
provide the Trustee under the Indenture and/or the transfer agent for the
Common Stock with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust Company;
(l) enter into such agreements (including an underwriting
agreement reasonably acceptable to the Company) and take all such other actions
in connection therewith as may reasonably be required in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to
the Shelf Registration Agreement, in connection with an Underwritten
Registration, and (i) make such representations and warranties to the Holders
and the Underwriter(s), in form, substance and scope as they may reasonably
request and as are customarily made by issuers to Underwriters in primary
Underwritten Offerings and covering matters including, but not limited to,
those set forth in the Purchase Agreement; (ii) obtain opinions of counsel for
the Company and updates thereof in customary form and covering matters
reasonably requested by the Underwriter(s)
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<PAGE> 15
of the type customarily covered in legal opinions to Underwriters in connection
with primary Underwritten Offerings addressed to each selling Holder and the
Underwriter requesting the same and covering the matters as may be reasonably
requested by such Holders and Underwriters; (iii) obtain "cold comfort" letters
and updates thereof from the Company's independent certified public
accountants, and the independent certified public accountants of any other
corporation or person ("Other Companies") with respect to which audited
financial statements are required to be included or incorporated by reference
in the Shelf Registration Statement, addressed to the selling Holders of
Transfer Restricted Securities and the Underwriters requesting the same, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to Underwriters in connection with primary
Underwritten Offerings; (iv) set forth in full or incorporate by reference in
the underwriting agreement the indemnification provisions and procedures of
Section 7 hereof with respect to all parties to be indemnified pursuant to said
Section; and (v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Transfer Restricted Securities being sold or
the Underwriter(s) of such Underwritten Offering to evidence compliance with
clause (i) above and with any customary conditions contained in the
underwriting agreement entered into by the Company pursuant to this clause (m).
The above shall be done at or prior to each closing under such underwriting
agreement, as and to the extent required thereunder;
(m) make available at reasonable times and in a reasonable manner
for inspection by a representative of the Holders of the Transfer Restricted
Securities, any underwriter participating in any disposition pursuant to such
Shelf Registration Statement and any attorney or accountant retained by such
selling Holders or any of the Underwriters, all relevant financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, Underwriter, attorney or accountant in
connection with such Shelf Registration Statement prior to its effectiveness;
provided, however, that such representatives, attorneys or accountants shall
agree to keep confidential (which agreement shall be confirmed in writing in
advance to the Company if the Company shall so request) all information,
records or documents made available to such persons which
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<PAGE> 16
are not otherwise available to the general public unless disclosure of such
records, information or documents is required by court or administrative order
(of which the Company shall have been given prior notice and an opportunity to
defend) after the exhaustion of all appeals therefrom, and to use such
information obtained pursuant to this provision only in connection with the
transaction for which such information was obtained, and not for any other
purpose;
(n) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act, for the twelve-month period (i)
commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to Underwriters in a firm commitment or best efforts
Underwritten Offering or (ii) if not sold to Underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Shelf Registration Statement;
(o) cause the Indenture to be qualified under the TIA, and, in
connection therewith, cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents as may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner;
(p) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment;
(q) cause all Transfer Restricted Securities (other than the
Debentures) covered by the Shelf Registration Statement to be listed on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed if requested by the Holders of a majority of the
outstanding Transfer Restricted Securities (with holders of Common Stock
constituting Transfer Restricted Securities being deemed to be Holders of the
aggregate principal amount of Debentures converted into
-15-
<PAGE> 17
such Common Stock for purposes of such calculation) or the Underwriters, if
any; and
(r) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
Underwriter (including any "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
Each Holder as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading or necessary to cause
such Shelf Registration Statement not to omit a material fact with respect to
such Holder necessary in order to make the statements therein not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence
of any fact of the kind described in Section 5(d)(v) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 3(a)
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 5(d)(v)
hereof to and including the date when each selling Holder covered by such Shelf
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof or shall have received
the Advice.
-16-
<PAGE> 18
SECTION 6. REGISTRATION EXPENSES
(a) Except as set forth in Section 6(b) hereof, all expenses
incident to the Company's performance of or compliance with this Agreement (the
"Registration Expenses") will be borne by the Company, regardless of whether a
Shelf Registration Statement becomes effective, including without limitation:
(i) all registration and filing fees and expenses
(including filings made with the NASD);
(ii) reasonable fees and expenses of compliance with
federal securities or state blue sky laws;
(iii) expenses of printing (including, without
limitation, expenses of printing or engraving certificates for the
Transfer Restricted Securities in a form eligible for deposit with
Depository Trust Company and of printing the Prospectus and any
Preliminary Prospectus), messenger and delivery services and
telephone;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent
certified public accountants of the Company (including the expenses of
any "cold comfort" letters required by or incidental to the
preparation and filing of a Shelf Registration Statement and
Prospectus and the disposition of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filings
and approval required to be made in connection with the Shelf
Registration Statement; and
(vii) fees and expenses of listing the Transfer
Restricted Securities on any securities exchange or quotation system
in accordance with Section 5(r) hereof.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
-17-
<PAGE> 19
(b) The Holders of Transfer Restricted Securities shall bear the
expense of any broker's commission or Underwriter's discount or commission and
the fees and expenses of any counsel for the Holders. In addition, each Holder
of Transfer Restricted Securities shall pay all Registration Expenses to the
extent required by applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each of
the Initial Purchasers, (ii) each Holder, (iii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) either of the Initial Purchasers or any Holder (any of the
persons referred to in this clause (iii) being hereinafter referred to as a
"controlling person") and (iv) the respective officers, directors, partners,
employees, representatives and agents of the Initial Purchasers, any Holder or
any controlling person (any person referred to in clause (i), (ii), (iii) or
(iv) may hereinafter be referred to as a "Non-Company Indemnitee"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement,
Prospectus or Preliminary Prospectus (or any amendments or supplements
thereto), including any document incorporated by reference therein, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except, with respect to any Non-Company Indemnitee, insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Non-Company Indemnitee
expressly for use therein.
(b) In case any action shall be brought against any Non- Company
Indemnitee, based upon the Shelf Registration Statement, Prospectus, or
Preliminary Prospectus (or any amendments or supplements thereto), and with
respect to which indemnity may be sought against the Company pursuant to this
Section 7, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses;
-18-
<PAGE> 20
provided, however, that the omission so to notify the Company shall not relieve
the Company from any liability that it may have to any Non-Company Indemnitee
(except to the extent that the Company is materially prejudiced or otherwise
forfeits substantive rights or defenses by reason of such failure). Such Non-
Company Indemnitee shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
counsel shall be paid by such Non-Company Indemnitee, unless (i) the employment
of such counsel shall have been specifically authorized in writing by the
Company, (ii) the Company shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Non-Company Indemnitee and the Company and it would
be inappropriate for the same counsel to represent such Non-Company Indemnitee
and the Company (in which case the Company shall not have the right to assume
the defense of such action on behalf of such Non-Company Indemnitee, it being
understood, however, that the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for the Non-Company Indemnitees, which firm
shall be designated in writing by the Non-Company Indemnitees and whose fees
and expenses reasonably incurred shall be reimbursed as they are incurred).
The Company shall not be liable for any settlement of any such action effected
without the written consent of the Company, but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Non-Company Indemnitee from and against any amounts payable pursuant to such
written consent in connection with such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
(c) Each Holder of Transfer Restricted Securities agrees to
indemnify and hold harmless (i) the Company, (ii) each of the Initial
Purchasers, (iii) each other
-19-
<PAGE> 21
Holder, (iv) any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, the Initial Purchasers and
each other Holder and (v) the respective officers, directors, partners,
employees, representatives and agents of each of the parties referred to in
clauses (i), (ii), (iii) and (iv), to the same extent as the foregoing
indemnity from the Company to each of the Non-Company Indemnitees, but only
with respect to information relating to such Holder that was furnished in
writing by such Holder to the Company expressly for use in the Shelf
Registration Statement (or any amendment or supplement thereto). In no event
shall the liability of any selling Holder hereunder be greater in amount than
the greater of (i) the dollar amount of the proceeds received by such Holder
upon the sales of the Transfer Restricted Securities giving rise to such
indemnification obligation, and (ii) the amount paid by the selling Holder for
such Transfer Restricted Securities.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party, on the one hand, or the
indemnified party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take
-20-
<PAGE> 22
account of the equitable considerations referred to in the immediately
preceding paragraph. The losses, claims, damages, liabilities or judgments of
an indemnified party referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim (but only to the extent
such investigation or defense was reasonably necessary) prior to the
indemnifying party's assumption of the defense thereof or subsequent thereto to
the extent permitted by the second sentence of Section 7(b) hereof.
Notwithstanding the provisions of this Section 7, none of the Holders shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total amount received by such Holder with respect to the sale of
Transfer Restricted Securities exceeds the sum of (A) the amount paid by such
Holder for such Debentures plus (B) the amount of any damages which such Holder
has otherwise been required to pay by reason of 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 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 7(d) are several in proportion to the respective principal amount of
Debentures held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any
of the Debentures or shares of Common Stock that are Transfer Restricted
Securities remain outstanding (and are "restricted securities" within the
meaning of Rule 144 under the Act)and during any such period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available to any Initial Purchaser or any beneficial owner of the Debentures or
shares of such Common Stock in connection with any sale thereof and any
prospective purchaser of such Debentures or Common Stock from such Initial
Purchaser or beneficial owner, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
-21-
<PAGE> 23
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements and
(c) furnishes the Company in writing information in accordance with Section
3(f) and agrees to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the
Holders of the Transfer Restricted Securities included in such offering in the
manner specified in Section 3(c); provided, however, that such Underwriters
must be reasonably satisfactory to the Company and further provided, however,
that notwithstanding anything contained in this Agreement to the contrary, the
Company shall not be required to undertake more than one such Underwritten
offering during any consecutive 12 month period.
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted Securities, in
addition to being entitled to exercise all rights provided herein, and as
provided in the Purchase Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of such Holder's rights under
this Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
-22-
<PAGE> 24
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders of Transfer
Restricted Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any other agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of a majority of the outstanding Transfer Restricted Securities affected by
such amendment, modification, supplement, waiver or departure (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Debentures converted into such
Common Stock for purposes of such calculation). Notwithstanding the foregoing,
a waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders of Transfer Restricted Securities whose
securities are being sold pursuant to such Shelf Registration Statement and
that does not directly or indirectly affect the rights of other Holders of
Transfer Restricted Securities shall be valid only with the written consent of
Holders of at least 66 2/3% of the Transfer Restricted Securities being sold,
in each case calculated in accordance with the provisions of Section 3(c).
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted Securities, at
the address set forth on the records of the Registrar under the
Indenture, with a copy to the Registrar; and
(ii) if to the Company or an Initial Purchaser, initially at
its address set forth in the Purchase Agreement and thereafter at such
other address, notice
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<PAGE> 25
of which is given in accordance with the provisions of this Section.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder of Transfer Restricted Securities unless
and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder; and provided, further, that nothing herein shall
be deemed to permit any assignment, transfer or any disposition of Transfer
Restricted Securities in violation of the terms of the Purchase Agreement or
applicable law. If any transferee of any Holder shall acquire Transfer
Restricted Securities, in any manner, whether by operation of law or otherwise,
such Transfer Restricted Securities shall be held subject to all of the terms
of this Agreement and by taking and holding such Transfer Restricted Securities
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement and such Person shall
be entitled to receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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<PAGE> 26
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the securities
sold pursuant to the Purchase Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
NeXstar Pharmaceuticals, Inc.
By: /s/ LARRY W. SMITH
-----------------------------
Name: Larry W. Smith
Title: Secretary
SBC Warburg Inc.
Oppenheimer & Co., Inc.
By: SBC Warburg Inc.
By: /s/ JAMES R. GRAY
----------------------------
Name: James R. Gray
Title: Associate Director
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<PAGE> 28
Exhibit A
NAME:
---------------------
NeXstar Pharmaceuticals, Inc.
Selling Securityholder's Questionnaire
IN CONNECTION WITH THE PROPOSED REGISTRATION
OF SECURITIES OF NEXSTAR PHARMACEUTICALS, INC.
Reference is made to the Registration Rights Agreement (the
"Registration Rights Agreement") dated as of July _, 1997 between NeXstar
Pharmaceuticals, Inc.(the "Company") and the Purchasers named therein.
Pursuant to the Registration Rights Agreement, the Company agreed to file a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration and sale under the Securities Act of
the Company's ___% Convertible Subordinated Debentures Due 2004 (the
"Debentures") and the shares of Common Stock of the Company issuable upon
conversion of the Debentures. The undersigned beneficial owner (the "Selling
Securityholder") of Registrable Securities (as defined in the Registration
Rights Agreement) hereby elects pursuant to the Registration Rights Agreement
to include in the Registration Statement the Registrable Securities
beneficially owned by it and listed in Item 4 below (unless otherwise specified
under Item 4). The inclusion in the Registration Statement of the Registrable
Securities owned by the Selling Securityholder shall be made in accordance with
and shall be subject to the provisions of the Registration Rights Agreement.
The Selling Securityholder is providing this Questionnaire to provide the
Company with information necessary for the inclusion in the Registration
Statement of the Registrable Securities beneficially owned by the Selling
Securityholder. All capitalized terms not otherwise defined herein shall have
the meanings given to them in the Registration Rights Agreement.
i. Complete Name of Selling Securityholder:
ii. Address for Notices:
<PAGE> 29
iii. Contact Person:
Name:
Address:
Tel.:
Fax.:
iv. Registrable Securities Beneficially
Owned by the Selling Securityholder:
EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING SECURITYHOLDER DOES
NOT OWN ANY DEBENTURES OR SHARES OF COMMON STOCK HERETOFORE ISSUED
UPON CONVERSION OF ANY DEBENTURE.
Principal Amount of Debentures:
Shares of Common Stock Heretofore Issued Upon Conversion of
Debentures:
v. Other Shares of Common Stock or Other
Securities of the Company Owned by the
Selling Securityholder:
EXCEPT AS SET FORTH BELOW, AND UNDER ITEM 4, THE UNDERSIGNED SELLING
SECURITYHOLDER DOES NOT OWN ANY SHARES OF COMMON STOCK OR ANY OTHER
SECURITIES OF THE COMPANY.
vi. Except as set forth below, the Selling
Securityholder has held no position or office
or has had any other material relationship
with the Company (or predecessor or affiliate
of the Company) during the past three years.
vii. The Selling Securityholder acknowledges that
it understands its obligation to comply with
the provisions of the
A-2
<PAGE> 30
Securities Exchange Act of 1934, and the
rules thereunder, relating to stock
manipulation, in connection with the offering
of its Registrable Securities covered by the
Registration Statement. The Selling
Securityholder agrees that neither it nor any
person acting on its behalf, will bid for, or
purchase any securities of the Company in
violation of such provisions, so long as the
Registrable Securities beneficially owned by
it are being offered pursuant to the
Registration Statement.
By its signature below, the Selling Securityholder consents to the disclosure
of the information contained herein to the extent required by the federal and
state securities laws and the rules of the Commission. The Selling
Securityholder understands that the information that is being furnished to the
Company in this Questionnaire will be relied upon by the Company in connection
with the preparation of the Registration Statement. The Selling Securityholder
agrees to promptly notify the Company of any changes in such information which
may occur subsequent to the date hereof.
Dated: , 199
----------- -- ---------------------------
Selling Securityholder
By:
------------------------
Name:
Title:
A-3
<PAGE> 1
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of September 9, 1996,
("Agreement"), between General Electric Capital Corporation, with an office at
303 International Circle Suite 300, Hunt Valley, MARYLAND 21031, (hereinafter
called, together with its successors and assigns, if any, "Lessor"), and
Nexstar Pharmaceuticals, Inc., a corporation, organized and existing under the
laws of the State of Colorado, with its mailing address and chief place of
business at 2860 Wilderness Place Suite 200 Boulder, CO 80301 (hereinafter
called "Lessee").
WITNESSETH:
I. LEASING:
(a) Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the
equipment ("Equipment") described in Annex A to any schedule hereto
("Schedule") and this Agreement shall be effective from and after the date of
execution hereof. Terms defined in a Schedule and not otherwise defined herein
shall have the meanings ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier",) and to lease the same to Lessee
under any Schedule shall be subject to receipt by Lessor, prior to the Lease
Commencement Date (with respect to such Equipment), of each of the following
documents in form and substance satisfactory to Lessor: (i) a Schedule relating
to the Equipment then to be leased hereunder, (ii) a Purchase Order Assignment
and Consent in the form of Annex B to the applicable Schedule, unless Lessor
shall have delivered its purchase order for such Equipment, (iii) evidence of
insurance which complies with the requirements of Section X, and (iv) such
other documents as Lessor may reasonably request. As a further condition to
such obligations of Lessor, Lessee shall, upon delivery of such Equipment (but
not later than the Last Delivery Date specified in the applicable Schedule)
execute and deliver to Lessor a Certificate of Acceptance (in the form of Annex
C to the applicable Schedule) covering such Equipment. Lessor hereby appoints
Lessee its agent for inspection and acceptance of the Equipment from the
Supplier. Upon execution by Lessee of any Certificate of Acceptance, the
Equipment described thereon shall be deemed to have been delivered to, and
irrevocably accepted by, Lessee for lease hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable hereunder and Lessee's right to use the
Equipment shall commence on the date of execution by Lessee of the Certificate
of Acceptance for such Equipment ("Lease Commencement Date"). The term of this
Agreement shall be the period specified in the applicable Schedule. If any term
is extended, the word "term" shall be deemed to refer to all extended terms,
and all provisions of this Agreement shall apply during any extended terms,
except as may be otherwise specifically provided in writing.
(b) Rent shall be paid to Lessor at its address stated above,
except as otherwise directed by Lessor. Payments of rent shall be in the
amount set forth in, and due in accordance with, the provisions of the
applicable Schedule. If one or more Advance Rentals are payable, such Advance
Rental shall be (i) set forth on the applicable Schedule, (ii) due upon
acceptance by Lessor of such Schedule, and (iii) when received by Lessor,
applied to the first rent payment and the balance, if any, to the final rental
payment(s) under such Schedule. In no event shall any Advance Rental or any
other rent payments be refunded to Lessee. If rent is not paid within ten days
of its due date, Lessee agrees to pay a late charge of five cents ($.05) per
dollar on, and in addition to, the amount of such rent but not exceeding the
lawful maximum, if any.
(c) So long as no default shall have occurred and be continuing
under the terms of this agreement, neither Lessor nor its agents, employees,
creditors, or assigns will disturb Lessee's quiet, peaceful and uninterrupted
possession of the Equipment during the term of this Lease and Lessee's
uninterrupted use thereof for its intended purpose.
III. RENT ADJUSTMENT:
(a) The periodic rent payments in each Schedule have been
calculated on the assumption (which, as between Lessor and Lessee, is mutual)
that the maximum effective corporate income tax rate (including any surcharge
but exclusive of any minimum tax rate) for calendar-year taxpayers ("Effective
Rate") will be thirty-five percent (35%) for each year of the lease term.
(b) If, solely as a result of Congressional enactment of any law
(including, without limitation) any modification of, or amendment or addition
to, the Internal Revenue Code of 1986 ("Code"), the Effective Rate is higher
than thirty-five percent (35%) for any year during the lease term, then Lessor
shall have the right to increase such rent payments by requiring payment of a
single additional sum equal to the product of (i) the Effective Rate (expressed
as a decimal) for such year less.35 (or, in the event that any adjustment has
been made hereunder for any previous year, the Effective Rate (expressed as a
decimal) used in calculating the next previous adjustment) times (ii) the
adjusted Stipulated Loss Value divided by the difference between the new
Effective Tax Rate (expressed as a decimal) and one (1). The adjusted
Stipulated Loss Value shall be the Stipulated Loss Value (calculated as of the
first rental due in the year for which such adjustment is being made) less the
product of the Tax Benefits that would be allowable under Section 168 of the
Code (as of the first day of the year for which such adjustment is being made
and all subsequent years of the lease term). Lessee shall pay to Lessor the
full amount of the additional rent payment on the later of (i) receipt of
notice or (ii) the first day of the year for which such adjustment is being
made.
(c) Lessee's obligations under this Section III shall survive any
expiration or termination of this Agreement.
IV. TAXES: Except as provided in Sections III and XV(c), Lessee shall have
no liability for taxes imposed by the United States of America or any State or
political subdivision thereof which are on or measured by the net income of
Lessor. Lessee shall report (to the extent that it is legally permissible) and
pay promptly all other taxes, fees and assessments due, imposed, assessed or
levied against any Equipment (or the purchase, ownership, delivery, leasing,
possession, use or operation thereof), this Agreement (or any rentals or
receipts hereunder), any Schedule, Lessor or Lessee by any foreign, federal,
state or local government or taxing authority during or related to the term of
this Agreement, including, without limitation, all license and registration
fees, and all sales, use, personal property, excise, gross receipts, franchise,
stamp or other taxes, imposts, duties and charges, together with any penalties,
fines or interest thereon (all hereinafter called "Taxes"). Lessee shall (i)
reimburse Lessor upon receipt of written request for reimbursement for any
Taxes charged to or assessed against Lessor, (ii) on request of Lessor, submit
to Lessor written evidence of Lessee's payment of Taxes, (iii) on all reports
or returns show the ownership of the Equipment by Lessor, and (iv) send a copy
thereof to Lessor. The obligations of Lessee under this Section IV shall
survive any expiration or termination of this Agreement.
<PAGE> 2
V. REPORTS:
(a) Lessee will notify Lessor in writing, within ten (10) days
after any tax or other lien shall attach to any Equipment, of the full
particulars thereof and of the location of such Equipment on the date of such
notification.
(b) Lessee will within ninety (90) days of the close of each
fiscal year of Lessee, deliver to Lessor, Lessee's complete financial
statements, certified by a recognized firm of certified public accountants.
Lessee will, within thirty (30) days after the date on which they are filed,
deliver to Lessor all Forms 10-K and 10-Q filed with the Securities and
Exchange Commission. Upon request Lessee will deliver to Lessor quarterly,
within ninety (90) days of the close of each fiscal quarter of Lessee, in
reasonable detail, copies of Lessee's quarterly financial report certified by
the chief financial officer of Lessee. Upon request, Lessee will deliver to
Lessor one copy of each financial statement, report, notice or proxy statement
sent by Lessee to shareholders generally and one copy of each regular or
periodic report, registration statement or prospectus filed by Lessee with any
securities exchange or the Securities and Exchange Commission or any successor
agency, such copies to be delivered to Lessor within thirty (30) days after
they become available or are otherwise filed.
(c) Lessee will permit Lessor to inspect any Equipment during
normal business hours.
(d) Lessee will keep the Equipment at the Equipment Location
(specified in the applicable Schedule) and will give Lessor prior written
notice of any relocation of Equipment. Upon the written request of Lessor,
Lessee will notify Lessor forthwith in writing of the location of any Equipment
as of the date of such notification.
(e) Lessee will promptly and fully report to Lessor in writing if
any Equipment is lost or damaged (where the estimated repair costs would exceed
ten percent (10%) of its then fair market value), or is otherwise involved in
an accident causing personal injury or property damage.
(f) Within thirty (30) days after any request by Lessor, Lessee
will furnish a certificate of an authorized officer of Lessee stating that he
has reviewed the activities of Lessee and that, to the best of his knowledge,
there exists no default (as described in Section XII) or event which with
notice or lapse of time (or both) would become such a default.
VI. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business and in a manner complying with all applicable
federal, state, and local laws and regulations and any applicable insurance
policies and Lessee shall not discontinue use of the Equipment.
(c) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
EQUIPMENT, OR THE INTEREST OF LESSEE HEREUNDER, NOR SHALL LESSEE REMOVE ANY
EQUIPMENT FROM THE CONTINENTAL UNITED STATES, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE LESSOR.
(d) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor.
VII. SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of
Equipment in good operating order, repair, condition and appearance in
accordance with manufacturer's recommendations, normal wear and tear excepted.
Lessee shall, if at any time requested by Lessor, affix in a prominent position
on each unit of Equipment plates, tags or other identifying labels showing
ownership thereof by Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or
install any accessory, equipment or device on any Equipment if such addition
will impair the originally intended function or use of such Equipment. All
additions, repairs, parts, supplies, accessories, equipment, and devices
furnished, attached or affixed to any Equipment which are not readily removable
shall be made only in compliance with applicable law, including Internal
Revenue Service guidelines, shall be free and clear of all liens, encumbrances
or rights of others, and shall become the property of Lessor. Lessee will not,
without the prior written consent of Lessor and subject to such conditions as
Lessor may impose for its protection, affix or install any Equipment to or in
any other personal or real property.
(c) Any alterations or modifications to the Equipment that may, at
any time during the term of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made at the expense of Lessee.
VIII. STIPULATED LOSS VALUE: Lessee shall promptly and fully notify Lessor
in writing if any unit of Equipment shall be or become worn out, lost, stolen,
destroyed, irreparably damaged in the reasonable determination of Lessee, or
permanently rendered unfit for use from any cause whatsoever (such occurrences
being hereinafter called "Casualty Occurrences"). On the rental payment date
next succeeding a Casualty Occurrence (the "Payment Date"), Lessee shall pay
Lessor the sum of (x) the Stipulated Loss Value of such unit calculated as of
the rental next preceding such Casualty Occurrence ("Calculation Date") and (y)
all rentals and other amounts which are due hereunder as of the Payment Date.
Upon payment of all sums due hereunder, the term of this lease as to such unit
shall terminate and (except in the case of the loss, theft or complete
destruction of such unit) Lessor shall be entitled to recover possession of
such unit.
IX. LOSS OR DAMAGE: Lessee hereby assumes and shall bear the entire risk
of any loss, theft, damage to, or destruction of, any unit of Equipment from
any cause whatsoever from the time the Equipment is shipped to Lessee.
X. INSURANCE: Lessee agrees, at its own expense, to keep all Equipment
insured for such amounts and against such hazards as Lessor may require,
including, but not limited to, insurance for damage to or loss of such
Equipment and liability coverage for personal injuries, death or property
damage, with Lessor named as additional insured and with a loss payable clause
in favor of Lessor, as its interest may appear, irrespective of any breach of
warranty or other act or omission of Lessee. All such policies shall be with
companies, and on terms, satisfactory to Lessor. Lessee agrees to deliver to
Lessor evidence of insurance satisfactory to Lessor. No insurance shall be
subject to any co-insurance clause. Lessee hereby appoints Lessor as Lessee's
<PAGE> 3
attorney-in-fact to make proof of loss and claim for insurance, and to make
adjustments with insurers and to receive payment of and execute or endorse all
documents, checks or drafts in connection with payments made as a result of
such insurance policies. Any expense of Lessor in adjusting or collecting
insurance shall be borne by Lessee. Lessee will not make adjustments with
insurers except (i) with respect to claims for damage to any unit of Equipment
where the repair costs do not exceed ten percent (10%) of such unit's fair
market value, or (ii) with Lessor's written consent. Said policies shall
provide that the insurance may not be altered or cancelled by the insurer until
after thirty (30) days' written notice to Lessor. Lessor may, at its option,
apply proceeds of insurance, in whole or in part, to (i) repair or replace
Equipment or any portion thereof, or (ii) satisfy any obligation of Lessee to
Lessor hereunder.
XI. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any
Schedule, Lessee shall promptly, at its own cost and expense: (i) perform any
testing and repairs required to place the affected units of Equipment in the
same condition and appearance as when received by Lessee (reasonable wear and
tear excepted) and in good working order for their originally intended purpose;
(ii) if deinstallation, disassembly or crating is required, cause such units to
be deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is satisfactory to Lessor; and
(iii) return such units to a location within the continental United States as
Lessor shall direct.
(b) Until Lessee has fully complied with the requirements of
Section XI(a) above. Lessee's rent payment obligation and all other obligations
under this Agreement shall continue from month to month notwithstanding any
expiration or termination of the lease term. Lessor may terminate such
continued leasehold interest upon ten (10) days' notice to Lessee.
XII. DEFAULT:
(a) Lessor may in writing declare this Agreement in default if:
Lessee breaches its obligation to pay rent or any other sum when due and fails
to cure the breach within ten (10) days; Lessee breaches any of its insurance
obligations herewith under Section X; Lessee breaches any of its other
obligations hereunder and fails to cure that breach within thirty (30) days
after written notice thereof: any representation or warranty made by or on
behalf of Lessee in connection with this Agreement shall be false or misleading
in any material respect; Lessee or any guarantor becomes insolvent or ceases to
do business as a going concern; any Equipment is illegally used; a petition is
filed by or against Lessee or any guarantor under any bankruptcy or insolvency
laws; there is a revocation or anticipatory repudiation of any guarantor's
obligations under any guaranty issued in connection with this Agreement; Lessee
or any guarantor shall be in default under any material obligation and the
applicable grace period with respect thereto shall have expired; Lessee or any
guarantor shall have terminated its existence, consolidated with, merged into
or conveyed or leased substantially all of its assets as an entirety to any
person (such actions being referred to as an "Event"), unless not less than
sixty (60) days prior to such Event: (x) such person is organized and existing
under the laws of the United States or any state, and executes and delivers to
Lessor an agreement containing an effective assumption by such person of the
due and punctual performance of this Lease or guaranty thereof, as the case may
be, and (y) Lessor is reasonably satisfied as to the credit worthiness of such
person; if Lessee or any guarantor is a privately held corporation and
effective control of Lessee's or any guarantor's voting capital stock, issued
and outstanding from time to time, is not retained by the present stockholders
(unless Lessee shall have provided sixty (60) days' prior written notice to
Lessor of the proposed disposition of stock and Lessor shall have consented
thereto in writing); or if Lessee or any guarantor is a publicly held
corporation as a result of or in connection with a material change in the
ownership of Lessee's or any guarantor's capital stock, Lessee's or any
guarantor's debt-to-worth ratio equals or exceeds twice Lessee's or any
guarantor's debt-to-worth ratio as of the date of this Lease (unless Lessor
shall have given its prior written consent thereto), if Lessee or any guarantor
is a natural person, any death or incompetency of Lessee or such guarantor. As
used herein, "debt-to-worth ratio" shall mean the ratio of (x) total
liabilities which, in accordance with generally accepted accounting principles
("GAAP") would be included in the liability side of a balance sheet, to (y)
tangible net worth including the sum of the par or stated value of all
outstanding capital stock, surplus and undivided profits, less any amounts
attributable to goodwill, patents, copyrights, mailing lists, catalogs,
trademarks, bond discount and underwriting expenses, organization expense and
other intangibles, all determined in accordance with GAAP. Any provision of
this Agreement to the contrary notwithstanding, Lessor may exercise all rights
and remedies hereunder independently with respect to each Schedule.
(b) After default, at the request of Lessor, Lessee shall comply
with the provisions of Section XI(a). Lessee hereby authorizes Lessor to
enter, with or without legal process, any premises where any Equipment is
believed to be and take possession thereof. Lessee shall, without further
demand, forthwith pay to Lessor as liquidated damages for loss of a bargain and
not as a penalty, the Stipulated Loss Value of the Equipment (calculated as of
the rental date next preceding the declaration of default), and all rentals and
other sums then due hereunder. Lessor may terminate this Agreement as to any or
all of the Equipment, provided that a termination shall occur only upon written
notice by Lessor to Lessee and only as to the items of Equipment specified in
any such notice. Lessor may, but shall not be required to, sell Equipment at
private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale; or Lessor may, but
shall not be required to, lease, otherwise dispose of or keep idle all or part
of the Equipment; and Lessor may use Lessee's premises for any or all of the
foregoing without liability for rent, costs, damages or otherwise. The proceeds
of sale, lease or other disposition, if any, shall be applied in the following
order of priorities: (1) to pay all of Lessor's costs, charges and expenses
incurred in taking, removing, holding, repairing and selling, leasing or
otherwise disposing of Equipment; then, (2) to the extent not previously paid
by Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to
reimburse to Lessee any sums previously paid by Lessee as liquidated damages;
and (4) any surplus shall be retained by Lessor. Lessee shall pay any
deficiency in (1) and (2) forthwith.
(c) The foregoing remedies are cumulative, and any or all thereof
may be exercised in lieu of or in addition to each other or any remedies at
law, in equity, or under statute. Lessee waives notice of sale or other
disposition (and the time and place thereof), and the manner and place of any
advertising. Lessee shall pay Lessor's actual attorney's fees incurred in
connection with the enforcement, assertion, defense or preservation of Lessor's
rights and remedies hereunder, or if prohibited by law, such lesser sum as may
be permitted. Waiver of any default shall not be a waiver of any other or
subsequent default.
(d) Any default under the terms of this or any other agreement
between Lessor and Lessee may be declared by Lessor a default under this and
any such other agreement.
XIII. ASSIGNMENT: Lessor may, without the consent of Lessee, assign
this Agreement or any Schedule or any interests therein. Lessee agrees that if
Lessee receives written notice of an assignment from Lessor, Lessee will pay
all rent and all other amounts payable under any assigned Equipment Schedule to
such assignee or as instructed by Lessor. Lessee further agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
assignee. Lessee hereby waives and agrees not to assert against any such
assignee any defense, set-off, recoupment claim or counterclaim which Lessee
has or may at any time have against Lessor for any reason whatsoever.
<PAGE> 4
XIV. NET LEASE; NO SET-OFF, ETC: This Agreement is a net lease. Lessee's
obligation to pay rent and other amounts due hereunder shall be absolute and
unconditional. Lessee shall not be entitled to any abatement or reductions of,
or set-offs against, said rent or other amounts, including, without limitation,
those arising or allegedly arising out of claims (present or future, alleged or
actual, and including claims arising out of strict tort or negligence of
Lessor) of Lessee against Lessor under this Agreement or otherwise. Nor shall
this Agreement terminate or the obligations of Lessee be affected by reason of
any defect in or damage to, or loss of possession, use or destruction of, any
Equipment from whatsoever cause. It is the intention of the parties that rents
and other amounts due hereunder shall continue to be payable in all events in
the manner and at the times set forth herein unless the obligation to do so
shall have been terminated pursuant to the express terms hereof.
XV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless
Lessor, its agents, employees, successors and assigns from and against any and
all losses, damages, penalties, injuries, claims, actions and suits, including
legal expenses, of whatsoever kind and nature, in contract or tort or
otherwise, unless caused by the gross negligence or willful misconduct of
Lessor, and including, but not limited to, Lessor's strict liability in tort,
arising out of (i) the selection, manufacture, purchase, acceptance or
rejection of Equipment, the ownership of Equipment during the term of this
Agreement, and the delivery, lease, possession, maintenance, uses, condition,
return or operation of Equipment (including, without limitation, latent and
other defects, whether or not discoverable by Lessor or Lessee and any claim
for patent, trademark or copyright infringement or environmental damage) or
(ii) the condition of Equipment sold or disposed of after use by Lessee, any
sublessee or employees of Lessee. Lessee shall, upon request, defend any
actions based on, or arising out of, any of the foregoing.
(b) The Lease has been entered into on the assumption that (i) the
Lease will be treated for federal income tax purposes as a true lease and the
Lessor will be treated as the owner and lessor of the Equipment and the Lessee
will be treated as the lessee of the Equipment, and (ii) on the Lease
Commencement Date for any unit of Equipment, such unit will qualify for all of
the items of deduction and credit specified in Section C of applicable Schedule
("TAX BENEFITS") in the hands of Lessor (all references to Lessor in this
Section XV include Lessor and the consolidated tax payer group of which Lessor
is a member).
(c) If for any reason whatsoever (i) tax counsel of Lessor shall
determine that Lessor is not entitled to claim on its federal income tax return
all or any portion of the Tax Benefits with respect to any Equipment or (ii)
any such Tax Benefit claimed on the federal income tax return of Lessor is
disallowed or adjusted by the Internal Revenue Service or (iii) any such Tax
Benefit is recomputed or recaptured (any such determination, disallowance,
adjustment, recomputation or recapture being hereinafter called a "LOSS"), then
Lessee shall pay to Lessor, as an indemnity and as additional rent, such amount
as shall, in the reasonable opinion of Lessor, cause Lessor's after-tax
economic yields and cash flows, computed on the same assumptions, including tax
rates (unless any adjustment has been made under Section III hereof, in which
case the Effective Rate used in the next preceding adjustment shall be
substituted), and were utilized by Lessor in originally evaluating the
transaction (such yields and flows being hereinafter called the "NET ECONOMIC
RETURN") to equal the Net Economic Return that would have been realized by
Lessor if such Loss had not occurred. Such amount shall be payable upon demand
accompanied by a statement describing in reasonable detail such Loss and the
computation of such amount. Anything in this paragraph to the contrary
notwithstanding, Lessee shall have no obligation to indemnify Lessor from or
against any such Loss to the extent that such Loss is caused by: (i) any
failure by Lessor to properly or timely claim on its federal income tax return
any Tax Benefits on any Equipment (unless such failure is based upon a
determination by tax counsel of Lessor that Lessor is not entitled to claim
such Tax Benefits with respect to such Equipment); (ii) any failure of Lessor
to have sufficient taxable income to benefit from the Tax Benefits; (iii) any
liability of the Lessor for any alternative minimum taxes; (iv) the status of
Lessor for purposes of federal income taxes; (v) any sale or other disposition
of any Equipment by Lessor other than after an event of default by Lessee;
(vi) any tax election made or not made by Lessor relating to the Tax Benefits;
or (vii) any event which results in a payment by Lessee in an amount equal to,
or measured by, the Stipulated Loss Value to the extent that such Loss was
included in Lessor's calculation of such Stipulated Loss Value.
(d) All of Lessor's rights, privileges and indemnities contained
in this Section XV shall survive the expiration or other termination of this
Agreement and the rights, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by Lessor, its
successors and assigns.
XVI. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT
WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT
MAKE, HAS NOT MADE, NOR SHALL LESSOR BE DEEMED TO MAKE OR HAVE MADE, ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH
RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.
All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without
limiting the foregoing, Lessor shall have no responsibility or liability to
Lessee or any other person with respect to any of the following, regardless of
any negligence of Lessor (i) any liability, loss or damage caused or alleged to
be caused directly or indirectly by any Equipment, any inadequacy thereof, any
deficiency or defect (latent or otherwise) therein, or any other circumstance in
connection therewith; (ii) the use, operation or performance of any Equipment or
any risks relating thereto; (iii) any interruption of service, loss of business
or anticipated profits or consequential damages; or (iv) the delivery,
operation, servicing, maintenance, repair, improvement or replacement of any
Equipment. If, and so long as, no default exists under this Lease, Lessee shall
be, and hereby is, authorized during the term of this Lease to assert and
enforce, at Lessee's sole cost and expense, from time to time, in the name of
and for the account of Lessor and/or Lessee, as their interests may appear,
whatever claims and rights Lessor may have against any Supplier of the
Equipment.
XVII. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee hereby represents and
warrants to Lessor that on the date hereof and on the date of execution of each
Schedule:
(a) Lessee has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents (together, the
"DOCUMENTS") and is duly qualified to do business wherever necessary to carry
on its present business and operations, including the jurisdiction(s) where the
Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and
delivered by Lessee and constitute valid, legal and binding agreements,
enforceable in accordance with their terms, except to the extent that the
enforcement of remedies therein provided may be limited under applicable
bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality with respect to the entry
into or performance by Lessee of the Documents except such as have already been
obtained.
<PAGE> 5
(d) The entry into and performance by Lessee of the Documents will
not: (i) violate any judgment, order, law or regulation applicable to Lessee
or any provision of Lessee's Certificate of Incorporation or By-Laws; or ( ii)
result in any breach of, constitute a default under or result in the creation
of any lien, charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which Lessee is a
party.
(e) There are no suits or proceedings pending or threatened in
court or before any commission, board or other administrative agency against or
affecting Lessee, which if decided adversely will have a material adverse
effect on the ability of Lessee to fulfill its obligations under this
Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is
and will remain tangible personal property.
(g) Each financial statement delivered to Lessor has been prepared
in accordance with GAAP consistently applied, and since the date of the most
recent such financing statement, there has been no material adverse change.
(h) Lessee is and will be at all times validly existing and in
good standing under the laws of the State of its incorporation (specified in
the first sentence of this Agreement).
(i) The Equipment will at all times be used for commercial or
business purposes.
XVIII. PURCHASE OPTION:
(a) So long as no default exists hereunder and the lease has not
been earlier terminated, Lessee may at lease expiration, upon at least one
hundred twenty (120) days prior written notice to Lessor, purchase all (but not
less than all) of the Equipment in any Schedule on an AS IS, WHERE IS BASIS
without recourse to or warranty from Lessor, express or implied ("AS IS BASIS")
for cash equal to its then Fair Market Value (plus all applicable sales taxes).
(b) "Fair Market Value", shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment dealer) would
pay for the Equipment in an arm's-length transaction to a willing seller under
no compulsion to sell; provided, however, that in such determination: (i) the
Equipment shall be assumed to be in the condition in which it is required to be
maintained and returned under this Agreement; (ii) in the case of any installed
Equipment, that Equipment shall be valued on an installed basis; and (iii)
costs of removal from current location shall not be a deduction from such
valuation. If Lessor and Lessee are unable to agree on the Fair Market Value at
least ninety (90) days before lease expiration, Lessor, shall appoint an
independent appraiser (reasonably acceptable to Lessee) to determine Fair
Market Value, and that determination shall be final, binding and conclusive.
Lessee shall bear all costs associated with any such appraisal.
(c) Lessee shall be deemed to have waived this option unless it
provides Lessor with written notice of its irrevocable election to exercise the
same within fifteen (15) days after Fair Market Value is determined (by
agreement or appraisal).
XIX. MISCELLANEOUS:
(A) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS; AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
LESSEE AND LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION,
THIS LEASE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(b) Unless and until Lessee exercises its rights under Section
XVIII above, nothing herein contained shall give or convey to Lessee any right,
title or interest in and to any Equipment except as a lessee. Any cancellation
or termination by Lessor, pursuant to the provision of this Agreement, any
Schedule, supplement or amendment hereto, or the lease of any Equipment
hereunder, shall not release Lessee from any then outstanding obligations to
Lessor hereunder. All Equipment shall at all times remain personal property of
Lessor regardless of the degree of its annexation to any real property and
shall not by reason of any installation in, or affixation to, real or personal
property become a part thereof.
(c) Time is of the essence of this Agreement. Lessor's failure at
any time to require strict performance by Lessee of any of the provisions
hereof shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith. Lessee agrees, upon Lessor's request, to execute any
instrument necessary or expedient for filing, recording or perfecting the
interest of Lessor. All notices required to be given hereunder shall be deemed
adequately given if sent by registered or certified mail to the addressee at
its address stated herein, or at such other place as such addressee may have
designated in writing and shall be deemed effective when sent. This Agreement
and any Schedule and Annexes thereto constitute the entire agreement of the
parties with respect to the subject matter hereof. NO VARIATION OR MODIFICATION
OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL
BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE
PARTIES HERETO.
LESSOR
----------
LESSEE ILLEGIBLE
----------
(d) In case of a failure of Lessee to comply with any provision of
this Agreement, Lessor shall have the right, but shall not be obligated, to
effect such compliance, in whole or in part; and all moneys spent and expenses
and obligations incurred or assumed by Lessor in effecting such compliance
shall constitute additional rent due to Lessor within five days after the date
Lessor sends notice to Lessee requesting payment. Lessor's effecting such
compliance shall not be a waiver of Lessee's default.
(e) Any rent or other amount not paid to Lessor when due hereunder
shall bear interest, both before and after any judgment or termination hereof,
at the lesser of eighteen percent (18%) per annum or the maximum rate allowed
by law. Any provisions in this Agreement and any Schedule which are in conflict
with any statute, law or applicable rule shall be deemed omitted, modified or
altered to conform thereto.
<PAGE> 6
IN WITNESS WHEREOF. Lessee and Lessor have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ ILLEGIBLE By: /s/ MICHAEL E. HART
-------------------------------- ------------------------------
Name: ILLEGIBLE Name: Michael E. Hart
------------------------------- ----------------------------
Title: ILLEGIBLE Title: VP and CFO
------------------------------ ---------------------------
<PAGE> 7
ADDENDUM NO. 1
TO MASTER LEASE AGREEMENT
DATED AS OF September 9, 1996
THIS ADDENDUM (this "Addendum") amends and supplements the above
referenced lease (the "Lease"), between General Electric Capital Corporation
("Lessor") and Nexstar Pharmaceuticals, Inc. ("Lessee") and is hereby
incorporated into the Lease as though fully set forth therein. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Lease.
The Lease is hereby amended as follows:
1. XXI. ADDITIONAL COVENANTS.
(a) At all times during the term of the Lease. Lessee
shall maintain: (i) unrestricted cash, cash equivalents and investment
grade securities (assuming such investment securities are highly
liquid) of at least $10,000,000; (ii) a tangible net worth of no less
than $60,000,000; and (iii) a total liabilities to tangible net worth
ratio of no more than .75:1, or within fifteen (15) days after Lessee
ceases to satisfy any such requirements. Lessee shall cause to be
delivered to Lessor an irrevocable standby letter of credit as
described in Section XXI(c) below, Unrestricted cash, cash equivalents
and investment grade securities shall be defined as being net of any
non-GE Capital contingent liabilities associated with other lease or
loan cash triggers, pledge agreements, etc. Except as defined herein.
accounting terms used herein shall be as defined herein, shall be as
defined, and all calculations hereunder shall be made, in accordance
with GAAP.
(b) Lessee's chief financial officer shall notify Lessor
of the amount of Lessee's unrestricted cash, cash equivalents,
investment grade securities, tangible net worth and total liabilities
to tangible net worth ratio, and shall certify that such amounts are
in compliance with the requirements of Section XXI(a) above, such
notification and certification shall be provided within fifteen (15)
days after the end of each quarter, reflecting such information as of
the end of the quarter immediately preceding such notice, unless
Lessee's unrestricted cash, cash equivalents and investment grade
securities fall below $30,000,000.00 at which point reporting becomes
monthly. If Lessee fails timely to provide such notification and
compliance certificates, within fifteen (15) days after such failure,
Lessee shall cause to be delivered to Lessor an irrevocable standby
letter of credit as described in Section XXI(c) below. A failure by
Lessee to provide such Letter of Credit or otherwise comply with this
Section XXI shall be a default hereunder.
(c) The irrevocable standby letter of credit provided
pursuant to this addendum shall be (i) in the amount of the then
Stipulated Loss Value of all of the Schedules, (ii) issued by a bank
which is acceptable to Lessor in its sole discretion, (iii) in the
form attached as Exhibit A or as may be acceptable to Lessor in its
sole discretion, and (iv) for an initial term of one (1) year with
automatic annual renewals thereafter (without amendment except for
extension of the then current expiration date by an additional year)
until Lessee has received written notice from Lessor to the effect
that the Letter of credit is being released in its entirety. Lessee
shall also execute a Letter of Credit Agreement in the form attached
as Exhibit B.
2. SECTION XII. All Schedules under this Lease shall be for a
minimum of $150,000.00.
Except as expressly modified hereby, all terms and provisions of the Lease
shall remain in full force and effect. This Addendum is not binding nor
effective with respect to the Lease or the Equipment until executed on behalf
of Lessor and Lessee by authorized representatives of Lessor and Lessee.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Addendum to be executed
by their duly authorized representatives as of the date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ ILLEGIBLE By: /s/ MICHAEL E. HART
-------------------------------- ------------------------------
Name: ILLEGIBLE Name: Michael E. Hart
------------------------------- ----------------------------
Title: ILLEGIBLE Title: VP and CFO
------------------------------ ---------------------------
Attest:
By: /s/ LAURI HARKER
------------------------------
<PAGE> 8
ADDENDUM NO. 2
TO MASTER LEASE AGREEMENT
DATED AS OF SEPTEMBER 9, 1996
THIS ADDENDUM (this "ADDENDUM") amends and supplements the above
referenced lease (the "LEASE"), between GENERAL ELECTRIC CAPITAL CORPORATION
("LESSOR") and NEXSTAR PHARMACEUTICALS, INC. ("LESSEE") and is hereby
incorporated into the Lease as though fully set forth therein. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Lease.
This Addendum No. 2 shall supersede Addendum No. 1 for all Schedules.
The Lease is hereby amended as follows:
1. XXI. ADDITIONAL COVENANTS.
(a) At all times during the term of the Lease, Lessee
shall maintain: (i) unrestricted cash, cash equivalents and investment
grade securities (assuming such investment securities are highly
liquid) of at least $15,000,000, (ii) a tangible net worth of no less
than $60,000,000; and (iii) a total liabilities to tangible net worth
ratio of no more than 1.25:1. or within fifteen (15) days after Lessee
ceases to satisfy any such requirements, Lessee shall cause to be
delivered to Lessor an irrevocable standby letter of credit as
described in Section XXI(c) below. Unrestricted cash, cash equivalents
and investment grade securities shall be defined as being net of any
non-GE Capital contingent liabilities associated with other lease or
loan cash triggers, pledge agreements, etc. Except as defined herein,
accounting terms used herein shall be as defined, and all calculations
hereunder shall be made, in accordance with GAAP.
(b) Lessee's chief financial officer shall notify Lessor
of the amount of Lessee's unrestricted cash, cash equivalents,
investment securities, tangible net worth and total liabilities to
tangible net worth ratio, and shall certify that such amounts are in
compliance with the requirements of Section XXI(a) above, such
notification and certification shall be provided within fifteen (15)
days after the end of each quarter, reflecting such information as of
the end of the quarter immediately preceding such notice, unless
Lessee's unrestricted cash, cash equivalents and investment grade
securities fall below $30,000,000.00 at which point reporting becomes
monthly. If Lessee fails timely to provide such notification and
compliance certificates, within fifteen (15) days after such failure,
Lessee shall cause to be delivered to Lessor an irrevocable standby
letter of credit as described in Section XXI(c) below. A failure by
Lessee to provide such Letter of Credit or otherwise comply with this
Section XXI shall be a default hereunder.
(c) The irrevocable standby letter of credit provided
pursuant to this addendum shall be (i) in the amount of the then
Stipulated Loss Value of all of the Schedules, (ii) issued by a bank
which is acceptable to Lessor in its sole discretion, (iii) in the
form attached as Exhibit A or as may be acceptable to Lessor in its
sole discretion, and (iv) for an initial term of one (1) year with
automatic annual renewals thereafter (without amendment except for
extension of the then current expiration date by an additional year)
until Lessee has received written notice from Lessor to the effect
that the Letter of credit is being released in its entirety. Lessee
shall also execute a Letter of Credit Agreement in the form attached
as Exhibit B.
2. SECTION XXI. All Schedules under this Lease shall be for a
minimum of $150,000.00.
Except as expressly modified hereby, ail terms and provisions of the Lease
shall remain in full force and effect. This Addendum is not binding nor
effective with respect to the Lease or the Equipment until executed on behalf
of Lessor and Lessee by authorized representatives of Lessor and Lessee.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Addendum to be executed
by their duly authorized representatives as of the date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ ROBERT R. BLEE By: /s/ MICHAEL E. HART
-------------------------------- ------------------------------
Name: Robert R. Blee Name: Michael E. Hart
------------------------------- ----------------------------
Title: Senior Credit Analyst Title: VP and CFO
------------------------------ ---------------------------
Attest:
By: /s/ LAURI HARKER
------------------------------
<PAGE> 9
ADDENDUM NO. 3
TO MASTER LEASE AGREEMENT
DATED AS OF SEPTEMBER 9,1996
THIS ADDENDUM (this "ADDENDUM") amends and supplements the above referenced
lease (the "LEASE"), between GENERAL ELECTRIC CAPITAL CORPORATION ("LESSOR")
and NEXSTAR PHARMACEUTICALS, INC. ("LESSEE") and is hereby incorporated into
the Lease as though fully set forth therein. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Lease.
The Lease is hereby amended as follows:
The State of Incorporation is changed from Colorado to Delaware.
Except as expressly modified hereby, all terms and provisions of the Lease shall
remain in full force and effect. This Addendum is not binding nor effective
with respect to the Lease or the Equipment until executed on behalf of Lessor
and Lessee by authorized representatives of Lessor and Lessee.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Addendum to be executed
by their duly authorized representatives as of the date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ ANNETTE J. SCALLION By: /s/ MICHAEL E. HART
------------------------------------ ------------------------------
Name: Annette J. Scallion Name: Michael E. Hart
----------------------------------- ----------------------------
Title: Specialist-Account Administration Title: VP and CFO
---------------------------------- ---------------------------
Attest:
By: /s/ LAURI HARKER
------------------------------
<PAGE> 1
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT,made as of March 27, 1997
("AGREEMENT"), by and between GENERAL ELECTRIC CAPITAL CORPORATION, a NEW YORK
corporation with an address at 4 NORTH PARK DRIVE SUITE 500, HUNT VALLEY, MD
("SECURED PARTY"), and NEXSTAR PHARMACEUTICALS, INC, a CORPORATION organized
and existing under the laws of the State of DELAWARE with its chief executive
offices located at 2860 WILDERNESS PLACE SUITE 200, BOULDER, CO 80301
("DEBTOR").
In consideration of the promises herein contained and of certain other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Debtor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST.
Debtor hereby gives, grants and assigns to Secured Party, its
successors and assigns forever, a security interest in and against any and all
property listed on any collateral schedule now or hereafter annexed hereto or
made a part hereof ("COLLATERAL SCHEDULE"), and in and against any and all
additions, attachments, accessories and accessions thereto, any and all
substitutions, replacements or exchanges therefor, and any and all insurance
and/or other proceeds thereof (all of the foregoing being hereinafter
individually and collectively referred to as the "COLLATERAL"). The foregoing
security interest is given to secure the payment and performance of any and all
debts, obligations and liabilities of any kind, nature or description whatsoever
(whether primary, secondary, direct, contingent, sole, joint or several, or
otherwise, and whether due or to become due) of Debtor to Secured Party, now
existing or hereafter arising, including but not limited to the payment and
performance of certain Promissory Notes from time to time identified on any
Collateral Schedule (collectively "NOTES" and each a "NOTE"), and any renewals,
extensions and modifications of such debts, obligations and liabilities (all of
the foregoing being hereinafter referred to as the "INDEBTEDNESS").
Notwithstanding the foregoing, and notwithstanding anything to the contrary
contained elsewhere in this Agreement, to the extent that Secured Party asserts
a purchase money security interest in any items of Collateral ("PMSI
COLLATERAL"): (i) the PMSI Collateral shall secure only that portion of the
Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the "PMSI
INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI Indebtedness.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor hereby represents, warrants and covenants as of the date hereof
and as of the date of execution of each Collateral Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing and in
good standing under the laws of the State set forth in the first paragraph of
this Agreement, has its chief executive offices at the location set forth in
such paragraph, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into, and to
perform its obligations, under this Agreement, each Note and any other
documents evidencing, or given in connection with, any of the Indebtedness (all
of the foregoing being hereinafter referred to as the "DEBT DOCUMENTS");
(c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements enforceable under all applicable laws in accordance with
their terms, except to the extent that the enforcement of remedies may be
limited under applicable bankruptcy and insolvency laws;
(d) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality with respect to the entry
into, or performance by, Debtor of any of the Debt Documents, except such as may
have already been obtained;
(e) The entry into, and performance by, Debtor of the Debt
Documents will not (i) violate any of the organizational documents of Debtor or
any judgment, order, law or regulation applicable to Debtor, or (ii) result in
any breach of, constitute a default under, or result in the creation of any
lien, claim or encumbrance on any of Debtor's property (except for liens in
favor of Secured Party) pursuant to, any indenture mortgage, deed of trust,
bank loan, credit agreement, or other agreement or instrument to which Debtor
is a party;
(f) There are no suits or proceedings pending or threatened in
court or before any commission, board or other administrative agency against or
affecting Debtor which could, in the aggregate, have a material adverse effect
on Debtor, its business or operations, or its ability to perform its
obligations under the Debt Documents;
(g) All financial statements delivered to Secured Party in
connection with the Indebtedness have been prepared in accordance with
generally accepted accounting principles, and since the date of the most recent
financial statement, there has been no material adverse change;
(h) The Collateral is not, and will not be, used by Debtor for
personal, family or household purposes;
(i) The Collateral is, and will remain, in good condition and
repair and Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and
(k) The Collateral is, and will remain, free and clear of all
liens, claims and encumbrances of every kind, nature and description, except
for (i) liens in favor of Secured Party, (ii) liens for taxes not yet due or
for taxes being contested in good faith and which do not involve, in the
reasonable judgment of Secured Party, any risk of the sale, forfeiture or loss
of any of the Collateral, and (iii) inchoate materialmen's, mechanic's,
repairmen's and similar liens arising by operation of law in the normal course
of business for amounts which are not delinquent (all of such permitted liens
being hereinafter referred to as "PERMITTED LIENS").
<PAGE> 2
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor shall
remain in possession of the Collateral; provided, however, that Secured Party
shall have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral which
because of its nature may require that Secured Party's security interest
therein be perfected by possession. Secured Party, its successors and assigns,
and their respective agents, shall have the right to examine and inspect any of
the Collateral at any time during normal business hours. Upon any request from
Secured Party, Debtor shall provide Secured Party with notice of the then
current location of the Collateral.
(b) Debtor shall (i) use the Collateral only in its trade or
business, (ii) maintain all of the Collateral in good condition and working
order, (iii) use and maintain the Collateral only in compliance with all
applicable laws, and (iv) keep all of the Collateral free and clear of all
liens, claims and encumbrances (except for Permitted Liens).
(c) Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease, mortgage, grant a
security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.
(d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on the use thereof, or on this Agreement or any of the other Debt
Documents. At its option, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of the Collateral
or to effect compliance with the terms of this Agreement or any of the other
Debt Documents. Debtor shall reimburse Secured Party, on demand, for any and
all costs and expenses incurred by Secured Party in connection therewith and
agrees that such reimbursement obligation shall be secured hereby.
(e) Debtor shall, at all times, keep accurate and complete records
of the Collateral, and Secured Party, its successors and assigns, and their
respective agents, shall have the right to examine, inspect, and make extracts
from all of Debtor's books and records relating to the Collateral at any time
during normal business hours.
(f) If agreed by the parties, Secured Party may, but shall in no
event be obligated to, accept substitutions and exchanges of property for
property, and additions to the property, constituting all or any part of the
Collateral. Such substitutions, exchanges and additions shall be accomplished
at any time and from time to time, by the substitution of a revised Collateral
Schedule for the Collateral Schedule now or hereafter annexed. Any property
which may be substituted, exchanged or added as a foresaid shall constitute a
portion of the Collateral and shall be subject to the security interest granted
herein. Additions to, reductions or exchanges of, or substitutions for, the
Collateral, payments on account of any obligation or liability secured hereby,
increases in the obligations and liabilities secured hereby, or the creation of
additional obligations and liabilities secured hereby, may from time to time be
made or occur without affecting the provisions of this Agreement or the
provisions of any obligation or liability which this Agreement secures.
(g) Any third person at any time and from time to time holding all
or any portion of the Collateral shall be deemed to, and shall, hold the
Collateral as the agent of, and as pledge holder for, Secured Party. At any
time and from time to time, Secured Party may give notice to any third person
holding all or any portion of the Collateral that such third person is holding
the Collateral as the agent of, and as pledge holder for, the Secured Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk, and Debtor
shall keep it insured against loss or damage by fire and extended coverage
perils, theft, burglary, and for any or all Collateral which are vehicles, for
risk of loss by collision, and where requested by Secured Party, against other
risks as required thereby, for the full replacement value thereof, with
companies, in amounts and under policies acceptable to Secured Party. Debtor
shall, if Secured Party so requires, deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy shall name
Secured Party as loss payee thereunder, shall provide for coverage to Secured
Party regardless of the breach by Debtor of any warranty or representation made
therein, shall not be subject to co-insurance, and shall provide for thirty
(30) days written notice to Secured Party of the cancellation or material
modification thereof. Debtor hereby appoints Secured Party as its attorney in
fact to make proof of loss, claim for insurance and adjustments with insurers,
and to execute or endorse all documents, checks or drafts in connection with
payments made as a result of any such insurance policies. Proceeds of insurance
shall be applied, at the option of Secured Party, to repair or replace the
Collateral or to reduce any of the Indebtedness secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party in the event of (i)
any change in the name of Debtor, (ii) any relocation of its chief executive
offices (iii) any relocation of any of the Collateral, (iv) any of the
Collateral being lost, stolen. missing, destroyed, materially damaged or worn
out, or (v) any lien, claim or encumbrance attaching or being made against any
of the Collateral other than Permitted Liens.
(b) Debtor agrees to furnish its annual financial statements and
such interim statements as Secured Party may require in form satisfactory to
Secured Party. Any and all financial statements submitted and to be submitted to
Secured Party have and will have been prepared on a basis of generally accepted
accounting principles, and are and will be complete and correct and fairly
present Debtor's financial condition as at the date thereof. Secured Party may
at any reasonable time examine the books and records of Debtor and make copies
thereof.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, furnish to
Secured Party such further information, execute and deliver to Secured Party
such documents and instruments (including, without limitation, Uniform
Commercial Code financing statements) and do such other acts and things, as
Secured Party may at any time reasonably request relating to the perfection or
protection of the security interest created by this Agreement or for the
purpose of carrying out the intent of this Agreement. Without limiting the
foregoing, Debtor shall cooperate and do all acts deemed necessary or advisable
by Secured Party to continue in Secured Party a perfected first security
interest in the Collateral, and shall obtain and furnish to Secured Party any
subordinations, releases, landlord, lessor, or mortgagee waivers, and similar
documents as may be from time to time requested by, and which are in form and
substance satisfactory to, Secured Party.
<PAGE> 3
(b) Debtor hereby grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute and file
applications for title, transfers of title, financing statements, notices of
lien and other documents pertaining to any or all of the Collateral. Debtor
shall, if any certificate of title be required or permitted by law for any of
the Collateral, obtain such certificate showing the lien hereof with respect to
the Collateral and promptly deliver same to Secured Party.
(c) Debtor shall indemnify and defend the Secured Party, its
successors and assigns, and their respective directors, officers and employees,
from and against any and all claims, actions and suits (including, without
limitation, related attorneys' fees) of any kind, nature or description
whatsoever arising, directly or indirectly, in connection with any of the
Collateral.
7. EVENTS OF DEFAULT.
Debtor shall be in default under this Agreement and each of the other
Debt Documents upon the occurrence of any of the following "Event(s) of
Default":
(a) Debtor fails to pay any installment or other amount due or
coming due under any of the Debt Documents within ten (10) days after its due
date;
(b) Any attempt by Debtor, without the prior written consent of
Secured Party, to sell, rent, lease, mortgage, grant a security interest in, or
otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;
(c) Debtor fails to procure, or maintain in effect at all times,
any of the insurance on the Collateral in accordance with Section 4 of this
Agreement;
(d) Debtor breaches any of its other obligations under any of the
Debt Documents and fails to cure the same within thirty (30) days after written
notice thereof;
(e) Any warranty, representation or statement made by Debtor in
any of the Debt Documents or otherwise in connection with any of the
Indebtedness shall be false or misleading in any material respect;
(f) Any of the Collateral being subjected to attachment,
execution, levy, seizure or confiscation in any legal proceeding or otherwise;
(g) Any default by Debtor under any other agreement between Debtor
and Secured Party;
(h) Any dissolution, termination of existence, merger,
consolidation, change in controlling ownership, insolvency, or business failure
of Debtor or any guarantor or other obligor for any of the Indebtedness
(collectively "GUARANTOR"), or if Debtor or any Guarantor is a natural person,
any death or incompetency of Debtor or such Guarantor;
(i) The appointment of a receiver for all or of any part of the
property of Debtor or any Guarantor, or any assignment for the benefit of
creditors by Debtor or any Guarantor; or
(j) The filing of a petition by Debtor or any Guarantor under any
bankruptcy, insolvency or similar law, or the filing of any such petition
against Debtor or any Guarantor if the same is not dismissed within thirty (30)
days of such filing.
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this
Agreement, the Secured Party, at its option, may declare any or all of the
Indebtedness, including without limitation the Notes, to be immediately due and
payable, without demand or notice to Debtor or any Guarantor. The obligations
and liabilities accelerated thereby shall bear interest (both before and after
any judgment) until paid in full at the lower of eighteen percent (18%) per
annum or the maximum rate not prohibited by applicable law.
(b) Upon such declaration of default, Secured Party shall have all
of the rights and remedies of a Secured Party under the Uniform Commercial
Code, and under any other applicable law. Without limiting the foregoing,
Secured Party shall have the right to (i) notify any account debtor of Debtor
or any obligor on any instrument which constitutes part of the Collateral to
make payment to the Secured Party, (ii) with or without legal process, enter
any premises where the Collateral may be and take possession and/or remove said
Collateral from said premises, (iii) sell the Collateral at public or private
sale, in whole or in part, and have the right to bid and purchase at said sale,
and/or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds therefrom to the obligations then in default. If requested by
Secured Party, Debtor shall promptly assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties, unless this Collateral is labeled
non-severable on the Collateral Schedule. Secured Party may also render any or
all of the Collateral unusable at the Debtor's premises and may dispose of such
Collateral on such premises without liability for rent or costs. Any notice
which Secured Party is required to give to Debtor under the Uniform Commercial
Code of the time and place of any public sale or the time after which any
private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) days prior to such action.
(c) Proceeds from any sale or lease or other disposition shall be
applied: first, to all costs of repossession, storage, and disposition
including without limitation attorneys', appraisers, and auctioneers' fees;
second, to discharge the obligations then in default; third, to discharge any
other Indebtedness of Debtor to Secured Party, whether as obligor, endorsor,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or
settling liens and claims against the Collateral; and lastly, to Debtor, if
there exists any surplus. Debtor shall remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt
Documents are placed in the hands of an attorney for collection of money due or
to become due or to obtain performance of any provision hereof, Debtor agrees
to pay all reasonable attorneys' fees incurred by Secured Party, and further
agrees that payment of such fees is secured hereunder. Debtor and Secured Party
agree that such fees to the extent not in excess of twenty percent (20%) of
subject amount owing after default (if permitted by law, or such lesser sum
as may otherwise be permitted by law) shall be deemed reasonable.
(e) Secured Party's rights and remedies hereunder or otherwise
arising are cumulative and may be exercised singularly or concurrently. Neither
the failure nor any delay on the part of the Secured Party to exercise any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial
<PAGE> 4
exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
Secured Party shall not be deemed to have waived any of its rights hereunder or
under any other agreement, instrument or paper signed by Debtor unless such
waiver be in writing and signed by Secured Party. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion.
(f) DEBTOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE
INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
9. MISCELLANEOUS.
(a) This Agreement, any Note and/or any of the other Debt
Documents may be assigned, in whole or in part, by Secured Party without notice
to Debtor, and Debtor hereby waives any defense. counterclaim or
cross-complaint by Debtor against any assignee, agreeing that Secured Party
shall be solely responsible therefor. Secured Party agrees to give Debtor
written notice after such assignment has occurred.
(b) All notices to be given in connection with this
Agreement shall be in writing, shall be addressed to the parties at their
respective addresses set forth hereinabove (unless and until a different address
may be specified in a written notice to the other party), and shall be deemed
given (i) on the date of receipt if delivered in hand, (ii) on the next business
day after being sent by express mail or by facsimile transmission, and (iii)
on the fourth business day after being sent by regular, registered or
certified mail. As used herein, the term "business day" shall mean and
include any day other than Saturdays, Sundays, or other days on which
commercial banks in New York, New York are required or authorized to be closed.
(c) Secured Party may correct patent errors herein and fill in all
blanks herein or in any Collateral Schedule consistent with the agreement of
the parties.
(d) Time is of the essence hereof. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.
(e) This Agreement, the Commitment Letter dated March 18, 1997 and
the Collateral Schedules constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior
understandings (whether written, verbal or implied) with respect thereto. This
Agreement and its Collateral Schedules shall not be changed or terminated
orally or by course of conduct, but only by a writing signed by both parties
hereto. Section headings contained in this Agreement have been included for
convenience only, and shall not affect the construction or interpretation
hereof.
(f) This Agreement shall continue in full force and effect until
all of the Indebtedness has been indefeasibly paid in full to Secured Party.
The surrender, upon payment or otherwise, of any Note or any of the other
documents evidencing any of the Indebtedness shall not affect the right of
Secured Party to retain the Collateral for such other Indebtedness as may then
exist or as it may be reasonably contemplated will exist in the future. This
Agreement shall automatically be reinstated in the event that Secured Party is
ever required to return or restore the payment of all or any portion of the
Indebtedness (all as though such payment had never been made).
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ ILLEGIBLE By: /s/ MICHAEL E. HART
-------------------------------- -------------------------------
Title: Senior Credit Analyst Title: VP and CFO
----------------------------- ----------------------------
<PAGE> 5
ADDENDUM NO. 1
TO MASTER SECURITY AGREEMENT
DATED AS OF MARCH 27, 1997
THIS ADDENDUM (this "ADDENDUM") amends and supplements the above referenced
Security Agreement (the "SECURITY AGREEMENT"), between General Electric Capital
Corporation ("SECURED PARTY") and Nexstar Pharmaceuticals, Inc. ("DEBTOR") and
is hereby incorporated into the Security Agreement as though fully set forth
therein. Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Security Agreement.
The Security Agreement is hereby amended as follows:
1. XXI. ADDITIONAL COVENANTS.
(a) At all times during the term of the Security
Agreement, Debtor shall maintain: (i) unrestricted cash, cash
equivalents and investment grade securities (assuming such investment
securities are highly liquid) of at least $15,000,000; (ii) a tangible
net worth of no less than $60,000.000; and (iii) a total liabilities
to tangible net worth ratio of no more than 1.25:1, or within fifteen
(15) days after Debtor ceases to satisfy any such requirements, Debtor
shall cause to be delivered to Secured Party an irrevocable standby
letter of credit as described in Section XXI(c) below. Unrestricted
cash, cash equivalents and investment grade securities shall be
defined as being net of any non-GE Capital contingent liabilities
associated with other lease or loan cash triggers, pledge agreements,
etc. Except as defined herein, accounting terms used herein shall be
as defined, and all calculations hereunder shall be made, in accordance
with GAAP.
(b) Debtor's chief financial officer shall notify Secured
Party of the amount of Debtor's unrestricted cash, cash equivalents,
investment grade securities, tangible net worth and total liabilities
to tangible net worth ratio, and shall certify that such amounts are
in compliance with the requirements of Section XXI(a) above, such
notification and certification be provided within fifteen (15) days
after the end of each quarter, reflecting such information as of the
end of the quarter immediately preceding such notice, unless Debtor's
unrestricted cash, cash equivalents and investment grade securities
fall below $30,000,000.00 at which point reporting becomes monthly. If
Debtor fails timely to provide such notification and compliance
certificates, within fifteen (15) days after such failure, Debtor
shall cause to be delivered to Secured Party an irrevocable standby
letter of credit as described in Section XXI(c) below. A failure by
Debtor to provide such Letter of Credit or otherwise comply with this
Section XXI shall be a default hereunder.
(c) The irrevocable standby letter of credit provided
pursuant to this Addendum shall be (i) in the amount of the then
outstanding loan balance under all Notes, (ii) issued by a bank which
is acceptable to Secured Party in its sole discretion, (iii) in the
form attached as Exhibit A or as may be acceptable to Secured Party in
its sole discretion, and (iv) for an initial term of one (1) year with
automatic annual renewals thereafter (without amendment except for
extension of the then current expiration date by an additional year)
until Debtor has received written notice from Secured Party to the
effect that the Letter of credit is being released in its entirety.
Debtor shall also execute a Letter of Credit Agreement in the form
attached as Exhibit B.
2. SECTION XXII. All Schedules under this Security Agreement
shall be for a minimum of $200,000.00.
Except as expressly modified hereby, all terms and provisions of the Security
Agreement shall remain in full force and effect. This Addendum is not binding
nor effective with respect to the Security Agreement or the Equipment until
executed on behalf of Secured Party and Debtor by authorized representatives of
Secured Party and Debtor.
IN WITNESS WHEREOF, Debtor and Secured Party have caused this Addendum to be
executed by their duly authorized representatives as of the date first above
written.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL CORPORATION NEXSTAR PHARMACEUTICALS, INC.
By: /s/ [ILLEGIBLE] By: /s/ MICHAEL E. HART
-------------------------------- ------------------------------
Name: [ILLEGIBLE] Name: Michael E. Hart
------------------------------- ----------------------------
Title: [ILLEGIBLE] Title: VP & CFO
------------------------------ ---------------------------
<PAGE> 1
NEXSTAR PHARMACEUTICALS, INC.
1993 INCENTIVE STOCK PLAN
1. Purpose of Plan. This Incentive Stock Plan is intended to encourage
ownership of shares of NeXstar Pharmaceuticals, Inc. (the "Corporation") by the
Corporation's officers, directors, employees, independent contractors, and
senior academic consultants, thereby providing additional incentive for such
Employees and Consultants to promote the success of the business. Options
granted hereunder may be either Incentive Stock Options or Nonstatutory Stock
Options, and Shares may be sold to Employees or Consultants hereunder, at the
discretion of the Board and as reflected in the terms of the written option or
stock restriction agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, the rules and
regulations promulgated thereunder and the interpretations thereof, all as from
time to time in effect.
(c) "Corporation" shall mean NeXstar Pharmaceuticals, Inc., a Delaware
corporation.
(d) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4(a) of the Plan, if one is appointed, or the Board if
none has been appointed.
(e) "Consultant" shall mean any person, including directors and senior
academic consultants, performing services for the benefit of the Corporation or
any Parent or Subsidiary of the Corporation as an independent consultant or
adviser.
(f) "Continuous Status as an Employee or a Consultant" shall mean the
absence of any interruption or termination of service as an Employee or a
Consultant, as applicable. Continuous Status as an Employee shall not be
considered interrupted in the case of sick leave or any other leave of absence
approved by the Board, provided that either such leave is for a period of not
more than ninety (90) days or reemployment upon the expiration of such leave is
provided or guaranteed by contract or statute.
(g) "Employee" shall mean any person employed by the Corporation or any
Parent or Subsidiary of the Corporation. The payment of a director's or
consultant's fee by the Corporation shall not be sufficient to constitute
"employment" by the Corporation.
<PAGE> 2
(h) "Fair Market Value" shall mean the average of the closing bid and
asked prices of a share of Common Stock, as reported by The Wall Street
Journal (or, if not reported, as otherwise quoted by the National Association
of Securities Dealers through NASDAQ), on the date of the grant of any Option
or the sale of any Common Stock to an Employee or Consultant under this Plan.
In the event the Common Stock is not traded publicly, the Fair Market Value of
a share of Common Stock on the date of the grant or sale shall be determined,
in good faith, by the Board or the Committee and such determination shall be
conclusive for all purposes. The Board or Committee shall take into account
such factors affecting value as it, in its sole and absolute discretion, may
deem relevant.
(i) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(1) "Optioned Stock" shall mean the Stock subject to an Option.
(m) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(n) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(o) "Plan" shall mean this Incentive Stock Plan.
(p) "Share" shall mean a share of the Stock, as adjusted in accordance
with Section 9 of the Plan.
(q) "Stock" shall mean the Common Stock of the Corporation.
(r) "Stock Agreement" shall mean the written agreement setting forth
the grant of an Option and terms and conditions relating thereto (which need
not be the same for each Option) or the terms of any restrictions in connection
with a sale of Stock under this Plan, in the form attached hereto or such other
form as the Board in its discretion may approve.
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<PAGE> 3
(s) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 425(f) of
the Code.
3. Shares Subject to Plan.
See Amendment.
(b) Reservation of Shares. The Corporation, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Corporation to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Corporation's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Corporation of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
4. Administration of Plan.
(b) Actions of the Board and Committee. All actions taken and all
interpretations and determinations made by the Board or by the Committee in
good faith (including determinations of Fair
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<PAGE> 4
Market Value) shall be final and binding on all Employees, Consultants,
Optionees, the Corporation and all other interested persons. No member of the
Committee shall be personally liable for any action or determination made in
good faith in connection with this Plan, and all members of the Board or the
Committee shall, in addition to their rights as directors, be fully protected
by the Corporation with respect to any such action, determination or
interpretation.
See Amendment.
(c) Powers of the Board. Subject to the provisions of the plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options or Nonstatutory Stock Options; (ii) to sell Stock to Employees or
Consultants; (iii) to determine, upon review of the relevant information, the
Fair Market Value of the Stock; (iv) to determine the price per share for any
Stock to be sold or the exercise price per share of Options to be granted,
which price shall be determined in accordance with Section 6 of the Plan; (v)
to determine the Employees and Consultants to whom, the time or times at which,
and the number of shares for which Options shall be granted or Stock shall be
sold; (vi) to interpret the Plan; (vii) to prescribe, amend, and rescind rules
and regulations relating to the Plan; (viii) to determine the terms and
provisions of each Stock Agreement (which need not be the same for each Option
or sale) and, with the consent of the holder thereof, modify, terminate or
amend such Stock Agreement; (ix) to accelerate or defer (with the consent of
the Optionee) the exercise date of any Option; (x) to authorize any person to
execute on behalf of the Corporation any Agreement required to effectuate the
grant of an Option or the sale of any Stock; and (xi) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
5. Eligibility.
(a) Generally. Options may be granted and Stock may be sold to
Employees and Consultants, provided that Incentive Stock options may only be
granted to Employees. An Employee or Consultant who has been granted an Option
or purchased any Stock may, if he is otherwise eligible, be granted additional
Options or purchase additional shares of Stock.
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<PAGE> 5
(b) Criteria. In making any determination as to Employees and
Consultants to whom Options shall be granted or Stock shall be sold, the
Committee shall take into account such factors as it shall deem relevant in
accomplishing the purpose of the Plan, including but not limited to the
Employee's or Consultant's loyalty, performance, and experience.
(c) ISO Limitations with Respect to Price. In no event shall an
Incentive Stock Option be granted to any person who, at the time such Option is
granted, owns (as defined in Section 422 of the Code) shares possessing more
than 10% of the total combined voting power of all classes of shares of the
Corporation or of its parent or subsidiary corporation, unless the option
price is at least 110% of the Fair Market Value of the stock subject to the
Option, and such Option is by its terms not exercisable after the expiration of
five (5) years from the date such Option is granted.
(d) ISO Limitations with Respect to Shares. Moreover, the aggregate
Fair Market Value (determined as of the time that option is granted) of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by any individual Employee during any single Calendar Year under
this Plan and all the incentive stock option plans of the Corporation (and its
parent and subsidiary corporations, if any), shall not exceed $100,000.
(e) No Employee Contract. The Plan shall not confer upon any Employee
or Consultant any right with respect to continuation of employment by or the
rendition of consulting services to the Corporation, nor shall it interfere in
any way with his or her right or the Corporation's right to terminate such
employment or services at any time.
6. Price.
(a) Generally. The per share exercise price for any Option and the
price for any Stock to be sold shall be such price as is determined by the
Board. However, the exercise price of the Shares which shall be covered by each
Incentive Stock Option shall be at least 100% of the Fair Market Value of the
Shares at the time of granting the Incentive Stock option. The exercise price
of a Nonstatutory Stock Option shall not be less than 85% of the Fair Market
Value on the date of the grant of the Option. If an Incentive Stock Option is
granted to an optionee who then owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation or its
Parent or any Subsidiary, the exercise price shall be as set forth in Section
5(c) above.
(b) Payment. The purchase price for any sale of Stock shall be paid at
the time of purchase and the exercise price shall be paid in full at the time
of exercise of any Option in cash or in
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<PAGE> 6
such other form of lawful consideration as the Board of Directors or the
Committee may approve from time to time, including, without limitation, the
transfer of outstanding shares of Stock as provided in Section 7(d) or the
Employee's or Consultant's promissory note in form satisfactory to the
Corporation and bearing interest at the applicable federal rate at the time of
exercise.
7. Options.
(a) Generally. Subject to the provisions of the Plan, the Board shall
determine for each Option (which need not be identical) the number of shares
for which the Option shall be granted, the option price of the Option, and all
other terms and conditions of the Option.
(b) Time of Granting Options. Neither anything contained in the Plan or
in any resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the Committee shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written Stock Option Agreement shall have been duly executed
and delivered by or on behalf of the Corporation and the person to whom such
option shall be granted.
(c) Term of Option. The term of each Option may be up to ten (10) years
from the date of grant thereof or such shorter term as may be provided in the
Stock Option Agreement. However, in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Corporation or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter time as may be provided in the Stock Option Agreement.
(d) Exercise of Option.
(i) Any Option granted hereunder shall be exercisable at such times
and under such conditions as determined by the Board, including performance
criteria with respect to the Corporation or the Optionee, or both, and as shall
be permissible under the terms of the Plan.
(ii) An Option may not be exercised for a fraction of a Share.
(iii) An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Corporation in accordance with the terms
of the Option by the person entitled to exercise the Option and full payment
for the Shares with respect to which the Option is exercised has been
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<PAGE> 7
received by the Corporation. The Board, in its sole discretion, may permit an
Optionee to surrender to the Corporation shares of Stock previously acquired by
the optionee at least six (6) months prior to such surrender as part or full
payment for the exercise of an Option. Such surrendered shares shall be valued
at their Fair Market Value on the date of exercise of the Option. Until the
issuance of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights a share holder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option.
(iv) Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(v) Except as otherwise specifically provided herein, an Option may
not be exercised at any time unless the holder thereof shall have maintained
Continuous Status as an Employee or Consultant of the Corporation or of one or
more of its subsidiaries, or a parent corporation, from the date of the
granting of the Option to the date of its exercise.
(e) Termination of Employment. In the event that the employment of an
Employee or the engagement of a Consultant to whom an Option shall have been
granted shall be terminated other than by reason of death or disability, such
Option may be exercised (to the extent that the Employee or Consultant shall
have been entitled to do so at the termination of his employment or engagement)
at any time within three months after such termination, but in any event no
later than the date of expiration of the Option term. Notwithstanding this
three-month period, if the holder of an Option (i) is terminated for "cause"
(as hereinafter defined) or (ii) is terminated due to his expropriation of
Corporation property (including trade secrets or other proprietary rights) ,
the Board shall have the authority, by notice to the holder of an Option, to
immediately terminate such Option, effective on the date of termination of
employment, and such Option shall no longer be exercisable to any extent
whatsoever. As used herein, "cause" shall mean that the holder of an Option has
willfully and intentionally engaged in material misconduct, gross neglect of
duties or grossly negligent failure to act which materially and adversely
affects the business or affairs of the Corporation, or has committed any act of
fraud or any act not approved by the Board involving any material conflict of
interest or self-dealing adverse to the Corporation, or has been convicted of
a felony or any offense involving moral turpitude, or has unreasonably failed
to comply with any reasonable direction from the Board with respect to a major
policy decision affecting the Corporation, issued pursuant to its authority
under the Bylaws of the Corporation, which
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<PAGE> 8
direction is approved by a majority of the Board. So long as the holder of an
Option shall maintain Continuous Status as an Employee or Consultant of the
Corporation or one or more of its subsidiaries, his Option shall not be
affected by any change of duties or position. To the extent that the holder of
an Option was not entitled to exercise his Option at the time of his
termination, or insofar as he does not exercise such Option to the extent he
was entitled within the time specified herein, the Option shall itself
terminate at the time of such termination.
(f) Disability of Optionee. Notwithstanding the provisions of Section
7(e) above, in the event an Employee or Consultant is unable to continue his
employment with or to perform services for the benefit of the Corporation as a
result of his total and permanent disability (as defined in Section 22(e)(3) of
the Code), he may, but only within one year after termination due to such
disability, exercise his Option to the extent he was entitled to exercise it at
the date of such disability. To the extent that he was not entitled to exercise
the Option at the date of disability, or insofar as he does not exercise such
Option to the extent he was entitled within the time specified herein, the
Option shall terminate.
(g) Death of Optionee. Unless otherwise set forth in the Option
Agreement, in the event of the death of an Optionee:
(i) if Optionee dies during the term of the Option and is at the
time of his death an Employee or Consultant of the Corporation who shall have
been in Continuous Status as an Employee or Consultant since the date of grant
of the Option, the Option may be exercised, at any time within one year
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent that of the right to exercise that would have accrued had the
Optionee continued living and remained in Continuous Status as an Employee or
Consultant one year after the date of death; or
(ii) if Optionee dies within three (3) months after the termination
of Continuous Status as an Employee or Consultant, the Option may be exercised,
at any time within one year following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that had
accrued at the date of such termination.
8. Non-Transferability of Options. The Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
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<PAGE> 9
9. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Corporation, the number of shares of Stock
covered by each outstanding Option and the number of shares of Stock which have
been authorized for issuance under the Plan but as to which no Stock has been
sold or Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or repurchase of Stock upon
termination of employment, as well as the price per share of Stock covered by
each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Stock resulting from a
stock split, the payment of a stock dividend with respect to the Stock, or any
other increase or decrease in the number of issued shares of Stock effected
without receipt of consideration by the Corporation (shares of Stock issued to
University Research Corporation for nominal consideration pursuant to the Stock
Purchase Agreement dated July 17, 1991, shall not be deemed issued without
receipt of consideration); provided, however, that conversion of any
convertible securities of the Corporation shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Corporation
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Stock subject to an Option.
10. Liquidation or Merger of the Corporation.
(a) Liquidation. In the event of a proposed dissolution or liquidation
of the Corporation, the Option shall terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances,
declare that any Option shall terminate as of a date fixed by the Board and
give each Optionee the right to exercise his Option as to all or any part of
the Shares covered by an Option, including Shares as to which the Option would
not otherwise be exercisable.
(b) Sale of Assets, Merger or Consolidation. In the event of a proposed
sale of all or substantially all of the assets of the Corporation, or the
merger or consolidation of the Corporation with or into another corporation in
a transaction in which the Corporation does not survive, the Board may, in the
exercise of its sole discretion in such instances, give each Optionee the right
to exercise his Option as to all or any part of the Shares covered by an
Option, including Shares as to which the Option would not otherwise be
exercisable. The Board shall notify the optionee that the Option shall be fully
exercisable for a period of not less than ten (10) nor more than sixty (60)
days from
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<PAGE> 10
the date of such notice and, if such Option shall not be exercised, the Board
may, in the exercise of its sole discretion in such instances, determine that
the Option shall terminate upon the expiration of such period and be of no
further force or effect.
11. Withholding Taxes; Satisfied by Withholding Optioned Shares.
(a) General. The Corporation, its Parent or any Subsidiary may take
such steps as it may deem necessary or appropriate for the withholding of any
taxes which the Corporation, its Parent or any Subsidiary is required by law or
regulation of any governmental authority, whether Federal, state or local,
domestic or foreign, to withhold in connection with any option including, but
not limited to, requiring the Optionee to pay such tax at the time of exercise
or the withholding of issuance of shares of Stock to be issued upon the
exercise of any Option until the Optionee reimburses the Corporation for the
amount the Corporation is required to withhold with respect to such taxes, or,
at the Corporation's sole discretion, cancelling any portion of such issuance
of Stock in any amount sufficient to reimburse itself for the amount it is
required to so withhold.
(b) Satisfying Taxes by Withholding Optioned Shares. All Federal and
state taxes required to be withheld or collected from an Optionee upon exercise
of an Option may be satisfied by the withholding of a sufficient number of
exercised Option Shares which, valued at Fair Market Value on the date of
exercise, would be equal to the total withholding obligation of the Optionee
for the exercise of such Option; provided, however, that if the Corporation is
a public reporting corporation, no person who is an "officer" of the
Corporation as such term is defined in Rule 3b-2 under the Securities Exchange
Act of 1934 may elect to satisfy the withholding of Federal and state taxes
upon the exercise of an Option by the withholding of Optioned Shares unless
such election is made either (i) at least six months prior to the date that the
exercise of the option becomes a taxable event or (ii) during any of the
periods beginning on the third business day following the date on which the
Corporation issues a news release containing the operating results of a fiscal
quarter or fiscal year and ending on the twelfth business day following such
date. Such election shall be deemed made upon receipt of notice thereof by an
officer of the Corporation, by mail, personal delivery or by facsimile message,
and shall (unless notice to the contrary is provided to the Corporation) be
operative for all Option exercises which occur during the twelve-month period
following election.
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12. Issuance of Share
(a) Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Corporation with respect to such
compliance.
(b) As a condition to the exercise of an Option or the sale of any
Stock, the Corporation may impose various conditions, including a requirement
that the person exercising such Option or purchasing such Stock represent and
warrant, at the time of any such exercise, that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares and such other restrictions on such Shares relating to employment
or other matters as may be determined by the Committee.
13. Effectiveness of Plan. The Plan shall become effective on February 8,
1993, but only if holders of the Corporation's Common and Preferred Stock
entitled to vote on the matter shall have approved the Plan within twelve
months after such date by an affirmative vote of at least a majority all such
shares then outstanding (on a common equivalent basis).
14. Termination and Amendment of Plan. The Plan shall terminate on
February 7, 2003, and no Option shall be granted under the Plan after that
date. The Board of Directors may at any time and from time to time modify or
amend the Plan (including the form of any Stock Agreement) in such respects as
it shall deem advisable, provided that without approval by a majority in
interest of all the shares of the Corporation there shall be: (a) no increase
in the total number of shares covered by the Plan (except by operation of
Section 9 hereof), (b) no change in the formula for determining the exercise
price or the maximum term of Options, (c) no change that would materially
lessen the requirements as to eligibility for participation in the Plan, and
(d) no change in the class of persons eligible to receive options or rights
under the Plan, including the definitions of "Employee" and "Consultant."
-11-
<PAGE> 12
FIRST AMENDMENT TO THE
1993 INCENTIVE STOCK PLAN
Section 3(a) of the Corporation's 1993 Incentive Stock Plan is hereby
amended and restated as follows:
(a) Authorized Shares. There will be reserved for use from time to time
under the Plan, an aggregate of 499,893 shares of Stock of $0.01 par value of
the Corporation, subject to adjustment as provided in Section 9 below. As the
Board of Directors of the Corporation shall from time to time determine, the
Shares may be in whole or in part, authorized but unissued Shares or issued
Shares which shall have been reacquired by the Corporation. If an Option should
expire or become unexercisable for any reason without having been exercised in
full the unpurchased Shares which were subject thereto shall become available
for future grant or sale under the Plan unless the Plan shall have been
terminated. If any shares issued prior to the approval of this Plan to any
employees, directors or consultants of the Corporation shall be repurchased by
the Corporation, the number of such repurchased shares shall increase the
aggregate number of shares available under the Plan.
<PAGE> 13
SECOND AMENDMENT TO THE
1993 INCENTIVE STOCK PLAN
Section 3(a) of the NeXstar Pharmaceuticals, Inc. 1993 Incentive Stock
Plan is hereby amended and restated as follows:
(a) Authorized Shares. There will be reserved for use from time to time
under the Plan, an aggregate of 2,403,555 shares of Stock of $0.01 par value of
the Corporation, subject to adjustment after December 31, 1994 as provided in
Section 9 below; provided, however, that any outstanding Option issued prior to
December 31, 1994 shall be subject to adjustment as provided in Section 9 below
from the time of the initial issuance of such Option, but the adjustment to any
such Option for events prior to December 31, 1994 shall not affect the
aggregate number of shares of Stock reserved for use from time to time under
the Plan. As the Board of Directors of the Corporation shall from time to time
determine, the Shares may be in whole or in part, authorized but unissued
Shares or issued Shares which shall have been reacquired by the Corporation. If
an Option should expire or become unexercisable for any reason without having
been exercised in full the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan unless the Plan shall
have been terminated. If any shares issued prior to the initial approval of
this Plan to any employees, directors or consultants of the Corporation shall
be repurchased by the Corporation after December 31, 1994, the number of such
repurchased shares shall increase the aggregate number of shares available
under the Plan.
<PAGE> 14
THIRD AMENDMENT TO THE
1993 INCENTIVE STOCK PLAN
The NeXagen, Inc. 1993 Incentive Stock Plan (the "NeXagen Plan") is amended
effective as of September 20, 1995, as follows:
Amendment of the NeXagen. Inc. 1993 Incentive Stock Plan
FIRST: Section 4(a) of the NeXagen Plan is amended to read in its entirety
as follows:
"(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to
directors and officers, and Employees and Consultants who are neither
directors nor officers.
(ii) Administration With Respect to Directors and Officers Subject
to Section 16(b). With respect to option grants made to officers and
directors subject to Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in a manner complying with the
rules under Rule 16b-3 relating to the disinterested administration of
employee benefit plans under which Section 16(b) exempt discretionary
grants and awards of equity securities are to be made, or (B) a committee
designated by the Board to administer the Plan, which committee (the
"Committee") shall be constituted to comply with the rules under Rule
16b-3 relating to the disinterested administration of employee benefit
plans under which Section 16(b) exempt discretionary grants and awards of
equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules under Rule 16b-3 relating
to the disinterested administration of employee benefit plans under which
Section 16(b) exempt discretionary grants and awards of equity securities
are to be made.
<PAGE> 15
(iii) Administration With Respect to Other Persons. With respect
to Option grants made to persons who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the Board or (B) a
committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity until otherwise directed by tile Board. The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Applicable
Laws."
SECOND: Section 4(c) of the NeXagen Plan is deleted.
THIRD: Section 4(d) of the NeXagen Plan is renumbered as Section 4(c).
FOURTH: In all other respects, the NeXagen Plan is hereby ratified and
confirmed.
-2-
<PAGE> 16
FOURTH AMENDMENT TO THE
1993 INCENTIVE STOCK PLAN
The NeXagen, Inc. 1993 Incentive Stock Plan (the "NeXagen Plan") is
amended, effective as of May 29, 1996, as follows:
FIRST Section 5(b) of the Plan is amended to add the following additional
sentence at the end:
"Notwithstanding any other provision of this Plan, no individual may be
granted, in any fiscal year of the Corporation, an Option or cumulative Options
to purchase more than 200,000 shares of Stock, except for the first year of an
individuals employment relationship when he or she may receive an Option for up
to an additional 200,000 shares of Stock in connection with the inception of
his or her employment with the Corporation."
SECOND In all other respects, the NeXagen Plan is hereby ratified and
confirmed.
<PAGE> 17
FIFTH AMENDMENT TO THE
1993 INCENTIVE STOCK PLAN
FIRST Section 3(a) of the 1993 Incentive Stock Plan is hereby amended in
its entirety to read as follows:
(a) Authorized Shares. There will be reserved for use from time to time
under the Plan an aggregate of 3,903,555 shares of Stock of $0.01 par value of
the Corporation, subject to adjustment after December 31, 1994 as provided in
Section 9 below; provided, however, that any outstanding option issued prior to
December 31, 1994 shall be subject to adjustment as provided in Section 9 below
from the time of the initial issuance of such Option, but the adjustment to any
such Option for events prior to December 31, 1994 shall not affect the
aggregate number of shares of Stock reserved for use from time to time under
the Plan. As the Board of Directors of the Corporation shall from time to time
determine, the Shares may be in whole or in part, authorized but unissued
Shares or issued Shares which shall have been reacquired by the Corporation. If
an option should expire or become unexercisable for any reason without having
been exercised in full the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan unless the Plan shall
have been terminated. If any shares issued prior to the initial approval of
this Plan to any employees, directors or consultants of the Corporation shall
be repurchased by the Corporation after December 31, 1994, the number of such
repurchased shares shall increase the aggregate number of shares available
under the Plan.
SECOND In all other respects, the 1993 Incentive Stock Plan is hereby
ratified and confirmed.
<PAGE> 1
NEXSTAR PHARMACEUTICALS, INC.
6 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
---------------------------------------
PURCHASE AGREEMENT
July 28, 1997
SBC Warburg Inc.
Oppenheimer & Co., Inc.
c/o SBC Warburg Inc.
277 Park Avenue
New York, New York 10072
Ladies and Gentlemen:
NeXstar Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$75,000,000 principal amount (the "Firm Securities") of the 6 1/4% Convertible
Subordinated Debentures Due 2004 (the "Debentures"), convertible into Common
Stock ("Stock") of the Company and, at the election of the Purchasers, up to an
aggregate of $5,000,000 principal amount of additional Debentures (the
"Optional Securities") as provided in Section 2 hereof. The Firm Securities and
the Optional Securities, if any, are herein collectively called the
"Securities".
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering memorandum, dated July 17, 1997 (the
"Preliminary Offering Memorandum") and an offering memorandum, dated
July 28, 1997 (the "Offering Memorandum", have been prepared in
connection with the offering of the Securities and shares of the Stock
issuable upon conversion thereof. Any reference to the Preliminary
Offering Memorandum or the Offering Memorandum shall be deemed to
refer to and include the Company's most recent Annual Report on Form
10-K and all subsequent documents filed with the United States
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act"), on or prior to the date
of the Preliminary Offering Memorandum or the Offering Memorandum, as
the case may be, and any reference to the Preliminary Offering
Memorandum or the Offering Memorandum, as the case may be, as amended
or supplemented, as of any specified date, shall be deemed to include
(i) any
<PAGE> 2
documents filed with the Commission pursuant to Section 13(a), 13(c)
or 15(d) of the Exchange Act after the date of the Preliminary
Offering Memorandum or the Offering Memorandum, as the case may be,
and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company
prior to the completion of the distribution of the Securities; and all
documents filed under the Exchange Act and so deemed to be included in
the Preliminary Offering Memorandum or the Offering Memorandum, as the
case may be, or any amendment or supplement thereto are hereinafter
called the "Exchange Act Reports". The Exchange Act Reports, when
they were or are filed with the Commission, conformed or will conform
in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder. The
Preliminary Offering Memorandum or the Offering Memorandum and any
amendments or supplements thereto and the Exchange Act Reports did not
and will not, as of their respective dates, contain an untrue
statement of a material fact or 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
SBC Warburg Inc. ("SBC Warburg") expressly for use therein.
(b) The Company and each of its subsidiaries (other than any
subsidiary which has no operations and de minimis assets (a "Shelf
Subsidiary")) has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to carry on
its business as it is currently being conducted and to own, lease and
operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, condition (financial or otherwise), stockholders'
equity, properties, business prospects or results of operations of the
Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect").
(c) All of the outstanding shares of capital stock of, or other
ownership interest in, each of the Company's subsidiaries (other than
any Shelf Subsidiary), except for any director qualifying shares or
similar nominal holdings required by foreign laws, have been duly
authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature.
(d) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement and authenticated and
delivered by the Trustee in accordance with the indenture to be dated
as of July 31, 1997, (the "Indenture") between the Company and IBJ
Schroder Bank & Trust Company, as Trustee (the "Trustee"), will have
been duly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture under which they are to be issued; the
Indenture has been duly authorized and, when executed and delivered by
the Company (and assuming due authorization, execution and delivery by
the Trustee), the Indenture will constitute a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Securities and the
Indenture will conform in all material respects to the descriptions
thereof in the Offering Memorandum and will be in substantially the
form previously delivered to you.
2
<PAGE> 3
(e) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights;
the shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for
issuance out of the Company's authorized and unissued shares of Common
Stock and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture will be duly and validly issued,
fully paid and non-assessable and will conform to the description of
the Stock contained in the Offering Memorandum.
(f) The Registration Rights Agreement between the Company and
the Purchasers to be dated as of July 31, 1997 (the "Registration
Rights Agreement") has been duly authorized, and, when executed and
delivered by the Company (assuming due authorization, execution and
delivery by the Purchasers), will constitute a valid and legally
binding agreement of the Company enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Registration Rights Agreement will conform in all material respects to
the description thereof in the Offering Memorandum.
(g) The authorized capital stock of the Company, including the
Stock, conforms as to legal matters to the description thereof
contained in the Offering Memorandum.
(h) Neither the Company nor any of its subsidiaries (other than
any Shelf Subsidiary) is (i) in violation of its respective charter or
by-laws, (ii) is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture or
instrument to which it is a party or by which it is bound or to which
any of its properties or assets is subject which default could result
in a Material Adverse Effect or (iii) is in violation in any respect
of any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject, which default or
violation could result in a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has failed to obtain a license,
permit, certificate, franchise or other governmental authorization
necessary to the ownership of its property or to the conduct of its
business as presently conducted where such failure could have a
Material Adverse Effect.
(i) The execution, delivery and performance of this Agreement,
the Indenture, the Registration Rights Agreement and the Securities,
compliance by the Company with all provisions hereof and thereof and
the consummation of the transactions contemplated hereby and the
issuance and delivery of the Securities will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its
subsidiaries, or any agreement, indenture or other instrument to which
it or any of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective properties are bound, or violate or
conflict with any laws, administrative regulations or rulings or court
decrees applicable to the Company, any of its subsidiaries or their
respective property, in any case which is reasonably likely to have a
Material Adverse Effect; and, except as required pursuant to the
Registration Rights Agreement, no consent, approval, authorization or
order of or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Indenture, the Registration
Rights Agreement and the Securities by the Company and the
consummation of the transactions contemplated hereby and thereby,
except such consents, approvals, authorizations, orders, registrations
or qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
3
<PAGE> 4
Securities by the Purchasers, and such consents, approvals,
authorizations, orders, registrations and qualifications as may be
required under the Act and the United States Trust Indenture Act of
1939 (the "Trust Indenture Act").
(j) Except as otherwise set forth in the Offering Memorandum,
there are no material legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any of their respective property is the subject which, if determined
adversely to the Company or its subsidiaries, might have a Material
Adverse Effect, and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated.
(k) Except as otherwise set forth in the Offering Memorandum,
the Company is conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is
conducting business which are material to the conduct of the business,
including, without limitation, the applicable laws, rules and
regulations of the United States Food and Drug Administration
(collectively the "FDA Regulations"); neither the Company nor any of
its subsidiaries has violated any foreign, federal, state or local law
or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), nor any federal or state law
relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws,
nor any provisions of the Employee Retirement Income Security Act or
the rules and regulations promulgated thereunder, which in each case
might result in any Material Adverse Effect.
(l) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable FDA Regulations and any applicable Environmental Laws, as
are necessary to own, lease and operate its respective properties and
to conduct its business in the manner described in the Offering
Memorandum except for such permits the absence of which would not have
a Material Adverse Effect; the Company and each of its subsidiaries
has fulfilled and performed all of its material obligations with
respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder
of any such permit which revocation, termination or other impairment
would result in a Material Adverse Effect; and, except as described in
the Offering Memorandum, such permits contain no restrictions, which
do not generally apply to companies holding such permits, that are
materially burdensome to the Company or any of its subsidiaries.
(m) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(n) Except as otherwise set forth in the Offering Memorandum, or
such as are not material to the business condition (financial or
otherwise), stockholders' equity, properties, business prospects or
results of operations of the Company and its subsidiaries, taken as a
whole, the Company and each of its subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions except liens for taxes not yet due
4
<PAGE> 5
and payable, to all property and assets described in the Offering
Memorandum as being owned by it. All leases to which the Company or
any of its subsidiaries is a party are valid and binding and no
default has occurred or is continuing thereunder which might result in
any Material Adverse Effect, and the Company and its subsidiaries
enjoy peaceful and undisturbed possession under all such leases to
which any of them is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such
subsidiary.
(o) The Company and its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is reasonable for
the conduct or their respective businesses and the value of their
respective properties and as is customary for companies engaged in
similar businesses in similar industries and similar geographic areas.
(p) Ernst & Young LLP are independent public accountants with
respect to the Company as required by the Exchange Act.
(q) The financial statements, together with related schedules
and notes forming part of or incorporated by reference in the Offering
Memorandum (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and cash
flows of the Company and its subsidiaries on the basis stated in the
Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and
statistical information and data set forth in or incorporated by
reference in the Offering Memorandum (and any amendment or supplement
thereto) is, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the
books and records of the Company.
(r) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(s) Neither the Company nor its subsidiaries have sustained,
since the date of the latest audited financial statements included in
the Offering Memorandum, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum, and, since such date, there
has not been any material change in the capital stock or payment or
declaration of dividends on its capital stock or long-term debt of the
Company or its subsidiaries (other than repayment by the Company on
July 1, 1997 of $5,000,000 of its long term debt from The Bank of
Boston) or any material adverse change, or, to the Company's
knowledge, any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity, business prospects or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Offering Memorandum.
(t) Except as otherwise described in the Offering Memorandum,
the Company and its subsidiaries own or possess adequate rights to use
all material trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as described in the Offering Memorandum, and,
except as otherwise set forth in the Offering Memorandum, the Company
has no knowledge of any
5
<PAGE> 6
infringement by it or its subsidiaries of valid trademark or trade
name rights, patent rights, mask works, copyrights, licenses, trade
secrets or other similar rights of others, and there is no claim that
has been made against the Company or its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade
secret or other infringement which could have a Material Adverse
Effect.
(u) There are no contracts or other documents which are required
to be described in or filed as exhibits to the Exchange Act Reports
which have not been so described or filed as required.
(v) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Exchange Act Reports which is
not so described.
(w) No labor disturbance by the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is
imminent which might be expected to have a Material Adverse Effect.
(x) With the exception of its 401(k) plans and non-retirement
related health and benefit plans which are not material in amount, the
Company has in effect no plans or arrangements in any manner subject
to or governed by the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder.
(y) Neither the Company nor any of its subsidiaries, nor to the
Company's knowledge, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of
its subsidiaries, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity, made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(z) This Agreement has been duly authorized, executed and
delivered by the Company.
(aa) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire
any shares of capital stock of, or ownership interest in, the Company
or any subsidiary thereof except as otherwise disclosed in the
Offering Memorandum.
(bb) The Company and its subsidiaries taken as whole maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with general accepted accounting
principles; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
6
<PAGE> 7
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of its
subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(dd) The Company has no subsidiaries that qualify as a
"Significant Subsidiary" under Regulation S-X promulgated under the
Exchange Act. Except for NeXstar Farmaceutica, S.A., Spain, and
NeXstar Pharmaceuticals Italia, S.r.l., there are no other
subsidiaries of the Company that are material to the business and
business prospects of the Company and its subsidiaries taken as a
whole.
(ee) When the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Act) as securities which are listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(ff) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations G, T, U, and X of the Board
of Governors of the Federal Reserve System.
(gg) Prior to the date hereof, neither the Company nor any of
its affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Securities.
(hh) The statements set forth in the Offering Memorandum under
the captions "Description of Debentures" and "Description of Capital
Stock", insofar as they purport to constitute a summary of the terms
of the Securities and the Stock, and under the captions "Certain
United States Federal Income Tax Consequences", "Risk Factors",
"Business" and "Plan of Distribution", insofar as they purport to
describe the provisions of the laws, legal proceedings and documents
referred to therein, are accurate, complete and fair.
(ii) Subject to compliance by the Purchasers with the
representations and agreements contained in Section 3 hereof, neither
the Company nor any person acting on its behalf has offered or sold
the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or, with
respect to Securities sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of any
directed selling efforts within the meaning of Rule 902 under the Act
and the Company, any affiliate of the Company and any person acting on
its or their behalf has complied with and will implement the "offering
restriction" within the meaning of such Rule 902; and
(jj) Within the preceding six months, neither the Company nor any
other person acting on behalf of the Company has offered or sold to
any person any Securities, or any securities of the same or a similar
class as the Securities, other than Securities offered or sold to the
Purchasers hereunder. The Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the
United States or to any U.S. person (as defined in Rule 902 under the
Act) of any Securities or any substantially similar security issued by
the Company, within six months subsequent to the date on which the
distribution of the Securities has been completed (as notified to the
Company by SBC Warburg), is made under restrictions and other
circumstances reasonably designed not to affect the status of the
offer and sale of the Securities in the United States and to U.S.
persons contemplated by this
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<PAGE> 8
Agreement as transactions exempt from the registration provisions of
the Securities Act (the foregoing will not prevent offers and sales
made pursuant to a shelf registration statement in accordance with the
Registration Rights Agreement).
2. (a) Subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 97.00% of the principal amount thereof, plus accrued
interest, if any, from July 31, 1997 to the Time of Delivery hereunder, the
principal amount of Firm Securities set forth opposite the name of such
Purchaser in Schedule I hereto.
(b) In the event and to the extent that the Purchasers shall
exercise the election to purchase Optional Securities, as provided below, the
Company agrees to issue and sell, subject to the terms and conditions herein
set forth, to each of the Purchasers, and each of the Purchasers agrees,
severally, and not jointly, to purchase from the Company at a purchase price of
97.00% of the principal amount thereof, plus accrued interest, if any, from
July 31, 1997 to the Time of Delivery hereunder that number of Optional
Securities as to which such election shall have been exercised determined by
multiplying such number of Optional Securities by a fraction, the numerator of
which is the maximum number of Optional Securities which such Purchaser is
entitled to purchase as set forth opposite the name of such Purchaser in
Schedule I hereto and the denominator of which is the maximum number of
Optional Securities which all of the Purchasers are entitled to purchase
hereunder (the foregoing will not prevent offers and sales made pursuant to an
exchange offer or shelf registration statement in accordance with the
Registration Rights Agreement).
(c) The Company hereby grants to each of the Purchasers the
right to purchase at their election up to the principal amount of Optional
Securities set forth opposite the name of such Purchaser in Schedule I hereto
on the terms referred to in the paragraph above for the sole purpose of
covering over-allotments in the sale of the Firm Securities. Any such election
to purchase Optional Securities may be exercised by written notice from SBC
Warburg to the Company given within a period of 30 calendar days after the date
of this Agreement, setting forth the aggregate principal amount of Optional
Securities to be purchased and the date on which such aggregate principal
amount of Optional Securities is to be delivered, as determined by SBC
Warburg, but in no event earlier than the First Time of Delivery and, unless
SBC Warburg and the Company otherwise agree in writing, no earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Securities,
the several Purchasers propose to offer the Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Memorandum and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons
who it reasonably believes are "qualified institutional buyers"
("QIBs") within the meaning of Rule 144A under the Act in transactions
meeting the requirements of Rule 144A, or (ii) upon the terms and
conditions set forth in Annex I to this Agreement;
(b) It is an "accredited investor" within the meaning of Rule
501 under the Act; and
(c) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Act.
4. (a) The Firm Securities and Optional Securities to be purchased
by each Purchaser hereunder will be in the form of one or more definitive
global Securities which will be deposited by or on behalf of the Company with
the Depository Trust Company ("DTC") or its designated custodian.
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<PAGE> 9
The Company will deliver the Securities to SBC Warburg, for the account of each
Purchaser, against payment by or on behalf of such Purchaser of the purchase
price therefor by wire transfer of immediately available funds to a bank
account designated by the Company, by causing DTC to credit the Securities to
the account of SBC Warburg at DTC. The Company will cause the certificates
representing the global Securities to be made available to SBC Warburg for
checking at the office of DTC or its designated custodian (the "Designated
Office") at least twenty-four hours prior to (a) with respect to the Firm
Securities, 9:30 a.m., New York City time on July 31, 1997 (the "First Time of
Delivery") and (b) with respect to the Optional Securities, (if not the First
Time of Delivery) the date specified (the "Second Time of Delivery") in the
written notice given by you of the Purchasers' election to Purchase the
Optional Securities or such other time and date as you and the Company may
agree upon in writing. Each of the First Time of Delivery and the Second Time
of Delivery is herein called the "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Purchasers pursuant to Section 7(j) hereof, will be delivered at such time and
date at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New
York 10004 (the "Closing Location"), and the Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 1:00 p.m., New York City time, on the New York Business
Day next preceding the Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Memorandum in a form approved by
you; to make no amendment or any supplement to the Offering Memorandum
which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) To furnish the Purchasers with four copies of the Offering
Memorandum and each amendment or supplement thereto with the
independent accountants' report(s) in the Offering Memorandum, and any
amendment or supplement containing amendments to the financial
statements covered by such report(s), signed by the accountants, and
additional copies thereof in such quantities as you may from time to
time reasonably request, and if, at any time prior to the expiration
of nine months after the date of the Offering Memorandum, any event
shall have occurred as a result of which the Offering Memorandum as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Offering Memorandum is delivered, not
misleading, or, if for any other reason it shall be necessary or
desirable during such same period to amend or supplement the Offering
Memorandum, to notify you and upon your request to prepare and furnish
without charge to each Purchaser and to any dealer in
9
<PAGE> 10
securities as many copies as you may from time to time reasonably
request of an amended Offering Memorandum or a supplement to the
Offering Memorandum which will correct such statement or omission or
effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the Time of Delivery, not to
sell, contract to sell or otherwise dispose of, any shares of Stock
of the Company or any securities that are convertible into or
exchangeable for shares of Stock (other than (i) pursuant to employee
stock option or employee stock purchase plans existing on, or upon the
conversion or exchange of convertible or exchangeable securities or
upon exercise of warrants outstanding as of, the date of this
Agreement, (ii) as contemplated by the Registration Rights Agreement
or (iii) in connection with an acquisition by the Company of an
enterprise, product, intellectual property right or a licence for any
of the foregoing, where the shares of Stock or other securities of the
Company so disposed of have an aggregate fair market value at the time
of disposition of $25,000,000 or less), without the prior written
consent of SBC Warburg;
(e) Not to be or become, at any time prior to the expiration of
two years after the Time of Delivery, an open-end investment company,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act and so long as any of the Securities (or
Stock issued upon conversion thereof) are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, for the benefit of
holders from time to time of Securities, to furnish at its expense,
upon request, to holders of Securities and prospective purchasers of
securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under
the Act;
(g) To use its best efforts to cause the Securities to be
eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after
the Time of Delivery, five copies of a notice on Form D under the Act
(one of which will be manually signed by a person duly authorized by
the Company); to otherwise comply with the requirements of Rule 503
under the Act; and to furnish promptly to you evidence of each such
required timely filing (including a copy thereof);
(i) To furnish to the holders of the Securities (x) as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, (y) as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date
of the Offering Memorandum), upon request, consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail, for which purpose a copy of the
Company's Quarterly Report on Form 10-Q shall be adequate;
(j) During a period of five years from the date of the Offering
Memorandum, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the
Company, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
by the Company with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed;
and (ii) such additional information concerning the business and
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<PAGE> 11
financial condition of the Company as you may from time to time
reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries
are consolidated in reports furnished to its stockholders generally or
to the Commission);
(k) During the period of two years after the Time of Delivery,
the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them;
(l) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Memorandum under the caption "Use of Proceeds";
(m) To reserve and keep available at all times, free of
preemptive rights, shares of Stock for the purpose of enabling the
Company to satisfy any obligations to issue shares of its Stock upon
conversion of the Securities;
(n) To use its best efforts to list, subject to notice of
issuance, the shares of Stock issuable upon conversion of the
Securities on the National Association of Securities Dealers Automated
Quotations National Market ("NASDAQ") ; and
(o) Pursuant to the Registration Rights Agreement, to file and
to use its best efforts to cause to be declared effective by the
Commission on or prior to 90 days from the First Time of Delivery a
registration statement on Form S-1 or Form S-3, if the use of said
form is then available, to cover resales of Transfer Restricted
Securities (as defined in the Registration Rights Agreement).
6. The Company covenants and agrees with the several Purchasers that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and the shares of Stock issuable
upon conversion of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Memorandum and the
Offering Memorandum and any amendments and supplements thereto and the mailing
and delivering of copies thereof to the Purchasers and dealers; (ii) the cost
of printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of the
Securities and the shares of Stock issuable upon conversion of the Securities
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Purchasers in
connection with such qualification up to a maximum of $5,000; (iv) the cost of
preparing the Securities; (v) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vi) any cost incurred in
connection with the designation of the Securities for trading in PORTAL and the
listing on NASDAQ of the shares of Stock issuable upon conversion of the
Securities; and (vii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, and transfer taxes on
resale of any of the Securities by them.
7. The obligations of the Purchasers hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company herein are,
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<PAGE> 12
at and as of the Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery,
with respect to the incorporation of the Company, the validity of the
Indenture, the Securities and the Registration Rights Agreement, the
Offering Memorandum, as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass
upon such matters;
(b) Willkie Farr & Gallagher, counsel for the Company, shall
have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority required to carry on its business as described in the
Offering Memorandum and to own, lease and operate its
properties;
(ii) The Company is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
Material Adverse Effect;
(iii) The Company has authorized capitalization as set
forth in the Offering Memorandum, and all the outstanding shares
of Common Stock have been duly authorized and validly issued and
are fully paid, non-assessable and not subject to any preemptive
or similar rights;
(iv) The shares initially issuable upon conversion of
the Securities have been duly authorized and reserved for
issuance and when issued and delivered upon conversion in
accordance with the provisions of the Securities, will have been
validly issued and will be fully paid and non-assessable, and the
issuance of such shares is not subject to any preemptive or
similar rights;
(v) After due inquiry, such counsel does not know of
any legal or governmental proceeding pending or threatened to
which the Company is a party or to which any of its property is
subject which is required to be described in the Exchange Act
Reports and is not so described, or of any contract or other
document which is required to be described in, or is required to
be filed as an exhibit to, the Exchange Act Reports which is not
described or filed as required;
(vi) The Company is not an "investment company" or a
company "controlled" by an investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(vii) This Agreement has been duly authorized, executed
and delivered by the Company;
(viii) The Securities have been duly authorized, executed,
issued and delivered, and constitute valid and legally binding
obligations of the Company entitled to the
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<PAGE> 13
benefits provided by the Indenture and are enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights and to general equity principles;
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, subject (a) to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles
and (b) to the extent rights to indemnity and contribution
thereunder may be limited by federal or state securities laws or
the policies underlying such laws; and the Registration Rights
Agreement conforms in all material respects to the summary
thereof in the Offering Memorandum;
(x) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, constitutes a valid and
legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity
principles;
(xi) The Company is not in violation of its charter or
by-laws and the issuance and sale of the Securities by the
Company to the Purchasers pursuant to this Agreement and the
compliance by the Company with all of the provisions of the
Securities, the Indenture, the Registration Rights Agreement and
this Agreement and the consummation by the Company of the
transactions herein and therein contemplated will not conflict
with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company;
(xii) The authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to the
description thereof contained in the Offering Memorandum;
(xiii) Except as required pursuant to the Registration
Rights Agreement and assuming due compliance by the Purchasers
with Section 3 of the Agreement, no consent, approval,
authorization or order of or filing or registration with, any
court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement, and the Securities
by the Company and the consummation of the transactions
contemplated by this Agreement and thereby, except such consents,
approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Securities by the Purchasers, and such consents, approvals,
authorizations, orders, registrations and qualifications as may
be required under the Act and the Trust Indenture Act;
(xiv) The statements set forth in the Offering Memorandum
under the captions "Description of Debentures" and "Description
of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Securities and the Stock, and under
the caption "Certain United States Federal Income Tax
Consequences", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate,
complete and fair;
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<PAGE> 14
(xv) The Exchange Act Reports (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act, and the rules and regulations
of the Commission thereunder; and such counsel has no reason to
believe that any of such documents, when they were so filed,
contained an 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 when such documents were so filed, not misleading;
(xvi) No registration of the Securities under the Act,
and no qualification of an indenture under the United States
Trust Indenture Act of 1939 with respect thereto, is required for
the offer, sale and initial resale of the Securities by the
Purchasers in the manner contemplated by this Agreement; and
(xvii) Such counsel have no reason to believe that the
Offering Memorandum and any further amendments or supplements
thereto made by the Company prior to the Time of Delivery (other
than the financial statements and other financial data contained
therein, as to which such counsel need express no opinion)
contained as of its date or contains as of the Time of Delivery
an untrue statement of a material fact or omitted or omits, as
the case may be, to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) You shall have received an opinion satisfactory to you,
dated the date hereof, of Adam Cochran, Vice President and General
Counsel of the Company, to the effect that:
(i) To the best of such counsel's knowledge, except as
otherwise disclosed in the Offering Memorandum, the Company owns
or possesses sufficient licenses or other rights to use all
necessary trademarks, trade names, trade secrets, patents,
proprietary rights technology and inventions (collectively, the
"Proprietary Rights") to conduct the business now being or
proposed to be conducted by the Company as described in the
Offering Memorandum;
(ii) To the best of such counsel's knowledge, except as
otherwise disclosed in the Offering Memorandum, there are no
legal or governmental proceedings relating to any Proprietary
Rights owned or used by the Company pending against the Company
or any third party; there are no legal or governmental
proceedings relating to a third party's Proprietary Rights
pending against the Company; and no such proceedings are
threatened or contemplated by governmental authorities or others;
(iii) Such counsel does not know of any contracts or
other documents relating to the Proprietary Rights of the Company
of a character required to be described in or to be filed as an
exhibit to the Exchange Act Reports that are not filed or
described as required;
(iv) To the best of such counsel's knowledge, except as
otherwise disclosed in the Offering Memorandum, the Company is
not infringing or otherwise violating any valid Proprietary
Rights of others and there are no infringements by others of any
Proprietary Rights owned or used by the Company which, in the
judgment of such counsel, could have a Material Adverse Effect;
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<PAGE> 15
(v) As to each United States patent and patent
application listed in Exhibit 1 thereto, there is an assignment
by each of the named inventors to the Company. The assignments
by the named inventors have been submitted to the United States
Patent and Trademark Office ("USPTO") and those assignments have
been recorded in the USPTO's title records;
(vi) The Company's United States patent applications
listed on Exhibit 1 thereto have been prepared and filed in the
USPTO in a form and with accompanying papers that are acceptable
to the USPTO for the purposes of according each such application
a filing date and serial number, and of placing each such
application in condition for eventual examination on the merits
as to patentability. For each such U.S. application an Official
Filing Receipt has been received from the USPTO. As to each of
such application, such counsel is not aware of any material
defect of form in preparation or filing;
(vii) As to each of the Company's foreign patents and
patent applications based on the United States patents or
applications listed on Exhibit 1 thereto, the applications have
either (a) been submitted to patent firms in the respective
foreign countries with instructions to file the applications in
the patent offices of those countries naming the Company as the
owner of record, or (b) as to certain Patent Cooperation Treaty
applications, been submitted directly to the relevant patent
office of those countries naming the Company as the owner of
record. In each such application, written confirmation has been
received that the application has, in fact, been accepted for
filing by such patent offices. There is no assurance that the
patent offices of the respective countries will not reject the
claims of the foreign patent applications as being unpatentable,
or that any claims will be allowed without amendment, nor is
there any assurance that those patent offices will ultimately
conclude that the foreign patent applications meet all
requirements for patentability;
(viii) To the best of such counsel's knowledge, after due
inquiry, the Company has not violated any FDA Regulation, any
Environmental Laws, or any federal or state law relating to
discrimination in the hiring, promotion or pay of employees or
any applicable federal or state wages and hours laws, or any
provisions of the Employee Retirement Income Security Act or the
rules and regulations promulgated thereunder, which in any case
might result in a Material Adverse Effect;
(ix) The Company and each of the Significant
Subsidiaries has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities
("permits"), including, without limitation, under any applicable
FDA Regulations or Environmental Laws, as are necessary to own,
lease and operate its properties and to conduct its business in
the manner described in the Offering Memorandum; to the best of
such counsel's knowledge, after due inquiry, the Company has
fulfilled and performed all of its material obligations with
respect to such permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment
of the rights of the holder of any such permit, subject in each
case to such qualification as may be set forth in Offering
Memorandum; and, except as described in the Offering Memorandum,
such permits contain no restrictions that are materially
burdensome of to the Company;
(x) To the best of such counsel's knowledge, after due
inquiry, except as otherwise set forth in the Offering Memorandum
or such as are not material to the business, condition (financial
or otherwise), stockholders' equity, properties, business
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<PAGE> 16
prospects or results of operations of the Company and its
subsidiaries, taken as a whole, the Company has good and
marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes not yet due
and payable, to all property and assets described in the Offering
Memorandum as being owned by it;
(xi) The statements in the Offering Memorandum related
to the Company's Proprietary Rights insofar as such statements
constitute summaries of matters of law, are accurate and complete
statements or summaries of such matters of law set forth therein;
(xii) To the best of such counsel's knowledge, after due
inquiry, all leases to which the Company is a party are valid and
binding and no default has occurred or is continuing thereunder
which might result in a Material Adverse Effect;
(xiii) To the best of such counsel's knowledge after due
inquiry, the Company is not in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument to which the Company is
a party or by which it is bound or to which any of its properties
or assets is subject which default could result in a Material
Adverse Effect; and
(xiv) The issuance and sale of the Securities by the
Company to the Purchasers pursuant to this Agreement and the
compliance by the Company with all of the provisions of the
Securities, the Indenture, the Registration Rights Agreement and
this Agreement and the consummation by the Company of the
transactions herein and therein contemplated will not conflict
with or constitute a breach of any of the terms or provisions of,
or a default under any agreement, indenture or other instrument
to which the Company is a party or by which the Company or its
properties are bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable
to the Company or its properties in any case which is reasonably
likely to have a Material Adverse Effect.
(d) On the date of the Offering Memorandum prior to the
execution of this Agreement and also at the Time of Delivery, Ernst &
Young LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex II hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Memorandum any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Memorandum, and (ii)
since the respective dates as of which information is given in the
Offering Memorandum there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries (other than repayment by the Company on July 1, 1997 of
$5,000,000 of its long term debt to The Bank of Boston) or any change,
or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Offering
Memorandum, the effect of which, in any such case described in Clause
(i) or (ii), is in the judgment of SBC Warburg so material and adverse
as to make it impracticable or inadvisable to proceed with the
offering
16
<PAGE> 17
or the delivery of the Securities on the terms and in the manner
contemplated in this Agreement and in the Offering Memorandum;
(f) On or after the date hereof, there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on NASDAQ;
(iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak
or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in the
judgment of SBC Warburg makes it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the
terms and in the manner contemplated in the Offering Memorandum;
(g) The Securities have been designated for trading on PORTAL;
(h) The shares of Stock issuable upon conversion of the
Securities shall have been duly listed, subject to notice of issuance,
on NASDAQ;
(i) Each of the officers, directors and/or stockholders of the
Company specified in Schedule II hereto shall have provided a lock-up
letter to the same effect as the limitation on the Company's ability
to sell shares of Stock set forth in paragraph 5(d) hereof; and
(j) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery,
as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to
the matters set forth in subsection (e) of this Section and as to such
other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Offering Memorandum or the Offering Memorandum or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by any Purchaser through SBC Warburg expressly for use
therein.
(b) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the Offering Memorandum, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact or necessary to
make the statements therein not misleading, in each case to
17
<PAGE> 18
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Offering Memorandum or the Offering Memorandum or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through SBC Warburg expressly for
use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
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) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Purchasers on the other from the offering of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Purchasers, in each case as set forth in the
Offering Memorandum. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Purchasers on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or
18
<PAGE> 19
prevent such statement or omission. The Company and the Purchasers agree that
it would not be just and equitable if contribution pursuant to this subsection
(d) were determined by pro rata allocation (even if the Purchasers 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
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total price at which the
Securities sold by it and distributed to investors were offered to investors
exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The Purchasers' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Act; and the obligations of
the Purchasers under this Section 8 shall be in addition to any liability which
the respective Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Securities on the terms contained herein. If within thirty-six hours after
such default by any Purchaser you do not arrange for the purchase of such
Securities then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to
you to purchase such Securities, on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall have the
right to postpone the Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Offering Memorandum, or in any other documents or arrangements, and the Company
agrees to prepare promptly any amendments to the Offering Memorandum which in
your opinion may thereby be made necessary. The term "Purchaser" as used in
this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement
with respect to such Securities; and
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the Company
as provided in subsection (a) above, some or all of such Securities remain
unpurchased, then the Company shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of Securities which
such Purchaser agreed to purchase hereunder and, in addition, to require each
non-defaulting Purchaser to purchase its pro rata share (based on the principal
amount of Securities which such Purchaser agreed to purchase hereunder) of the
Securities of such defaulting Purchaser or Purchasers for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
19
<PAGE> 20
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Purchasers, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Purchaser
except as provided in Sections 6 and 8 hereof; but, if for any other reason,
the Securities are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Purchasers through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Purchasers in making
preparations for the purchase, sale and delivery of the Securities, but the
Company shall then be under no further liability to any Purchaser except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or
given by SBC Warburg.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of SBC Warburg, 277 Park Avenue, New
York, New York 10072, Attention: Legal Department; and if to the Company shall
be delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Offering Memorandum, Attention: Secretary.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company and, to the extent provided in Sections
8 and 10 hereof, the officers and directors of the Company and each person who
controls the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one
and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us 5 (five) counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Purchasers, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Purchasers and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Purchasers is pursuant to the authority set forth in a form of
Agreement among Purchasers, the form of which shall be submitted to the Company
for examination upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
20
<PAGE> 21
NeXstar Pharmaceuticals, Inc.
By: /s/ PATRICK J. MAHAFFY
-----------------------
Name: Patrick J. Mahaffy
Title: President and Chief
Executive Officer
Accepted as of the date hereof:
SBC Warburg Inc.
Oppenheimer & Co., Inc.
By: SBC Warburg Inc.
By: /s/ MICHAEL S. BALDOCK
----------------------
Name: Michael S. Baldock
Title: SBC Warburg-Managing
Director
On behalf of each of the Purchasers
By: /s/ JAMES R. GRAY
-----------------
Name: James R. Gray
Title: Associate Director
21
<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
MAXIMUM AMOUNT
PRINCIPAL AMOUNT OF OPTIONAL
OF FIRM SECURITIES SECURITIES TO BE
TO BE PURCHASED PURCHASED
<S> <C> <C>
SBC Warburg Inc............................. $45,000,000 $3,000,000
Oppenheimer & Co., Inc...................... $30,000,000 $2,000,000
Total.............................. $75,000,000 $5,000,000
</TABLE>
22
<PAGE> 23
ANNEX I
(1) The Securities have not been and will not be registered under the
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S
under the Act or pursuant to an exemption from the registration requirements of
the Act. Each Purchaser represents that it has offered and sold the
Securities, and will offer and sell the Securities (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Time of Delivery, only in accordance
with Rule 903 of Regulation S, Rule 144A or pursuant to Paragraph 2 of this
Annex I under the Act. Accordingly, each Purchaser agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Purchaser agrees that, at or prior to
confirmation of sale of Securities (other than a sale pursuant to Rule 144A) or
pursuant to Paragraph 2 of this Annex I, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used
above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities except with its affiliates or with the prior written
consent of the Company.
(2) Notwithstanding the foregoing, Securities in registered form may
be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any
of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with
I-1
<PAGE> 24
the applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Securities in such
jurisdictions. Each Purchaser understands that no action has been taken to
permit a public offering in any jurisdiction outside the United States where
action would be required for such purpose. Each Purchaser agrees not to cause
any advertisement of the Securities to be published in any newspaper or
periodical or posted in any public place and not to issue any circular relating
to the Securities, except in any such case with SBC Warburg's express written
consent and then only at its own risk and expense.
I-2
<PAGE> 25
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants
shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
applicable published rules and regulations thereunder;
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the
Offering Memorandum comply as to form in all material respects with
the applicable requirements of the Exchange Act and the related
published rules and regulations;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included
in the Offering Memorandum agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years;
(iv) On the basis of limited procedures not constituting an audit
in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Memorandum, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Offering Memorandum are not in conformity
with generally accepted accounting principles applied on the
basis substantially consistent with the basis for the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Offering Memorandum;
(B) any other unaudited income statement data and balance
sheet items included in the Offering Memorandum do not agree with
the corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
in the Offering Memorandum;
(C) the unaudited financial statements which were not
included in the Offering Memorandum but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited income statement data and balance
sheet items included in the Offering Memorandum and referred to
in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Offering Memorandum;
II-1
<PAGE> 26
(D) any unaudited pro forma consolidated condensed
financial statements included in the Offering Memorandum do not
comply as to form in all material respects with the applicable
accounting requirements or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Offering Memorandum) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Purchasers, or any
increases in any items specified by the Purchasers, in each case
as compared with amounts shown in the latest balance sheet
included in the Offering Memorandum except in each case for
changes, increases or decreases which the Offering Memorandum
discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Memorandum to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified
by the Purchasers, or any increases in any items specified by the
Purchasers, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Purchasers, except in each case for
decreases or increases which the Offering Memorandum discloses
have occurred or may occur or which are described in such letter;
and
(v) In addition to the examination referred to in their
report(s) included in the Offering Memorandum and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Purchasers, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Offering
Memorandum, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
II-2
<PAGE> 27
SCHEDULE II
Lock Up Letters
Patrick J. Mahaffy
Lawrence Gold
Warburg, Pincus Capital Partners, L.P.
Warburg, Pincus Investors, L.P.
<PAGE> 1
EXHIBIT 11.1
NEXSTAR PHARMACEUTICALS, INC.
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net loss $ (8,263,000) $ (4,040,000) $(17,984,000) ($10,333,000)
============ ============ ============ ===========
Weighted average shares outstanding
during the period 26,447,000 26,132,000 26,436,000 25,686,000
============ ============ ============ ===========
Net loss per common share $ (0.31) $ (0.15) $ (0.68) $ ( 0.40)
============ ============ ============ ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,143,000
<SECURITIES> 9,937,000
<RECEIVABLES> 36,741,000
<ALLOWANCES> 1,039,000
<INVENTORY> 15,643,000
<CURRENT-ASSETS> 87,152,000
<PP&E> 74,852,000
<DEPRECIATION> 31,231,000
<TOTAL-ASSETS> 139,264,000
<CURRENT-LIABILITIES> 39,366,000
<BONDS> 29,236,000
0
0
<COMMON> 265,000
<OTHER-SE> 70,397,000
<TOTAL-LIABILITY-AND-EQUITY> 139,264,000
<SALES> 42,096,000
<TOTAL-REVENUES> 44,084,000
<CGS> 9,976,000
<TOTAL-COSTS> 9,976,000
<OTHER-EXPENSES> 50,445,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,528,000
<INCOME-PRETAX> (17,865,000)
<INCOME-TAX> 119,000
<INCOME-CONTINUING> (17,984,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,984,000)
<EPS-PRIMARY> (.68)
<EPS-DILUTED> (.68)
</TABLE>
