As
filed
with the Securities and Exchange Commission on October 11, 2005
Registration
No. 333-_______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
DISCOVERY
LABORATORIES, INC.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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94-3171943
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(State
or Other Jurisdiction of Incorporation)
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(I.R.S.
Employer Identification Number)
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2600
Kelly Road, Suite 100
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Warrington,
Pennsylvania 18976
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(Address,
Including Zip Code and Telephone Number, Including Area Code, of Registrant’s
Principal Executive Offices)
David
L.
Lopez, C.P.A., Esq.
Senior
Vice President, General Counsel
Discovery
Laboratories, Inc.
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976
(215)
488-9300
(Name,
address, including zip code, and telephone number, including area code, of
agent
for service)
Copies
to:
Ira
L.
Kotel, Esq.
Dickstein
Shapiro Morin & Oshinsky LLP
1177
Avenue of the Americas, 47th Floor
New
York,
New York 10036-2714
(212)
835-1400
__________________
Approximate
date of commencement of proposed sale to public:
From
time to time or at one time after this registration statement becomes effective
in light of market conditions and other factors.
If
the
only securities being registered on this Form are being offered pursuant
to
dividend or interest reinvestment plans, please check the following box.
|_|
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the
“Securities Act”), other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.
|X|
If
this
Form is filed to register additional securities for an offering pursuant
to Rule
462(b) under the Securities Act, please check the following box and list
the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the
same
offering. |_|
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. |_|
__________________
CALCULATION
OF REGISTRATION FEE
|
Title
Of Each Class Of Securities
To
Be Registered
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Amount
To Be
Registered(1)(2)
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Proposed
Maximum Offering Price Per Unit(1)(2)
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Proposed
Maximum Aggregate Offering Price(2)(3)
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Amount
Of
Registration
Fee(4)
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Debt
Securities
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||||
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Preferred
Stock, par value $.001 per share
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||||
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Common
Stock, par value $.001 per share
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Total
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$100,000,000
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$100,000,000
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$11,770
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(1)
There
are
being registered under this registration statement such indeterminate number
of
shares of common stock and preferred stock of the registrant and such
indeterminate principal amount of debt securities of the registrant, as shall
have an aggregate initial offering price not to exceed $100,000,000. If any
debt
securities are issued at an original issue discount, then the debt securities
registered shall include such additional debt securities as may be necessary
such that the aggregate initial public offering price of all securities issued
pursuant to this registration statement will equal $100,000,000. Any securities
registered under this registration statement may be sold separately or as
units
with other securities registered under this registration statement. The proposed
maximum initial offering prices per unit will be determined, from time to
time,
by the registrant in connection with the issuance by the registrant of the
securities registered under this registration statement. The securities
registered also include such indeterminate amounts and numbers of common
stock,
preferred stock and debt securities as may be issued upon conversion of or
exchange for preferred stock or debt securities that provide for such conversion
or exchange. Also registered hereby are such additional and indeterminable
number of shares as may be issuable due to adjustments for changes resulting
from stock dividends, stock splits and similar changes.
(2)
Not
specified with respect to each class of securities being registered under
this
registration statement pursuant to General Instruction II.D. of Form S-3
under
the Securities Act of 1933.
(3)
Estimated
solely for the purpose of calculating the registration fee, pursuant to Rule
457(o) under the Securities Act of 1933. No additional consideration will
be
received for common stock, preferred stock or debt securities that are issued
upon conversion into or exchange for or exercise of preferred stock or debt
securities. The proposed maximum aggregate offering price per class of security
will be determined from time to time by the registrant in connection with
the
issuance by the registrant of the securities registered hereunder and is
not
specified as to each class of security pursuant to General Instruction II.D
of
Form S-3 under the Securities Act.
(4)
Pursuant
to Rule 457(o) under the Securities Act of 1933, the registration fee is
calculated on the maximum offering price of all securities listed, and the
table
does not specify information by each class about the amount to be
registered.
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said
Section
8(a), may determine.
[SIDE
LEGEND] The information in this prospectus is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This
prospectus is not an offer to sell these securities and it is not soliciting
an
offer to buy these securities in any state where an offer or sale is not
permitted.
SUBJECT
TO COMPLETION, DATED OCTOBER 11, 2005
PROSPECTUS
$100,000,000
Discovery
Laboratories, Inc.
Debt
Securities, Preferred Stock and Common Stock
We
may
sell from time to time in one or more offerings up to $100,000,000 in the
aggregate of:
| · |
our
secured or unsecured debt securities, in one or more series, which
may be
either senior, senior subordinated or subordinated debt securities;
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shares
of our preferred stock in one or more series;
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shares
of our common stock; and
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| · |
any
combination of the foregoing.
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When
we
decide to sell particular securities, we will provide you with the specific
terms and the public offering price of the securities we are then offering
in
one or more prospectus supplements to this prospectus. The prospectus supplement
may add to, change or update information contained in this prospectus. The
prospectus supplement may also contain important information about U.S. Federal
income tax consequences. You should carefully read this prospectus, together
with any prospectus supplements and information incorporated by reference
in
this prospectus and any prospectus supplements, before you decide to invest.
This
prospectus may not be used to offer or sell any securities unless accompanied
by
a prospectus supplement.
Our
common stock is quoted on the Nasdaq National Market under the trading symbol
“DSCO.”
Any
common stock sold pursuant to this prospectus or any prospectus supplement
will
be listed on that exchange, subject to official notice of issuance. Each
prospectus supplement to this prospectus will contain information, where
applicable, as to any other listing on any national securities exchange or
The
Nasdaq Stock Market of the securities covered by the prospectus
supplement.
Investing
in our securities involves significant risks. See “Risk Factors” beginning on
page 6.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal offense.
The
date
of this prospectus is ___________, 2005.
TABLE
OF CONTENTS
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ABOUT
THIS PROSPECTUS
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1
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ABOUT
DISCOVERY
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1
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RISK
FACTORS
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6
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FORWARD-LOOKING
STATEMENTS
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18
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USE
OF PROCEEDS
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20
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RATIO
OF EARNINGS TO FIXED CHARGES
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20
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DESCRIPTION
OF DEBT SECURITIES
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21
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DESCRIPTION
OF PREFERRED STOCK
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28
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DESCRIPTION
OF COMMON STOCK
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29
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PLAN
OF DISTRIBUTION
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32
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EXPERTS
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33
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LEGAL
MATTERS
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34
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INTERESTS
OF NAMED EXPERTS AND COUNSEL
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34
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WHERE
YOU CAN FIND MORE INFORMATION
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34
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INFORMATION
INCORPORATED BY REFERENCE
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34
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This
prospectus is part of a registration statement we filed with the Securities
and
Exchange Commission. You should rely only on the information we have provided
or
incorporated by reference in this prospectus or any prospectus supplement.
We
have not authorized anyone to provide you with additional or different
information. We are not making an offer of these securities in any state
where
the offer is not permitted. You should not assume that the information in
this
prospectus is accurate as of any date other than the date on the front of
the
prospectus.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission (the “SEC”) utilizing a “shelf” registration process or
continuous offering process, which allows us to offer
and
sell any combination of the securities described in this prospectus in one
or
more offerings. Using this prospectus, we may offer up to a total dollar
amount
of $100,000,000 of these securities.
This
prospectus provides you with a general description of the securities we may
offer. Each time we offer to sell securities pursuant to this registration
statement and the prospectus contained herein, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. That prospectus supplement may include additional risk factors
about
us and the terms of that particular offering. Prospectus supplements may
also
add to, update or change the information contained in this prospectus. To
the
extent that any statement that we make in a prospectus supplement is
inconsistent with statements made in this prospectus, the statements made
in
this prospectus will be deemed modified or superseded by those made in such
prospectus supplement. In addition, as we describe in the
section entitled “Where You Can Find More Information,” we have filed and plan
to continue to file other documents with the SEC that contain information
about
us and the business conducted by us and our subsidiaries. Before you decide
whether to invest
in any
of these securities, you should read this prospectus, the prospectus supplement
that further describes the offering of these securities and the information
we
file with the SEC.
In
this
prospectus and any prospectus supplement, unless otherwise indicated,
the terms “Discovery”, “the Company”, “we”, “us” and “our” refer and relate to
Discovery Laboratories, Inc., and its consolidated subsidiaries.
ABOUT
DISCOVERY
Discovery
Laboratories, Inc. is a biotechnology company developing its proprietary
surfactant technology as Surfactant Replacement Therapies (SRT) for respiratory
diseases. Surfactants are produced naturally in the lungs and are essential
for
breathing. Our technology produces a precision-engineered surfactant that
is
designed to closely mimic the essential properties of natural human lung
surfactant. We believe that through our technology, pulmonary surfactants
have
the potential, for the first time, to address respiratory diseases where
there
are few or no approved therapies available.
Our
SRT
pipeline is initially focused on the most significant respiratory conditions
prevalent in the neonatal intensive care unit. Our lead product, SurfaxinÒ
(lucinactant),
for the
prevention of Respiratory Distress Syndrome (RDS) in premature infants, has
received an Approvable Letter from the U.S. Food and Drug Administration
(FDA)
and is under review for approval in Europe by the European
Medical Evaluation Agency (EMEA).
Surfaxin is also being developed for the treatment of Chronic Lung Disease
(CLD,
also known as Bronchopulmonary Dysplasia) in premature infants. In addition,
we
are developing Aerosurf™,
aerosolized SRT administered through nasal continuous positive airway pressure
(nCPAP), for neonatal respiratory failures.
Our
SRT
technology is also being developed to address the various respiratory conditions
affecting pediatric, young adult and adult patients in the critical care
and
other hospital settings. We are conducting a Phase 2 clinical trial to address
Acute Respiratory Distress Syndrome (ARDS) in adults, and are also developing
aerosol formulations of SRT to address Acute Lung Injury (ALI), asthma, Chronic
Obstructive Pulmonary Disorder (COPD), and other respiratory
conditions.
With
the
goal of becoming a fully integrated biotechnology company, we are implementing
a
long-term business strategy which includes: (i) investing in manufacturing
capabilities for the production of our precision-engineered surfactant drug
products to meet anticipated clinical and commercial needs, if approved,
in the
United States, Europe and other markets; (ii) building our own specialty
pulmonary United States sales and marketing organization to focus initially
on
opportunities in the neonatal intensive care unit (NICU); (iii) securing
aerosol
generating technology and engineering capabilities through a corporate
partnership for our aerosol SRT pipeline programs, including Aerosurf; and
(iv)
securing corporate partnerships for the development and potential
commercialization of SRT, including Surfaxin, in Europe and the rest of the
world.
1
SURFACTANT
TECHNOLOGY
Our
precision-engineered surfactant replacement technology was invented at The
Scripps Research Institute and was exclusively licensed to Johnson & Johnson
which, together with its wholly-owned subsidiary, Ortho Pharmaceutical
Corporation, developed it further. We acquired the exclusive worldwide
sublicense to the technology in October 1996.
Surfactants
are protein and lipid (fat) compositions that are produced naturally in the
lungs and are critical to all air-breathing mammals. They cover the entire
alveolar surface, or air sacs, of the lungs and the terminal conducting airways
which lead to the air sacs. Surfactants facilitate respiration by continually
modifying the surface tension of the fluid normally present within the alveoli,
or air sacs, that line the inside of the lungs. In the absence of sufficient
surfactant or should the surfactant degrade, these air sacs tend to collapse,
and, as a result, the lungs do not absorb sufficient oxygen. In addition
to
lowering aveolar surface-tension, surfactants play other important roles
in
human respiration including, but not limited to, lowering the surface tension
of
the conducting airways and maintaining airflow and airway patency (keeping
the
airways open and expanded). Human surfactants include four known surfactant
proteins, A, B, C and D. It has been established, through numerous studies,
that
surfactant protein B (SP-B) is essential for respiratory function.
Presently,
the FDA has approved surfactants as replacement therapy only for RDS in
premature infants, a condition in which infants born premature have an
insufficient amount of their own natural surfactant. The most commonly used
of
these approved replacement surfactants are derived from either pig or cow
lungs.
Although they are clinically effective, they have drawbacks and cannot readily
be scaled or developed to treat broader populations for RDS in premature
infants
and other respiratory diseases. There is presently only one approved synthetic
surfactant available, but it does not contain surfactant proteins, is not
widely
used and is not actively marketed by its manufacturer.
Animal-derived
surfactant products are prepared using a chemical extraction process from
minced
cow and pig lung. Because of the animal-sourced materials and the chemical
extraction processes, there can potentially be significant variation in
production lots and, consequently, product quality specifications must be
broad.
In addition, the protein levels of these animal-derived surfactants are
inherently lower than the protein levels of native human surfactant. The
production costs of these animal-derived surfactants are high relative to
other
analogous pharmaceutical products, generation of large quantities is severely
limited, and these products cannot readily be reformulated for aerosol delivery
to the lungs.
Our
precision-engineered surfactant product candidates, including Surfaxin, are
engineered versions of natural human lung surfactant and contain a
precision-engineered peptide, sinapultide. Sinapultide is a 21 amino acid
protein-like substance that is designed to closely mimic the essential
attributes of human surfactant protein B (SP-B), the surfactant protein that
is
most important for the proper functioning of the respiratory system. Our
products have the ability to be precisely formulated, either as a liquid
instillate, aerosolized liquid or dry powder, to address various medical
indications.
We
believe that our precision-engineered surfactant can be manufactured in
sufficient quantities, of more exact and consistent pharmaceutical grade
quality, less expensively than the animal-derived surfactants and with no
potential to cause adverse immunological responses in young and older adults,
all important attributes for our products to potentially fulfill significant
unmet medical needs. In addition, we believe that our precision-engineered
surfactants might possess other pharmaceutical benefits not currently found
with
the animal surfactants such as longer shelf-life, reduced number of
administrations to the patient’s lungs and elimination of the risk of
animal-borne diseases including the brain-wasting bovine spongiform
encephalopathy (commonly called “mad-cow disease”).
DISCOVERY’S
KEY SRT PROGRAMS
Our
key
SRT programs are focused on: (i) research and development projects for
respiratory failures of patients in the NICU, critical care unit and other
hospital settings, where there are few or no approved therapies, (ii)
manufacturing capabilities for the production of our surfactant drug products,
and (iii) sales and marketing capabilities in the United states to focus
initially on opportunities in the NICU beginning with the execution of the
launch of Surfaxin, if approved. These programs include:
2
SRT
for Neonatal Intensive Care Unit
We
are
conducting several NICU therapeutic programs targeting respiratory conditions
cited as some of the most prevalent respiratory disorders affecting infants
in
the NICU.
Surfaxin®
(Lucinactant) for Respiratory Distress Syndrome in Premature
Infants
RDS
is a
condition in which premature infants are born with an insufficient amount
of
their own natural surfactant. Premature infants born prior to 32 weeks gestation
have not fully developed their own natural lung surfactant and therefore
need
treatment to sustain life. This condition often results in the need for the
infant to undergo surfactant replacement therapy or mechanical ventilation.
RDS
is experienced in approximately half of the babies born between 28 and 32
weeks
gestational age. The incidence of RDS approaches 100% in babies born less
than
26 weeks gestational age. Surfaxin is the first precision-engineered, protein
B-based agent that mimics the surface-active properties of human surfactant.
To
treat premature infants suffering from RDS, surfactants, including Surfaxin,
are
delivered in a liquid form and injected through an endotracheal tube (a tube
inserted into the infant’s mouth and down the trachea).
We
have
received an Approvable Letter from the FDA for SurfaxinÒ
(lucinactant), our lead product, for the prevention of RDS in premature infants,
to which we submitted a Response Letter on July 29, 2005. We have received
formal written notification from the FDA, following its review of our previously
submitted response letter, outlining select items that need to be further
addressed in order for the FDA to deem the response complete. We are in the
process of addressing these items and anticipate submitting our response
to the
FDA in October 2005. Certain pre-approval activities are ongoing, including
labeling discussions, process validation and re-inspection activities related
to
our Surfaxin manufacturing process. The approval of Surfaxin is anticipated
in
April 2006 with commercial launch to occur in the second quarter of 2006.
We
have also filed a Marketing Authorization Application (MAA) with the EMEA
for
clearance to market Surfaxin in Europe and anticipate potential EMEA approval
to
occur in the second quarter of 2006. See “Manufacturing” below.
Surfaxin®
for
Chronic Lung Disease (CLD, also known as Bronchopulmonary
Dysplasia)
Chronic
Lung Disease is
a
costly syndrome associated with surfactant and SP-B deficiency, and the
prolonged use of mechanical ventilation and oxygen supplementation, usually
associated with a premature infant being treated for RDS. Presently there
are no
approved drugs for the treatment of CLD. These babies suffer from abnormal
lung
development and typically have a need for respiratory assistance - oftentimes,
for many months, as well as comprehensive care spanning years.
We
are
conducting a Phase 2 double-blind, controlled trial (that will enroll up
to 210
very low birth weight premature infants born at risk for developing CLD)
to
determine the safety and tolerability of administering up to 5 total doses
of
Surfaxin in the first 10 days of life as a therapeutic approach for the
prevention of CLD. This study is designed to determine whether such treatment
can decrease the proportion of infants on mechanical ventilation or oxygen
or
the incidence of death or CLD. The results of this trial are expected to
be
available in the first quarter of 2006.
Aerosurf™
for
Neonatal Respiratory Failures
Serious
respiratory problems are some of the most prevalent medical issues facing
premature infants in the NICU. There are approximately 1.5 million premature
infants born annually worldwide at risk for respiratory problems associated
with
surfactant dysfunction. The majority of these infants are usually at a birth
weight greater than 1250 grams, and neonatologists generally try to avoid
mechanically ventilating these patients because doing so requires intubation
(the invasive process of inserting a breathing tube down the trachea). This
reluctance is due to the risks associated with intubation and the need for
paralytic agents and sedation. As a result, many neonatologists will only
intubate in cases of severe respiratory disease, where the benefits clearly
outweigh the risks. Noted neonatologists have commented on the potential
utility
of a non-invasive method of delivering SRT to treat premature infants suffering
from respiratory disorders including RDS, CLD, bronchiolitis, acute hypoxia,
pneumonia, and transient tachypnea.
3
Aerosurf
is our precision-engineered aerosolized SRT administered via nCPAP intended
to
treat premature infants at risk for respiratory failures. We recently completed
and announced the results of our first pilot Phase 2 clinical study of Aerosurf,
which was designed as an open label, multicenter study to evaluate the
feasibility, safety and tolerability of Aerosurf delivered via nCPAP for
the
prevention of RDS in premature infants administered within 30 minutes of
birth
over a three hour duration. The study showed that it is feasible to deliver
Aerosurf via nCPAP and the treatment was generally safe and well tolerated.
We
are currently in the process of evaluating a collaborative partnership to
secure
a specific aerosol generation technology and engineering solution which we
believe may enhance the delivery of Aerosurf. If we can successfully secure
such
collaboration, we anticipate conducting multiple Phase 2 clinical studies
of
Aerosurf in 2006.
SRT
for Critical Care and Hospital Indications
SRT
for Acute Respiratory Distress Syndrome (ARDS)
ARDS
is a
life-threatening disorder for which no approved therapies exist anywhere
in the
world. It is characterized by an excess of fluid in the lungs and decreased
oxygen levels in the patient. One prominent characteristic of this disorder
is
the destruction of surfactants naturally present in lung tissue. The conditions
are caused by illnesses including pneumonia and septic shock (a toxic condition
caused by infection) and events such as smoke inhalation, near drowning,
industrial accidents, major surgery and other traumas.
We
are
presently conducting a Phase 2 open-label, controlled, multi-center clinical
trial of our SRT for the treatment of adults with ARDS. In December 2004,
we
announced what we believe to be encouraging preliminary data from this trial
and
that we were modifying the trial protocol to allow for increased enrollment
of
up to 160 patients. Patients will be randomized to either receive our SRT
or the
current standard of care, which is mechanical ventilation and support therapies.
The primary endpoint of this trial is the incidence rate of patients being
alive
and off mechanical ventilation at Day 28. Key secondary endpoints include
mortality at the end of Day 28 and safety and tolerability of our SRT and
the
bronchoscopic lavage procedure. Results of the Phase 2 trial are anticipated
to
be available in the first quarter of 2006.
Our
SRT
is administered to patients in high concentration and large volume via a
proprietary sequential lavage technique, or lung wash, delivered through
a
bronchoscope to each of the 19 segments of the lung. The procedure is intended
to cleanse and remove inflammatory substances and debris from the lungs,
while
leaving sufficient amounts of our precision-engineered surfactant behind
to help
re-establish the lungs’ capacity to absorb oxygen. The objective is to restore
functional surfactant levels and to allow critically ill patients to be removed
from mechanical ventilation sooner.
The
FDA
has granted us Fast-Track Status and Orphan Drug Designation for our
SRT
for the
treatment of ARDS in adults. The EMEA has granted us Orphan Product designation
for our
SRT
for the
treatment of ALI in adults (which in this circumstance is a larger patient
population that encompasses ARDS).
Manufacturing
Our
precision-engineered surfactant product candidates, including Surfaxin, must
be
manufactured in a sterile environment and in compliance with current good
manufacturing practice requirements (cGMPs) set by the FDA and other relevant
worldwide regulatory authorities. These product candidates are manufactured
through the combination of sinapultide and certain other active ingredients,
including certain lipids, that are provided by our suppliers. Using these
ingredients, our surfactant drug products, including Surfaxin, are manufactured
at the sterile facilities of our contract manufacturer, Laureate Pharma,
Inc.
(Laureate), with our own specialized equipment under the direction and
supervision of our manufacturing and quality control personnel. The termination,
disruption or expiration of the manufacturing relationships with any of these
parties would have a material adverse effect on our
business.
4
In
January 2005, the FDA issued an inspection report (FDA Form-483) to Laureate
citing certain observations concerning Laureate’s compliance with cGMPs in
connection with the FDA’s review of our New Drug Application (NDA) for Surfaxin
for the prevention of RDS in premature infants. We are in the process of
addressing these items and anticipate submitting our response to the FDA
in
October 2005. We believe that the quality systems and documentation control
enhancements that we have implemented jointly with Laureate to support our
response to the FDA prepare us for the FDA’s reinspection of Laureate’s Totowa
facility. Assuming the adequacy of such corrective actions and the approval
of
the NDA, we anticipate that the commercial launch of Surfaxin will occur
in the
second quarter of 2006.
We
are
implementing a long-term manufacturing strategy for the production of our
precision-engineered surfactant drug products to meet anticipated clinical
and
commercial needs, if approved, in the United States, Europe and other markets.
We are investing in the further development and scale-up of the current contract
manufacturer of our SRT, Laureate, and conducting evaluations with the purpose
of securing additional manufacturing capabilities in order to meet production
needs as they expand, including alternative contract manufacturers and acquiring
or building our own manufacturing facility.
Sales
& Marketing
We
are
building our own specialty pulmonary United States sales and marketing
organization to execute the launch of Surfaxin, if approved, in the United
States. Our sales and marketing force will be initially focused on opportunities
in the NICU and, as products are developed, on expanding such opportunities
to
critical care and hospital settings. This strategic initiative, led by the
anticipated launch of Surfaxin, is intended to allow us to manage and administer
our own sales and marketing operation, establish a strong presence in the
NICU
and optimize company economics.
Corporate
Information
Surfaxin®
is our
trademark. This prospectus also includes product names, trademarks and trade
names of other companies, which names are the exclusive property of the holders
thereof.
Our
executive offices are located at 2600 Kelly Road, Suite 100, Warrington,
Pennsylvania 18976. Our telephone number is (215) 488-9300 and our facsimile
number is (215) 488-9301. We maintain a website on the Internet at www.discoverylabs.com.
Information contained in our web site is not a part of this
prospectus.
5
RISK
FACTORS
An
investment in our securities involves significant risks. You should carefully
consider the risks described below or in any applicable prospectus supplement
and other information, including our financial statements and related notes
previously included in our periodic reports filed with the SEC. If any of
the
factors or conditions summarized in the following risks actually occur, our
business prospects, financial condition and results of operations could be
materially harmed, the value or trading price of our securities could decline
and you could lose all or part of your investment. The risks and uncertainties
described below are those that we currently believe may materially affect
us.
Additional risks and uncertainties of which we are unaware or which we currently
deem immaterial also may become important factors that affect us.
Because
we are a biotechnology company, we may not successfully develop and market
our
products, and even if we do, we may not generate enough revenue or become
profitable.
We
are a
biotechnology company, therefore, you must evaluate us in light of the
uncertainties and complexities present in such companies. We currently have
no
products approved for marketing and sale and are conducting research and
development on our product candidates. As a result, we have not begun to
market
or generate revenues from the commercialization of any of our products. Our
long-term viability will be impaired if we are unable to obtain regulatory
approval for, or successfully market, our product candidates.
To
date,
we have only generated revenues from investments, research grants and
collaborative research and development agreements. We will need to engage
in
significant, time-consuming and costly research, development, pre-clinical
studies, clinical testing and regulatory approval for our products under
development prior to their commercialization. In addition, pre-clinical or
clinical studies may show that our products are not effective or safe for
one or
more of their intended uses. We may fail in the development and
commercialization of our products. As of June 30, 2005, we have an accumulated
deficit of approximately $162.2 million and we expect to continue to incur
significant increasing operating losses over the next several years. If we
succeed in the development of our products, we still may not generate sufficient
or sustainable revenues or we may not be profitable.
Our
technology platform is based solely on our proprietary precision-engineered,
surfactant technology. Our ongoing clinical trials for our lead surfactant
replacement technologies may be delayed, or fail, which will harm our
business.
Our
precision-engineered surfactant platform technology is based on the scientific
rationale of SRT to treat life threatening respiratory disorders and as the
foundation for the development of novel respiratory therapies and products.
Our
business is dependent upon the successful development and approval of our
product candidates based on this platform technology. We have received an
Approvable Letter from the FDA for Surfaxin, our lead product, for the
prevention of RDS in premature infants, and have filed an MAA with the EMEA
for
clearance to market Surfaxin in Europe. The Approvable Letter from the FDA
contains conditions that we must meet in order to obtain approval and they
primarily involve finalizing labeling and correcting previously reported
manufacturing issues. We submitted a Response Letter to the FDA’s Approvable
Letter on July 29, 2005. We have received formal written notification from
the
FDA, following its review of our Response Letter, outlining select items
that
need to be further addressed in order for the FDA to deem the response complete.
We are in the process of addressing these items and anticipate submitting
our
response to the FDA in October 2005. Certain pre-approval activities are
ongoing, including labeling discussions, process validation and reinspection
activities related to our Surfaxin manufacturing process. The approval of
Surfaxin is now anticipated in April 2006 with commercial launch to occur
in the
second quarter of 2006. Currently, we are conducting a Phase 2 clinical trial
for the treatment of ARDS in adults and we have initiated a Phase 2 clinical
trial using aerosolized SRT via nCPAP to potentially treat premature infants
in
the NICU suffering from Neonatal Respiratory Failures and a Phase 2 clinical
trial using Surfaxin for the prevention of CLD.
Companies
in the pharmaceutical and biotechnology industries have suffered significant
setbacks in advanced clinical trials, even after obtaining promising results
in
earlier trials. Data obtained from tests are susceptible to varying
interpretations which may delay, limit or prevent regulatory approval. In
addition, we may be unable to enroll patients quickly enough to meet our
expectations for completing any or all of these trials. The timing and
completion of current and planned clinical trials of our product candidates
depend on, among other factors, the rate at which patients are enrolled,
which
is a function of many factors, including:
6
—the
number of clinical sites;
—the
size
of the patient population;
—the
proximity of patients to the clinical sites;
—the
eligibility criteria for the study;
—the
existence of competing clinical trials; and
—the
existence of alternative available products.
Delays
in
patient enrollment in clinical trials may occur, which would likely result
in
increased costs, program delays or both.
If
the parties we depend on for manufacturing our pharmaceutical products do
not
timely supply these products, it may delay or impair our ability to develop
and
market our products.
We
rely
on outside manufacturers for our drug substance and other active ingredients
for
Surfaxin and to produce material that meets appropriate standards for use
in
clinical studies of our products. Presently, Laureate is our sole clinical
manufacturing facility that has been qualified to produce appropriate clinical
grade material of our drug product for use in our ongoing clinical studies.
In
January 2005, the FDA issued an inspection report (FDA Form-483) to Laureate,
citing certain observations concerning Laureate’s compliance with current cGMPs
in connection with the FDA’s review of our NDA for Surfaxin for the prevention
of RDS in premature infants. The general focus of the inspection observations
relates to basic quality controls, process assurances and documentation
requirements to support the commercial production process. Certain quality
systems and documentation control enhancements have been implemented by us
and
Laureate in response to the FDA’s inspection report. In preparation for the
FDA’s reinspection of Laureate’s Totowa facility certain pre-approval
manufacturing activities are ongoing including process validation and
reinspection activities related to our Surfaxin manufacturing process. We
have
received an Approvable Letter from the FDA for Surfaxin for the prevention
of
RDS in premature infants, which contains conditions that we must meet in
order
to obtain approval and they primarily involve finalizing labeling and correcting
previously reported manufacturing issues. We submitted a Response Letter
to the
FDA’s Approvable Letter on July 29, 2005. We have received formal written
notification from the FDA, following its review of our Response Letter,
outlining select items that need to be further addressed in order for the
FDA to
deem the response complete. We are in the process of addressing these items
and
anticipate submitting our response to the FDA in October 2005. Certain
pre-approval activities are ongoing, including labeling discussions, process
validation and reinspection activities related to our Surfaxin manufacturing
process. Assuming the adequacy of such corrective actions and the approval
of
our NDA for Surfaxin, we anticipate that the commercial launch of Surfaxin
will
occur in the second quarter of 2006. We anticipate that our manufacturing
capabilities through Laureate, upon successful completion and implementation
of
our Action Plan should allow sufficient commercial production of Surfaxin,
if
approved, to supply the present worldwide demand for the prevention of RDS
in
premature infants and our other Surfactant Replacement Therapies for our
planned
clinical trials. If the FDA does not accept the cGMP Action Plan, or we or
Laureate do not adequately address the initiatives set forth therein, the
FDA
may delay its approval of our NDA for Surfaxin or reject our NDA. Any delay
in
the approval of the NDA, or the rejection thereof, will have a material adverse
effect on our business.
Laureate
or other outside manufacturers may not be able to (i) produce our drug substance
or drug product to appropriate standards for use in clinical studies, (ii)
comply with remediation activities set forth in the cGMP Action Plan (iii)
perform under any definitive manufacturing agreements with us or (iv) remain
in
the contract manufacturing business for a sufficient time to successfully
produce and market our product candidates. If we do not maintain important
manufacturing relationships, we may fail to find a replacement manufacturer
or
develop our own manufacturing capabilities which could delay or impair our
ability to obtain regulatory approval for our products and substantially
increase our costs or deplete profit margins, if any. If we do find replacement
manufacturers, we may not be able to enter into agreements with them on terms
and conditions favorable to us and, there could be a substantial delay before
a
new facility could be qualified and registered with the FDA and foreign
regulatory authorities.
7
We
may,
in the future, elect to manufacture some of our products on our own. We
currently own certain specialized manufacturing equipment, employ certain
manufacturing managerial personnel, and we are considering an investment
in
additional manufacturing equipment; however, we do not presently maintain
a
complete manufacturing facility. If we decide to manufacture products on
our own
and do not successfully develop manufacturing capabilities, it will adversely
affect sales of our products.
The
FDA
and foreign regulatory authorities require manufacturers to register
manufacturing facilities. The FDA and corresponding foreign regulators also
inspect these facilities to confirm compliance with cGMPs or similar
requirements that the FDA or corresponding foreign regulators establish.
Contract manufacturers may face manufacturing or quality control problems
causing product production and shipment delays or a situation where the
contractor may not be able to maintain compliance with the FDA’s cGMP
requirements, or those of comparable foreign regulatory authorities, necessary
to continue manufacturing our drug substance. Any failure to comply with
cGMP
requirements or other FDA and comparable foreign regulatory requirements
could
adversely affect our clinical research activities and our ability to market
and
develop our products. See also “Risks Related to Our Business - In order to
conduct our clinical trials we need adequate supplies of our drug substance
and
drug product, which may not be readily available.”
In
order to conduct our clinical trials we need adequate supplies of our drug
substance and drug product, which may not be readily
available.
To
succeed, clinical trials require adequate supplies of drug substance and
drug
product, which may be difficult or uneconomical to procure or manufacture.
We
rely on third party contract manufacturers for our drug substance and other
active ingredients for Surfaxin and to produce material that meets appropriate
standards for use in clinical trials of our products. Laureate, our contract
manufacturer, may not be able to produce Surfaxin to appropriate standards
for
use in clinical studies. Manufacturing or quality control problems have already
and may again occur at Laureate or our other contract manufacturers, causing
production and shipment delays or a situation where the contractor may not
be
able to maintain compliance with the FDA’s cGMP requirements necessary to
continue manufacturing our ingredients or drug product. If any such suppliers
or
manufacturers of our products fail to comply with cGMP requirements or other
FDA
and comparable foreign regulatory requirements, it could adversely affect
our
clinical research activities and our ability to market and develop our products.
See also “Risks Related to Our Business - If the parties we depend on for
manufacturing our pharmaceutical products do not timely supply these products,
it may delay or impair our ability to develop and market our
products.”
We
will need additional capital and our ability to continue all of our existing
planned research and development activities is uncertain. Any additional
financing could result in equity dilution.
We
will
need substantial additional funding to conduct our presently planned research
and product development activities. Based on our current operating plan,
we
believe that our currently available financial resources will be adequate
to
satisfy our capital needs into 2006. Our future capital requirements will
depend
on a number of factors that are uncertain, including the results of our research
and development activities, clinical studies and trials, competitive and
technological advances and the regulatory process, among others. We will
likely
need to raise substantial additional funds through collaborative ventures
with
potential corporate partners and through additional debt or equity financings.
We may also continue to seek additional funding through capital lease
transactions. We may in some cases elect to develop products on our own instead
of entering into collaboration arrangements. This would increase our cash
requirements for research and development.
We
have
not entered into arrangements to obtain any additional financing, except
for the
Committed Equity Financing Facility (CEFF) with Kingsbridge, our revolving
credit facility with PharmaBio and our capital equipment lease financing
arrangement with GECC. Any additional financing could include unattractive
terms
or result in significant dilution of stockholders’ interests and share prices
may decline. If we fail to enter into collaborative ventures or to receive
additional funding, we may have to delay, scale back or discontinue certain
of
our research and development operations, and consider licensing the development
and commercialization of products that we consider valuable and which we
otherwise would have developed ourselves. If we are unable to raise required
capital, we may be forced to limit many, if not all, of our research and
development programs and related operations, curtail commercialization of
our
product candidates and, ultimately, cease operations. See “Risks
Related to Our Business - Our Committed Equity Financing Facility may have
a
dilutive impact on our stockholders.”
8
Furthermore,
we could cease to qualify for listing of our securities on the NASDAQ National
Market if the market price of our common stock declines as a result of the
dilutive aspects of such potential financings. See “Risks
Related to Our Business - The market price of our stock may be adversely
affected by market volatility.”
Our
Committed Equity Financing Facility may have a dilutive impact on our
stockholders.
We
have a
CEFF with Kingsbridge, pursuant to which Kingsbridge is committed to finance
up
to $75.0 million of capital to support our future growth, which expires in
October 2007. Subject to certain conditions and limitations, from time to
time
under the CEFF, we may require Kingsbridge to purchase newly-issued shares
of
its common stock at a discount between 6% and 10% of the volume weighted
average
price of our common stock and thus raise capital as required, at the time,
price
and in amounts deemed suitable to us. The issuance of shares of our common
stock
under the CEFF and upon exercise of the warrant will have a dilutive impact
on
our other stockholders and the issuance or even potential issuance of such
shares could have a negative effect on the market price of our common stock.
In
addition, if we access the CEFF, we will issue shares of our common stock
to
Kingsbridge at a discount of between 6% and 10% of the daily volume weighted
average price of our common stock during a specified period of trading days
after we access the CEFF. Issuing shares at a discount will further dilute
the
interests of other stockholders.
To
the
extent that Kingsbridge sells shares of our common stock issued under the
CEFF
to third parties, our stock price may decrease due to the additional selling
pressure in the market. The perceived risk of dilution from sales of stock
to or
by Kingsbridge may cause holders of our common stock to sell their shares,
or it
may encourage short sales of our common stock or either similar transactions.
This could contribute to a decline in the stock price of our common
stock.
We
may
not be able to meet the conditions we are required to meet under CEFF and
we may
not be able to access any portion of the remaining capital available under
the
CEFF. In addition, we are dependent upon the financial ability of Kingsbridge
to
fund the CEFF. Any failure by Kingsbridge to perform its obligations under
the
CEFF could have a material adverse effect upon us.
The
clinical trial and regulatory approval process for our products is expensive
and
time consuming, and the outcome is uncertain.
In
order
to sell Surfaxin and our other products that are under development, we must
receive regulatory approvals for each product. The FDA and comparable agencies
in foreign countries extensively and rigorously regulate the testing,
manufacture, distribution, advertising, pricing and marketing of drug products
like our products. This approval process includes preclinical studies and
clinical trials of each pharmaceutical compound to establish the safety and
effectiveness of each product and the confirmation by the FDA and comparable
agencies in foreign countries that the manufacturer of the product maintains
good laboratory and manufacturing practices during testing and manufacturing.
Although we are involved in certain late-stage clinical trials, pharmaceutical
and biotechnology companies have suffered significant setbacks in advanced
clinical trials, even after promising results in earlier clinical trials
or in
preliminary findings for such clinical trials. Further, even if favorable
testing data is generated by clinical trials of drug products, the FDA or
EMEA
may not accept or approve an NDA or MAA filed by a pharmaceutical or
biotechnology company for such drug product. On April 13, 2004, we filed
an NDA
for Surfaxin for the prevention of RDS in premature infants. The FDA accepted
the NDA filing and in February 2005 we received an Approvable Letter from
the
FDA with respect to our NDA. The Approvable Letter contains conditions that
we
must meet prior to obtaining final U.S. marketing approval for Surfaxin.
We
submitted a Response Letter to the FDA’s Approvable Letter on July 29, 2005. We
have received formal written notification from the FDA, following its review
of
our Response Letter, outlining select items that need to be further addressed
in
order for the FDA to deem the response complete. We are in the process of
addressing these items and anticipate submitting our response to the FDA
in
October 2005. Certain pre-approval activities are ongoing, including labeling
discussions, process validation and reinspection activities related to our
Surfaxin manufacturing process. The conditions that we must meet primarily
involve finalizing labeling and correcting previously reported manufacturing
issues, however, the FDA might still reject the NDA. We have also submitted
an
MAA with the EMEA for clearance to market Surfaxin for the prevention and
treatment of RDS in premature infants. The EMEA has validated the MAA indicating
that the application is complete and that the review process has begun. However,
the EMEA may not complete the review or may reject the MAA.
9
The
approval process is lengthy, expensive and uncertain. It is also possible
that
the FDA or comparable foreign regulatory authorities could interrupt, delay
or
halt any one or more of our clinical trials for any of our product candidates.
If we, or any regulatory authorities, believe that trial participants face
unacceptable health risks, any one or more of our trials could be suspended
or
terminated. We also may not reach agreement with the FDA and/or comparable
foreign agencies on the design of any one or more of the clinical studies
necessary for approval. Conditions imposed by the FDA and comparable agencies
in
foreign countries on our clinical trials could significantly increase the
time
required for completion of such clinical trials and the costs of conducting
the
clinical trials. Data obtained from clinical trials are susceptible to varying
interpretations which may delay, limit or prevent regulatory
approval.
Delays
and terminations of the clinical trials we conduct could result from
insufficient patient enrollment. Patient enrollment is a function of several
factors, including the size of the patient population, stringent enrollment
criteria, the proximity of the patients to the trial sites, having to compete
with other clinical trials for eligible patients, geographical and geopolitical
considerations and others. Delays in patient enrollment can result in greater
costs and longer trial timeframes. Patients may also suffer adverse medical
events or side effects that are common to this class of drug such as a decrease
in the oxygen level of the blood upon administration.
Clinical
trials generally take two to five years or more to complete, and, accordingly,
our first product is not expected to be commercially available in the United
States until at least the second quarter of 2006, and our other product
candidates will take longer. The FDA has notified us that two of our intended
indications for our precision-engineered surfactant-based therapy, MAS in
full-term infants and ARDS in adults, have been granted designation as
“fast-track” products under provisions of the Food and Drug Administration
Modernization Act of 1997. The FDA has also granted us Orphan Drug Designation
for three of our intended indications for Surfaxin: ARDS in adults; RDS in
infants; and MAS in full-term infants. To support our development of Surfaxin
for the treatment of MAS, the FDA has awarded us an Orphan Products Development
Grant. Fast-Track Status does not accelerate the clinical trials nor does
it
mean that the regulatory requirements are less stringent. The Fast-Track
Status
provisions are designed to expedite the FDA’s review of new drugs intended to
treat serious or life-threatening conditions. The FDA generally will review
the
New Drug Application for a drug granted Fast-Track Status within six months
instead of the typical one to three years.
The
EMEA
has granted Orphan Medicinal Product designation for three of our intended
indications for Surfaxin: RDS in premature infants, MAS in full-term infants
and
ALI in adults.
Our
products may not, however, continue to qualify for expedited review and our
other drug candidates may fail to qualify for fast track development or
expedited review. Even though some of our drug candidates have qualified
for
expedited review, the FDA may not approve them at all or any sooner than
other
drug candidates that do not qualify for expedited review.
The
FDA
and comparable foreign agencies could withdraw any approvals we obtain, if
any.
Further, if there is a later discovery of unknown problems or if we fail
to
comply with other applicable regulatory requirements at any stage in the
regulatory process, the FDA may restrict or delay our marketing of a product
or
force us to make product recalls. In addition, the FDA could impose other
sanctions such as fines, injunctions, civil penalties or criminal prosecutions.
To market our products outside the United States, we also need to comply
with
foreign regulatory requirements governing human clinical trials and marketing
approval for pharmaceutical products. The FDA and foreign regulators have
not
yet approved any of our products under development for marketing in the United
States or elsewhere. If the FDA and other regulators do not approve our
products, we will not be able to market our products.
10
Our
strategy, in many cases, is to enter into collaboration agreements with third
parties with respect to our products and we may require additional collaboration
agreements. If we fail to enter into these agreements or if we or the third
parties do not perform under such agreements, it could impair our ability
to
commercialize our products.
Our
strategy for the completion of the required development and clinical testing
of
our products and for the manufacturing, marketing and commercialization of
our
products, in many cases, depends upon entering into collaboration arrangements
with pharmaceutical companies to market, commercialize and distribute our
products. We have a revised collaboration arrangement with Esteve for Surfaxin
and certain other of our product candidates that is now focused on key Southern
European markets. Within these countries, Esteve will be responsible for
the
development and marketing of Surfaxin for a broader portfolio of indications,
including the prevention/treatment of RDS in premature infants, MAS in full-term
infants and ALI/ARDS in adults. Esteve will also be responsible for the
sponsorship of certain clinical trial costs related to obtaining EMEA approval
for commercialization of Surfaxin in Europe for several indications. We will
be
responsible for the remainder of the regulatory activities relating to Surfaxin,
including with respect to EMEA filings.
If
we or
Esteve breach or terminate the agreements that make up such collaboration
arrangements or Esteve otherwise fails to conduct their Surfaxin-related
activities in a timely manner or if there is a dispute about their obligations,
we may need to seek other partners or we may have to develop our own internal
sales and marketing capability for the indications of Surfaxin which Esteve.
Accordingly, we may need to enter into additional collaboration agreements
and
our success, particularly outside of the United States, may depend upon
obtaining additional collaboration partners. In addition, we may depend on
our
partners’ expertise and dedication of sufficient resources to develop and
commercialize our proposed products. We may, in the future, grant to
collaboration partners rights to license and commercialize pharmaceutical
products developed under collaboration agreements. Under these arrangements,
our
collaboration partners may control key decisions relating to the development
of
the products. The rights of our collaboration partners would limit our
flexibility in considering alternatives for the commercialization of our
products. If we fail to successfully develop these relationships or if our
collaboration partners fail to successfully develop or commercialize any
of our
products, it may delay or prevent us from developing or commercializing our
products in a competitive and timely manner and would have a material adverse
effect on the commercialization of Surfaxin. See “Risks Related to Our Business
- We currently have a limited sales and marketing team and, therefore, must
develop a sales and marketing team or enter into distribution arrangements
and
marketing alliances, which could require us to give up rights to our product
candidates. Our limited sales and marketing experience may restrict our success
in commercializing our product candidates.”
If
we cannot protect our intellectual property, other companies could use our
technology in competitive products. If we infringe the intellectual property
rights of others, other companies could prevent us from developing or marketing
our products.
We
seek
patent protection for our drug candidates so as to prevent others from
commercializing equivalent products in substantially less time and at
substantially lower expense. The pharmaceutical industry places considerable
importance on obtaining patent and trade secret protection for new technologies,
products and processes. Our success will depend in part on our ability and
that
of parties from whom we license technology to:
—defend
our patents and otherwise prevent others from infringing on our proprietary
rights;
—protect
trade secrets; and
—operate
without infringing upon the proprietary rights of others, both in the United
States and in other countries.
The
patent position of firms relying upon biotechnology is highly uncertain and
involves complex legal and factual questions for which important legal
principles are unresolved. To date, the United States Patent and Trademark
Office has not adopted a consistent policy regarding the breadth of claims
that
the United States Patent and Trademark Office allows in biotechnology patents
or
the degree of protection that these types of patents afford. As a result,
there
are risks that we may not develop or obtain rights to products or processes
that
are or may seem to be patentable.
11
Even
if we obtain patents to protect our products, those patents may not be
sufficiently broad and others could compete with us.
We,
and
the parties licensing technologies to us, have filed various United States
and
foreign patent applications with respect to the products and technologies
under
our development, and the United States Patent and Trademark Office and foreign
patent offices have issued patents with respect to our products and
technologies. These patent applications include international applications
filed
under the Patent Cooperation Treaty. Our pending patent applications, those
we
may file in the future or those we may license from third parties may not
result
in the United States Patent and Trademark Office or foreign patent office
issuing patents. Also, if patent rights covering our products are not
sufficiently broad, they may not provide us with sufficient proprietary
protection or competitive advantages against competitors with similar products
and technologies. Furthermore, if the United States Patent and Trademark
Office
or foreign patent offices issue patents to us or our licensors, others may
challenge the patents or circumvent the patents, or the patent office or
the
courts may invalidate the patents. Thus, any patents we own or license from
or
to third parties may not provide any protection against
competitors.
Furthermore,
the life of our patents is limited. We have licensed a series of patents
from
Johnson & Johnson and its wholly owned subsidiary, Ortho Pharmaceutical
Corporation, which are important, either individually or collectively, to
our
strategy of commercializing our surfactant technology. Such patents, which
include relevant European patents, expire on various dates beginning in 2009
and
ending in 2017 or, in some cases, possibly later. We have filed, and when
possible and appropriate, will file, other patent applications with respect
to
our products and processes in the United States and in foreign countries.
We may
not be able to develop additional products or processes that will be patentable
or additional patents may not be issued to us. See also “Risks Related to Our
Business - If we cannot meet requirements under our license agreements, we
could
lose the rights to our products.”
Intellectual
property rights of third parties could limit our ability to market our
products.
Our
commercial success also significantly depends on our ability to operate without
infringing the patents or violating the proprietary rights of others. The
United
States Patent and Trademark Office keeps United States patent applications
confidential while the applications are pending. As a result, we cannot
determine which inventions third parties claim in pending patent applications
that they have filed. We may need to engage in litigation to defend or enforce
our patent and license rights or to determine the scope and validity of the
proprietary rights of others. It will be expensive and time consuming to
defend
and enforce patent claims. Thus, even in those instances in which the outcome
is
favorable to us, the proceedings can result in the diversion of substantial
resources from our other activities. An adverse determination may subject
us to
significant liabilities or require us to seek licenses that third parties
may
not grant to us or may only grant at rates that diminish or deplete the
profitability of the products to us. An adverse determination could also
require
us to alter our products or processes or cease altogether any related research
and development activities or product sales.
If
we cannot meet requirements under our license agreements, we could lose the
rights to our products.
We
depend
on licensing agreements with third parties to maintain the intellectual property
rights to our products under development. Presently, we have licensed rights
from Johnson & Johnson and Ortho Pharmaceutical. These agreements require us
to make payments and satisfy performance obligations in order to maintain
our
rights under these licensing agreements. All of these agreements last either
throughout the life of the patents, or with respect to other licensed
technology, for a number of years after the first commercial sale of the
relevant product.
In
addition, we are responsible for the cost of filing and prosecuting certain
patent applications and maintaining certain issued patents licensed to us.
If we
do not meet our obligations under our license agreements in a timely manner,
we
could lose the rights to our proprietary technology.
Finally,
we may be required to obtain licenses to patents or other proprietary rights
of
third parties in connection with the development and use of our products
and
technologies. Licenses required under any such patents or proprietary rights
might not be made available on terms acceptable to us, if at all.
12
We
rely on confidentiality agreements that could be breached and may be difficult
to enforce.
Although
we believe that we take reasonable steps to protect our intellectual property,
including the use of agreements relating to the non-disclosure of confidential
information to third parties, as well as agreements that purport to require
the
disclosure and assignment to us of the rights to the ideas, developments,
discoveries and inventions of our employees and consultants while we employ
them, the agreements can be difficult and costly to enforce. Although we
seek to
obtain these types of agreements from our consultants, advisors and research
collaborators, to the extent that they apply or independently develop
intellectual property in connection with any of our projects, disputes may
arise
as to the proprietary rights to this type of information. If a dispute arises,
a
court may determine that the right belongs to a third party, and enforcement
of
our rights can be costly and unpredictable. In addition, we will rely on
trade
secrets and proprietary know-how that we will seek to protect in part by
confidentiality agreements with our employees, consultants, advisors or others.
Despite the protective measures we employ, we still face the risk
that:
—they
will breach these agreements;
—any
agreements we obtain will not provide adequate remedies for the applicable
type
of breach or that our trade secrets or proprietary know-how will otherwise
become known or competitors will independently develop similar technology;
and
—our
competitors will independently discover our proprietary information and trade
secrets.
We
currently have a limited sales and marketing team and, therefore, must develop
a
sales and marketing team or enter into distribution arrangements and marketing
alliances, which could require us to give up rights to our product candidates.
Our limited sales and marketing experience may restrict our success in
commercializing our product candidates.
If
we
successfully develop and obtain regulatory approval for Surfaxin and the
other
product candidates that we are currently developing, we may: (1) market and
sell
them through our sales force, (2) license some of them to large pharmaceutical
companies and/or (3) market and sell them through other arrangements, including
co-promotion arrangements.
We
currently have a limited sales and marketing team and we plan to further
develop
our marketing and sales team as we expect to rely primarily on such team
to
market Surfaxin in the United States, if Surfaxin is approved by the FDA.
Recruiting, training and retaining qualified sales personnel is therefore
critical to our success. Competition for skilled personnel is intense, and
we
may be unable to attract and retain a sufficient number of qualified individuals
to successfully launch Surfaxin. Additionally, we may not be able to provide
adequate incentive to our sales force. Accordingly, we may be unable to
establish marketing, sales and distribution capabilities necessary to
commercialize and gain market acceptance for Surfaxin or our other product
candidates.
Developing
a marketing and sales team to market and sell products is a difficult,
significantly expensive and time-consuming process. We have no prior experience
developing a marketing and sales team and may be unsuccessful in our attempt
to
do so. If we are unable to develop an internal sales and marketing operation,
we
may not be able to increase market awareness and sell our products.
Establishing
the expertise necessary to successfully market and sell Surfaxin, or any
other
product, will require a substantial capital investment. We expect to incur
significant expenses in developing our marketing and sales team. Our ability
to
make that investment and also execute our current operating plan is dependent
on
numerous factors, including, the performance of third party collaborators
with
whom we may contract. Accordingly, we may not have sufficient funds to
successfully commercialize Surfaxin or any other potential product in the
United
States or elsewhere.
We
may
also need to enter into additional co-promotion arrangements with third parties
where our own sales force is neither well situated nor large enough to achieve
maximum penetration in the market. We may not be successful in entering into
any
co-promotion arrangements, and the terms of any co-promotion arrangements
may
not be favorable to us. In addition, if we enter into co-promotion arrangements
or market and sell additional products directly, we may need to further expand
our sales force and incur additional costs.
13
We
may
also rely on third-party distributors to distribute our products or enter
into
marketing alliances to sell our products. We may not be successful in entering
into distribution arrangements and marketing alliances with third parties.
Our
failure to successfully develop a marketing and sales team or to enter into
these arrangements on favorable terms could delay or impair our ability to
commercialize our product candidates and could increase our costs of
commercialization. Dependence on distribution arrangements and marketing
alliances to commercialize our product candidates will subject us to a number
of
risks, including:
—we
may
be required to relinquish important rights to our products or product
candidates;
—we
may
not be able to control the amount and timing of resources that our distributors
or collaborators may devote to the commercialization of our product candidates;
—our
distributors or collaborators may experience financial difficulties;
—our
distributors or collaborators may not devote sufficient time to the marketing
and sales of our products thereby exposing us to potential expenses in
terminating such distribution agreements; and
—business
combinations or significant changes in a collaborator’s business strategy may
also adversely affect a collaborator’s willingness or ability to complete its
obligations under any arrangement.
If
we
fail to establish marketing and sales capabilities or fail to enter into
arrangements with third parties in a timely manner or if they fail to perform,
it could adversely affect sales of our products. We and any of our third-party
collaborators must also market our products in compliance with federal, state
and local laws relating to the providing of incentives and inducements.
Violation of these laws can result in substantial penalties. If we are unable
to
successfully motivate and expand our marketing and sales force and further
develop our sales and marketing capabilities, or if our distributors fail
to
promote our products, we will have difficulty maintaining and increasing
the
sales of our products.
We
may be unable to either establish marketing and sales capabilities or enter
into
corporate collaborations necessary to successfully commercialize Surfaxin
or our
other potential products.
We
have
limited experience in marketing or selling pharmaceutical products and have
limited marketing and sales resources. To achieve commercial success for
Surfaxin, or any other approved product, we must either rely upon our limited
marketing and sales force and related infrastructure, or enter into arrangements
with others to market and sell our products. We intend to promote Surfaxin
in
the United States through our own dedicated marketing and sales team.
Recruiting, training and retaining qualified sales personnel is therefore
critical to our success. Competition for skilled personnel is intense, and
we
may not be able to attract and retain a sufficient number of qualified
individuals to successfully launch Surfaxin. Accordingly, we may be unable
to
establish marketing, sales and distribution capabilities necessary to
commercialize and gain market acceptance for Surfaxin.
In
addition, establishing the expertise necessary to successfully market and
sell
Surfaxin, or any other product, will require a substantial capital investment.
Our ability to make that investment and also execute our current operating
plan
is dependent on numerous factors, including, as described above, partnering
of
clinical programs at opportune times and continued prudent fiscal management.
Accordingly, we may not have the funds to successfully commercialize Surfaxin
or
any other potential product in the United States or elsewhere.
Moreover,
Surfaxin competes, and our product candidates in development are likely to
compete, with products of other companies that currently have extensive and
well-funded marketing and sales operations. Because these companies are capable
of devoting significantly greater resources to their marketing and sales
efforts, our marketing and sales efforts may not compete successfully against
the efforts of these other companies.
We
have
also announced our intention to market and sell Surfaxin outside of the United
States through one or more marketing partners upon receipt of approval abroad.
Although our agreement with Esteve provides for collaborative efforts in
directing a global commercialization effort, we have somewhat limited influence
over the decisions made by Esteve or their sublicensees or the resources
they
devote to the marketing and distribution of Surfaxin products in their licensed
territory, and Esteve or their sublicensees may not meet their obligations
in
this regard. Our marketing and distribution arrangement with Esteve may not
be
successful, and we may not receive any revenues from it. Also, we may not
be
able to enter into marketing and sales agreements on acceptable terms, if
at
all, for Surfaxin in territories not covered by the Esteve agreement, or
for any
of our other product candidates.
14
We
depend upon key employees and consultants in a competitive market for skilled
personnel. If we are unable to attract and retain key personnel, it could
adversely affect our ability to develop and market our
products.
We
are
highly dependent upon the principal members of our management team, especially
our Chief Executive Officer, Dr. Capetola, and our directors, as well as
our
scientific advisory board members, consultants and collaborating scientists.
Many of these people have been involved in our formation or have otherwise
been
involved with us for many years, have played integral roles in our progress
and
we believe that they will continue to provide value to us. A loss of any
of
these personnel may have a material adverse effect on aspects of our business
and clinical development and regulatory programs. Currently, we have employment
agreements with seven officers expiring in December 2005. However, commencing
on
January 1, 2006, and on each January 1st thereafter, the term of these
agreements shall automatically be extended for one additional year, unless
at
least 90 days prior to such January 1st date, either we or the officer shall
have given notice that such party does not wish to extend the agreement.
Although these employment agreements generally provide for severance payments
that are contingent upon the applicable employee’s refraining from competition
with us, the loss of any of these persons’ services would adversely affect our
ability to develop and market our products and obtain necessary regulatory
approvals, and the applicable noncompete provisions can be difficult and
costly
to monitor and enforce. Further, we do not maintain key-man life insurance.
Our
future success also will depend in part on the continued service of our key
scientific and management personnel and our ability to identify, hire and
retain
additional personnel, including marketing and sales staff. We experience
intense
competition for qualified personnel, and the existence of non-competition
agreements between prospective employees and their former employers may prevent
us from hiring those individuals or subject us to suit from their former
employers.
While
we
attempt to provide competitive compensation packages to attract and retain
key
personnel, some of our competitors are likely to have greater resources and
more
experience than we have, making it difficult for us to compete successfully
for
key personnel.
Our
industry is highly competitive and we have less capital and resources than
many
of our competitors, which may give them an advantage in developing and marketing
products similar to ours or make our products obsolete.
Our
industry is highly competitive and subject to rapid technological innovation
and
evolving industry standards. We compete with numerous existing companies
intensely in many ways. We intend to market our products under development
for
the treatment of diseases for which other technologies and treatments are
rapidly developing and, consequently, we expect new companies to enter our
industry and that competition in the industry will increase. Many of these
companies have substantially greater research and development, manufacturing,
marketing, financial, technological, personnel and managerial resources than
we
have. In addition, many of these competitors, either alone or with their
collaborative partners, have significantly greater experience than we do
in:
—developing
products;
—undertaking
preclinical testing and human clinical trials;
—obtaining
FDA and other regulatory approvals or products; and
—manufacturing
and marketing products.
Accordingly,
our competitors may succeed in obtaining patent protection, receiving FDA
or
comparable foreign approval or commercializing products before us. If we
commence commercial product sales, we will compete against companies with
greater marketing and manufacturing capabilities who may successfully develop
and commercialize products that are more effective or less expensive than
ours.
These are areas in which, as yet, we have limited or no experience. In addition,
developments by our competitors may render our product candidates obsolete
or
noncompetitive.
Presently,
there are no approved drugs that are specifically indicated for the prevention
and treatment of MAS in full-term infants or ALI/ARDS in adults. Current
therapy
consists of general supportive care and mechanical ventilation.
15
Four
products, three that are animal-derived and one that is a synthetic, are
specifically approved for the prevention of RDS in premature infants.
Exosurf®
is
synthetic and is marketed by GlaxoSmithKline, plc, outside the United States
and
contains only phospholipids (the fats normally present in the lungs) and
synthetic organic detergents and no stabilizing protein or peptides. This
product, however, does not contain any surfactant proteins, is not widely
used
and its active marketing recently has been discontinued by its manufacturer.
Curosurf®
is a
porcine lung extract that is marketed in Europe by Chiesi Farmaceutici S.p.A.,
and in the United States by Dey Laboratories, Inc. Survanta®,
marketed by the Ross division of Abbott Laboratories, Inc., is an extract
of
bovine lung that contains the cow version of surfactant protein C. Forest
Laboratories, Inc., markets its calf lung surfactant, Infasurf®
in the
United States for the prevention of RDS in premature infants. Although none
of
the four approved surfactants for RDS in premature infants is approved for
ALI
or ARDS in adults, which are significantly larger markets, there are a
significant number of other potential therapies in development for these
indications that are not surfactant-related. Any of these various drugs or
devices could significantly impact the commercial opportunity for Surfaxin.
We
believe that engineered precision-engineered surfactants such as Surfaxin
will
be far less expensive to produce than the animal-derived products approved
for
the prevention of RDS in premature infants and will have no capability of
transmitting the brain-wasting bovine spongiform encephalopathy (commonly
called
“mad-cow disease”) or causing adverse immunological responses in young and older
adults.
We
also
face, and will continue to face, competition from colleges, universities,
governmental agencies and other public and private research organizations.
These
competitors are becoming more active in seeking patent protection and licensing
arrangements to collect royalties for use of technology that they have
developed. Some of these technologies may compete directly with the technologies
that we are developing. These institutions will also compete with us in
recruiting highly qualified scientific personnel. We expect that therapeutic
developments in the areas in which we are active may occur at a rapid rate
and
that competition will intensify as advances in this field are made. As a
result,
we need to continue to devote substantial resources and efforts to research
and
development activities.
If
product liability claims are brought against us, it may result in reduced
demand
for our products or damages that exceed our insurance
coverage.
The
clinical testing of, marketing and use of our products exposes us to product
liability claims in the event that the use or misuse of those products causes
injury, disease or results in adverse effects. Use of our products in clinical
trials, as well as commercial sale, could result in product liability claims.
In
addition, sales of our products through third party arrangements could also
subject us to product liability claims. We presently carry product liability
insurance with coverages of up to $10.0 million per occurrence and $10.0
million
in the aggregate, an amount we consider reasonable and customary relating
to our
clinical trials of Surfaxin. However, this insurance coverage includes various
deductibles, limitations and exclusions from coverage, and in any event might
not fully cover any potential claims. We may need to obtain additional product
liability insurance coverage prior to initiating other clinical trials. We
expect to obtain product liability insurance coverage before commercialization
of our proposed products; however, the insurance is expensive and insurance
companies may not issue this type of insurance when we need it. We may not
be
able to obtain adequate insurance in the future at an acceptable cost. Any
product liability claim, even one that was not in excess of our insurance
coverage or one that is meritless and/or unsuccessful, could adversely affect
our cash available for other purposes, such as research and development.
In
addition, the existence of a product liability claim could affect the market
price of our common stock.
We
expect to face uncertainty over reimbursement and healthcare
reform.
In
both
the United States and other countries, sales of our products will depend
in part
upon the availability of reimbursement from third party payors, which include
government health administration authorities, managed care providers and
private
health insurers. Third party payors are increasingly challenging the price
and
examining the cost effectiveness of medical products and services.
16
Directors,
executive officers, principal stockholders and affiliated entities own a
significant percentage of our capital stock, and they may make decisions
that
you do not consider to be in your best interest.
As
of
June 30, 2005, our directors, executive officers, principal stockholders
and
affiliated entities beneficially owned, in the aggregate, approximately 14%
of
our outstanding voting securities. As a result, if some or all of them acted
together, they would have the ability to exert substantial influence over
the
election of our Board of Directors and the outcome of issues requiring approval
by our stockholders. This concentration of ownership may have the effect
of
delaying or preventing a change in control of our company that may be favored
by
other stockholders. This could prevent transactions in which stockholders
might
otherwise recover a premium for their shares over current market
prices.
The
market price of our stock may be adversely affected by market
volatility.
The
market price of our common stock, like that of many other development stage
pharmaceutical or biotechnology companies, has been and is likely to be
volatile. In addition to general economic, political and market conditions,
the
price and trading volume of our stock could fluctuate widely in response
to many
factors, including:
—announcements
of the results of clinical trials by us or our competitors;
—adverse
reactions to products;
—governmental
approvals, delays in expected governmental approvals or withdrawals of any
prior
governmental approvals or public or regulatory agency concerns regarding
the
safety or effectiveness of our products;
—changes
in the United States or foreign regulatory policy during the period of product
development;
—developments
in patent or other proprietary rights, including any third party challenges
of
our intellectual property rights;
—announcements
of technological innovations by us or our competitors;
—announcements
of new products or new contracts by us or our competitors;
—actual
or anticipated variations in our operating results due to the level of
development expenses and other factors;
—changes
in financial estimates by securities analysts and whether our earnings meet
or
exceed the estimates;
—conditions
and trends in the pharmaceutical and other industries;
—new
accounting standards; and
—the
occurrence of any of the risks described in “Management’s Discussion and
Analysis of Financial Condition and Results of Operations - Risks Related
to Our
Business.”
Our
common stock is listed for quotation on the NASDAQ National Market. Year
to date
through September 23, 2005, the price of our common stock has ranged from
$9.15
to $5.05. We expect the price of our common stock to remain volatile. The
average daily trading volume in our common stock varies significantly. Year
to
date through September 23, 2005, the average daily trading volume in our
common
stock was approximately 593,000 shares and the average number of transactions
per day was approximately 1,800. Our relatively low average volume and low
average number of transactions per day may affect the ability of our
stockholders to sell their shares in the public market at prevailing prices
and
a more active market may never develop.
In
addition, we may not be able to continue to adhere to the strict listing
criteria of the National Market. If the common stock were no longer listed
on
the National Market, investors might only be able to trade on the Nasdaq
SmallCap Market, in the over-the-counter market in the Pink Sheets®
(a
quotation medium operated by the National Quotation Bureau, LLC) or on the
OTC
Bulletin Board®
of the
National Association of Securities Dealers, Inc. This would impair the liquidity
of our securities not only in the number of shares that could be bought and
sold
at a given price, which might be depressed by the relative illiquidity, but
also
through delays in the timing of transactions and reduction in media
coverage.
In
the
past, following periods of volatility in the market price of the securities
of
companies in our industry, securities class action litigation has often been
instituted against companies in our industry. If we face securities litigation
in the future, even if meritless or unsuccessful, it would result in substantial
costs and a diversion of management attention and resources, which would
negatively impact our business.
17
A
substantial number of our securities are eligible for future sale and this
could
affect the market price for our stock and our ability to raise
capital.
The
market price of our common stock could drop due to sales of a large number
of
shares of our common stock or the perception that these sales could occur.
As of
August
31, 2005,
we had
53,776,796 shares of common stock issued and outstanding. In addition, as
of
August 31, 2005, up to 10,632,177 shares of our common stock were issuable
upon
exercise of outstanding options and warrants. In December 2003, we filed
a shelf
registration statement on Form S-3 with the Commission for the proposed offering
from time to time of up to 6,500,000 shares of common stock. In connection
with
our December 2003 shelf registration statement, we registered an additional
1,468,592 shares of common stock in February 2005. Under these shelf
registration statements, 708,952 shares of our common stock currently remain
available for us to sell in registered transactions. We have no immediate
plans
to sell any securities under the shelf registration. However, we may issue
securities from time to time in response to market conditions or other
circumstances on terms and conditions that will be determined at such time.
Additionally,
shares of common stock remain reserved for issuance pursuant to the terms
and
conditions of the CEFF with Kingsbridge.
Holders
of our stock options and warrants are likely to exercise them, if ever, at
a
time when we otherwise could obtain a price for the sale of our securities
that
is higher than the exercise price per security of the options or warrants.
This
exercise, or the possibility of this exercise, may impede our efforts to
obtain
additional financing through the sale of additional securities or make this
financing more costly, and may reduce the price of our common
stock.
Provisions
of our Restated Certificate of Incorporation, Shareholders Rights Agreement
and
Delaware law could defer a change of our management which could discourage
or
delay offers to acquire us.
Provisions
of our Restated Certificate of Incorporation, as amended (our “Certificate of
Incorporation”), our Shareholders Rights Agreement and Delaware law may make it
more difficult for someone to acquire control of us or for our stockholders
to
remove existing management, and might discourage a third party from offering
to
acquire us, even if a change in control or in management would be beneficial
to
our stockholders. For example, our Certificate of Incorporation allows us
to
issue shares of preferred stock without any vote or further action by our
stockholders. Our Board of Directors has the authority to fix and determine
the
relative rights and preferences of preferred stock. Our Board of Directors
also
has the authority to issue preferred stock without further stockholder approval.
As a result, our Board of Directors could authorize the issuance of a series
of
preferred stock that would grant to holders the preferred right to our assets
upon liquidation, the right to receive dividend payments before dividends
are
distributed to the holders of common stock and the right to the redemption
of
the shares, together with a premium, prior to the redemption of our common
stock. In addition, our Board of Directors, without further stockholder
approval, could issue large blocks of preferred stock. We have adopted a
shareholders rights agreement which under certain circumstances would
significantly impair the ability of third parties to acquire control of us
without prior approval of our Board of Directors thereby discouraging
unsolicited takeover proposals. The rights issued under the shareholders
rights
agreement would cause substantial dilution to a person or group that attempts
to
acquire us on terms not approved in advance by our Board of
Directors.
FORWARD-LOOKING
STATEMENTS
The
statements set forth under the captions “Company Summary” and elsewhere in this
prospectus, including in “Risk Factors,” and those incorporated by reference
herein, which are not historical, including, without limitation, statements
concerning our research and development programs and clinical trials, the
possibility, timing and outcome of submissions of regulatory filings for
our
products under development, the seeking of collaboration arrangements with
pharmaceutical companies or others to develop, manufacture and market products,
the research and development of particular compounds and technologies and
the
period of time for which our existing resources will enable us to fund our
operations, constitute “Forward Looking Statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We intend that all forward-looking statements be subject
to the safe-harbor provisions of the Private Securities Litigation Reform
Act of
1995. These forward-looking statements are only predictions and reflect our
views as of the date they are made with respect to future events and financial
performance. Forward-looking statements are subject to many risks and
uncertainties which could cause our actual results to differ materially from
any
future results expressed or implied by the forward-looking statements.
18
Examples
of the risks and uncertainties include, but are not limited to: risk that
financial conditions may change; risks relating to the progress of our research
and development (including the results of clinical trials being conducted
by us
and the risk that our lead product candidate, Surfaxin®,
or
other drug candidates will not prove to be safe or useful for the treatment
of
certain indications); the risk that we will not be able to raise additional
capital or enter into additional collaboration agreements (including strategic
alliances for our aerosol and Surfactant Replacement Therapies); risk that
we
will not be able to develop a successful sales and marketing organization
in a
timely manner, if at all; risk that our internal sales and marketing
organization will not succeed in developing market awareness of our products;
risk that our internal sales and marketing organization will not be able
to
attract or maintain qualified personnel; delays in the FDA’s or other health
regulatory authorities’ approval or potential rejection of any applications we
file, including the New Drug Application (NDA) we filed in April 2004 and
the
Marketing Approval Application (MAA) we submitted in October 2004; risks
that
any such regulatory authority will not approve the marketing and sale of
a drug
product even after acceptance of an application we file for any such drug
product; risks relating to the ability of our third party contract manufacturers
to provide us with adequate supplies of drug substance and drug products
for
completion of any of our clinical studies or commercialization; risks relating
to the lack of adequate supplies of drug substance and drug product for
completion of any of our clinical studies, and risks relating to the development
of competing therapies and/or technologies by other companies; and the other
risks and uncertainties detailed under the heading “Risk Factors” and in the
documents incorporated by reference in this report. Companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks
in advanced clinical trials, even after obtaining promising earlier trial
results. Data obtained from tests are susceptible to varying interpretations,
which may delay, limit or prevent regulatory approval.
Except
to
the extent required by applicable laws, rules and regulations, we do not
undertake any obligation or duty to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
19
USE
OF PROCEEDS
Except
as
described in any prospectus supplement or post-effective amendment, we will
retain broad discretion over the use of the net proceeds from the sale of
our
securities offered hereby and the net proceeds from the sales of securities
offered by this prospectus will be used to meet working capital requirements
for: (i) the development of manufacturing capabilities for the production
of our
precision-engineered surfactant drug products to meet anticipated clinical
and
commercial needs, if approved, in the United States, Europe and other markets;
(ii) building our own specialty pulmonary United States commercial organization
to focus initially on opportunities in the neonatal intensive care unit (NICU),
including commercialization activities associated with the potential launch
of
Surfaxin in 2006; (iii) the advancement of our SRT product candidates in
clinical trials, including our aerosol formulations to address various
respiratory diseases; (iv) business development and commercialization activities
associated with securing partnerships for the development and potential
commercialization of SRT in Europe and the rest of the world; and (v) general
corporate purposes. We expect, from time to time, to evaluate the acquisition
of
businesses, products and technologies for which a portion of the net proceeds
may be used.
The
amounts and timing of the expenditures may vary significantly depending on
numerous factors, such as the progress of our research and development efforts,
technological advances and the competitive environment for Surfaxin and its
intended uses. Pending the application of the net proceeds, we expect to
invest
the proceeds in short-term, interest-bearing instruments or other
investment-grade securities.
RATIO
OF EARNINGS TO FIXED CHARGES
Our
earnings were insufficient to cover fixed charges in each of the years in
the
five-year period ended December 31, 2004 and in the three-month period ended
June 30, 2005. Our fixed charges do not include any dividend requirements
with
respect to preferred stock because, as of the date of this prospectus and
for
the five preceding fiscal years, we have had no preferred stock
outstanding.
We
compute the ratio of earnings to fixed charges by dividing (i) earnings (loss),
which consists of net income from continuing operations before income taxes
plus
fixed charges and amortization of capitalized interest less interest capitalized
during the period and adjusted for undistributed earnings in equity investments,
by (ii) fixed charges, which consist of interest expense, capitalized interest
and the interest portion of rental expense under operating leases estimated
to
be representative of the interest factor.
|
|
|
Fiscal
year Ended December 31,
|
|
|
Three Months
Ended
June
30,
2005
|
|
||||||||||||||||||
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
||||||||
|
|
|
(in
thousands)
|
|
|||||||||||||||||||||
|
Ratio
of earnings to fixed charges
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage
deficiency
|
|
$
|
(10,861)
|
|
$
|
(11,146)
|
|
$
|
(17,443)
|
|
$
|
(24,280)
|
|
$
|
(46,203)
|
|
$
|
(19,142)
|
|
|||||
|
(1)
|
Adjusted
earnings, as described above, were insufficient to cover fixed
charges in
each period. We have not included a ratio of earnings to combined
fixed
charges and preferred stock dividends because we do not have any
preferred
stock outstanding.
|
20
DESCRIPTION
OF DEBT SECURITIES
The
following description, together with the additional information we include
in
any applicable prospectus supplements, summarizes the material terms and
provisions of the debt securities that we may offer under this prospectus.
While
the terms we have summarized below will apply generally to any future debt
securities we may offer under this prospectus, we will describe the particular
terms of any debt securities that we may offer in more detail in the applicable
prospectus supplement. The terms of any debt securities we offer under a
prospectus supplement may differ from the terms we describe below. However,
no
prospectus supplement shall fundamentally change the terms that are set forth
in
this prospectus or offer a security that is not registered and described
in this
prospectus at the time of its effectiveness. As of June 30, 2005, we have
$11.2
million in outstanding indebtedness including accrued interest.
We
will
issue the senior debt securities under the senior indenture that we will
enter
into with the trustee named in the senior indenture. We will issue the
subordinated debt securities under the subordinated indenture that we will
enter
into with the trustee named in the subordinated indenture. We have filed
forms
of these documents as exhibits to the registration statement which includes
this
prospectus. We use the term “indentures” in this prospectus to refer to both the
senior indenture and the subordinated indenture.
The
indentures will be qualified under the Trust Indenture Act of 1939. We use
the
term “trustee” to refer to either the senior trustee or the subordinated
trustee, as applicable.
The
following summaries of material provisions of the senior debt securities,
the
subordinated debt securities and the indentures are subject to, and qualified
in
their entirety by reference to, all the provisions of the indenture applicable
to a particular series of debt securities. Except as we may otherwise indicate,
the terms of the senior indenture and the subordinated indenture are
identical.
General
Debt
securities may be issued in separate series without limitation as to aggregate
principal amount. We may specify a maximum aggregate principal amount for
the
debt securities of any series.
We
are
not limited as to the amount of debt securities we may issue under the
indentures. The prospectus supplement will set forth:
| · |
whether
the debt securities will be senior or subordinated;
|
| · |
the
offering price;
|
| · |
the
title;
|
| · |
any
limit on the aggregate principal amount;
|
| · |
the
person who shall be entitled to receive interest, if other than
the record
holder on the record date;
|
| · |
the
date the principal will be payable;
|
| · |
the
interest rate, if any, the date interest will accrue, the interest
payment
dates and the regular record dates;
|
| · |
the
place where payments may be made;
|
| · |
any
mandatory or optional redemption provisions;
|
| · |
if
applicable, the method for determining how the principal, premium,
if any,
or interest will be calculated by reference to an index or formula;
|
| · |
if
other than U.S. currency, the currency or currency units in which
principal, premium, if any, or interest will be payable and whether
we or
the holder may elect payment to be made in a different
currency;
|
| · |
the
portion of the principal amount that will be payable upon acceleration
of
stated maturity, if other than the entire principal amount;
|
| · |
if
the principal amount payable at stated maturity will not be determinable
as of any date prior to stated maturity, the amount which will
be deemed
to be the principal amount;
|
| · |
any
defeasance provisions if different from those described below under
“Satisfaction and Discharge;
Defeasance;”
|
| · |
any
conversion or exchange provisions;
|
| · |
any
obligation to redeem or purchase the debt securities pursuant to
a sinking
fund;
|
| · |
whether
the debt securities will be issuable in the form of a global security;
|
| · |
any
subordination provisions, if different from those described below
under
“Subordinated Debt Securities;”
|
| · |
any
deletions of, or changes or additions to, the events of default
or
covenants; and
|
| · |
any
other specific terms of such debt
securities.
|
21
Unless
otherwise specified in the prospectus supplement:
| · |
the
debt securities will be registered debt securities; and
|
| · |
registered
debt securities denominated in U.S. dollars will be issued in
denominations of $1,000 or an integral multiple of $1,000.
|
Debt
securities may be sold at a substantial discount below their stated principal
amount, bearing no interest or interest at a rate which at the time of issuance
is below market rates.
Exchange
and Transfer
Debt
securities may be transferred or exchanged at the office of the security
registrar or at the office of any transfer agent designated by us.
We
will
not impose a service charge for any transfer or exchange, but we may require
holders to pay any tax or other governmental charges associated with any
transfer or exchange.
In
the
event of any potential redemption of debt securities of any series, we will
not
be required to:
| · |
issue,
register the transfer of, or exchange, any debt security of that
series
during a period beginning at the opening of business 15 days before
the
day of mailing of a notice of redemption and ending at the close
of
business on the day of the mailing; or
|
| · |
register
the transfer of or exchange any debt security of that series selected
for
redemption, in whole or in part, except the unredeemed portion
being
redeemed in part.
|
We
may
initially appoint the trustee as the security registrar. Any transfer agent,
in
addition to the security registrar, initially designated by us will be named
in
the prospectus supplement. We may designate additional transfer agents or
change
transfer agents or change the office of the transfer agent. However, we will
be
required to maintain a transfer agent in each place of payment for the debt
securities of each series.
Global
Securities
The
debt
securities of any series may be represented, in whole or in part, by one
or more
global securities. Each global security will:
| · |
be
registered in the name of a depositary that we will identify in
a
prospectus supplement;
|
| · |
be
deposited with the depositary or nominee or custodian; and
|
| · |
bear
any required legends.
|
No
global
security may be exchanged in whole or in part for debt securities registered
in
the name of any person other than the depositary or any nominee unless:
| · |
the
depositary has notified us that it is unwilling or unable to continue
as
depositary or has ceased to be qualified to act as depositary;
|
| · |
an
event of default is continuing; or
|
| · |
any
other circumstances described in a prospectus supplement.
|
As
long
as the depositary, or its nominee, is the registered owner of a global security,
the depositary or nominee will be considered the sole owner and holder of
the
debt securities represented by the global security for all purposes under
the
indenture. Except in the above limited circumstances, owners of beneficial
interests in a global security:
22
| · |
will
not be entitled to have the debt securities registered in their
names,
|
| · |
will
not be entitled to physical delivery of certificated debt securities,
and
|
| · |
will
not be considered to be holders of those debt securities under
the
indentures.
|
Payments
on a global security will be made to the depositary or its nominee as the
holder
of the global security. Some jurisdictions have laws that require that certain
purchasers of securities take physical delivery of such securities in definitive
form. These laws may impair the ability to transfer beneficial interests
in a
global security.
Institutions
that have accounts with the depositary or its nominee are referred to as
“participants.” Ownership of beneficial interests in a global security will be
limited to participants and to persons that may hold beneficial interests
through participants. The depositary will credit, on its book-entry registration
and transfer system, the respective principal amounts of debt securities
represented by the global security to the accounts of its participants.
Ownership
of beneficial interests in a global security will be shown on and effected
through records maintained by the depositary, with respect to participants’
interests, or any participant, with respect to interests of persons held
by
participants on their behalf.
Payments,
transfers and exchanges relating to beneficial interests in a global security
will be subject to policies and procedures of the depositary.
The
depositary policies and procedures may change from time to time. Neither
we nor
the trustee will have any responsibility or liability for the depositary’s or
any participant’s records with respect to beneficial interests in a global
security.
Payment
and Paying Agent
The
provisions of this paragraph will apply to debt securities unless otherwise
indicated in the prospectus supplement. Payment of interest on a debt security
on any interest payment date will be made to the person in whose name the
debt
security is registered at the close of business on the regular record date.
Payment on debt securities of a particular series will be payable at the
office
of a paying agent or paying agents designated by us. However, at our option,
we
may pay interest by mailing a check to the record holder. The corporate trust
office will be designated as our sole paying agent.
We
may
also name any other paying agents in the prospectus supplement. We may designate
additional paying agents, change paying agents or change the office of any
paying agent. However, we will be required to maintain a paying agent in
each
place of payment for the debt securities of a particular series.
All
moneys paid by us to a paying agent for payment on any debt security which
remain unclaimed at the end of two years after such payment was due will
be
repaid to us. Thereafter, the holder may look only to us for such
payment.
Consolidation,
Merger and Sale of Assets
We
may
not consolidate with or merge into any other person, in a transaction in
which
we are not the surviving corporation, or convey, transfer or lease our
properties and assets substantially as an entirety to, any person, unless:
| · |
the
successor, if any, is a U.S. corporation, limited liability company,
partnership, trust or other entity;
|
| · |
the
successor assumes our obligations on the debt securities and under
the
indenture;
|
| · |
immediately
after giving effect to the transaction, no default or event of
default
shall have occurred and be continuing; and
|
| · |
certain
other conditions are met.
|
If
the
debt securities are convertible for our other securities or securities of
other
entities, the person with whom we consolidate or merge or to whom we sell
all of
our property must make provisions for the conversion of the debt securities
into
securities which the holders of the debt securities would have received if
they
had converted the debt securities before the consolidation, merger or
sale.
23
Events
of Default
Unless
we
inform you otherwise in the prospectus supplement, the indenture will define
an
event of default with respect to any series of debt securities as one or
more of
the following events:
(1)
failure to pay principal of or any premium on any debt security of that series
when due;
(2)
failure to pay any interest on any debt security of that series for 90 days
when
due;
(3)
failure to deposit any sinking fund payment when due;
(4)
failure to perform any other covenant in the indenture continued for 90 days
after being given the notice required in the indenture;
(5)
our
bankruptcy, insolvency or reorganization; and
(6)
any
other event of default specified in the prospectus supplement.
An
event
of default of one series of debt securities is not necessarily an event of
default for any other series of debt securities.
If
an
event of default, other than an event of default described in clause (5)
above,
shall occur and be continuing, either the trustee or the holders of at least
25%
in aggregate principal amount of the outstanding securities of that series
may
declare the principal amount of the debt securities of that series to be
due and
payable immediately.
If
an
event of default described in clause (5) above shall occur, the principal
amount
of all the debt securities of that series will automatically become immediately
due and payable. Any payment by us on the subordinated debt securities following
any such acceleration will be subject to the subordination provisions described
below under “Subordinated Debt Securities.”
After
acceleration the holders of a majority in aggregate principal amount of the
outstanding securities of that series may, under certain circumstances, rescind
and annul such acceleration if all events of default, other than the non-payment
of accelerated principal, or other specified amount, have been cured or waived.
Other
than the duty to act with the required care during an event of default, the
trustee will not be obligated to exercise any of its rights or powers at
the
request of the holders unless the holders shall have offered to the trustee
reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series will have
the
right to direct the time, method and place of conducting any proceeding for
any
remedy available to the trustee or exercising any trust or power conferred
on
the trustee.
A
holder
will not have any right to institute any proceeding under the indentures,
or for
the appointment of a receiver or a trustee, or for any other remedy under
the
indentures, unless:
(1)
the
holder has previously given to the trustee written notice of a continuing
event
of default with respect to the debt securities of that series;
(2)
the
holders of at least 25% in aggregate principal amount of the outstanding
debt
securities of that series have made a written request and have offered
reasonable indemnity to the trustee to institute the proceeding; and
(3)
the
trustee has failed to institute the proceeding and has not received direction
inconsistent with the original request from the holders of a majority in
aggregate principal amount of the outstanding debt securities of that series
within 90 days after the original request.
24
Holders
may, however, sue to enforce the payment of principal, premium or interest
on
any debt security on or after the due date or to enforce the right, if any,
to
convert any debt security without following the procedures listed in (1)
through
(3) above.
We
will
furnish the trustee an annual statement by our officers as to whether or
not we
are in default in the performance of the indenture and, if so, specifying
all
known defaults.
Modification
and Waiver
We
and
the trustee may make modifications and amendments to the indentures with
the
consent of the holders of a majority in aggregate principal amount of the
outstanding securities of each series affected by the modification or amendment.
However,
neither we nor the trustee may make any modification or amendment without
the
consent of the holder of each outstanding security of that series affected
by
the modification or amendment if such modification or amendment would:
| · |
change
the stated maturity of any debt security;
|
| · |
reduce
the principal, premium, if any, or interest on any debt security;
|
| · |
reduce
the principal of an original issue discount security or any other
debt
security payable on acceleration of maturity;
|
| · |
reduce
the rate of interest on any debt security;
|
| · |
change
the currency in which any debt security is payable;
|
| · |
impair
the right to enforce any payment after the stated maturity or redemption
date;
|
| · |
waive
any default or event of default in payment of the principal of,
premium or
interest on any debt security;
|
| · |
waive
a redemption payment or modify any of the redemption provisions
of any
debt security;
|
| · |
adversely
affect the right to convert any debt security in any material respect;
or
|
| · |
change
the provisions in the indenture that relate to modifying or amending
the
indenture.
|
Satisfaction
and Discharge; Defeasance
We
may be
discharged from our obligations on the debt securities of any series that
have
matured or will mature or be redeemed within one year if we deposit with
the
trustee enough cash to pay all the principal, interest and any premium due
to
the stated maturity date or redemption date of the debt securities.
Each
indenture will contain a provision that permits us to elect:
| · |
to
be discharged from all of our obligations, subject to limited exceptions,
with respect to any series of debt securities then outstanding;
and/or
|
| · |
to
be released from our obligations under the following covenants
and from
the consequences of an event of default resulting from a breach
of these
covenants: (1) the subordination provisions under a subordinated
indenture; and (2) covenants as to payment of taxes and maintenance
of
corporate existence.
|
To
make
either of the above elections, we must deposit in trust with the trustee
enough
money to pay in full the principal, interest and premium on the debt securities.
This amount may be made in cash and/or U.S. government obligations. As a
condition to either of the above elections, we must deliver to the trustee
an
opinion of counsel that the holders of the debt securities will not recognize
income, gain or loss for Federal income tax purposes as a result of the action.
If
any of
the above events occurs, the holders of the debt securities of the series
will
not be entitled to the benefits of the indenture, except for the rights of
holders to receive payments on debt securities or the registration of transfer
and exchange of debt securities and replacement of lost, stolen or mutilated
debt securities.
25
Notices
Notices
to holders will be given by mail to the addresses of the holders in the security
register.
Governing
Law
The
indentures and the debt securities will be governed by, and construed under,
the
law of the State of New York.
Regarding
the Trustee
The
indentures will limit the right of the trustee, should it become a creditor
of
us, to obtain payment of claims or secure its claims.
The
trustee will be permitted to engage in certain other transactions. However,
if
the trustee, acquires any conflicting interest, and there is a default under
the
debt securities of any series for which they are trustee, the trustee must
eliminate the conflict or resign.
Subordinated
Debt Securities
Payment
on subordinated debt securities will, to the extent provided in the indenture,
be subordinated in right of payment to the prior payment in full of all of
our
senior indebtedness. Subordinated debt securities also are effectively
subordinated to all debt and other liabilities, including trade payables
and
lease obligations, if any, of our subsidiaries.
Upon
any
distribution of our assets upon any dissolution, winding up, liquidation
or
reorganization, the payment of the principal of and interest on subordinated
debt securities will be subordinated in right of payment to the prior payment
in
full in cash or other payment satisfactory to the holders of senior indebtedness
of all senior indebtedness. In the event of any acceleration of the subordinated
debt securities because of an event of default, the holders of any senior
indebtedness would be entitled to payment in full in cash or other payment
satisfactory to such holders of all senior indebtedness obligations before
the
holders of subordinated debt securities are entitled to receive any payment
or
distribution. The indentures will require us or the trustee to promptly notify
holders of designated senior indebtedness if payment of subordinated debt
securities is accelerated because of an event of default.
We
may
not make any payment on subordinated debt securities, including upon redemption
at the option of the holder of any subordinated debt securities or at our
option, if:
| · |
a
default in the payment of the principal, premium, if any, interest,
rent
or other obligations in respect of designated senior indebtedness
occurs
and is continuing beyond any applicable period of grace, which
is called a
“payment default”; or
|
| · |
a
default other than a payment default on any designated senior indebtedness
occurs and is continuing that permits holders of designated senior
indebtedness to accelerate its maturity, and the trustee receives
notice
of such default, which is called a “payment blockage notice from us or any
other person permitted to give such notice under the indenture,
which is
called a “non-payment default”.
|
We
may
resume payments and distributions on subordinated debt securities:
| · |
in
the case of a payment default, upon the date on which such default
is
cured or waived or ceases to exist; and
|
| · |
in
the case of a non-payment default, the earlier of the date on which
such
nonpayment default is cured or waived or ceases to exist and 179
days
after the date on which the payment blockage notice is received
by the
trustee, if the maturity of the designated senior indebtedness
has not
been accelerated.
|
No
new
period of payment blockage may be commenced pursuant to a payment blockage
notice unless 365 days have elapsed since the initial effectiveness of the
immediately prior payment blockage notice and all scheduled payments of
principal, premium and interest, including any liquidated damages, on the
notes
that have come due have been paid in full in cash. No non-payment default
that
existed or was continuing on the date of delivery of any payment blockage
notice
shall be the basis for any later payment blockage notice unless the non-payment
default is based upon facts or events arising after the date of delivery
of such
payment blockage notice.
26
If
the
trustee or any holder of the notes receives any payment or distribution of
our
assets in contravention of the subordination provisions on subordinated debt
securities before all senior indebtedness is paid in full in cash, property
or
securities, including by way of set-off, or other payment satisfactory to
holders of senior indebtedness, then such payment or distribution will be
held
in trust for the benefit of holders of senior indebtedness or their
representatives to the extent necessary to make payment in full in cash or
payment satisfactory to the holders of senior indebtedness of all unpaid
senior
indebtedness.
In
the
event of our bankruptcy, dissolution or reorganization, holders of senior
indebtedness may receive more, ratably, and holders of subordinated debt
securities may receive less, ratably, than our other creditors (including
our
trade creditors). This subordination will not prevent the occurrence of any
event of default under the indenture.
As
of
June 30, 2005, $11.2 million in senior indebtedness was outstanding. Unless
we
inform you otherwise in the prospectus supplement, we will not be prohibited
from incurring debt, including senior indebtedness, under any indenture relating
to subordinated debt securities. We may from time to time incur additional
debt,
including senior indebtedness.
We
are
obligated to pay reasonable compensation to the trustee and to indemnify
the
trustee against certain losses, liabilities or expenses incurred by the trustee
in connection with its duties relating to subordinated debt securities. The
trustee’s claims for these payments will generally be senior to those of
noteholders in respect of all funds collected or held by the trustee.
Certain
Definitions
“indebtedness”
means:
(1)
all
indebtedness, obligations and other liabilities for borrowed money, including
overdrafts, foreign exchange contracts, currency exchange agreements, interest
rate protection agreements, and any loans or advances from banks, or evidenced
by bonds, debentures, notes or similar instruments, other than any account
payable or other accrued current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of materials
or
services;
(2)
all
reimbursement obligations and other liabilities with respect to letters of
credit, bank guarantees or bankers’ acceptances;
(3)
all
obligations and liabilities in respect of leases required in conformity with
generally accepted accounting principles to be accounted for as capitalized
lease obligations on our balance sheet;
(4)
all
obligations and liabilities, contingent or otherwise, as lessee under leases
for
facility equipment (and related assets leased together with such equipment)
and
under any lease or related document (including a purchase agreement, conditional
sale or other title retention or synthetic lease agreement) in connection
with
the lease of real property or improvement thereon (or any personal property
included as part of any such lease) which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property or pay an agreed upon residual value of the leased property,
including the obligations under such lease or related document to purchase
or
cause a third party to purchase such leased property (whether or not such
lease
transaction is characterized as an operating lease or a capitalized lease
in
accordance with GAAP) or pay an agreed upon residual value of the leased
property to the lessor;
(5)
all
obligations with respect to an interest rate or other swap, cap or collar
agreement or other similar instrument or agreement or foreign currency hedge,
exchange, purchase agreement or other similar instrument or agreement;
(6)
all
direct or indirect guaranties or similar agreements in respect of, and our
obligations or liabilities to purchase, acquire or otherwise assure a creditor
against loss in respect of, indebtedness, obligations or liabilities of others
of the type described in (1) through (5) above;
27
(7)
any
indebtedness or other obligations described in (1) through (6) above secured
by
any mortgage, pledge, lien or other encumbrance existing on property which
is
owned or held by us; and
(8)
any
and all refinancings, replacements, deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (1) through (7)
above.
“senior
indebtedness” means the principal, premium, if any, interest, including any
interest accruing after bankruptcy, and rent or termination payment on or
other
amounts due on our current or future indebtedness, whether created, incurred,
assumed, guaranteed or in effect guaranteed by us, including any deferrals,
renewals, extensions, refundings, amendments, modifications or supplements
to
the above. However, senior indebtedness does not include:
| · |
indebtedness
that expressly provides that it shall not be senior in right of
payment to
subordinated debt securities or expressly provides that it is on
the same
basis or junior to subordinated debt securities;
|
| · |
our
indebtedness to any of our majority-owned subsidiaries; and
|
| · |
subordinated
debt securities.
|
DESCRIPTION
OF PREFERRED STOCK
We
currently have authorized 5,000,000 shares of preferred stock, par value
$.001
per share. As of June 30, 2005, we do not have any shares of preferred stock
outstanding. Under our Certificate of Incorporation, our Board of Directors
is
authorized to issue shares of our preferred stock from time to time, in one
or
more classes or series, without stockholder approval. Prior to the issuance
of
shares of each series, the Board of Directors is required by the General
Corporation Law of the State of Delaware and our Certificate of Incorporation
to
adopt resolutions and file a Certificate of Designation with the Secretary
of
State of the State of Delaware, fixing for each such series the designations,
powers, preferences, rights, qualifications, limitations and restrictions
of the
shares of such series. Any exercise of our Board of Directors of its rights
to
do so may affect the rights and entitlements of the holders of our common
stock
as set forth below.
Our
Board
of Directors could authorize the issuance of shares of preferred stock with
terms and conditions which could have the effect of discouraging a takeover
or
other transaction which holders of some, or a majority, of such shares might
believe to be in their best interests or in which holders of some, or a
majority, of such shares might receive a premium for their shares over the
then-market price of such shares.
General
Subject
to limitations prescribed by the General Corporation Law of the State of
Delaware, our Certificate of Incorporation and our Amended and Restated By-Laws
(“By-Laws”), our Board of Directors is authorized to fix the number of shares
constituting each series of preferred stock and the designations, powers,
preferences, rights, qualifications, limitations and restrictions of the
shares
of such series, including such provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets, conversion
or
exchange, and such other subjects or matters as may be fixed by resolution
of
the Board of Directors. Each series of preferred stock that we offer under
this
prospectus will, when issued, be fully paid and nonassessable and will not
have,
or be subject to, any preemptive or similar rights.
28
The
applicable prospectus supplement(s) will describe the following terms of
the
series of preferred stock in respect of which this prospectus is being
delivered:
| · |
the
title and stated value of the preferred stock;
|
| · |
the
number of shares of the preferred stock offered, the liquidation
preference per share and the purchase price of the preferred stock;
|
| · |
the
dividend rate(s), period(s) and/or payment date(s) or the method(s)
of
calculation for dividends;
|
| · |
whether
dividends shall be cumulative or non-cumulative and, if cumulative,
the
date from which dividends on the preferred stock shall accumulate;
|
| · |
the
procedures for any auction and remarketing, if any, for the preferred
stock;
|
| · |
the
provisions for a sinking fund, if any, for the preferred stock;
|
| · |
the
provisions for redemption, if applicable, of the preferred stock;
|
| · |
any
listing of the preferred stock on any securities exchange or market;
|
| · |
the
terms and conditions, if applicable, upon which the preferred stock
will
be convertible into common stock or another series of our preferred
stock,
including the conversion price (or its manner of calculation) and
conversion period;
|
| · |
the
terms and conditions, if applicable, upon which preferred stock
will be
exchangeable into our debt securities, including the exchange price,
or
its manner of calculation, and exchange period;
|
| · |
voting
rights, if any, of the preferred stock; a discussion of any material
and/or special United States federal income tax considerations
applicable
to the preferred stock;
|
| · |
whether
interests in the preferred stock will be represented by depositary
shares;
|
| · |
the
relative ranking and preferences of the preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of
our
affairs;
|
| · |
any
limitations on issuance of any series of preferred stock ranking
senior to
or on a parity with the preferred stock as to dividend rights and
rights
upon liquidation, dissolution or winding up of our affairs; and
|
| · |
any
other specific terms, preferences, rights, limitations or restrictions
on
the preferred stock.
|
Unless
otherwise specified in the prospectus supplement, the preferred stock will,
with
respect to dividend rights and rights upon liquidation, dissolution or winding
up of Discovery rank:
| · |
senior
to all classes or series of our common stock, and to all equity
securities
issued by us the terms of which specifically provide that such
equity
securities rank junior to the preferred stock with respect to dividend
rights or rights upon the liquidation, dissolution or winding up
of us;
|
| · |
on
a parity with all equity securities issued by us that do not rank
senior
or junior to the preferred stock with respect to dividend rights
or rights
upon the liquidation, dissolution or winding up of us; and
|
| · |
junior
to all equity securities issued by us the terms of which do not
specifically provide that such equity securities rank on a parity
with or
junior to the preferred stock with respect to dividend rights or
rights
upon the liquidation, dissolution or winding up of us (including
any
entity with which we may be merged or consolidated or to which
all or
substantially all of our assets may be transferred or which transfers
all
or substantially all of our assets).
|
As
used
for these purposes, the term “equity securities” does not include convertible
debt securities.
Transfer
Agent and Registrar
The
transfer agent and registrar for any series of preferred stock will be set
forth
in the applicable prospectus supplement.
DESCRIPTION
OF COMMON STOCK
General
This
prospectus summarizes the general terms of our common stock. For a more detailed
description of the common stock, you should read the applicable provisions
of
Delaware law and our Certificate of Incorporation and By-Laws.
29
We
currently have authorized 180,000,000 shares of common stock, par value $0.001
per share. As of September 30, 2005, there were 56,791,243 shares of common
stock outstanding, which does not include:
| · |
8,201,573
shares of common stock issuable upon exercise of options outstanding,
at a
weighted average exercise price of $6.26 per share;
|
| · |
2,463,770
shares of common stock issuable upon exercise of warrants outstanding,
at
a weighted average exercise price of $7.67;
|
| · |
11,086,203
shares of common stock available for future issuance under our
shelf
registration statement on Form S-3 (No. 333-118595) dated August
26, 2004,
which was filed in connection with the CEFF;
|
| · |
708,592
shares of common stock available for future issuance under our
shelf
registration statement on Form S-3MEF (No. 333-122887) dated February
17,
2005;
|
| · |
1,914,270
shares of common stock available for future grant under our Amended
and
Restated 1998 Employee Stock Option Plan; and
|
| · |
88,231
shares of common stock available for future issuance under our
401(k)
Plan.
|
Common
Stock
This
description of our common stock is a summary. You should keep in mind, however,
that it is our Certificate of Incorporation and our By-Laws, and not this
summary, which defines any rights you may acquire as a stockholder. There
may be
other provisions in such documents which are also important to you. You should
read such documents for a full description of the terms of our capital
stock.
Subject
to any preferential rights of any preferred stock created by our Board of
Directors, as a holder of our common stock you are entitled to such dividends
as
our Board of Directors may declare from time to time out of funds that we
can
legally use to pay dividends. The holders of common stock possess exclusive
voting rights, except to the extent our Board of Directors specifies voting
power for any preferred stock that, in the future, may be issued.
As
a
holder of our common stock, you are entitled to one vote for each share of
common stock and do not have any right to cumulate votes in the election
of
directors. In the event of our liquidation, dissolution or winding-up, you
will
be entitled to receive on a proportionate basis any assets remaining after
provision for payment of creditors and after payment of any liquidation
preferences to holders of preferred stock. Holders of our common stock have
no
preemptive rights and no conversion rights or other subscription rights.
There
are no redemption or sinking fund provisions applicable to our common stock.
All
the outstanding shares of common stock are, and the shares offered by this
prospectus, when issued and paid for, will be, validly issued, fully paid
and
nonassessable. Our common stock is quoted on Nasdaq under the symbol “DSCO”.
Stockholder
Rights Plan
The
summary description of the Rights set out herein does not purport to be
complete, and is qualified in its entirety by reference to the terms and
provision of our Shareholder Rights Agreement, dated as of February 6,
2005.
On
February 6, 2004, our Board of Directors adopted a shareholder rights agreement.
Pursuant to the rights agreement our Board of Directors (i) declared that
each
stockholder of record as of the close of business on February 6, 2004, would
be
issued a dividend of one preferred stock purchase right (a “Right”) for each
share of our common stock held by such stockholder and (ii) determined that
each
share of common stock issued by us after such date through the Final Expiration
Date (as defined below) shall be issued with a tandem Right. Each Right
represents the right to purchase one ten-thousandth of a share of our Series
A
Junior Participating Cumulative Preferred Stock (“Series A Preferred”) at an
exercise price equal to $50 per Right (as the same may be adjusted, the
“Exercise Price”). The Rights shall be evidenced by certificates for our common
stock until the earlier to occur of:
| · |
10
days following a public announcement that a person or group of
affiliated
or associated persons (with certain exceptions, an “Acquiring Person”)
have acquired beneficial ownership of 15% or more of the outstanding
shares of our common stock; and
|
| · |
10
business days (or such later date as may be determined by action
of the
Board of Directors prior to such time as any person or group of
affiliated
persons becomes an Acquiring Person) following the commencement
of, or
announcement of an intention to make, a tender offer or exchange
offer the
consummation of which would result in the beneficial ownership
by a person
or group of 15% or more of the outstanding shares of Common Stock
(the
earlier of such dates being called the “Distribution
Date”).
|
30
The
Rights are not exercisable until the Distribution Date. Until a Right is
exercised, the holder thereof, as such, will have no rights as a Discovery
stockholder, including, without limitation, the right to vote or to receive
dividends.
The
Rights will expire upon the close of business on February 6, 2014 (the “Final
Expiration Date”), unless the Rights are earlier redeemed or exchanged by us, in
each case as described below.
The
shares of Series A Preferred purchasable upon exercise of the Rights will
be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of 10,000 times the per share amount of dividends declared on our
common
stock. If no common stock dividend is declared in a quarter, a preferred
stock
quarterly dividend of $1.00 per share will be required. In the event of
liquidation, holders of Series A Preferred will be entitled to a preferential
distribution payment of at least 10,000 times the payment made per share
of
common stock. Each share of Series A Preferred will entitle the holder to
10,000
votes, voting together with our common stock. In the event of any merger,
consolidation or other transaction in which shares of our common stock are
converted or exchanged, the holders of Series A Preferred will be entitled
to
receive 10,000 times the amount of consideration received per share of our
common stock in respect of such transaction. The Rights are protected by
customary anti-dilution provisions.
Because
of the nature of the Series A Preferred’s dividend and liquidation rights, the
fair market value of the one ten-thousandth of a share of Series A Preferred
purchasable upon exercise of each Right should approximate the fair market
value
of one share of our common stock. If any person or group of affiliated or
associated persons becomes an Acquiring Person, each holder of a Right, (other
than Rights beneficially owned by the Acquiring Person, which become void),
will
have the right to receive upon exercise and payment of the then current Exercise
Price, that number of shares of our common stock having a market value of
two
times the Exercise Price.
If,
after
a person or group has become an Acquiring Person, we are acquired in a merger
or
other business combination transaction, or 50% or more of our consolidated
assets or earning power are sold, proper provision will be made so that each
holder of a Right (other than Rights beneficially owned by an Acquiring Person,
which become void) will thereafter have the right to receive, upon exercise
at
the then current Exercise Price, that number of shares of common stock of
the
person with whom we engaged in the foregoing transaction (or its parent),
which
at the time of such transaction will have a market value of two times the
Exercise Price. In lieu of exercise, our Board of Directors may exchange
the
Rights (other than Rights owned by an Acquiring Person, which become void),
in
whole or in part, for such securities or other property or rights as the
Board
may determine, including any class or series of our common stock or preferred
stock.
At
any
time prior to the time an Acquiring Person becomes such, our Board of Directors
may redeem the Rights in whole, but not in part, at a price of $.001 per
Right,
subject to adjustment.
We
may
amend the Rights to the extent and on the conditions set out in the Rights
Agreement.
Anti-Takeover
Provisions
As
a
corporation organized under the laws of the State of Delaware, we are subject
to
Section 203 of the General Corporation Law of the State of Delaware, which
restricts our ability to enter into business combinations with an interested
stockholder or a stockholder owning 15% or more of our outstanding voting
stock,
or that stockholder’s affiliates or associates, for a period of three years.
These restrictions do not apply if:
—prior
to
becoming an interested stockholder, our Board of Directors approves either
the
business combination or the transaction in which the stockholder becomes
an
interested stockholder;
—upon
consummation of the transaction in which the stockholder becomes an interested
stockholder, the interested stockholder owns at least 85% of our voting stock
outstanding at the time the transaction commenced, subject to exceptions;
or
—on
or
after the date a stockholder becomes an interested stockholder, the business
combination is both approved by our Board of Directors and authorized at
an
annual or special meeting of our stockholders by the affirmative vote of
at
least two-thirds of the outstanding voting stock not owned by the interested
stockholder.
Number
of Directors; Removal
Our
By-Laws provide that our Board of Directors shall consist of at least three
directors and may consist of such larger number as may be determined, from
time-to-time, by the Board of Directors. Our By-laws provide that directors
may
be removed with or without cause by the affirmative vote of holders of a
majority of the total voting power of all outstanding securities.
This
provision and the Board of Directors’ right to issue shares of our preferred
stock from time to time, in one or more classes or series without stockholder
approval are intended to enhance the likelihood of continuity and stability
in
the composition of the policies formulated by our Board of Directors. These
provisions are also intended to discourage some tactics that may be used
in
proxy fights.
Transfer
Agent and Registrar
The
Transfer Agent and Registrar for our common stock is Continental Stock Transfer
& Trust Company.
31
PLAN
OF DISTRIBUTION
We
may
sell the securities being offered by us in this prospectus pursuant to
underwritten public offerings, negotiated transactions, block trades or any
combination of such methods. We may sell the securities to or through
underwriters, dealers, agents or directly to one or more purchasers. We and
our
agents reserve the right to accept and to reject in whole or in part any
proposed purchase of securities. A prospectus supplement or post-effective
amendment, which we will file each time we effect an offering of any securities,
will provide the names of any underwriters, dealers or agents, if any, involved
in the sale of such securities, and any applicable fees, commissions, or
discounts to which such persons shall be entitled to in connection with such
offering.
We
and
our agents, dealers and underwriters, as applicable, may sell the securities
being offered by us in this prospectus from time to time in one or more
transactions as follows:
—at
a
fixed price or prices, which may be changed;
—at
market prices prevailing at the time of sale;
—at
prices related to such prevailing market prices; or
—at
negotiated prices.
We
may
determine the price or other terms of the securities offered under this
prospectus by use of an electronic auction. We will describe how any auction
will determine the price or any other terms, how potential investors may
participate in the auction and the nature of the underwriters’ obligations in
the applicable prospectus supplement or amendment.
We
may
solicit directly offers to purchase securities. We may also designate agents
from time to time to solicit offers to purchase securities. Any agent that
we
designate, who may be deemed to be an underwriter as that term is defined
in the
Securities Act, may then resell such securities to the public at varying
prices
to be determined by such agent at the time of resale. We may engage in at
the
market offerings of our common stock. An at the market offering is an offering
of our common stock at other than a fixed price to or through a market maker.
Under Rule 415(a)(4) promulgated under the Securities Act, the total
value
of at the market offerings made under this prospectus may not exceed 10%
of the
aggregate market value of our common stock held by non-affiliates. We shall
name
any underwriter that we engage for an at the market offering in a post-effective
amendment to the registration statement containing this prospectus. We shall
also describe any additional details of our arrangement with such underwriter,
including commissions or fees paid, or discounts offered, by us and whether
such
underwriter is acting as principal or agent, in the related prospectus
supplement. If we use underwriters to sell securities, we will enter into
an
underwriting agreement with the underwriters at the time of the sale to them,
which agreement shall be filed as an exhibit to the related prospectus
supplement. Underwriters may also receive commissions from purchasers of
the
securities.
32
Underwriters
may also use dealers to sell securities. In such an event, the dealers may
receive compensation in the form of discounts, concessions or commissions
from
the underwriters and/or commissions from the purchasers for whom they may
act as
agents.
Underwriters,
dealers, agents and other persons may be entitled, under agreements that
may be
entered into with us, to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act or to contribution
with respect to payments which they may be required to make in respect of
such
liabilities. Underwriters and agents may engage in transactions with, or
perform
services for, us in the ordinary course of business. If so indicated in the
applicable prospectus supplement,
we may authorize underwriters, dealers or other persons to solicit offers
by
certain institutions to purchase the securities offered by us under this
prospectus pursuant to contracts providing for payment and delivery on a
future
date or dates. The obligations of any purchaser under these contracts will
be
subject only to those conditions described in the applicable prospectus
supplement, and the prospectus supplement will set forth the price to be
paid
for securities pursuant to those contracts and the commissions payable for
solicitation of the contracts.
Any
underwriter may engage in over-allotment, stabilizing and syndicate short
covering transactions and penalty bids in accordance with Regulation M of
the
Exchange Act. Over-allotment involves sales in excess of the offering size,
which create a short position. Stabilizing transactions involve bids to purchase
the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate short covering transactions involve purchases
of
securities in the open market after the distribution has been completed in
order
to cover syndicate short positions. Penalty bids permit the underwriters
to
reclaim selling concessions from dealers when the securities originally sold
by
such dealers are purchased in covering transactions to cover syndicate short
positions. These transactions may cause the price of the securities sold
in an
offering to be higher than it would otherwise be. These transactions, if
commenced, may be discontinued by the underwriters at any time.
Our
common stock is quoted on the Nasdaq National Market under the symbol “DSCO.”
The other securities are not listed on any securities exchange or other stock
market and, unless we state otherwise in the applicable prospectus supplement,
we do not intend to apply for listing of the other securities on any securities
exchange or other stock market. Any underwriters to whom we sell securities
for
public offering and sale may make a market in the securities that they purchase,
but the underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. Accordingly, we give you no assurance
as to the development or liquidity of any trading market for the securities.
The
anticipated date of delivery of the securities offered hereby will be set
forth
in the applicable prospectus supplement relating to each offering.
In
order
to comply with certain state securities laws, if applicable, the securities
may
be sold in such jurisdictions only through registered or licensed brokers
or
dealers. In certain states, the securities may not be sold unless the securities
have been registered or qualified for sale in such state or an exemption
from
regulation or qualification is available and is complied with. Sales of
securities must also be made by us in compliance with all other applicable
state
securities laws and regulations.
We
shall
pay all expenses of the registration of the securities.
33
EXPERTS
Our
consolidated financial statements and management’s assessment of the
effectiveness of our internal control over financial reporting, appearing
in our
Annual Report on Form 10-K for the year ended December 31, 2004, have been
audited by Ernst & Young LLP, our independent registered public accounting
firm, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given on the authority
of such
firms as experts in accounting and auditing.
LEGAL
MATTERS
If
and
when offered, the validity of the securities being registered hereunder will
be
passed upon for us by Dickstein Shapiro Morin & Oshinsky LLP.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
Attorneys
of Dickstein Shapiro Morin & Oshinsky LLP beneficially own shares of common
stock, the aggregate value of which exceeds $50,000.
WHERE
YOU CAN FIND MORE INFORMATION
We
file
annual, quarterly and periodic reports, proxy statements and other information
with the SEC. You may read and copy any materials that we file with the SEC
at
the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room
by
calling the SEC at 1-800-SEC-0330. Many of our SEC filings are also available
to
the public from the SEC’s Website at “http://www.sec.gov.” We make available
free of charge our annual, quarterly and current reports, proxy statements
and
other information upon request. To request such materials, please send an
e-mail
to ir@DiscoveryLabs.com or contact John G. Cooper, our Executive Vice President,
Chief Financial Officer, at our address as set forth above.
We
maintain a Website at “http://www.DiscoveryLabs.com” (this is not a hyperlink,
you must visit this website through an Internet browser). Our Website and
the
information contained therein or connected thereto are not incorporated into
this Registration Statement.
We
have
filed with the SEC a registration statement (which contains this prospectus)
on
Form S-3 under the Securities Act relating to the securities we are offering
by
this prospectus. This prospectus does not contain all of the information
set
forth in the registration statement and the exhibits and schedules to the
registration statement. Please refer to the registration statement and its
exhibits and schedules for further information with respect to us and our
securities. Statements contained in this prospectus as to the contents of
any
contract or other document are not necessarily complete and, in each instance,
we refer you to the copy of that contract or document filed as an exhibit
to the
registration statement. You may read and obtain a copy of the registration
statement and its exhibits and schedules from the SEC, as described in the
preceding paragraph.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC
allows us to “incorporate by reference” the information we file with them, which
means that we can disclose important information to you by referring you
to
those documents. The information incorporated by reference is considered
to be
part of this prospectus, and information that we file later with the SEC
will
automatically update and supersede this information. We incorporate by reference
the documents filed with SEC listed below:
|
1.
|
Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2004,
filed on March 16, 2005;
|
|
2.
|
Our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31,
2005 and June 30, 2005;
|
|
3.
|
Our
Current Reports on Form 8-K filed with the SEC on February 2, February
14,
February 18, February 22, March 17, April 28, August 1, August
3, August
15, August 19, and September 9,
2005;
|
|
4.
|
The
description of our common stock contained in our Registration Statement
on
Form 8-A filed with the SEC on July 13, 1995;
and
|
|
5.
|
All
documents we have filed with the SEC pursuant to Sections 13(a),
13(c), 14
or 15(d) of the Exchange Act after the date of this initial registration
statement and prior to the effectiveness of the registration statement,
as
well as subsequent to the date of this prospectus and prior to
the
termination of this offering, shall be deemed to be incorporated
by
reference into this prospectus and to be a part of this prospectus
from
the date of the filing of the
documents.
|
34
You
may
request a copy of these filings, at no cost, by sending an e-mail to
ir@DiscoveryLabs.com and requesting any one or more of such filings or by
contacting John G. Cooper, our Executive Vice President, Chief Financial
Officer, at the following address or telephone number: Discovery Laboratories,
Inc., 2600 Kelly Road, Suite 100, Warrington, Pennsylvania 18976, Attention:
John G. Cooper; (215) 488-9300. Exhibits to the documents will not be sent,
unless those exhibits have specifically been incorporated by reference in
this
prospectus.
All
reports and other documents subsequently filed by us with the SEC pursuant
to
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
after
the date of this prospectus and prior to the termination of the offering
shall
be deemed to be incorporated by reference in this prospectus and to be a
part of
this prospectus from the date of filing of such reports and documents. This
prospectus also incorporates by reference any documents that we file with
the
SEC after the date of the initial registration statement and prior to the
effectiveness of the registration statement. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein shall
be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated
by
reference in this prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
35
$100,000,000
Discovery
Laboratories, Inc.
Debt
Securities, Preferred Stock and Common Stock
No
dealer, salesperson or other person is authorized to provide you with
information or to represent anything not contained in this prospectus. You
must
not rely on any unauthorized information or representations. We are offering
to
sell, and seeking offers to buy, only the securities of Discovery Laboratories,
Inc. covered by this prospectus, and only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date, regardless of the time of delivery
of
this prospectus or of any sale of the shares.
___________,
2005
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth all expenses, other than the underwriting discounts
and commissions, payable by the registrant in connection with the sale of
the
securities being registered. All of such fees expenses, except for the
registration fee, are estimates:
|
|
Amount
|
|
|
Securities
and Exchange Commission registration fee
|
$11,770
|
|
|
Nasdaq
National Market Listing Fee
|
$45,000
|
|
|
Accounting
fees and expenses
|
$100,000
|
|
|
Legal
fees and expenses
|
$200,000
|
|
|
Miscellaneous
fees and expenses
|
$43,230
|
|
|
Total
|
$400,000
|
|
We
shall
bear all expenses in connection with the issuance and distribution of the
securities being offered hereby.
Item
15. Indemnification of Directors and Officers
Article
Eighth of our Certificate of Incorporation limits the liability of directors
to
the maximum extent permitted by Delaware law. Delaware law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except for liability for
(i)
any breach of their duty of loyalty to the corporation or its stockholders,
(ii)
acts or omissions not in good faith or that involve intentional misconduct
or a
knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock
repurchases or redemptions as provided in Section 174 of the General Corporation
Law of the State of Delaware or (iv) any transaction from which the director
derives an improper personal benefit.
Our
By-Laws provide that we shall indemnify our directors and officers, the
directors and officers of any of our subsidiaries and any other individuals
acting as directors or officers of any other corporation at our request,
to the
fullest extent permitted by law.
We
have
entered into indemnification agreements with certain of our executive officers
containing provisions that may require us, among other things, to indemnify
them
against liabilities that may arise by reason of their status or service as
officers other than liabilities arising from willful misconduct of a culpable
nature and to advance certain expenses incurred as a result of any proceeding
against them as to which they could be indemnified. We have obtained limited
directors’ and officers’ liability insurance.
These
provisions in our Certificate of Incorporation and our By-Laws do not eliminate
the officers’ and directors’ fiduciary duty, and in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief
will
remain available under Delaware law. In addition, each officer and director
will
continue to be subject to liability for breach of their duty of loyalty to
us
for acts or omissions not in good faith or involving intentional misconduct,
for
knowing violations of law, for actions leading to improper personal benefit
to
the officer or director and for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. The provisions
also do not affect an officer’s or director’s responsibilities under any other
law, such as the federal securities laws or state or federal environmental
laws.
II-1
Item
16. Exhibits
|
Exhibit
No.
|
Description
|
Method
of Filing
|
|
1.1
|
Form
of Underwriting Agreement.
|
To
be filed, if necessary, by a Current Report on Form 8-K or by
amendment.
|
|
3.1
|
Restated
Certificate of Incorporation of Discovery, dated September 18,
2002.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, as filed with the SEC
on March
31, 2003.
|
|
3.2
|
Certificate
of Amendment to the Certificate of Incorporation of Discovery,
dated as of
May 28, 2004.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004, as filed with the SEC on August
9,
2004.
|
|
3.3
|
Certificate
of Amendment to the Restated Certificate of Incorporation of Discovery,
dated as of July 8, 2005.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2005, as filed with the SEC on August
5,
2005.
|
|
3.4
|
Amended
and Restated By-Laws of Discovery.
|
Incorporated
by reference to Exhibit 3.2 to Discovery’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2003, as filed with the SEC
on March
15, 2004.
|
|
4.1
|
Shareholder
Rights Agreement, dated as of February 6, 2004, by and between
Discovery
and Continental Stock Transfer & Trust Company.
|
Incorporated
by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on February 6, 2004.
|
|
4.2
|
Certificate
of Designations, Preferences and Rights of Series A Junior Participating
Cumulative Preferred Stock of Discovery, dated February 6,
2004.
|
Incorporated
by reference to Exhibit 2.2 to Discovery’s Form 8-A12G, as filed with the
SEC on February 6, 2004.
|
|
4.3
|
Form
of Senior Indenture to be entered into between Discovery and The
Bank of
New York, as trustee.
|
Filed
herewith.
|
|
4.4
|
Form
of Subordinated Indenture to be entered into between Discovery
and The
Bank of New York, as trustee.
|
Filed
herewith.
|
|
4.5
|
Form
of Senior Debt Security.
|
To
be filed, if necessary, by a Current Report on Form 8-K or by
amendment.
|
|
4.6
|
Form
of Subordinated Debt Security.
|
To
be filed, if necessary, by a Current Report on Form 8-K or by
amendment.
|
|
4.7
|
Form
of Certificate of Designations of Preferred Stock.
|
To
be filed, if necessary, by a Current Report on Form 8-K or by
amendment.
|
|
5.1
|
Opinion
of Dickstein Shapiro Morin & Oshinsky LLP, legal
counsel.
|
Filed
herewith.
|
|
12.1
|
Statement
regarding computation of ratios of earnings to fixed charges.
|
Filed
herewith.
|
|
23.1
|
Consent
of Ernst & Young LLP, independent registered public accounting
firm.
|
Filed
herewith.
|
|
23.2
|
Consent
of Dickstein Shapiro Morin & Oshinsky LLP, legal counsel (included in
its opinion filed as Exhibit 5.1 to this registration
statement).
|
Filed
herewith.
|
|
24.1
|
Powers
of Attorney (included in signature page to this registration
statement).
|
Filed
herewith.
|
|
25.1
|
Form
T-1 Statement of Eligibility of Trustee for the Senior Indenture
under the
Trust Indenture Act of 1939.
|
Filed
herewith.
|
|
25.2
|
Form
T-1 Statement of Eligibility of Trustee for the Subordinated Indenture
under the Trust Indenture Act of 1939.
|
Filed
herewith.
|
II-2
Item
17. Undertakings
(a)
The
undersigned registrant hereby undertakes:
(1) To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act
of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective
date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change
in the information set forth in the registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement;
(iii) To
include any material information with respect to the plan of distribution
not
previously disclosed in the registration statement or any material change
to
such information in the registration statement;
provided,
however,
that
paragraphs (1)(i) and (1)(ii) do not apply if the registration statement
is on
Form S-3, Form S-8, or Form F-3, and the information required to be included
in
a post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That,
for
the purpose of determining any liability under the Securities Act of 1933,
each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To
remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
II-3
(b)
The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the registrant’s
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) of the Securities Exchange Act
of
1934) that is incorporated by reference in the registration statement shall
be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be
the initial bona fide offering thereof.
(h)
Insofar as indemnification for liabilities arising under the Securities Act
of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being
registered, the registrant will, unless in the opinion of its counsel the
matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of
such issue.
(i)
The
undersigned registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(j)
The
undersigned registrant hereby undertakes to file an application for the purpose
of determining the eligibility of the trustee to act under subsection (a)
of
section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the
Act.
II-4
SIGNATURES
Pursuant
to the requirement of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this Registration Statement to be
signed
on its behalf by the undersigned, thereunto duly authorized in the City of
Warrington, Commonwealth of Pennsylvania, on the 11th day of October,
2005.
|
DISCOVERY
LABORATORIES, INC.
(Registrant)
|
||
| |
|
|
| By: | /s/ Robert J. Capetola, Ph.D. | |
|
Robert J. Capetola, Ph.D. |
||
|
President
and Chief
Executive Officer
|
||
We,
the
undersigned officers and directors of Discovery Laboratories, Inc., and each
of
us, do hereby constitute and appoint each of Robert J. Capetola, Ph.D., and
David L. Lopez, C.P.A., Esq., or any of them, each acting alone, his true
and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, to do any and all acts and things in our name, place and
stead,
in any and all capacities, in connection with this registration statement
on
Form S-3 under the Securities Act of 1933, as amended, or any registration
statement for the same offering that is to be effective upon filing under
the
Securities Act of 1933, as amended, including, without limitation, to sign
for
us or any of us in our names in the capacities indicated below any and all
amendments or supplements to this registration statement, including any and
all
stickers and post-effective amendments to the registration statement, and
to
sign any and all additional registration statements relating to the same
offering of securities as this registration statement that are filed pursuant
to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the
same,
with all exhibits thereto, and other documents in connection therewith, with
the
Securities and Exchange Commission and any applicable securities exchange
or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each
and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes or substitute, may lawfully do or cause to be
done
by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on the
dates indicated.
|
Signature
|
Name
& Title
|
Date
|
|
/s/
Robert J. Capetola
|
Robert
J. Capetola, Ph.D.
President,
Chief Executive Officer and Director
|
October
11, 2005
|
|
/s/
John G. Cooper
|
John
G. Cooper
Executive
Vice President and Chief Financial Officer
|
October
11, 2005
|
|
/s/Kathleen
A. McGowan
|
Kathleen
A. McGowan
Controller
(Principal Accounting Officer)
|
October
11, 2005
|
|
/s/
Herbert McDade
|
Herbert
McDade, Jr.
Chairman
of the Board of Directors
|
October
11, 2005
|
|
/s/
W. Thomas Amick
|
W.
Thomas Amick
Director
|
October
11, 2005
|
|
/s/
Max Link
|
Max
Link, Ph.D.
Director
|
October
11, 2005
|
|
|
Antonio
Esteve
Director
|
|
|
|
Marvin
E. Rosenthale
Director
|
Exhibit
4.3
FORM
OF
INDENTURE TO BE ENTERED INTO
DISCOVERY
LABORATORIES, INC.
and
THE
BANK
OF NEW YORK
as
Trustee
____________________________
INDENTURE
Dated
as
of ,
2005
____________________________
Senior
Debt Securities
TABLE
OF CONTENTS
|
PAGE
|
|||
|
ARTICLE
I DEFINITIONS AND INCORPORATION BY REFERENCE
|
1
|
||
|
Section
1.1
|
Definitions
|
1
|
|
|
Section
1.2
|
Other
Definitions
|
5
|
|
|
Section
1.3
|
Incorporation
by Reference of Trust Indenture Act
|
5
|
|
|
Section
1.4
|
Rules
of Construction
|
6
|
|
|
ARTICLE
II THE SECURITIES
|
6
|
||
|
Section
2.1
|
Issuable
in Series
|
6
|
|
|
Section
2.2
|
Establishment
of Terms of Series of Securities
|
6
|
|
|
Section
2.3
|
Execution
and Authentication
|
9
|
|
|
Section
2.4
|
Registrar
and Paying Agent
|
10
|
|
|
Section
2.5
|
Paying
Agent to Hold Money in Trust
|
10
|
|
|
Section
2.6
|
Securityholder
Lists
|
11
|
|
|
Section
2.7
|
Transfer
and Exchange
|
11
|
|
|
Section
2.8
|
Mutilated,
Destroyed, Lost and Stolen Securities
|
11
|
|
|
Section
2.9
|
Outstanding
Securities
|
12
|
|
|
Section
2.10
|
Treasury
Securities
|
13
|
|
|
Section
2.11
|
Temporary
Securities
|
13
|
|
|
Section
2.12
|
Cancellation
|
13
|
|
|
Section
2.13
|
Defaulted
Interest
|
13
|
|
|
Section
2.14
|
Global
Securities
|
14
|
|
|
Section
2.15
|
CUSIP
Numbers
|
15
|
|
i
|
ARTICLE
III REDEMPTION
|
16
|
||
|
Section
3.1
|
Notice
to Trustee
|
16
|
|
|
Section
3.2
|
Selection
of Securities to be Redeemed
|
16
|
|
|
Section
3.3
|
Notice
of Redemption
|
16
|
|
|
Section
3.4
|
Effect
of Notice of Redemption
|
17
|
|
|
Section
3.5
|
Deposit
of Redemption Price
|
17
|
|
|
Section
3.6
|
Securities
Redeemed in Part
|
17
|
|
|
ARTICLE
IV COVENANTS
|
17
|
||
|
Section
4.1
|
Payment
of Principal and Interest
|
17
|
|
|
Section
4.2
|
SEC
Reports
|
18
|
|
|
Section
4.3
|
Compliance
Certificate
|
18
|
|
|
Section
4.4
|
Corporate
Existence
|
18
|
|
|
Section
4.5
|
Taxes
|
18
|
|
|
ARTICLE
V SUCCESSORS
|
19
|
||
|
Section
5.1
|
When
Company May Merge, Etc
|
19
|
|
|
Section
5.2
|
Successor
Corporation Substituted
|
19
|
|
|
ARTICLE
VI DEFAULTS AND REMEDIES
|
19
|
||
|
Section
6.1
|
Events
of Default
|
19
|
|
|
Section
6.2
|
Acceleration
of Maturity; Rescission and Annulment
|
21
|
|
|
Section
6.3
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
22
|
|
|
Section
6.4
|
Trustee
May File Proofs of Claim
|
22
|
|
|
Section
6.5
|
Trustee
May Enforce Claims Without Possession of Securities
|
23
|
|
ii
|
Section
6.6
|
Application
of Money Collected
|
23
|
|
|
Section
6.7
|
Limitation
on Suits
|
24
|
|
|
Section
6.8
|
Unconditional
Right of Holders to Receive Principal and Interest
|
24
|
|
|
Section
6.9
|
Restoration
of Rights and Remedies
|
25
|
|
|
Section
6.10
|
Rights
and Remedies Cumulative
|
25
|
|
|
Section
6.11
|
Delay
or Omission Not Waiver
|
25
|
|
|
Section
6.12
|
Control
by Holders
|
25
|
|
|
Section
6.13
|
Waiver
of Past Defaults
|
26
|
|
|
Section
6.14
|
Undertaking
for Costs
|
26
|
|
|
ARTICLE
VII TRUSTEE
|
26
|
||
|
Section
7.1
|
Duties
of Trustee
|
26
|
|
|
Section
7.2
|
Rights
of Trustee
|
28
|
|
|
Section
7.3
|
Individual
Rights of Trustee
|
29
|
|
|
Section
7.4
|
Trustee’s
Disclaimer
|
29
|
|
|
Section
7.5
|
Notice
of Defaults
|
29
|
|
|
Section
7.6
|
Reports
by Trustee to Holders
|
30
|
|
|
Section
7.7
|
Compensation
and Indemnity
|
30
|
|
|
Section
7.8
|
Replacement
of Trustee
|
31
|
|
|
Section
7.9
|
Successor
Trustee by Merger, etc
|
32
|
|
|
Section
7.10
|
Eligibility;
Disqualification
|
32
|
|
|
Section
7.11
|
Preferential
Collection of Claims Against Company
|
32
|
|
|
ARTICLE
VIII SATISFACTION AND DISCHARGE; DEFEASANCE
|
32
|
||
|
Section
8.1
|
Satisfaction
and Discharge of Indenture
|
32
|
|
|
Section
8.2
|
Application
of Trust Funds; Indemnification
|
33
|
|
iii
|
Section
8.3
|
Legal
Defeasance of Securities of any Series
|
34
|
|
|
Section
8.4
|
Covenant
Defeasance
|
35
|
|
|
Section
8.5
|
Repayment
to Company
|
36
|
|
|
Section
8.6
|
Reinstatement
|
37
|
|
|
ARTICLE
IX AMENDMENTS AND WAIVERS
|
37
|
||
|
Section
9.1
|
Without
Consent of Holders
|
37
|
|
|
Section
9.2
|
With
Consent of Holders
|
38
|
|
|
Section
9.3
|
Limitations
|
38
|
|
|
Section
9.4
|
Compliance
with Trust Indenture Act
|
39
|
|
|
Section
9.5
|
Revocation
and Effect of Consents
|
39
|
|
|
Section
9.6
|
Notation
on or Exchange of Securities
|
39
|
|
|
Section
9.7
|
Trustee
Protected
|
39
|
|
|
ARTICLE
X MISCELLANEOUS
|
40
|
||
|
Section
10.1
|
Trust
Indenture Act Controls
|
40
|
|
|
Section
10.2
|
Notices
|
40
|
|
|
Section
10.3
|
Communication
by Holders with Other Holders
|
41
|
|
|
Section
10.4
|
Certificate
and Opinion as to Conditions Precedent
|
41
|
|
|
Section
10.5
|
Statements
Required in Certificate or Opinion
|
41
|
|
|
Section
10.6
|
Rules
by Trustee and Agents
|
41
|
|
|
Section
10.7
|
Legal
Holidays
|
42
|
|
|
Section
10.8
|
No
Recourse Against Others
|
42
|
|
|
Section
10.9
|
Counterparts
|
42
|
|
iv
|
Section
10.10
|
Governing
Laws; Waiver of Jury Trial
|
42
|
|
|
Section
10.11
|
No
Adverse Interpretation of Other Agreements
|
42
|
|
|
Section
10.12
|
Successors
|
42
|
|
|
Section
10.13
|
Severability
|
43
|
|
|
Section
10.14
|
Table
of Contents, Headings, Etc
|
43
|
|
|
Section
10.15
|
Securities
in a Foreign Currency or in ECU
|
43
|
|
|
Section
10.16
|
Judgment
Currency
|
44
|
|
|
Section
10.17
|
Force
Majeure
|
44
|
|
|
ARTICLE
XI SINKING FUNDS
|
44
|
||
|
Section
11.1
|
Applicability
of Article
|
44
|
|
|
Section
11.2
|
Satisfaction
of Sinking Fund Payments with Securities
|
45
|
|
|
Section
11.3
|
Redemption
of Securities for Sinking Fund
|
45
|
|
v
DISCOVERY
LABORATORIES, INC.
Reconciliation
and tie between Trust Indenture Act of 1939 and
Indenture,
dated as of ,
2005
|
Section
310(a)(1)
|
|
7.10
|
|
(a)(2)
|
|
7.10
|
|
(a)(3)
|
|
Not
Applicable
|
|
(a)(4)
|
|
Not
Applicable
|
|
(a)(5)
|
|
7.10
|
|
(b)
|
|
7.10
|
|
Section
311(a)
|
|
7.11
|
|
(b)
|
|
7.11
|
|
(c)
|
|
Not
Applicable
|
|
Section
312(a)
|
|
2.6
|
|
(b)
|
|
10.3
|
|
(c)
|
|
10.3
|
|
Section
313(a)
|
|
7.6
|
|
(b)(1)
|
|
7.6
|
|
(b)(2)
|
|
7.6
|
|
(c)(1)
|
|
7.6
|
|
(d)
|
|
7.6
|
|
Section
314(a)
|
|
4.2,
10.5
|
|
(b)
|
|
Not
Applicable
|
|
(c)(1)
|
|
10.4
|
|
(c)(2)
|
|
10.4
|
|
(c)(3)
|
|
Not Applicable
|
|
(d)
|
|
Not
Applicable
|
|
(e)
|
|
10.5
|
|
(f)
|
|
Not
Applicable
|
|
Section
315(a)
|
|
7.1
|
|
(b)
|
|
7.5
|
|
(c)
|
|
7.1
|
|
(d)
|
|
7.1
|
|
(e)
|
|
6.14
|
|
Section
316(a)
|
|
2.10
|
|
(a)(1)(A)
|
|
6.12
|
|
(a)(1)(B)
|
|
6.13
|
|
(b)
|
|
6.8
|
|
Section
317(a)(1)
|
|
6.3
|
|
(a)(2)
|
|
6.4
|
|
(b)
|
|
2.5
|
|
Section
318(a)
|
|
10.1
|
|
Note:
|
This
reconciliation and tie shall not, for any purpose, be deemed to be
part of
the Indenture.
|
vi
INDENTURE,
dated as of ,
2005
between Discovery Laboratories, Inc., a Delaware corporation (the “Company”),
and The Bank of New York, a New York banking corporation (the “Trustee”).
Each
party agrees as follows for the benefit of the other party and for the equal
and
ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE
I
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1 Definitions.
“Additional
Amounts” means any additional amounts which are required hereby or by any
Security, under circumstances specified herein or therein, to be paid by the
Company in respect of certain taxes imposed on Holders specified therein and
which are owing to such Holders.
“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”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.
“Agent”
means any Registrar, Paying Agent, Service Agent or authenticating agent.
“Authorized
Newspaper” means a newspaper in an official language of the country of
publication customarily published at least once a day for at least five days
in
each calendar week and of general circulation in the place in connection with
which the term is used. If it shall be impractical to make any publication
of
any notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof that is made or given by the Trustee shall constitute
a
sufficient publication of such notice.
“Bearer”
means anyone in possession from time to time of a Bearer Security.
“Bearer
Security” means any Security, including any interest coupon appertaining
thereto, that does not provide for the identification of the Holder thereof.
“Board
of
Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been adopted by the Board of
Directors or pursuant to authorization by the Board of Directors and to be
in
full force and effect on the date of the certificate and delivered to the
Trustee.
1
“Business
Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate
or supplemental indenture hereto for a particular Series, any day except a
Saturday, Sunday or a legal holiday in The City of New York on which banking
institutions are authorized or required by law, regulation or executive order
to
close.
“Company”
means the party named as such above until a successor replaces it and thereafter
means the successor.
“Company
Order” means a written order signed in the name of the Company by two Officers,
one of whom must be the Company’s chief executive officer, chief financial
officer or principal accounting officer.
“Company
Request” means a written request signed in the name of the Company by its
Chairman of the Board, a 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 at which at any particular time
its corporate trust business shall be principally administered, which office
at
the date hereof is located at 101 Barclay Street, Floor 8 West, New York, New
York 10286, Attention: Corporate Trust Administration, or such other address
as
the Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as such successor Trustee may designate from time to time
by
notice to the Holders and the Company).
“Default”
means any event which is, or after notice or passage of time would be, an Event
of Default.
“Depositary”
means, with respect to the Securities of any Series issuable or issued in whole
or in part in the form of one or more Global Securities, the person designated
as Depositary for such Series by the Company, which Depositary shall be a
clearing agency registered under the Exchange Act; and if at any time there
is
more than one such person, “Depositary” as used with respect to the Securities
of any Series shall mean the Depositary with respect to the Securities of such
Series.
“Discount
Security” means any Security that provides for an amount less than the stated
principal amount thereof to be due and payable upon declaration of acceleration
of the maturity thereof pursuant to Section 6.2.
“Dollars”
means the currency of The United States of America.
“ECU”
means the European Currency Unit as determined by the Commission of the European
Union.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
2
“Foreign
Currency” means any currency or currency unit issued by a government other than
the government of The United States of America.
“Foreign
Government Obligations” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government
that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged or (ii) obligations of a person controlled
or supervised by or acting as an agency or instrumentality of such government
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by such government, which, in either case under clauses (i)
or
(ii), are not callable or redeemable at the option of the issuer thereof.
“Global
Security” or “Global Securities” means a Security or Securities, as the case may
be, in the form established pursuant to Section 2.2 evidencing all or part
of a
Series of Securities, issued to the Depositary for such Series or its nominee,
and registered in the name of such Depositary or nominee.
“Holder”
or “Securityholder” means a person in whose name a Security is registered or the
holder of a Bearer Security.
“Indenture”
means this Indenture as amended from time to time and shall include the form
and
terms of particular Series of Securities established as contemplated hereunder.
“interest”
with respect to any Discount Security which by its terms bears interest only
after Maturity, means interest payable after Maturity.
“Maturity,”
when used with respect to any Security or installment of principal thereof,
means the date on which the principal of such Security or such installment
of
principal becomes due and payable as therein or herein provided, whether at
the
Stated Maturity or by declaration of acceleration, call for redemption, notice
of option to elect repayment or otherwise.
“Officer”
means the Chairman of the Board, any President, any Vice-President, the
Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary
of
the Company.
“Officers’
Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal
accounting officer.
“Opinion
of Counsel” means a written opinion of legal counsel. The counsel may be an
employee of or counsel to the Company.
“person”
means any individual, corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
“principal”
of a Security means the principal of the Security plus, when appropriate, the
premium, if any, on, and any Additional Amounts in respect of, the Security.
3
“Responsible
Officer” means any officer of the Trustee in its corporate trust department
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who
at
the time shall be such officers, respectively, and also means, with respect
to a
particular corporate trust matter, any other officer to whom any corporate
trust
matter is referred because of his or her knowledge of and familiarity with
a
particular subject and who shall have direct responsibility for the
administration of this Indenture.
“SEC”
means the Securities and Exchange Commission.
“Securities”
means the debentures, notes or other debt instruments of the Company of any
Series authenticated and delivered under this Indenture.
“Series”
or “Series of Securities” means each series of debentures, notes or other debt
instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.
“Stated
Maturity” when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
“Subsidiary”
of any specified person means any corporation of which at least a majority
of
the outstanding stock having by the terms thereof ordinary voting power for
the
election of directors of such corporation (irrespective of whether or not at
the
time stock of any other class or classes of such corporation shall have or
might
have voting power by reason of the happening of any contingency) is at the
time
directly or indirectly owned by such person, or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries.
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb)
as in
effect on the date of this Indenture; provided, however, that in the event
the
Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the
extent required by any such amendment, the Trust Indenture Act 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 or
include each person who is then a Trustee hereunder, and if at any time there
is
more than one such person, “Trustee” as used with respect to the Securities of
any Series shall mean the Trustee with respect to Securities of that Series.
“U.S.
Government Obligations” means securities which are (i) direct obligations of The
United States of America for the payment of which its full faith and credit
is
pledged or (ii) obligations of a person controlled or supervised by and acting
as an agency or instrumentality of The United States of America the payment
of
which is unconditionally guaranteed as a full faith and credit obligation by
The
United States of America, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on
or
principal of any such U.S. Government Obligation held by such custodian for
the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
4
Section
1.2 Other Definitions.
|
TERM
|
|
DEFINED IN
SECTION
|
|
“Bankruptcy
Law”
|
|
6.1
|
|
“Custodian”
|
|
6.1
|
|
“Event
of Default”
|
|
6.1
|
|
“Journal”
|
|
10.15
|
|
“Judgment
Currency”
|
|
10.16
|
|
“Legal
Holiday”
|
|
10.7
|
|
“mandatory
sinking fund payment”
|
|
11.1
|
|
“Market
Exchange Rate”
|
|
10.15
|
|
“New
York Banking Day”
|
|
10.16
|
|
“optional
sinking fund payment”
|
|
11.1
|
|
“Paying
Agent”
|
|
2.4
|
|
“Registrar”
|
|
2.4
|
|
“Required
Currency”
|
|
10.16
|
|
“Service
Agent”
|
|
2.4
|
|
“successor
person”
|
|
5.1
|
Section
1.3 Incorporation by Reference of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms
used
in this Indenture have the following meanings:
“Commission”
means the SEC.
“indenture
securities” means the Securities.
“indenture
security holder” means a Securityholder.
“indenture
to be qualified” means this Indenture.
“indenture
trustee” or “institutional trustee” means the Trustee.
“obligor”
on the indenture securities means the Company and any successor obligor upon
the
Securities.
5
All
other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA and not
otherwise defined herein are used herein as so defined.
Section
1.4 Rules of Construction.
Unless
the context otherwise requires:
(a)
a term
has the meaning assigned to it;
(b)
an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
(c)
references
to “generally accepted accounting principles” shall mean generally accepted
accounting principles in effect as of the time when and for the period as to
which such accounting principles are to be applied;
(d)
“or”
is
not exclusive;
(e)
words
in
the singular include the plural, and in the plural include the singular; and
(f)
provisions
apply to successive events and transactions.
ARTICLE
II
THE
SECURITIES
Section
2.1 Issuable in Series.
The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited. The Securities may be issued in one or more
Series. All Securities of a Series shall be identical except as may be set
forth
in a Board Resolution, a supplemental indenture or an Officers’ Certificate
detailing the adoption of the terms thereof pursuant to the authority granted
under a Board Resolution. In the case of Securities of a Series to be issued
from time to time, the Board Resolution, Officers’ Certificate or supplemental
indenture may provide for the method by which specified terms (such as interest
rate, maturity date, record date or date from which interest shall accrue)
are
to be determined. Securities may differ between Series in respect of any
matters, provided that all Series of Securities shall be equally and ratably
entitled to the benefits of the Indenture.
Section
2.2 Establishment of Terms of Series of Securities.
At
or
prior to the issuance of any Securities within a Series, the following shall
be
established (as to the Series generally, in the case of Subsection 2.2.1 and
either as to such Securities within the Series or as to the Series generally
in
the case of Subsections 2.2.2 through 2.2.22) by a Board Resolution, a
supplemental indenture or an Officers’ Certificate pursuant to authority granted
under a Board Resolution:
6
2.2.1
the
title
of the Series (which shall distinguish the Securities of that particular Series
from the Securities of any other Series);
2.2.2
the
price
or prices (expressed as a percentage of the principal amount thereof) at which
the Securities of the Series will be issued;
2.2.3
any
limit
upon the aggregate principal amount of the Securities of the Series which may
be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the Series pursuant to Section 2.7,
2.8,
2.11, 3.6 or 9.6);
2.2.4
the
date
or dates on which the principal of the Securities of the Series is payable;
2.2.5
the
rate
or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to,
any
commodity, commodity index, stock exchange index or financial index) at which
the Securities of the Series shall bear interest, if any, the date or dates
from
which such interest, if any, shall accrue, the date or dates on which such
interest, if any, shall commence and be payable and any regular record date
for
the interest payable on any interest payment date;
2.2.6
the
place
or places where the principal of and interest, if any, on the Securities of
the
Series shall be payable, or the method of such payment, if by wire transfer,
mail or other means;
2.2.7
if
applicable, the period or periods within which, the price or prices at which
and
the terms and conditions upon which the Securities of the Series may be
redeemed, in whole or in part, at the option of the Company;
2.2.8
the
obligation, if any, of the Company to redeem or purchase the Securities of
the
Series pursuant to any sinking fund or analogous provisions or at the option
of
a Holder thereof and the period or periods within which, the price or prices
at
which and the terms and conditions upon which Securities of the Series shall
be
redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9
the
dates, if any, on which and the price or prices at which the Securities of
the
Series will be repurchased by the Company at the option of the Holders thereof
and other detailed terms and provisions of such repurchase obligations;
2.2.10
if
other
than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be issuable;
2.2.11
the
forms
of the Securities of the Series in bearer or fully registered form (and, if
in
fully registered form, whether the Securities will be issuable as Global
Securities);
7
2.2.12
if
other
than the principal amount thereof, the portion of the principal amount of the
Securities of the Series that shall be payable upon declaration of acceleration
of the maturity thereof pursuant to Section 6.2;
2.2.13
the
currency of denomination of the Securities of the Series, which may be Dollars
or any Foreign Currency, including, but not limited to, the ECU, and if such
currency of denomination is a composite currency other than the ECU, the agency
or organization, if any, responsible for overseeing such composite currency;
2.2.14
the
designation of the currency, currencies or currency units in which payment
of
the principal of and interest, if any, on the Securities of the Series will
be
made;
2.2.15
if
payments of principal of or interest, if any, on the Securities of the Series
are to be made in one or more currencies or currency units other than that
or
those in which such Securities are denominated, the manner in which the exchange
rate with respect to such payments will be determined;
2.2.16
the
manner in which the amounts of payment of principal of or interest, if any,
on
the Securities of the Series will be determined, if such amounts may be
determined by reference to an index based on a currency or currencies or by
reference to a commodity, commodity index, stock exchange index or financial
index;
2.2.17
the
provisions, if any, relating to any security provided for the Securities of
the
Series;
2.2.18
if
the
holders of Securities of the Series may convert or exchange the Securities
into
or for securities of the Issuer or of other entities or other property, the
period or periods within which, the rate or rates at which and the terms and
conditions upon which Securities of the Series may be converted or exchanged,
in
whole or in part;
2.2.19
any
addition to or change in the Events of Default which applies to any Securities
of the Series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the principal amount thereof due and
payable pursuant to Section 6.2;
2.2.20
any
addition to or change in the covenants set forth in Articles IV or V which
applies to Securities of the Series;
2.2.21
any
other
terms of the Securities of the Series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section 9.1,
but
which may modify or delete any provision of this Indenture insofar as it applies
to such Series); and
8
2.2.22
any
depositories, interest rate calculation agents, exchange rate calculation agents
or other agents with respect to Securities of such Series if other than those
appointed herein.
All
Securities of any one Series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to the Board Resolution, supplemental indenture or
Officers’ Certificate referred to above, and the authorized principal amount of
any Series may not be increased to provide for issuances of additional
Securities of such Series, unless otherwise provided in such Board Resolution,
supplemental indenture or Officers’ Certificate.
Section
2.3 Execution and Authentication.
Two
Officers shall sign the Securities for the Company by manual or facsimile
signature.
If
an
Officer whose signature is on a Security no longer holds that office at the
time
the Security is authenticated, the Security shall nevertheless be valid.
A
Security shall not be valid until authenticated by the manual signature of
the
Trustee or an authenticating agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The
Trustee shall at any time, and from time to time, authenticate Securities for
original issue in the principal amount provided in the Board Resolution,
supplemental indenture hereto or Officers’ Certificate, upon receipt by the
Trustee of a Company Order. Such Company Order may authorize authentication
and
delivery pursuant to oral or electronic instructions from the Company or its
duly authorized agent or agents, which oral instructions shall be promptly
confirmed in writing. Each Security shall be dated the date of its
authentication unless otherwise provided by a Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate.
The
aggregate principal amount of Securities of any Series outstanding at any time
may not exceed any limit upon the maximum principal amount for such Series
set
forth in the Board Resolution, supplemental indenture hereto or Officers’
Certificate delivered pursuant to Section 2.2, except as provided in Section
2.8.
Prior
to
the issuance of Securities of any Series, the Trustee shall have received and
(subject to Section 7.2) shall be fully protected in conclusively relying on:
(a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate
establishing the form of the Securities of that Series or of Securities within
that Series and the terms of the Securities of that Series or of Securities
within that Series, (b) an Officers’ Certificate complying with Section 10.4,
and (c) an Opinion of Counsel complying with Section 10.4.
The
Trustee shall have the right to decline to authenticate and deliver any
Securities of such Series: (a) if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken; or (b) if the Trustee
in
good faith by its board of directors or trustees, executive committee or a
trust
committee of directors and/or vice-presidents shall determine that such action
would expose the Trustee to personal liability to Holders of any then
outstanding Series of Securities.
9
The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or
an Affiliate.
Section
2.4 Registrar and Paying Agent.
The
Company shall maintain, with respect to each Series of Securities, at the place
or places specified with respect to such Series pursuant to Section 2.2, an
office or agency where Securities of such Series may be presented or surrendered
for payment (“Paying Agent”), where Securities of such Series may be surrendered
for registration of transfer or exchange (“Registrar”) and where notices and
demands to or upon the Company in respect of the Securities of such Series
and
this Indenture may be served (“Service Agent”). The Registrar shall keep a
register with respect to each Series of Securities and to their transfer and
exchange. The Company will give prompt written notice to the Trustee of the
name
and address, and any change in the name or address, of each Registrar, Paying
Agent or Service Agent. If at any time the Company shall fail to maintain any
such required Registrar, Paying Agent or Service Agent or shall fail to furnish
the Trustee with the name and address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of
the
Trustee, and the Company hereby appoints the Trustee as its agent to receive
all
such presentations, surrenders, notices and demands.
The
Company may also from time to time designate one or more co-registrars,
additional paying agents or additional service agents 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 a Registrar, Paying Agent and Service Agent in each place so specified
pursuant to Section 2.2 for Securities of any Series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the name or address of any such co-registrar,
additional paying agent or additional service agent. The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
paying agent; and the term “Service Agent” includes any additional service
agent.
The
Company hereby appoints the Trustee the initial Registrar, Paying Agent and
Service Agent for each Series unless another Registrar, Paying Agent or Service
Agent, as the case may be, is appointed prior to the time Securities of that
Series are first issued.
Section
2.5 Paying Agent to Hold Money in Trust.
The
Company shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust, for the benefit of
Securityholders of any Series of Securities, or the Trustee, all money held
by
the Paying Agent for the payment of principal of or interest on the Series
of
Securities, and will notify the Trustee of any default by the Company in making
any such payment. While any such default continues, the Trustee may require
a
Paying Agent to pay all money held by it to the Trustee. The Company at any
time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or
a
Subsidiary) shall have no further liability for the money. If the Company or
a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust
fund for the benefit of Securityholders of any Series of Securities all money
held by it as Paying Agent.
10
Section
2.6 Securityholder Lists.
The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at
least ten days before each interest payment date and at such other times as
the
Trustee may request in writing a list, in such form and as of such date as
the
Trustee may reasonably require, of the names and addresses of Securityholders
of
each Series of Securities.
Section
2.7 Transfer and Exchange.
Where
Securities of a Series are presented to the Registrar or a co-registrar with
a
request to register a transfer or to exchange them for an equal principal amount
of Securities of the same Series, the Registrar shall register the transfer
or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trustee shall authenticate
Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.11, 3.6 or 9.6).
Neither
the Company nor the Registrar shall be required (a) to issue, register the
transfer of, or exchange Securities of any Series for the period beginning
at
the opening of business fifteen days immediately preceding the mailing of a
notice of redemption of Securities of that Series selected for redemption and
ending at the close of business on the day of such mailing, or (b) to register
the transfer of or exchange Securities of any Series selected, called or being
called for redemption as a whole or the portion being redeemed of any such
Securities selected, called or being called for redemption in part.
Section
2.8 Mutilated, Destroyed, Lost and Stolen
Securities.
If
any
mutilated Security is surrendered to the Trustee, the Company shall execute
and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same Series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
11
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 upon its request the Trustee shall authenticate
and make available for delivery, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same Series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In
case
any such mutilated, destroyed, lost or stolen Security has become or is about
to
become due and payable, the Company in its discretion may, instead of issuing
a
new Security, pay such Security.
Upon
the
issuance of any new Security under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every
new
Security of any Series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that Series duly issued hereunder.
The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.
Section
2.9 Outstanding Securities.
The
Securities outstanding at any time are all the Securities authenticated by
the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest on a Global Security effected by the Trustee
in
accordance with the provisions hereof and those described in this Section as
not
outstanding.
If
a
Security is replaced pursuant to Section 2.8, it ceases to be outstanding until
the Trustee receives proof satisfactory to it that the replaced Security is
held
by a bona fide purchaser.
If
the
Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds on the Maturity of Securities of a Series money sufficient to
pay
such Securities payable on that date, then on and after that date such
Securities of the Series cease to be outstanding and interest on them ceases
to
accrue.
A
Security does not cease to be outstanding because the Company or an Affiliate
holds the Security.
12
In
determining whether the Holders of the requisite principal amount of outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, the principal amount of a Discount Security that
shall be deemed to be outstanding for such purposes shall be the amount of
the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 6.2.
Section
2.10 Treasury Securities.
In
determining whether the Holders of the required principal amount of Securities
of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver Securities of a Series owned by the Company or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in conclusively relying on any such
request, demand, authorization, direction, notice, consent or waiver only
Securities of a Series that the Trustee knows are so owned shall be so
disregarded.
Section
2.11 Temporary Securities.
Until
definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but
may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee upon
request shall authenticate definitive Securities of the same Series and date
of
maturity in exchange for temporary Securities. Until so exchanged, temporary
securities shall have the same rights under this Indenture as the definitive
Securities.
Section
2.12 Cancellation.
The
Company at any time may deliver Securities to the Trustee for cancellation.
The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Securities surrendered for transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Securities (subject
to the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise
directs. The Company may not issue new Securities to replace Securities that
it
has paid or delivered to the Trustee for cancellation.
Section
2.13 Defaulted Interest.
If
the
Company defaults in a payment of interest on a Series of Securities, it shall
pay the defaulted interest, plus, to the extent permitted by law, any interest
payable on the defaulted interest, to the persons who are Securityholders of
the
Series on a subsequent special record date. The Company shall fix the record
date and payment date. At least 30 days before the record date, the Company
shall mail to the Trustee and to each Securityholder of the Series a notice
that
states the record date, the payment date and the amount of interest to be paid.
The Company may pay defaulted interest in any other lawful manner.
13
Section
2.14 Global Securities.
2.14.1
Terms of Securities.
A Board
Resolution, a supplemental indenture hereto or an Officers’ Certificate shall
establish whether the Securities of a Series shall be issued in whole or in
part
in the form of one or more Global Securities and the Depositary for such Global
Security or Securities.
2.14.2
Transfer and Exchange.
Notwithstanding any provisions to the contrary contained in Section 2.7 of
the
Indenture and in addition thereto, any Global Security shall be exchangeable
pursuant to Section 2.7 of the Indenture for Securities registered in the names
of Holders other than the Depositary for such Security or its nominee only
if
(i) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or if at any time such
Depositary ceases to be a clearing agency registered under the Exchange Act,
and, in either case, the Company fails to appoint a successor Depositary within
90 days of such event, (ii) the Company executes and delivers to the Trustee
an
Officers’ Certificate to the effect that such Global Security shall be so
exchangeable or (iii) an Event of Default with respect to the Securities
represented by such Global Security shall have happened and be continuing.
Any
Global Security that is exchangeable pursuant to the preceding sentence shall
be
exchangeable for Securities registered in such names as the Depositary shall
direct in writing in an aggregate principal amount equal to the principal amount
of the Global Security with like tenor and terms.
Except
as
provided in this Section 2.14.2, a Global Security may not be transferred except
as a whole by the Depositary with respect to such Global Security to a nominee
of such Depositary, by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by the Depositary or any such nominee
to a
successor Depositary or a nominee of such a successor Depositary.
2.14.3
Legend.
Unless
otherwise provided pursuant to Section 2.2, any Global Security issued hereunder
shall bear a legend in substantially the following form:
“This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depositary or a nominee of
the
Depositary. This Security is exchangeable for Securities registered in the
name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except
as a
whole by the Depositary to a nominee of the Depositary, 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
a
successor Depositary.”
2.14.4
Acts of Holders.
The
Depositary, as a Holder, may appoint agents and otherwise authorize participants
to give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a Holder is entitled to give or take under the
Indenture.
14
2.14.5
Payments.
Notwithstanding the other provisions of this Indenture, unless otherwise
specified as contemplated by Section 2.2, payment of the principal of, premium,
if any, and interest, if any, on any Global Security shall be made to the Holder
thereof.
2.14.6
Consents, Declaration and Directions.
Except
as provided in Section 2.14.5, the Company, the Trustee and any Agent shall
treat a person as the Holder of such principal amount of outstanding Securities
of such Series represented by a Global Security as shall be specified in a
written statement of the Depositary with respect to such Global Security, for
purposes of obtaining any consents, declarations, waivers or directions required
to be given by the Holders pursuant to this Indenture.
2.14.7
Trustee Protections.
Each
Holder of a Security agrees to indemnify the Company and the Trustee against
any
liability that may result from the transfer, exchange or assignment of such
Holder's Security in violation of any provision of this Indenture and/or
applicable United States Federal or state securities law.
The
Trustee shall have no obligation or duty to monitor, determine or inquire as
to
compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any
Security (including any transfers between or among depositary participants
or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Neither
the Trustee nor any agent thereof shall have any responsibility for any actions
taken or not taken by the Depositary.
Section
2.15 CUSIP Numbers.
The
Company in issuing the Securities may use CUSIP numbers (if then generally
in
use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other elements of identification printed
on
the Securities, and any such redemption shall not be affected by any defect
in
or omission of such numbers. The Company will promptly notify the Trustee in
writing of any change in the CUSIP numbers.
15
ARTICLE
III
REDEMPTION
Section
3.1 Notice to Trustee.
The
Company may, with respect to any Series of Securities, reserve the right to
redeem and pay the Series of Securities or may covenant to redeem and pay the
Series of Securities or any part thereof prior to the Stated Maturity thereof
at
such time and on such terms as provided for in such Securities. If a Series
of
Securities is redeemable and the Company wants or is obligated to redeem prior
to the Stated Maturity thereof all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee in writing of
the
redemption date and the principal amount of Series of Securities to be redeemed.
The Company shall give the notice at least 45 days before the redemption date
(or such shorter notice as may be acceptable to the Trustee).
Section
3.2 Selection of Securities to be Redeemed.
Unless
otherwise indicated for a particular Series by a Board Resolution, a
supplemental indenture or an Officers’ Certificate, if less than all the
Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities
of
the Series outstanding not previously called for redemption. The Trustee may
select for redemption portions of the principal of Securities of the Series
that
have denominations larger than $1,000. Securities of the Series and portions
of
them it selects shall be in amounts of $1,000 or whole multiples of $1,000
or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.10, the minimum principal denomination for each Series
and integral multiples thereof. Provisions of this Indenture that apply to
Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.
Section
3.3 Notice of Redemption.
Unless
otherwise indicated for a particular Series by Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate, at least 30 days but not more than
90 days before a redemption date, the Company shall mail a notice of redemption
by first-class mail to each Holder whose Securities are to be redeemed and
if
any Bearer Securities are outstanding, publish on one occasion a notice in
an
Authorized Newspaper.
The
notice shall identify the Securities of the Series to be redeemed (including
the
CUSIP numbers thereof) and shall state:
(a)
the
redemption date;
(b)
the
redemption price;
(c)
the
name
and address of the Paying Agent;
16
(d)
that
Securities of the Series called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(e)
that
interest on Securities of the Series called for redemption ceases to accrue
on
and after the redemption date; and
(f)
any
other
information as may be required by the terms of the particular Series or the
Securities of a Series being redeemed.
At
the
Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense.
Section
3.4 Effect of Notice of Redemption.
Once
notice of redemption is mailed or published as provided in Section 3.3,
Securities of a Series called for redemption become due and payable on the
redemption date and at the redemption price. A notice of redemption may not
be
conditional. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price plus accrued interest to the redemption date.
Section
3.5 Deposit of Redemption Price.
On
or
before the redemption date, the Company shall deposit with the Paying Agent
money sufficient to pay the redemption price of and accrued interest, if any,
on
all Securities to be redeemed on that date.
Section
3.6 Securities Redeemed in Part.
Upon
surrender of a Security that is redeemed in part, the Trustee shall authenticate
for the Holder a new Security of the same Series and the same maturity equal
in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE
IV
COVENANTS
Section
4.1 Payment of Principal and Interest.
The
Company covenants and agrees for the benefit of the Holders of each Series
of
Securities that it will duly and punctually pay the principal of and interest,
if any, on the Securities of that Series in accordance with the terms of such
Securities and this Indenture.
17
Section
4.2 SEC Reports.
The
Company shall deliver to the Trustee after it files them with the SEC copies
of
the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA Section 314(a).
Section
4.3 Compliance Certificate.
The
Company shall deliver to the Trustee, within 120 days after the end of each
fiscal year of the Company, an Officers’ Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view
to
determining whether the Company has kept, observed, performed and fulfilled
its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any
of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge).
The
Company will, so long as any of the Securities are outstanding, deliver to
the
Trustee, forthwith upon becoming aware of any Default or Event of Default,
an
Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
Section
4.4 Corporate Existence.
Subject
to Article V, the Company will do or cause to be done all things necessary
to
preserve and keep in full force and effect its corporate existence and the
rights (charter and statutory), licenses and franchises of the Company;
provided, however, that the Company shall not be required to preserve any such
right, license 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 its Subsidiaries taken as a whole and that the loss thereof
is
not adverse in any material respect to the Holders.
Section
4.5 Taxes.
The
Company shall pay prior to delinquency all taxes, assessments and governmental
levies, except as contested in good faith and by appropriate proceedings.
18
ARTICLE
V
SUCCESSORS
Section
5.1 When Company May Merge, Etc.
The
Company shall not consolidate with or merge into, or convey, transfer or lease
all or substantially all of its properties and assets to, any person (a
“successor person”), and may not permit any person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to,
the
Company, unless:
(a)
the
successor person (if any) is a corporation, partnership, trust or other entity
organized and validly existing under the laws of any U.S. domestic jurisdiction
and expressly assumes the Company’s obligations on the Securities and under this
Indenture and
(b)
immediately
after giving effect to the transaction, no Default or Event of Default, shall
have occurred and be continuing.
The
Company shall deliver to the Trustee prior to the consummation of the proposed
transaction an Officers’ Certificate to the foregoing effect and an Opinion of
Counsel stating that the proposed transaction and such supplemental indenture
comply with this Indenture.
Section
5.2 Successor Corporation Substituted.
Upon
any
consolidation or merger, or any sale, lease, conveyance or other disposition
of
all or substantially all of the assets of the Company in accordance with Section
5.1, the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, lease, conveyance or other
disposition 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 has been named as the Company herein; provided,
however, that the predecessor Company in the case of a sale, lease, conveyance
or other disposition shall not be released from the obligation to pay the
principal of and interest, if any, on the Securities.
ARTICLE
VI
DEFAULTS
AND REMEDIES
Section
6.1 Events of Default.
“Event
of
Default,” wherever used herein with respect to Securities of any Series, means
any one of the following events, unless in the establishing Board Resolution,
supplemental indenture or Officers’ Certificate, it is provided that such Series
shall not have the benefit of said Event of Default:
19
(a)
default
in the payment of any interest on any Security of that Series when it becomes
due and payable, and continuance of such default for a period of 90 days (unless
the entire amount of such payment is deposited by the Company with the Trustee
or with a Paying Agent prior to the expiration of such period of 90 days);
or
(b)
default
in the payment of the principal of any Security of that Series at its Maturity;
or
(c)
default
in the deposit of any sinking fund payment, when and as due in respect of any
Security of that Series; or
(d)
default
in the performance or breach of any covenant or warranty of the Company in
this
Indenture (other than a covenant or warranty that has been included in this
Indenture solely for the benefit of Series of Securities other than that
Series), which default continues uncured for a period of 90 days after there
has
been given, by registered or certified mail, to the Company by the Trustee
or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the outstanding Securities of that Series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or
(e)
the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i)
commences
a voluntary case,
(ii)
consents
to the entry of an order for relief against it in an involuntary case,
(iii)
consents
to the appointment of a Custodian of it or for all or substantially all of
its
property,
20
(iv)
makes
a
general assignment for the benefit of its creditors, or
(v)
generally
is unable to pay its debts as the same become due; or
(f)
a
court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that:
(i)
is
for
relief against the Company in an involuntary case,
(ii)
appoints
a Custodian for the Company or for all or substantially all of its property,
or
(iii)
orders
the liquidation of the Company and the order or decree remains unstayed and
in
effect for 90 days; or
(g)
any
other
Event of Default provided with respect to Securities of that Series, which
is
specified in a Board Resolution, a supplemental indenture hereto or an Officers’
Certificate, in accordance with Section 2.2.19.
The
term
“Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law
for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
Section
6.2 Acceleration of Maturity; Rescission and Annulment.
If
an
Event of Default with respect to Securities of any Series at the time
outstanding occurs and is continuing (other than an Event of Default referred
to
in Section 6.1(e) or (f)) then in every such case the Trustee or the Holders
of
not less than 25% in principal amount of the outstanding Securities of that
Series may declare the principal amount (or, if any Securities of that Series
are Discount Securities, such portion of the principal amount as may be
specified in the terms of such Securities) of and accrued and unpaid interest,
if any, on all of the Securities of that Series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) and accrued and unpaid interest, if any, shall become immediately due
and payable. If an Event of Default specified in Section 6.1(e) or (f) shall
occur, the principal amount (or specified amount) of and accrued and unpaid
interest, if any, on all outstanding 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.
At
any
time after such a declaration of acceleration with respect to any Series has
been made and before a judgment or decree for payment of the money due has
been
obtained by the Trustee as hereinafter in this Article provided, the Holders
of
a majority in principal amount of the outstanding Securities of that Series,
by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a)
the
Company has paid or deposited with the Trustee a sum sufficient to pay
(i)
all
overdue interest, if any, on all Securities of that Series,
(ii)
the
principal of any Securities of that Series which have become due otherwise
than
by such declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities,
(iii)
to
the
extent that payment of such interest is lawful, interest upon any overdue
principal and overdue interest at the rate or rates prescribed therefor in
such
Securities, and
(iv)
all
sums
paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and
21
(b)
all
Events of Default with respect to Securities of that Series, other than the
non-payment of the principal of Securities of that Series which have become
due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 6.13.
No
such
rescission shall affect any subsequent Default or impair any right consequent
thereon.
Section
6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The
Company covenants that if
(a)
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 90 days,
or
(b)
default
is made in the payment of principal of any Security at the Maturity thereof,
or
(c)
default
is made in the deposit of any sinking fund payment when and as due by the terms
of a Security, then, the Company will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole amount then due
and
payable on such Securities for principal and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal or any overdue interest, at the rate or rates prescribed therefor
in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If
the
Company fails to pay such amounts forthwith upon such demand, the Trustee,
in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute
such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the moneys
adjudged or deemed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities, wherever
situated.
If
an
Event of Default with respect to any Securities of any Series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its
rights and the rights of the Holders of Securities of such Series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section
6.4 Trustee May File Proofs of Claim.
In
case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then
be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
22
(a)
to
file
and prove a claim for the whole amount of principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, fees,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(b)
to
collect and receive any moneys or other property payable or deliverable on
any
such claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, fees, disbursements and advances of
the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder 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.
Section
6.5 Trustee May Enforce Claims Without Possession of
Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any
such proceeding instituted by the Trustee shall be brought in its own name
as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit
of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section
6.6 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 interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First:
To
the payment of all amounts due the Trustee under Section 7.7; and
Second:
To the payment of the amounts then due and unpaid for principal of 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 interest,
respectively; and
23
Third:
To
the Company.
Section
6.7 Limitation on Suits.
No
Holder
of any Security of any Series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of
a receiver or trustee, or for any other remedy hereunder, unless
(a)
such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of that Series;
(b)
the
Holders of not less than 25% in principal amount of the outstanding Securities
of that Series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(c)
such
Holder or Holders have offered to the Trustee indemnity satisfactory to it
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(d)
the
Trustee for 90 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(e)
no
direction inconsistent with such written request has been given to the Trustee
during such 90-day period by the Holders of a majority in principal amount
of
the outstanding Securities of that Series;
it
being
understood and intended that no one or more of such Holders shall have any
right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any
other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such Holders
(it being understood that the Trustee does not have an affirmative duty to
ascertain whether or not such actions or forbearances are unduly prejudicial
to
such Holders).
Section
6.8 Unconditional Right of Holders to Receive Principal and
Interest.
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 interest, if any, on such Security on the Stated Maturity or Stated
Maturities expressed in such Security (or, in the case of redemption, on the
redemption date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
24
Section
6.9 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
6.10 Rights and Remedies Cumulative.
Except
as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to
be
exclusive of any other right or remedy, and every right and remedy shall, to
the
extent permitted by law, be cumulative and in addition to every other right
and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other
appropriate right or remedy.
Section
6.11 Delay or Omission Not Waiver.
No
delay
or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
Section
6.12 Control by Holders.
The
Holders of a majority in principal amount of the outstanding Securities of
any
Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities of such
Series, provided that
(a)
such
direction shall not be in conflict with any rule of law or with this Indenture,
(b)
the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(c)
subject
to the provisions of Section 6.1, the Trustee shall have the right to decline
to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability.
25
Section
6.13 Waiver of Past Defaults.
Subject
to Section 6.2, the Holders of not less than a majority in principal amount
of
the outstanding Securities of any Series may on behalf of the Holders of all
the
Securities of such Series waive any past Default hereunder with respect to
such
Series and its consequences, except a Default in the payment of the principal
of
or interest on any Security of such Series (provided, however, that the Holders
of a majority in principal amount of the outstanding Securities of any Series
may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). 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
6.14 Undertaking for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in
its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the outstanding Securities of any Series, or to any suit instituted
by
any Holder for the enforcement of the payment of the principal of or interest
on
any Security on or after the Stated Maturity or Stated Maturities expressed
in
such Security (or, in the case of redemption, on the redemption date).
ARTICLE
VII
TRUSTEE
Section
7.1 Duties of Trustee.
(a)
If
an
Event of Default has occurred and is continuing, the Trustee shall exercise
the
rights and powers vested in it by this Indenture and use the same degree of
care
and skill in their exercise as a prudent person would exercise or use under
the
circumstances in the conduct of such person’s own affairs.
(b)
Except
during the continuance of an Event of Default:
(i)
The
Trustee need perform only those duties that are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
26
(ii)
In
the
absence of bad faith on its part, the Trustee may conclusively rely, as to
the
truth of the statements and the correctness of the opinions expressed therein,
upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and
conforming to the requirements of this Indenture; however, in the case of any
such Officers’ Certificates or Opinions of Counsel which by any provisions
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine such Officers’ Certificates and Opinions of Counsel to determine
whether or not they conform to the requirements of this Indenture (but need
not
confirm or investigate the accuracy of mathematical calculations or other facts
stated therein).
(c)
The
Trustee may not be relieved from liability for its own negligent action, its
own
negligent failure to act or its own willful misconduct, except that:
(i)
This
paragraph does not limit the effect of paragraph (b) of this Section.
(ii)
The
Trustee shall not be liable for any error of judgment made in good faith by
a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii)
The
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it with respect to Securities of any Series in good
faith
in accordance with the direction of the Holders of a majority in principal
amount of the outstanding Securities of such Series relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such Series.
(d)
Every
provision of this Indenture that in any way relates to the Trustee is subject
to
paragraph (a), (b) and (c) of this Section.
(e)
The
Trustee may refuse to perform any duty or exercise any right or power unless
it
receives indemnity satisfactory to it against any loss, liability, damage,
claim
or expense.
(f)
The
Trustee shall not be liable for interest on any money received by it except
as
the Trustee may agree in writing with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by
law.
(g)
No
provision of this Indenture shall require the Trustee to risk its own funds
or
otherwise incur any financial liability in the performance of any of its duties,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk is not reasonably assured to it.
27
(h)
The
Paying Agent, the Registrar and any authenticating agent shall be entitled
to
the protections and immunities as are set forth in paragraphs (a), (b) and
(c)
of this Section with respect to the Trustee.
Section
7.2 Rights of Trustee.
(a)
The
Trustee may conclusively rely on and shall be protected in acting or refraining
from acting upon any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate
any
fact or matter stated in the document.
(b)
Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.
(c)
The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care. No Depositary shall be
deemed an agent of the Trustee and the Trustee shall not be responsible for
any
act or omission by any Depositary.
(d)
The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers;
provided,
however,
that the
Trustee’s conduct does not constitute willful misconduct, gross negligence or
bad faith.
(e)
The
Trustee may consult with counsel of its selection and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(f)
The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
of Securities unless such Holders shall have offered to the Trustee 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.
(g)
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, at reasonable times during normal business
hours, personally or by agent or attorney at the sole cost of the Company and
shall incur no liability or additional liability of any kind by reason of such
inquiry or investigation.
28
(h)
The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and
shall be enforceable by, the Trustee in each of its capacities hereunder, and
each agent, custodian and other Person employed to act hereunder.
(i)
In
no
event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of
the
likelihood of such loss or damage and regardless of the form of
action.
(j)
The
Trustee may request that the Company deliver a certificate setting forth the
names of individuals and/or titles of officers authorized at such time to take
specified actions pursuant to this Indenture.
In
addition, the Trustee shall not be deemed to have knowledge of any Default
or
Event of Default except (1) any Event of Default occurring pursuant to Sections
6.1(a)(1), 6.1(a)(2), 6.1(a)(3) and 4.1 hereof or (2) any Default or Event
of
Default of which the Trustee shall have received written notification in the
manner set forth in this Indenture or a Responsible Officer of the Trustee
shall
have obtained actual knowledge. Delivery of reports, information and documents
to the Trustee under Section 4.2 is for informational purposes only and the
information and the Trustee’s receipt of the foregoing shall not constitute
constructive notice of any information contained therein, or determinable from
information contained therein including the Company’s compliance with any of
their covenants thereunder (as to which the Trustee is entitled to rely
exclusively on an Officers’ Certificate).
Section
7.3 Individual Rights of Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or an Affiliate with
the
same rights it would have if it were not Trustee. Any Agent may do the same
with
like rights. The Trustee is also subject to Sections 7.10 and 7.11.
Section
7.4 Trustee’s Disclaimer.
The
Trustee makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities, and it shall not be responsible for any statement
in the Securities other than its authentication.
Section
7.5 Notice of Defaults.
If
a
Default or Event of Default occurs and is continuing with respect to the
Securities of any Series and if it is known to the Trustee, the Trustee shall
mail to each Securityholder of the Securities of that Series and, if any Bearer
Securities are outstanding, publish on one occasion in an Authorized Newspaper,
notice of a Default or Event of Default within 90 days after it occurs or,
if
later, after the Trustee has knowledge of such Default or Event of Default.
Except in the case of a Default or Event of Default in payment of principal
of
or interest on any Security of any Series, the Trustee may withhold the notice
if and so long as its corporate trust committee or a committee of its
Responsible Officers in good faith determines that withholding the notice is
in
the interests of Securityholders of that Series.
29
Section
7.6 Reports by Trustee to Holders.
Within
60
days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by
the
Registrar and, if any Bearer Securities are outstanding, publish in an
Authorized Newspaper, a brief report dated as of such May 15, in accordance
with, and to the extent required under, TIA Section 313.
A
copy of
each report at the time of its mailing to Securityholders of any Series shall
be
filed with the SEC and each stock exchange on which the Securities of that
Series are listed. The Company shall promptly notify the Trustee when Securities
of any Series are listed on any stock exchange.
Section
7.7 Compensation and Indemnity.
The
Company shall pay to the Trustee from time to time such compensation for its
services as shall be agreed from time to time in writing. The Trustee’s
compensation shall not be limited by any law on compensation of a trustee of
an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such expenses shall include
the reasonable compensation and expenses of the Trustee’s agents and counsel.
The
Company shall indemnify the Trustee (including the cost of defending itself)
against any loss, liability, damage, claim or expense incurred by it except
as
set forth in the next paragraph in the performance of its duties under this
Indenture as Trustee or Agent. The Trustee shall notify the Company promptly
of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld. This indemnification shall
apply to officers, directors, employees, shareholders and agents of the Trustee.
The
Company need not reimburse any expense or indemnify against any loss, liability,
damage, claim or expense incurred by the Trustee or by any officer, director,
employee, shareholder or agent of the Trustee through negligence or bad faith.
To
secure
the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities of any Series on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Securities of that Series.
When
the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(e) or (f) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
30
Section
7.8 Replacement of Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign with respect to the Securities of one or more Series by
so
notifying the Company. The Holders of a majority in principal amount of the
Securities of any Series may remove the Trustee with respect to that Series
by
so notifying the Trustee and the Company in writing. The Company may remove
the
Trustee with respect to Securities of one or more Series if:
(a)
the
Trustee fails to comply with Section 7.10;
(b)
the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;
(c)
a
Custodian or public officer takes charge of the Trustee or its property; or
(d)
the
Trustee becomes incapable of acting.
If
the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the Holders of a majority
in
principal amount of the then outstanding Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If
a
successor Trustee with respect to the Securities of any one or more Series
does
not take office within 30 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in principal
amount of the Securities of the applicable Series may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If
the
Trustee with respect to the Securities of any one or more Series fails to comply
with Section 7.10, any Securityholder of the applicable Series may petition
any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A
successor Trustee shall deliver a written acceptance of its appointment to
the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee subject to the lien provided for in Section 7.7, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with respect
to each Series of Securities for which it is acting as Trustee under this
Indenture. A successor Trustee shall mail a notice of its succession to each
Securityholder of each such Series and, if any Bearer Securities are
outstanding, publish such notice on one occasion in an Authorized Newspaper.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company’s obligations under Section 7.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
31
Section
7.9 Successor Trustee by Merger, etc.
If
the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation,
the
successor corporation without any further act shall be the successor Trustee.
Section
7.10 Eligibility; Disqualification.
This
Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a) (1), (2) and (5). The Trustee shall always have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
Section
7.11 Preferential Collection of Claims Against Company.
The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed shall
be subject to TIA Section 311(a) to the extent indicated.
ARTICLE
VIII
SATISFACTION
AND DISCHARGE; DEFEASANCE
Section
8.1 Satisfaction and Discharge of Indenture.
This
Indenture shall upon Company Order cease to be of further effect (except as
hereinafter provided in this Section 8.1), and the Trustee, at the expense
of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a)
either
(i)
all
Securities theretofore authenticated and delivered (other than Securities that
have been destroyed, lost or stolen and that have been replaced or paid) have
been delivered to the Trustee for cancellation; or
(ii)
all
such
Securities not theretofore delivered to the Trustee for cancellation
(1)
have
become due and payable, or
(2)
will
become due and payable at their Stated Maturity within one year, or
32
(3)
are
to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name,
and
at the expense, of the Company, or
(4)
are
deemed paid and discharged pursuant to Section 8.3, as applicable;
and
the
Company, in the case of (1), (2) or (3) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust an amount sufficient for
the
purpose of paying and discharging the entire indebtedness on such Securities
not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable on or prior to the date of such deposit) or to the Stated
Maturity or redemption date, as the case may be;
(b)
the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(c)
the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 7.7, and, if money shall have been deposited with
the Trustee pursuant to clause (a) of this Section, the provisions of Sections
2.4, 2.7, 2.8, 8.1, 8.2 and 8.5 shall survive.
Section
8.2 Application of Trust Funds; Indemnification.
(a)
Subject
to the provisions of Section 8.5, all money deposited with the Trustee pursuant
to Section 8.1, all money and U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all
money received by the Trustee in respect of U.S. Government Obligations or
Foreign Government Obligations deposited with the Trustee pursuant to Section
8.3 or 8.4, 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 interest for whose payment such money has been deposited with
or
received by the Trustee or to make mandatory sinking fund payments or analogous
payments as contemplated by Sections 8.3 or 8.4.
(b)
The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against U.S. Government Obligations or Foreign
Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest
and principal received in respect of such obligations other than any payable
by
or on behalf of Holders.
33
(c)
The
Trustee shall deliver or pay to the Company from time to time upon Company
Request any U.S. Government Obligations or Foreign Government Obligations or
money held by it as provided in Sections 8.3 or 8.4 which are then in excess
of
the amount thereof which then would have been required to be deposited for
the
purpose for which such U.S. Government Obligations or Foreign Government
Obligations or money were deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations or Foreign
Government Obligations held under this Indenture.
Section
8.3 Legal Defeasance of Securities of any Series.
Unless
this Section 8.3 is otherwise specified, pursuant to Section 2.2.21, to be
inapplicable to Securities of any Series, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the outstanding Securities
of
such Series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates
to
such outstanding Securities of such Series, shall no longer be in effect (and
the Trustee, at the expense of the Company, shall, at Company Request, execute
proper instruments acknowledging the same), except as to:
(a)
the
rights of Holders of Securities of such Series to receive, from the trust funds
described in subparagraph (d) hereof, (i) payment of the principal of and each
installment of principal of and interest on the outstanding Securities of such
Series on the Stated Maturity of such principal or installment of principal
or
interest and (ii) the benefit of any mandatory sinking fund payments applicable
to the Securities of such Series on the day on which such payments are due
and
payable in accordance with the terms of this Indenture and the Securities of
such Series;
(b)
the
provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and
(c)
the
rights, powers, trust and immunities of the Trustee hereunder; provided that,
the following conditions shall have been satisfied:
(d)
the
Company shall have deposited or caused to be deposited irrevocably with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities (i) in the case of Securities of
such
Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest
and
principal in respect thereof, in accordance with their terms, will provide
(and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money,
an
amount in cash, sufficient, in the opinion of a nationally recognized firm
of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of principal
(including mandatory sinking fund or analogous payments) of and interest, if
any, on all the Securities of such Series on the dates such installments of
interest or principal are due;
34
(e)
such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(f)
no
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(g)
the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel to the effect that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Securities of such Series will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
(h)
the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring
the
Holders of the Securities of such Series over any other creditors of the company
or with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(i)
such
deposit shall not result in the trust arising from such deposit constituting
an
investment company (as defined in the Investment Company Act of 1940, as
amended), or such trust shall be qualified under such Act or exempt from
regulation thereunder; and
(j)
the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this Section have been complied
with.
Section
8.4 Covenant Defeasance.
Unless
this Section 8.4 is otherwise specified pursuant to Section 2.2.21 to be
inapplicable to Securities of any Series, on and after the 91st day after the
date of the deposit referred to in subparagraph (a) hereof, the Company may
omit
to comply with any term, provision or condition set forth under Sections 4.2,
4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained in
a
supplemental indenture hereto for a particular Series of Securities or a Board
Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.21 (and
the failure to comply with any such covenants shall not constitute a Default
or
Event of Default under Section 6.1) and the occurrence of any event described
in
clause (e) of Section 6.1 shall not constitute a Default or Event of Default
hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:
35
(a)
With
reference to this Section 8.4, the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 8.2(c) ) with the Trustee
as trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities (i) in the case of
Securities of such Series denominated in Dollars, cash in Dollars (or such
other
money or currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest
and
principal in respect thereof, in accordance with their terms, will provide
(and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money,
an
amount in cash, sufficient, in the opinion of a nationally recognized firm
of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, to pay principal and interest, if any, on
and
any mandatory sinking fund in respect of the Securities of such Series on the
dates such installments of interest or principal are due;
(b)
Such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(c)
No
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(d)
the
Company shall have delivered to the Trustee an Opinion of Counsel confirming
that Holders of the Securities of such Series will not recognize income, gain
or
loss for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred;
(e)
the
Company shall have delivered to the Trustee an Officers’ Certificate stating the
deposit was not made by the Company with the intent of preferring the Holders
of
the Securities of such Series over any other creditors of the Company or with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company; and
(f)
The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance contemplated by this Section have been complied
with.
Section
8.5 Repayment to Company.
The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal and interest that remains unclaimed
for two years or such other shorter period set forth in applicable escheat
or
abandoned or unclaimed property law. After that, Securityholders entitled to
the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
36
Section
8.6 Reinstatement.
If
the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Sections 8.1, 8.3 or 8.4, as the case may be,
by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1, 8.3 or 8.4, as the case may be, until such time as
the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.1, 8.3 or 8.4, as the case may be;
provided, however, that if the Company makes any payment of principal of,
premium, if any, or interest on any Securities because of reinstatement of
its
obligations, the Company shall be subrogated to the rights of the holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE
IX
AMENDMENTS
AND WAIVERS
Section
9.1 Without Consent of Holders.
The
Company and the Trustee may amend or supplement this Indenture or the Securities
of one or more Series without the consent of any Securityholder:
(a)
to
cure
any ambiguity, defect or inconsistency;
(b)
to
comply
with Article V;
(c)
to
provide for uncertificated Securities in addition to or in place of certificated
Securities;
(d)
to
make
any change that does not adversely affect the rights of any Securityholder
in
any material respect;
(e)
to
provide for the issuance of and establish the form and terms and conditions
of
Securities of any Series as permitted by this Indenture;
(f)
to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to
or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee; or
37
(g)
to
comply
with requirements of the SEC in order to effect or maintain the qualification
of
this Indenture under the TIA.
Section
9.2 With Consent of Holders.
The
Company and the Trustee may enter into a supplemental indenture with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities of each Series affected by such supplemental indenture
(including consents obtained in connection with a tender offer or exchange
offer
for the Securities of such Series), for the purpose of adding any provisions
to
or changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture or of modifying in any manner the rights of
the
Securityholders of each such Series. Except as provided in Section 6.13, the
Holders of at least a majority in principal amount of the outstanding Securities
of each Series affected by such waiver by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for the
Securities of such Series) may waive compliance by the Company with any
provision of this Indenture or the Securities with respect to such Series.
It
shall
not be necessary for the consent of the Holders of Securities under this Section
9.2 to approve the particular form of any proposed supplemental indenture or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After a supplemental indenture or waiver under this Section becomes
effective, the Company shall mail to the Holders of Securities affected thereby
and, if any Bearer Securities affected thereby are outstanding, publish on
one
occasion in an Authorized Newspaper, a notice briefly describing the
supplemental indenture or waiver. Any failure by the Company to mail or publish
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver.
Section
9.3 Limitations.
Without
the consent of each Securityholder affected, an amendment or waiver may not:
(a)
change
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver;
(b)
reduce
the rate of or extend the time for payment of interest (including default
interest) on any Security;
(c)
reduce
the principal or change the Stated Maturity of any Security or reduce the amount
of, or postpone the date fixed for, the payment of any sinking fund or analogous
obligation;
(d)
reduce
the principal amount of Discount Securities payable upon acceleration of the
maturity thereof;
(e)
waive
a
Default or Event of Default in the payment of the principal of or interest,
if
any, on any Security (except a rescission of acceleration of the Securities
of
any Series by the Holders of at least a majority in principal amount of the
outstanding Securities of such Series and a waiver of the payment default that
resulted from such acceleration);
38
(f)
make
the
principal of or interest, if any, on any Security payable in any currency other
than that stated in the Security;
(g)
make
any
change in Sections 6.8, 6.13, 9.3, 10.15 or 10.16; or
(h)
waive
a
redemption payment with respect to any Security or change any of the provisions
with respect to the redemption of any Securities.
Section
9.4 Compliance with Trust Indenture Act.
Every
amendment to this Indenture or the Securities of one or more Series shall be
set
forth in a supplemental indenture hereto that complies with the TIA as then
in
effect.
Section
9.5 Revocation and Effect of Consents.
Until
an
amendment or waiver becomes effective, a consent to it by a Holder of a Security
is a continuing consent by the Holder and every subsequent Holder of a Security
or portion of a Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.
Any
amendment or waiver once effective shall bind every Securityholder of each
Series affected by such amendment or waiver unless it is of the type described
in any of clauses (a) through (g) of Section 9.3. In that case, the amendment
or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same
debt as the consenting Holder’s Security.
Section
9.6 Notation on or Exchange of Securities.
The
Trustee may place an appropriate notation about an amendment or waiver on any
Security of any Series thereafter authenticated. The Company in exchange for
Securities of that Series may issue and the Trustee shall authenticate upon
request new Securities of that Series that reflect the amendment or waiver.
Section
9.7 Trustee Protected.
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 7.1) shall be fully protected in conclusively 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. The
Trustee shall sign all supplemental indentures, except that the Trustee need
not
sign any supplemental indenture that adversely affects its rights.
39
ARTICLE
X
MISCELLANEOUS
Section
10.1 Trust Indenture Act Controls.
If
any
provision of this Indenture limits, qualifies, or conflicts with another
provision which is required or deemed to be included in this Indenture by the
TIA, such required or deemed provision shall control.
Section
10.2 Notices.
Any
notice or communication by the Company or the Trustee to the other is duly
given
if in writing and delivered in person or mailed by first-class mail
if
to the
Company:
Discovery
Laboratories, Inc.
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976-3646
Attention:
General Counsel
if
to the
Trustee:
The
Bank
of New York
101
Barclay Street, Floor 8W
New
York,
New York 10286
Attention:
Corporate Trust Administration
The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any
notice or communication to a Securityholder shall be mailed by first-class
mail
to his address shown on the register kept by the Registrar and, if any Bearer
Securities are outstanding, published in an Authorized Newspaper. Failure to
mail a notice or communication to a Securityholder of any Series or any defect
in it shall not affect its sufficiency with respect to other Securityholders
of
that or any other Series.
If
a
notice or communication is mailed or published in the manner provided above,
within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If
the
Company mails a notice or communication to Securityholders, it shall mail a
copy
to the Trustee and each Agent at the same time.
40
Section
10.3 Communication by Holders with Other Holders.
Securityholders
of any Series may communicate pursuant to TIA Section 312(b) with other
Securityholders of that Series or any other Series with respect to their rights
under this Indenture or the Securities of that Series or all Series. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of
TIA Section 312(c).
Section
10.4 Certificate and Opinion as to Conditions Precedent.
Upon
any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a)
an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b)
an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Section
10.5 Statements Required in Certificate or Opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant
to
TIA Section 314(a) (4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a)
a
statement that the person making such certificate or opinion has read such
covenant or condition;
(b)
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;
(c)
a
statement that, in the opinion of such person, he has made such examination
or
investigation as is necessary to enable him to express an informed opinion
as to
whether or not such covenant or condition has been complied with; and
(d)
a
statement as to whether or not, in the opinion of such person, such condition
or
covenant has been complied with.
Section
10.6 Rules by Trustee and Agents.
The
Trustee may make reasonable rules for action by or a meeting of Securityholders
of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
41
Section
10.7 Legal Holidays.
Unless
otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture for a particular Series, a “Legal Holiday” is any day that is not a
Business Day. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal
Holiday, and no interest shall accrue for the intervening period.
Section
10.8 No Recourse Against Others.
A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities
or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of
the
consideration for the issue of the Securities.
Section
10.9 Counterparts.
This
Indenture 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.
Section
10.10 Governing Laws; Waiver of Jury Trial.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. EACH OF THE COMPANY AND
THE
TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF
OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
Section
10.11 No Adverse Interpretation of Other Agreements.
This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary. Any such indenture, loan or debt agreement
may
not be used to interpret this Indenture.
Section
10.12 Successors.
All
agreements of the Company in this Indenture and the Securities shall bind its
successor. All agreements of the Trustee in this Indenture shall bind its
successor.
42
Section
10.13 Severability.
In
case
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
10.14 Table of Contents, Headings, Etc.
The
Table
of Contents, Cross Reference Table, and headings of the Articles and Sections
of
this Indenture have been inserted for convenience of reference only, are not
to
be considered a part hereof, and shall in no way modify or restrict any of
the
terms or provisions hereof.
Section
10.15 Securities in a Foreign Currency or in ECU.
Unless
otherwise specified in a Board Resolution, a supplemental indenture hereto
or an
Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with
respect to a particular Series of Securities, whenever for purposes of this
Indenture any action may be taken by the Holders of a specified percentage
in
aggregate principal amount of Securities of all Series or all Series affected
by
a particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or currency
other than Dollars (including ECUs), then the principal amount of Securities
of
such Series which shall be deemed to be outstanding for the purpose of taking
such action shall be that amount of Dollars that could be obtained for such
amount at the Market Exchange Rate at such time. For purposes of this Section
10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York
City for cable transfers of that currency as published by the Federal Reserve
Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate
shall mean the rate of exchange determined by the Commission of the European
Union (or any successor thereto) as published in the Official Journal of the
European Union (such publication or any successor publication, the “Journal”).
If such Market Exchange Rate is not available for any reason with respect to
such currency, the Trustee shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New York
or, in the case of ECUs, the rate of exchange as published in the Journal,
as of
the most recent available date, or quotations or, in the case of ECUs, rates
of
exchange from one or more major banks in The City of New York or in the country
of issue of the currency in question or, in the case of ECUs, in Luxembourg
or
such other quotations or, in the case of ECUs, rates of exchange as the Trustee,
upon consultation with the Company, shall deem appropriate. The provisions
of
this paragraph shall apply in determining the equivalent principal amount in
respect of Securities of a Series denominated in currency other than Dollars
in
connection with any action taken by Holders of Securities pursuant to the terms
of this Indenture.
All
decisions and determinations of the Trustee regarding the Market Exchange Rate
or any alternative determination provided for in the preceding paragraph shall
be in its sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and irrevocably
binding upon the Company and all Holders.
43
Section
10.16 Judgment Currency.
The
Company agrees, to the fullest extent that it may effectively do so under
applicable law, that (a) if for the purpose of obtaining judgment in any court
it is necessary to convert the sum due in respect of the principal of or
interest or other amount on the Securities of any Series (the “Required
Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking
Day,
then, the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Trustee could purchase in The City of New York
the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency
(i)
shall not be discharged or satisfied by any tender, any recovery pursuant to
any
judgment (whether or not entered in accordance with clause (a) ), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a
legal holiday in The City of New York on which banking institutions are
authorized or required by law, regulation or executive order to close.
Section
10.17 Force Majeure.
In
no
event shall the Trustee be responsible or liable for any failure or delay in
the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including, without limitation,
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and interruptions,
loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable
efforts which are consistent with accepted practices in the banking industry
to
resume performance as soon as practicable under the circumstances.
ARTICLE
XI
SINKING
FUNDS
Section
11.1 Applicability of Article.
The
provisions of this Article shall be applicable to any sinking fund for the
retirement of the Securities of a Series, except as otherwise permitted or
required by any form of Security of such Series issued pursuant to this
Indenture.
44
The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any Series is herein referred to as a “mandatory sinking fund
payment” and any other amount provided for by the terms of Securities of such
Series is herein referred to as an “optional sinking fund payment.” If provided
for by the terms of Securities of any Series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 11.2. Each
sinking fund payment shall be applied to the redemption of Securities of any
Series as provided for by the terms of the Securities of such Series.
Section
11.2 Satisfaction of Sinking Fund Payments with
Securities.
The
Company may, in satisfaction of all or any part of any sinking fund payment
with
respect to the Securities of any Series to be made pursuant to the terms of
such
Securities
(1)
deliver outstanding Securities of such Series to which such sinking fund payment
is applicable (other than any of such Securities previously called for mandatory
sinking fund redemption) and (2) apply as credit Securities of such Series
to
which such sinking fund payment is applicable and which have been redeemed
either at the election of the Company pursuant to the terms of such Series
of
Securities (except pursuant to any mandatory sinking fund) or through the
application of permitted optional sinking fund payments or other optional
redemptions pursuant to the terms of such Securities, provided that such
Securities have not been previously so credited. Such Securities shall be
received by the Trustee, together with an Officers’ Certificate with respect
thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for
such purpose by the Trustee at the price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. If as a result of the delivery or
credit of Securities in lieu of cash payments pursuant to this Section 11.2,
the
principal amount of Securities of such Series to be redeemed in order to exhaust
the aforesaid cash payment shall be less than $100,000, the Trustee need not
call Securities of such Series for redemption, except upon receipt of a Company
Order that such action be taken, and such cash payment shall be held by the
Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall from
time to time upon receipt of a Company Order pay over and deliver to the Company
any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the
Company having an unpaid principal amount equal to the cash payment required
to
be released to the Company.
Section
11.3 Redemption of Securities for Sinking Fund.
Not
less
than 45 days (unless otherwise indicated in the Board Resolution, supplemental
indenture hereto or Officers’ Certificate in respect of a particular Series of
Securities) prior to each sinking fund payment date for any Series of
Securities, the Company will deliver to the Trustee an Officers’ Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that Series pursuant to the terms of that Series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
Series pursuant to Section 11.2, and the optional amount, if any, to be added
in
cash to the next ensuing mandatory sinking fund payment, and the Company shall
thereupon be obligated to pay the amount therein specified. Not less than 30
days (unless otherwise indicated in the Board Resolution, Officers’ Certificate
or supplemental indenture in respect of a particular Series of Securities)
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.3. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
3.4, 3.5 and 3.6.
45
IN
WITNESS WHEREOF,
the
parties hereto have caused this Indenture to be duly executed as of the day
and
year first above written.
DISCOVERY
LABORATORIES, INC.
By: _______________________
Name:
Title:
THE
BANK OF NEW YORK, as Trustee
By: _______________________
Name:
Title:
[Signature
Page to the Indenture]
Exhibit
4.4
FORM
OF
INDENTURE TO BE ENTERED INTO
DISCOVERY
LABORATORIES, INC.
and
THE
BANK
OF NEW YORK
as
Trustee
____________________________
INDENTURE
Dated
as
of ,
2005
____________________________
Subordinated
Debt Securities
TABLE
OF
CONTENTS
|
PAGE
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|||||
|
ARTICLE
I DEFINITIONS
AND INCORPORATION BY REFERENCE
|
|
1
|
|
||
|
Section
1.1
|
|
Definitions
|
|
1
|
|
|
Section
1.2
|
|
Other
Definitions
|
|
6
|
|
|
Section
1.3
|
|
Incorporation
by Reference of Trust Indenture Act
|
|
7
|
|
|
Section
1.4
|
|
Rules
of Construction
|
|
7
|
|
|
ARTICLE
II THE
SECURITIES
|
|
8
|
|
||
|
Section
2.1
|
|
Issuable
in Series
|
|
8
|
|
|
Section
2.2
|
|
Establishment
of Terms of Series of Securities
|
|
8
|
|
|
Section
2.3
|
|
Execution
and Authentication
|
|
10
|
|
|
Section
2.4
|
|
Registrar
and Paying Agent
|
|
11
|
|
|
Section
2.5
|
|
Paying
Agent to Hold Money in Trust
|
|
12
|
|
|
Section
2.6
|
|
Securityholder
Lists
|
|
12
|
|
|
Section
2.7
|
|
Transfer
and Exchange
|
|
12
|
|
|
Section
2.8
|
|
Mutilated,
Destroyed, Lost and Stolen Securities
|
|
13
|
|
|
Section
2.9
|
|
Outstanding
Securities
|
|
14
|
|
|
Section
2.10
|
|
Treasury
Securities
|
|
14
|
|
|
Section
2.11
|
|
Temporary
Securities
|
|
14
|
|
|
Section
2.12
|
|
Cancellation
|
|
15
|
|
|
Section
2.13
|
|
Defaulted
Interest
|
|
15
|
|
|
Section
2.14
|
|
Global
Securities
|
|
15
|
|
|
Section
2.15
|
|
CUSIP
Numbers
|
|
17
|
|
i
|
ARTICLE
III REDEMPTION
|
|
17
|
|
||
|
Section
3.1
|
|
Notice
to Trustee
|
|
17
|
|
|
Section
3.2
|
|
Selection
of Securities to be Redeemed
|
|
17
|
|
|
Section
3.3
|
|
Notice
of Redemption
|
|
18
|
|
|
Section
3.4
|
|
Effect
of Notice of Redemption
|
|
18
|
|
|
Section
3.5
|
|
Deposit
of Redemption Price
|
|
18
|
|
|
Section
3.6
|
|
Securities
Redeemed in Part
|
|
19
|
|
|
ARTICLE
IV COVENANTS
|
|
19
|
|
||
|
Section
4.1
|
|
Payment
of Principal and Interest
|
|
19
|
|
|
Section
4.2
|
|
SEC
Reports
|
|
19
|
|
|
Section
4.3
|
|
Compliance
Certificate
|
|
19
|
|
|
Section
4.4
|
|
Corporate
Existence
|
|
19
|
|
|
Section
4.5
|
|
Taxes
|
|
20
|
|
|
ARTICLE
V SUCCESSORS
|
|
20
|
|
||
|
Section
5.1
|
|
When
Company May Merge, Etc.
|
|
20
|
|
|
Section
5.2
|
|
Successor
Corporation Substituted
|
|
20
|
|
|
ARTICLE
VI DEFAULTS
AND REMEDIES
|
|
21
|
|
||
|
Section
6.1
|
|
Events
of Default
|
|
21
|
|
|
Section
6.2
|
|
Acceleration
of Maturity; Rescission and Annulment
|
|
22
|
|
|
Section
6.3
|
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
|
23
|
|
|
Section
6.4
|
|
Trustee
May File Proofs of Claim
|
|
24
|
|
|
Section
6.5
|
|
Trustee
May Enforce Claims Without Possession of Securities
|
|
24
|
|
ii
|
Section
6.6
|
Application
of Money Collected
|
|
25
|
|
|
|
Section
6.7
|
|
Limitation
on Suits
|
|
25
|
|
|
Section
6.8
|
|
Unconditional
Right of Holders to Receive Principal and Interest
|
|
26
|
|
|
Section
6.9
|
|
Restoration
of Rights and Remedies
|
|
26
|
|
|
Section
6.10
|
|
Rights
and Remedies Cumulative
|
|
26
|
|
|
Section
6.11
|
|
Delay
or Omission Not Waiver
|
|
26
|
|
|
Section
6.12
|
|
Control
by Holders
|
|
26
|
|
|
Section
6.13
|
|
Waiver
of Past Defaults
|
|
27
|
|
|
Section
6.14
|
|
Undertaking
for Costs
|
|
27
|
|
|
ARTICLE
VII TRUSTEE
|
|
27
|
|
||
|
Section
7.1
|
|
Duties
of Trustee
|
|
27
|
|
|
Section
7.2
|
|
Rights
of Trustee
|
|
29
|
|
|
Section
7.3
|
|
Individual
Rights of Trustee
|
|
30
|
|
|
Section
7.4
|
|
Trustee's
Disclaimer
|
|
30
|
|
|
Section
7.5
|
|
Notice
of Defaults
|
|
31
|
|
|
Section
7.6
|
|
Reports
by Trustee to Holders
|
|
31
|
|
|
Section
7.7
|
|
Compensation
and Indemnity
|
|
31
|
|
|
Section
7.8
|
|
Replacement
of Trustee
|
|
32
|
|
|
Section
7.9
|
|
Successor
Trustee by Merger, etc.
|
|
33
|
|
|
Section
7.10
|
|
Eligibility;
Disqualification
|
|
33
|
|
|
Section
7.11
|
|
Preferential
Collection of Claims Against Company
|
|
33
|
|
|
ARTICLE
VIII SATISFACTION
AND DISCHARGE; DEFEASANCE
|
|
33
|
|
||
|
Section
8.1
|
|
Satisfaction
and Discharge of Indenture
|
|
33
|
|
iii
|
Section
8.2
|
|
Application
of Trust Funds; Indemnification
|
|
34
|
|
|
Section
8.3
|
|
Legal
Defeasance of Securities of any Series
|
|
35
|
|
|
Section
8.4
|
|
Covenant
Defeasance
|
|
36
|
|
|
Section
8.5
|
|
Repayment
to Company
|
|
38
|
|
|
Section
8.6
|
|
Reinstatement
|
|
38
|
|
|
ARTICLE
IX AMENDMENTS
AND WAIVERS
|
|
38
|
|
||
|
Section
9.1
|
|
Without
Consent of Holders
|
|
38
|
|
|
Section
9.2
|
|
With
Consent of Holders
|
|
39
|
|
|
Section
9.3
|
|
Limitations
|
|
39
|
|
|
Section
9.4
|
|
Compliance
with Trust Indenture Act
|
|
40
|
|
|
Section
9.5
|
|
Revocation
and Effect of Consents
|
|
40
|
|
|
Section
9.6
|
|
Notation
on or Exchange of Securities
|
|
40
|
|
|
Section
9.7
|
|
Trustee
Protected
|
|
41
|
|
|
ARTICLE
X MISCELLANEOUS
|
|
41
|
|
||
|
Section
10.1
|
|
Trust
Indenture Act Controls
|
|
41
|
|
|
Section
10.2
|
|
Notices
|
|
41
|
|
|
Section
10.3
|
|
Communication
by Holders with Other Holders
|
|
42
|
|
|
Section
10.4
|
|
Certificate
and Opinion as to Conditions Precedent
|
|
41
|
|
|
Section
10.5
|
|
Statements
Required in Certificate or Opinion
|
|
42
|
|
|
Section
10.6
|
|
Rules
by Trustee and Agents
|
|
43
|
|
|
Section
10.7
|
|
Legal
Holidays
|
|
43
|
|
|
Section
10.8
|
|
No
Recourse Against Others
|
|
43
|
|
|
Section
10.9
|
|
Counterparts
|
|
43
|
|
iv
|
Section
10.10
|
|
Governing
Laws; Waiver of Jury Trial
|
|
43
|
|
|
Section
10.11
|
|
No
Adverse Interpretation of Other Agreements
|
|
43
|
|
|
Section
10.12
|
|
Successors
|
|
44
|
|
|
Section
10.13
|
|
Severability
|
|
44
|
|
|
Section
10.14
|
|
Table
of Contents, Headings, Etc
|
|
44
|
|
|
Section
10.15
|
|
Securities
in a Foreign Currency or in ECU
|
|
44
|
|
|
Section
10.16
|
|
Judgment
Currency
|
|
45
|
|
|
Section
10.17
|
|
Force
Majeure
|
|
45
|
|
|
ARTICLE
XI SINKING
FUNDS
|
|
46
|
|
||
|
Section
11.1
|
|
Applicability
of Article
|
|
46
|
|
|
Section
11.2
|
|
Satisfaction
of Sinking Fund Payments with Securities
|
|
46
|
|
|
Section
11.3
|
|
Redemption
of Securities for Sinking Fund
|
|
47
|
|
|
ARTICLE
XII SUBORDINATION
OF SECURITIES
|
|
47
|
|
||
|
Section
12.1
|
|
Agreement
of Subordination
|
|
47
|
|
|
Section
12.2
|
|
Payments
to Holders
|
|
47
|
|
|
Section
12.3
|
|
Subrogation
of Securities
|
|
50
|
|
|
Section
12.4
|
|
Authorization
to Effect Subordination
|
|
51
|
|
|
Section
12.5
|
|
Notice
to Trustee
|
|
51
|
|
|
Section
12.6
|
|
Trustee's
Relation to Senior Indebtedness
|
|
52
|
|
|
Section
12.7
|
|
No
Impairment of Subordination
|
|
53
|
|
|
Section
12.8
|
|
Article
Applicable to Paying Agents
|
|
53
|
|
|
Section
12.9
|
|
Senior
Indebtedness Entitled to Rely
|
|
53
|
|
v
DISCOVERY
LABORATORIES, INC.
Reconciliation
and tie between Trust Indenture Act of 1939 and
Indenture,
dated as of ,
2005
|
Section
310(a) (1)
|
|
7.10
|
|
(a)
(2)
|
|
7.10
|
|
(a)
(3)
|
|
Not Applicable
|
|
(a)
(4)
|
|
Not
Applicable
|
|
(a)
(5)
|
|
7.10
|
|
(b)
|
|
7.10
|
|
Section
311(a)
|
|
7.11
|
|
(b)
|
|
7.11
|
|
(c)
|
|
Not
Applicable
|
|
Section
312(a)
|
|
2.6
|
|
(b)
|
|
10.3
|
|
(c)
|
|
10.3
|
|
Section
313(a)
|
|
7.6
|
|
(b)
(1)
|
|
7.6
|
|
(b)
(2)
|
|
7.6
|
|
(c)
(1)
|
|
7.6
|
|
(d)
|
|
7.6
|
|
Section
314(a)
|
|
4.2,
10.5
|
|
(b)
|
|
Not
Applicable
|
|
(c)
(1)
|
|
10.4
|
|
(c)
(2)
|
|
10.4
|
|
(c)
(3)
|
|
Not
Applicable
|
|
(d)
|
|
Not
Applicable
|
|
(e)
|
|
10.5
|
|
(f)
|
|
Not
Applicable
|
|
Section
315(a)
|
|
7.1
|
|
(b)
|
|
7.5
|
|
(c)
|
|
7.1
|
|
(d)
|
|
7.1
|
|
(e)
|
|
6.14
|
|
Section
316(a)
|
|
2.10
|
|
(a)
(1)(a)
|
|
6.12
|
|
(a)
(1)(b)
|
|
6.13
|
|
(b)
|
|
6.8
|
|
Section
317(a)(1)
|
|
6.3
|
|
(a)(2)
|
|
6.4
|
|
(b)
|
|
2.5
|
|
Section
318(a)
|
|
10.1
|
Note:
This reconciliation and tie shall not, for any purpose, be deemed to be part
of
the Indenture.
vi
INDENTURE,
dated as of ,
2005
between Discovery Laboratories, Inc., a Delaware corporation (the “Company”),
and The Bank of New York, a New York banking corporation (the “Trustee”).
Each
party agrees as follows for the benefit of the other party and for the equal
and
ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE
I
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1 Definitions.
“Additional
Amounts” means any additional amounts which are required hereby or by any
Security, under circumstances specified herein or therein, to be paid by
the
Company in respect of certain taxes imposed on Holders specified therein
and
which are owing to such Holders.
“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”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.
“Agent”
means any Registrar, Paying Agent, Service Agent or authenticating agent.
“Authorized
Newspaper” means a newspaper in an official language of the country of
publication customarily published at least once a day for at least five days
in
each calendar week and of general circulation in the place in connection
with
which the term is used. If it shall be impractical to make any publication
of
any notice required hereby in an Authorized Newspaper, any publication or
other
notice in lieu thereof that is made or given by the Trustee shall constitute
a
sufficient publication of such notice.
“Bearer”
means anyone in possession from time to time of a Bearer Security.
“Bearer
Security” means any Security, including any interest coupon appertaining
thereto, that does not provide for the identification of the Holder thereof.
“Board
of
Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been adopted by the Board of
Directors or pursuant to authorization by the Board of Directors and to be
in
full force and effect on the date of the certificate, and delivered to the
Trustee.
1
“Business
Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate
or supplemental indenture hereto for a particular Series, any day except
a
Saturday, Sunday or a legal holiday in The City of New York on which banking
institutions are authorized or required by law, regulation or executive order
to
close.
“Company”
means the party named as such above until a successor replaces it and thereafter
means the successor.
“Company
Order” means a written order signed in the name of the Company by two Officers,
one of whom must be the Company’s chief executive officer, chief financial
officer or principal accounting officer.
“Company
Request” means a written request signed in the name of the Company by its
Chairman of the Board, a 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 at which at any particular time
its corporate trust business shall be principally administered, which office
at
the date hereof is located at 101 Barclay Street, Floor 8 West, New York,
New
York 10286, Attention: Corporate Trust Administration, or such other address
as
the Trustee may designate from time to time by notice to the Holders and
the
Company, or the principal corporate trust office of any successor Trustee
(or
such other address as such successor Trustee may designate from time to time
by
notice to the Holders and the Company).
“Default”
means any event which is, or after notice or passage of time would be, an
Event
of Default.
“Depositary”
means, with respect to the Securities of any Series issuable or issued in
whole
or in part in the form of one or more Global Securities, the person designated
as Depositary for such Series by the Company, which Depositary shall be a
clearing agency registered under the Exchange Act; and if at any time there
is
more than one such person, “Depositary” as used with respect to the Securities
of any Series shall mean the Depositary with respect to the Securities of
such
Series.
“Designated
Senior Indebtedness” means any of our senior indebtedness that expressly
provides that it is “designated senior indebtedness” for purposes of this
Indenture (provided that the instrument, agreement or other document creating
or
evidencing such Senior Indebtedness may place limitations and conditions
on the
right of such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness).
“Discount
Security” means any Security that provides for an amount less than the stated
principal amount thereof to be due and payable upon declaration of acceleration
of the maturity thereof pursuant to Section 6.2.
2
“Dollars”
means the currency of The United States of America.
“ECU”
means the European Currency Unit as determined by the Commission of the European
Union.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Foreign
Currency” means any currency or currency unit issued by a government other than
the government of The United States of America.
“Foreign
Government Obligations” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government
that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged or (ii) obligations of a person controlled
or supervised by or acting as an agency or instrumentality of such government
the timely payment of which is unconditionally guaranteed as a full faith
and
credit obligation by such government, which, in either case under clauses
(i) or
(ii), are not callable or redeemable at the option of the issuer thereof.
“Global
Security” or “Global Securities” means a Security or Securities, as the case may
be, in the form established pursuant to Section 2.2 evidencing all or part
of a
Series of Securities, issued to the Depositary for such Series or its nominee,
and registered in the name of such Depositary or nominee.
“Holder”
or “Securityholder” means a person in whose name a Security is registered or the
holder of a Bearer Security.
“indebtedness”
means, with respect to any person, and without duplication, (a) all
indebtedness, obligations and other liabilities (contingent or otherwise)
of
such person for borrowed money (including obligations of the Company in respect
of overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from banks,
whether or not evidenced by notes or similar instruments) or evidenced by
bonds,
debentures, notes or similar instruments (whether or not the recourse of
the
lender is to the whole of the assets of such person or to only a portion
thereof) (other than any account payable or other accrued current liability
or
obligation incurred in the ordinary course of business in connection with
the
obtaining of materials or services), (b) all reimbursement obligations and
other
liabilities (contingent or otherwise) of such person with respect to letters
of
credit, bank guarantees or bankers’ acceptances, (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of such person
required, in conformity with generally accepted accounting principles, to
be
accounted for as capitalized lease obligations on the balance sheet of such
person and all obligations and all other obligations and liabilities, contingent
or otherwise, as lessee under leases for facility equipment (and related
assets
leased together with such equipment) and under any lease or related document
(including a purchase agreement, conditional sale or other title retention
or
synthetic lease agreement) in connection with the lease of real property
or
improvement thereon (or any personal property included as part of any such
lease) which provides that such Person is contractually obligated to purchase
or
cause a third party to purchase the leased property or pay an agreed upon
residual value of the leased property, including the obligations under such
lease or related document to purchase or cause a third party to purchase
such
leased property (whether or not such lease transaction is characterized as
an
operating lease or a capitalized lease in accordance with GAAP) or pay an
agreed
upon residual value of the leased property to the lessor; (d) all obligations
of
such person (contingent or otherwise) with respect to an interest rate or
other
swap, cap or collar agreement or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement,
(e) all direct or indirect guaranties or similar agreements by such person
in
respect of, and obligations or liabilities (contingent or otherwise) of such
person to purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of indebtedness, obligations or liabilities of another person
of
the kind described in clauses (a) through (d), (f) any indebtedness or other
obligations described in clauses (a) through (e) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or
held by
such person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such person and (g) any and all refinancings,
replacements, deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability
of
the kind described in clauses (a) through (f).
3
“Indenture”
means this Indenture as amended from time to time and shall include the form
and
terms of particular Series of Securities established as contemplated hereunder.
“interest”
with respect to any Discount Security which by its terms bears interest only
after Maturity, means interest payable after Maturity.
“Maturity,”
when used with respect to any Security or installment of principal thereof,
means the date on which the principal of such Security or such installment
of
principal becomes due and payable as therein or herein provided, whether
at the
Stated Maturity or by declaration of acceleration, call for redemption, notice
of option to elect repayment or otherwise.
“Officer”
means the Chairman of the Board, any President, any Vice-President, the
Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary
of
the Company.
“Officers’
Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal
accounting officer.
“Opinion
of Counsel” means a written opinion of legal counsel. The counsel may be an
employee of or counsel to the Company.
“person”
means any individual, corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
“principal”
of a Security means the principal of the Security plus, when appropriate,
the
premium, if any, on, and any Additional Amounts in respect of, the Security.
4
“Representative”
means the (a) indenture trustee or other trustee, agent or representative
for
any Senior Indebtedness or (b) with respect to any Senior Indebtedness that
does
not have any such trustee, agent or other representative, (i) in the case
of
such Senior Indebtedness issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Indebtedness,
any
holder or owner of such Senior Indebtedness acting with the consent of the
required persons necessary to bind such holders or owners of such Senior
Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the
holder or owner of such Senior Indebtedness.
“Responsible
Officer” means any officer of the Trustee in its corporate trust department
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons
who at
the time shall be such officers, respectively, and also means, with respect
to a
particular corporate trust matter, any other officer to whom any corporate
trust
matter is referred because of his or her knowledge of and familiarity with
a
particular subject and who shall have direct responsibility for the
administration of this Indenture.
“SEC”
means the Securities and Exchange Commission.
“Securities”
means the debentures, notes or other debt instruments of the Company of any
Series authenticated and delivered under this Indenture.
“Senior
Indebtedness” means the principal, premium, if any, interest, including any
interest accruing after bankruptcy, and rent or termination payment on or
other
amounts due on our current or future Indebtedness, whether created, incurred,
assumed, guaranteed or in effect guaranteed by us, including any deferrals,
renewals, extensions, refundings, amendments, modifications or supplements
to
the above. However, Senior Indebtedness does not include: (i) Indebtedness
that
expressly provides that it shall not be senior in right of payment to the
Securities or expressly provides that it is on the same basis or junior to
the
Securities; (ii) our indebtedness to any of our majority-owned subsidiaries;
and
(iii) the Securities.
“Series”
or “Series of Securities” means each series of debentures, notes or other debt
instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.
“Stated
Maturity” when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as
the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
“Subsidiary”
of any specified person means any corporation of which at least a majority
of
the outstanding stock having by the terms thereof ordinary voting power for
the
election of directors of such corporation (irrespective of whether or not
at the
time stock of any other class or classes of such corporation shall have or
might
have voting power by reason of the happening of any contingency) is at the
time
directly or indirectly owned by such person, or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries.
5
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb)
as in
effect on the date of this Indenture; provided, however, that in the event
the
Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the
extent required by any such amendment, the Trust Indenture Act 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 or
include each person who is then a Trustee hereunder, and if at any time there
is
more than one such person, “Trustee” as used with respect to the Securities of
any Series shall mean the Trustee with respect to Securities of that Series.
“U.S.
Government Obligations” means securities which are (i) direct obligations of The
United States of America for the payment of which its full faith and credit
is
pledged or (ii) obligations of a person controlled or supervised by and acting
as an agency or instrumentality of
The
United States of America the payment of which is unconditionally guaranteed
as a
full faith and credit obligation by The United States of America, and which
in
the case of (i) and (ii) are not callable or redeemable at the option of
the
issuer thereof, and shall also include a depository receipt issued by a bank
or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of
such
depository receipt from any amount received by the custodian in respect of
the
U.S. Government Obligation evidenced by such depository receipt.
Section
1.2 Other Definitions.
|
TERM
|
|
DEFINED IN
SECTION
|
|
“Bankruptcy
Law”
|
|
6.1
|
|
“Custodian”
|
|
6.1
|
|
“Event
of Default”
|
|
6.1
|
|
“Journal”
|
|
10.15
|
|
“Judgment
Currency”
|
|
10.16
|
|
“Legal
Holiday”
|
|
10.7
|
|
“mandatory
sinking fund payment”
|
|
11.1
|
|
“Market
Exchange Rate”
|
|
10.15
|
|
“New
York Banking Day”
|
|
10.16
|
|
“optional
sinking fund payment”
|
|
11.1
|
|
“Paying
Agent”
|
|
2.4
|
|
“Payment
Blockage Notice”
|
|
12.2
|
|
“Registrar”
|
|
2.4
|
|
“Required
Currency”
|
|
10.16
|
|
“Service
Agent”
|
|
2.4
|
|
“successor
person”
|
|
5.1
|
6
Section
1.3 Incorporation by Reference of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms
used
in this Indenture have the following meanings:
“Commission”
means the SEC.
“indenture
securities” means the Securities. “indenture security holder” means a
Securityholder.
“indenture
to be qualified” means this Indenture.
“indenture
trustee” or “institutional trustee” means the Trustee.
“obligor”
on the indenture securities means the Company and any successor obligor upon
the
Securities.
All
other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA and not
otherwise defined herein are used herein as so defined.
Section
1.4 Rules of Construction.
Unless
the context otherwise requires:
(a)
a
term
has the meaning assigned to it;
(b)
an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
(c)
references
to “generally accepted accounting principles” shall mean generally accepted
accounting principles in effect as of the time when and for the period as
to
which such accounting principles are to be applied;
(d)
“or”
is
not exclusive;
(e)
words
in
the singular include the plural, and in the plural include the singular;
and
(f)
provisions
apply to successive events and transactions.
7
ARTICLE
II
THE
SECURITIES
Section
2.1 Issuable in Series.
The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited. The Securities may be issued in one or
more
Series. All Securities of a Series shall be identical except as may be set
forth
in a Board Resolution, a supplemental indenture or an Officers’ Certificate
detailing the adoption of the terms thereof pursuant to the authority granted
under a Board Resolution. In the case of Securities of a Series to be issued
from time to time, the Board Resolution, Officers’ Certificate or supplemental
indenture may provide for the method by which specified terms (such as interest
rate, maturity date, record date or date from which interest shall accrue)
are
to be determined. Securities may differ between Series in respect of any
matters, provided that all Series of Securities shall be equally and ratably
entitled to the benefits of the Indenture but all Securities issued hereunder
shall be subordinate and junior in right of payment, to the extent and in
the
manner set forth in Article XII, to all Senior Indebtedness of the Company.
Section
2.2 Establishment of Terms of Series of Securities.
At
or
prior to the issuance of any Securities within a Series, the following shall
be
established (as to the Series generally, in the case of Subsection 2.2.1
and
either as to such Securities within the Series or as to the Series generally
in
the case of Subsections 2.2.2 through 2.2.22) by a Board Resolution, a
supplemental indenture or an Officers’ Certificate pursuant to authority granted
under a Board Resolution:
2.2.1
the
title
of the Series (which shall distinguish the Securities of that particular
Series
from the Securities of any other Series);
2.2.2
the
price
or prices (expressed as a percentage of the principal amount thereof) at
which
the Securities of the Series will be issued;
2.2.3
any
limit
upon the aggregate principal amount of the Securities of the Series which
may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the Series pursuant to Section 2.7,
2.8,
2.11, 3.6 or 9.6);
2.2.4
the
date
or dates on which the principal of the Securities of the Series is payable;
2.2.5
the
rate
or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to,
any
commodity, commodity index, stock exchange index or financial index) at which
the Securities of the Series shall bear interest, if any, the date or dates
from
which such interest, if any, shall accrue, the date or dates on which such
interest, if any, shall commence and be payable and any regular record date
for
the interest payable on any interest payment date;
8
2.2.6
the
place
or places where the principal of and interest, if any, on the Securities
of the
Series shall be payable, or the method of such payment, if by wire transfer,
mail or other means;
2.2.7
if
applicable, the period or periods within which, the price or prices at which
and
the terms and conditions upon which the Securities of the Series may be
redeemed, in whole or in part, at the option of the Company;
2.2.8
the
obligation, if any, of the Company to redeem or purchase the Securities of
the
Series pursuant to any sinking fund or analogous provisions or at the option
of
a Holder thereof and the period or periods within which, the price or prices
at
which and the terms and conditions upon which Securities of the Series shall
be
redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9
the
dates, if any, on which and the price or prices at which the Securities of
the
Series will be repurchased by the Company at the option of the Holders thereof
and other detailed terms and provisions of such repurchase obligations;
2.2.10
if
other
than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be issuable;
2.2.11
the
forms
of the Securities of the Series in bearer or fully registered form (and,
if in
fully registered form, whether the Securities will be issuable as Global
Securities);
2.2.12
if
other
than the principal amount thereof, the portion of the principal amount of
the
Securities of the Series that shall be payable upon declaration of acceleration
of the maturity thereof pursuant to Section 6.2;
2.2.13
the
currency of denomination of the Securities of the Series, which may be Dollars
or any Foreign Currency, including, but not limited to, the ECU, and if such
currency of denomination is a composite currency other than the ECU, the
agency
or organization, if any, responsible for overseeing such composite currency;
2.2.14
the
designation of the currency, currencies or currency units in which payment
of
the principal of and interest, if any, on the Securities of the Series will
be
made;
2.2.15
if
payments of principal of or interest, if any, on the Securities of the Series
are to be made in one or more currencies or currency units other than that
or
those in which such Securities are denominated, the manner in which the exchange
rate with respect to such payments will be determined;
2.2.16
the
manner in which the amounts of payment of principal of or interest, if any,
on
the Securities of the Series will be determined, if such amounts may be
determined by reference to an index based on a currency or currencies or
by
reference to a commodity, commodity index, stock exchange index or financial
index;
9
2.2.17
the
provisions, if any, relating to any security provided for the Securities
of the
Series;
2.2.18
if
the
holders of Securities of the Series may convert or exchange the Securities
into
or for securities of the Issuer or of other entities or other property, the
period or periods within which, the rate or rates at which and the terms
and
conditions upon which Securities of the Series may be converted or exchanged,
in
whole or in part;
2.2.19
any
addition to or change in the Events of Default which applies to any Securities
of the Series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the principal amount thereof due and
payable pursuant to Section 6.2;
2.2.20
any
addition to or change in the covenants set forth in Articles IV or V which
applies to Securities of the Series;
2.2.21
any
other
terms of the Securities of the Series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section 9.1,
but
which may modify or delete any provision of this Indenture insofar as it
applies
to such Series); and
2.2.22
any
depositories, interest rate calculation agents, exchange rate calculation
agents
or other agents with respect to Securities of such Series if other than those
appointed herein.
All
Securities of any one Series need not be issued at the same time and may
be
issued from time to time, consistent with the terms of this Indenture, if
so
provided by or pursuant to the Board Resolution, supplemental indenture or
Officers’ Certificate referred to above, and the authorized principal amount of
any Series may not be increased to provide for issuances of additional
Securities of such Series, unless otherwise provided in such Board Resolution,
supplemental indenture or Officers’ Certificate.
Section
2.3 Execution and Authentication.
Two
Officers shall sign the Securities for the Company by manual or facsimile
signature.
If
an
Officer whose signature is on a Security no longer holds that office at the
time
the Security is authenticated, the Security shall nevertheless be valid.
A
Security shall not be valid until authenticated by the manual signature of
the
Trustee or an authenticating agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The
Trustee shall at any time, and from time to time, authenticate Securities
for
original issue in the principal amount provided in the Board Resolution,
supplemental indenture hereto or Officers’ Certificate, upon receipt by the
Trustee of a Company Order. Such Company Order may authorize authentication
and
delivery pursuant to oral or electronic instructions from the Company or
its
duly authorized agent or agents, which oral instructions shall be promptly
confirmed in writing. Each Security shall be dated the date of its
authentication unless otherwise provided by a Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate.
10
The
aggregate principal amount of Securities of any Series outstanding at any
time
may not exceed any limit upon the maximum principal amount for such Series
set
forth in the Board
Resolution,
supplemental indenture hereto or Officers’ Certificate delivered pursuant to
Section 2.2, except as provided in Section 2.8.
Prior
to
the issuance of Securities of any Series, the Trustee shall have received
and
(subject to Section 7.2) shall be fully protected in conclusively relying
on:
(a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate
establishing the form of the Securities of that Series or of Securities within
that Series and the terms of the Securities of that Series or of Securities
within that Series, (b) an Officers’ Certificate complying with Section 10.4,
and (c) an Opinion of Counsel complying with Section 10.4.
The
Trustee shall have the right to decline to authenticate and deliver any
Securities of such Series: (a) if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken; or (b) if the Trustee
in
good faith by its board of directors or trustees, executive committee or
a trust
committee of directors and/or vice-presidents shall determine that such action
would expose the Trustee to personal liability to Holders of any then
outstanding Series of Securities.
The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or
an Affiliate.
Section
2.4 Registrar and Paying Agent.
The
Company shall maintain, with respect to each Series of Securities, at the
place
or places specified with respect to such Series pursuant to Section 2.2,
an
office or agency where Securities of such Series may be presented or surrendered
for payment (“Paying Agent”), where Securities of such Series may be surrendered
for registration of transfer or exchange (“Registrar”) and where notices and
demands to or upon the Company in respect of the Securities of such Series
and
this Indenture may be served (“Service Agent”). The Registrar shall keep a
register with respect to each Series of Securities and to their transfer
and
exchange. The Company will give prompt written notice to the Trustee of the
name
and address, and any change in the name or address, of each Registrar, Paying
Agent or Service Agent. If at any time the Company shall fail to maintain
any
such required Registrar, Paying Agent or Service Agent or shall fail to furnish
the Trustee with the name and address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of
the
Trustee, and the Company hereby appoints the Trustee as its agent to receive
all
such presentations, surrenders, notices and demands.
11
The
Company may also from time to time designate one or more co-registrars,
additional paying agents or additional service agents 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 a Registrar, Paying Agent and Service Agent in each place so specified
pursuant to Section 2.2 for Securities of any Series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the name or address of any such co-registrar,
additional paying agent or additional service agent. The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
paying agent; and the term “Service Agent” includes any additional service
agent.
The
Company hereby appoints the Trustee the initial Registrar, Paying Agent and
Service Agent for each Series unless another Registrar, Paying Agent or Service
Agent, as the case may be, is appointed prior to the time Securities of that
Series are first issued.
Section
2.5 Paying Agent to Hold Money in Trust.
The
Company shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust, for the benefit of
Securityholders of any Series of Securities, or the Trustee, all money held
by
the Paying Agent for the payment of principal of or interest on the Series
of
Securities, and will notify the Trustee of any default by the Company in
making
any such payment. While any such default continues, the Trustee may require
a
Paying Agent to pay all money held by it to the Trustee. The Company at any
time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company
or a
Subsidiary) shall have no further liability for the money. If the Company
or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust
fund for the benefit of Securityholders of any Series of Securities all money
held by it as Paying Agent.
Section
2.6 Securityholder Lists.
The
Trustee shall preserve in as current a form as is reasonably practicable
the
most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA Section
312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at
least ten days before each interest payment date and at such other times
as the
Trustee may request in writing a list, in such form and as of such date as
the
Trustee may reasonably require, of the names and addresses of Securityholders
of
each Series of Securities.
Section
2.7 Transfer and Exchange.
Where
Securities of a Series are presented to the Registrar or a co-registrar with
a
request to register a transfer or to exchange them for an equal principal
amount
of Securities of the same Series, the Registrar shall register the transfer
or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trustee shall authenticate
Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover
any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge payable
upon
exchanges pursuant to Sections 2.11, 3.6 or 9.6).
12
Neither
the Company nor the Registrar shall be required (a) to issue, register the
transfer of, or exchange Securities of any Series for the period beginning
at
the opening of business fifteen days immediately preceding the mailing of
a
notice of redemption of Securities of that Series selected for redemption
and
ending at the close of business on the day of such mailing, or (b) to register
the transfer of or exchange Securities of any Series selected, called or
being
called for redemption as a whole or the portion being redeemed of any such
Securities selected, called or being called for redemption in part.
Section
2.8 Mutilated, Destroyed, Lost and Stolen Securities.
If
any
mutilated Security is surrendered to the Trustee, the Company shall execute
and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same Series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If
there
shall be delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security and (ii) such
security or indemnity as may be required by them to save each of them and
any
agent of either of them harmless, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and make available for delivery, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same Series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In
case
any such mutilated, destroyed, lost or stolen Security has become or is about
to
become due and payable, the Company in its discretion may, instead of issuing
a
new Security, pay such Security.
Upon
the
issuance of any new Security under this Section, the Company may require
the
payment of a sum sufficient to cover any tax or other governmental charge
that
may be imposed in relation thereto and any other expenses (including the
fees
and expenses of the Trustee) connected therewith.
Every
new
Security of any Series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all
the
benefits of this Indenture equally and proportionately with any and all other
Securities of that Series duly issued hereunder.
13
The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or
payment
of mutilated, destroyed, lost or stolen Securities.
Section
2.9 Outstanding Securities.
The
Securities outstanding at any time are all the Securities authenticated by
the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest on a Global Security effected by the Trustee
in
accordance with the provisions hereof and those described in this Section
as not
outstanding.
If
a
Security is replaced pursuant to Section 2.8, it ceases to be outstanding
until
the Trustee receives proof satisfactory to it that the replaced Security
is held
by a bona fide purchaser.
If
the
Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds on the Maturity of Securities of a Series money sufficient
to pay
such Securities payable on that date, then on and after that date such
Securities of the Series cease to be outstanding and interest on them ceases
to
accrue.
A
Security does not cease to be outstanding because the Company or an Affiliate
holds the Security.
In
determining whether the Holders of the requisite principal amount of outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, the principal amount of a Discount Security
that
shall be deemed to be outstanding for such purposes shall be the amount of
the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 6.2.
Section
2.10 Treasury Securities.
In
determining whether the Holders of the required principal amount of Securities
of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver Securities of a Series owned by the Company or
an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in conclusively relying on any such
request, demand, authorization, direction, notice, consent or waiver only
Securities of a Series that the Trustee knows are so owned shall be so
disregarded.
Section
2.11 Temporary Securities.
Until
definitive Securities are ready for delivery, the Company may prepare and
the
Trustee shall authenticate temporary Securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but
may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee upon
request shall authenticate definitive Securities of the same Series and date
of
maturity in exchange for temporary Securities. Until so exchanged, temporary
securities shall have the same rights under this Indenture as the definitive
Securities.
14
Section
2.12 Cancellation.
The
Company at any time may deliver Securities to the Trustee for cancellation.
The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Securities surrendered for transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Securities (subject
to the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise
directs. The Company may not issue new Securities to replace Securities that
it
has paid or delivered to the Trustee for cancellation.
Section
2.13 Defaulted Interest.
If
the
Company defaults in a payment of interest on a Series of Securities, it shall
pay the defaulted interest, plus, to the extent permitted by law, any interest
payable on the defaulted interest, to the persons who are Securityholders
of the
Series on a subsequent special record date. The Company shall fix the record
date and payment date. At least 30 days before the record date, the Company
shall mail to the Trustee and to each Securityholder of the Series a notice
that
states the record date, the payment date and the amount of interest to be
paid.
The Company may pay defaulted interest in any other lawful manner.
Section
2.14 Global Securities.
2.14.1
Terms of Securities. A
Board
Resolution, a supplemental indenture hereto or an Officers’ Certificate shall
establish whether the Securities of a Series shall be issued in whole or
in part
in the form of one or more Global Securities and the Depositary for such
Global
Security or Securities.
2.14.2
Transfer and Exchange. Notwithstanding
any provisions to the contrary contained in Section 2.7 of the Indenture
and in
addition thereto, any Global Security shall be exchangeable pursuant to Section
2.7 of the Indenture for Securities registered in the names of Holders other
than the Depositary for such Security or its nominee only if (i) such Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time such Depositary ceases to be a
clearing agency registered under the Exchange Act, and, in either case, the
Company fails to appoint a successor Depositary within 90 days of such event,
(ii) the Company executes and delivers to the Trustee an Officers’ Certificate
to the effect that such Global Security shall be so exchangeable or (iii)
an
Event of Default with respect to the Securities represented by such Global
Security shall have happened and be continuing. Any Global Security that
is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Securities registered in such names as the Depositary shall direct in writing
in
an aggregate principal amount equal to the principal amount of the Global
Security with like tenor and terms.
15
Except
as
provided in this Section 2.14.2, a Global Security may not be transferred
except
as a whole by the Depositary with respect to such Global Security to a nominee
of such Depositary, by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by the Depositary or any such nominee
to a
successor Depositary or a nominee of such a successor Depositary.
2.14.3
Legend. Unless
otherwise provided pursuant to Section 2.2, any Global Security issued hereunder
shall bear a legend in substantially the following form:
“This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depositary or a nominee
of the
Depositary. This Security is exchangeable for Securities registered in the
name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except
as a
whole by the Depositary to a nominee of the Depositary, 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 a
successor Depositary.”
2.14.4
Acts of Holders. The
Depositary, as a Holder, may appoint agents and otherwise authorize participants
to give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a Holder is entitled to give or take under the
Indenture.
2.14.5
Payments. Notwithstanding
the other provisions of this Indenture, unless otherwise specified as
contemplated by Section 2.2, payment of the principal of, premium, if any,
and
interest, if any, on any Global Security shall be made to the Holder thereof.
2.14.6
Consents, Declaration and Directions. Except
as
provided in Section 2.14.5, the Company, the Trustee and any Agent shall
treat a
person as the Holder of such principal amount of outstanding Securities of
such
Series represented by a Global Security as shall be specified in a written
statement of the Depositary with respect to such Global Security, for purposes
of obtaining any consents, declarations, waivers or directions required to
be
given by the Holders pursuant to this Indenture.
2.14.7
Trustee Protections.
Each
Holder of a Security agrees to indemnify the Company and the Trustee against
any
liability that may result from the transfer, exchange or assignment of such
Holder's Security in violation of any provision of this Indenture and/or
applicable United States Federal or state securities law.
The
Trustee shall have no obligation or duty to monitor, determine or inquire
as to
compliance with any restrictions on transfer imposed under this Indenture
or
under applicable law with respect to any transfer of any interest in any
Security (including any transfers between or among depositary participants
or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the
terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
16
Neither
the Trustee nor any agent thereof shall have any responsibility for any actions
taken or not taken by the Depositary.
Section
2.15 CUSIP Numbers.
The
Company in issuing the Securities may use CUSIP numbers (if then generally
in
use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that
no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other elements of identification printed
on
the Securities, and any such redemption shall not be affected by any defect
in
or omission of such numbers. The Company will promptly notify the Trustee
in
writing of any change in the CUSIP numbers.
ARTICLE
III
REDEMPTION
Section
3.1 Notice to Trustee.
The
Company may, with respect to any Series of Securities, reserve the right
to
redeem and pay the Series of Securities or may covenant to redeem and pay
the
Series of Securities or any part thereof prior to the Stated Maturity thereof
at
such time and on such terms as provided for in such Securities. If a Series
of
Securities is redeemable and the Company wants or is obligated to redeem
prior
to the Stated Maturity thereof all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee in writing of
the
redemption date and the principal amount of Series of Securities to be redeemed.
The Company shall give the notice at least 45 days before the redemption
date
(or such shorter notice as may be acceptable to the Trustee).
Section
3.2 Selection of Securities to be Redeemed.
Unless
otherwise indicated for a particular Series by a Board Resolution, a
supplemental indenture or an Officers’ Certificate, if less than all the
Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities
of
the Series outstanding not previously called for redemption. The Trustee
may
select for redemption portions of the principal of Securities of the Series
that
have denominations larger than $1,000. Securities of the Series and portions
of
them it selects shall be in amounts of $1,000 or whole multiples of $1,000
or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.10, the minimum principal denomination for each Series
and integral multiples thereof. Provisions of this Indenture that apply to
Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.
17
Section
3.3 Notice of Redemption.
Unless
otherwise indicated for a particular Series by Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate, at least 30 days but not more than
90 days before a redemption date, the Company shall mail a notice of redemption
by first-class mail to each Holder whose Securities are to be redeemed and
if
any Bearer Securities are outstanding, publish on one occasion a notice in
an
Authorized Newspaper.
The
notice shall identify the Securities of the Series to be redeemed (including
the
CUSIP numbers thereof) and shall state:
(a)
the
redemption date;
(b)
the
redemption price;
(c)
the
name
and address of the Paying Agent;
(d)
that
Securities of the Series called for redemption must be surrendered to the
Paying
Agent to collect the redemption price;
(e)
that
interest on Securities of the Series called for redemption ceases to accrue
on
and after the redemption date; and
(f)
any
other
information as may be required by the terms of the particular Series or the
Securities of a Series being redeemed.
At
the
Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense.
Section
3.4 Effect of Notice of Redemption.
Once
notice of redemption is mailed or published as provided in Section 3.3,
Securities of a Series called for redemption become due and payable on the
redemption date and at the redemption price. A notice of redemption may not
be
conditional. Upon surrender to the Paying Agent, such Securities shall be
paid
at the redemption price plus accrued interest to the redemption date.
Section
3.5 Deposit of Redemption Price.
On
or
before the redemption date, the Company shall deposit with the Paying Agent
money sufficient to pay the redemption price of and accrued interest, if
any, on
all Securities to be redeemed on that date.
18
Section
3.6 Securities Redeemed in Part.
Upon
surrender of a Security that is redeemed in part, the Trustee shall authenticate
for the Holder a new Security of the same Series and the same maturity equal
in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE
IV
COVENANTS
Section
4.1 Payment of Principal and Interest.
The
Company covenants and agrees for the benefit of the Holders of each Series
of
Securities that it will duly and punctually pay the principal of and interest,
if any, on the Securities of that Series in accordance with the terms of
such
Securities and this Indenture.
Section
4.2 SEC Reports.
The
Company shall deliver to the Trustee after it files them with the SEC copies
of
the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA Section 314(a).
Section
4.3 Compliance Certificate.
The
Company shall deliver to the Trustee, within 120 days after the end of each
fiscal year of the Company, an Officers’ Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view
to
determining whether the Company has kept, observed, performed and fulfilled
its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained
in
this Indenture and is not in default in the performance or observance of
any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge).
The
Company will, so long as any of the Securities are outstanding, deliver to
the
Trustee, forthwith upon becoming aware of any Default or Event of Default,
an
Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
Section
4.4 Corporate Existence.
Subject
to Article V, the Company will do or cause to be done all things necessary
to
preserve and keep in full force and effect its corporate existence and the
rights (charter and statutory), licenses and franchises of the Company;
provided, however, that the Company shall not be required to preserve any
such
right, license 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 its Subsidiaries taken as a whole and that the loss thereof
is
not adverse in any material respect to the Holders.
19
Section
4.5 Taxes.
The
Company shall pay prior to delinquency all taxes, assessments and governmental
levies, except as contested in good faith and by appropriate proceedings.
ARTICLE
V
SUCCESSORS
Section
5.1 When Company May Merge, Etc.
The
Company shall not consolidate with or merge into, or convey, transfer or
lease
all or substantially all of its properties and assets to, any person (a
“successor person”), and may not permit any person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety
to, the
Company, unless:
(a)
the
successor person (if any) is a corporation, partnership, trust or other entity
organized and validly existing under the laws of any U.S. domestic jurisdiction
and expressly assumes the Company’s obligations on the Securities and under this
Indenture and
(b)
immediately
after giving effect to the transaction, no Default or Event of Default, shall
have occurred and be continuing.
The
Company shall deliver to the Trustee prior to the consummation of the proposed
transaction an Officers’ Certificate to the foregoing effect and an Opinion of
Counsel stating that the proposed transaction and such supplemental indenture
comply with this Indenture.
Section
5.2 Successor Corporation Substituted.
Upon
any
consolidation or merger, or any sale, lease, conveyance or other disposition
of
all or substantially all of the assets of the Company in accordance with
Section
5.1, the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, lease, conveyance or other
disposition 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 has been named as the Company herein; provided,
however, that the predecessor Company in the case of a sale, lease, conveyance
or other disposition shall not be released from the obligation to pay the
principal of and interest, if any, on the Securities.
20
ARTICLE
VI
DEFAULTS
AND REMEDIES
Section
6.1 Events of Default.
“Event
of
Default,” wherever used herein with respect to Securities of any Series, means
any one of the following events, unless in the establishing Board Resolution,
supplemental indenture or Officers’ Certificate, it is provided that such Series
shall not have the benefit of said Event of Default:
(a)
default
in the payment of any interest on any Security of that Series when it becomes
due and payable, and continuance of such default for a period of 90 days
(unless
the entire amount of such payment is deposited by the Company with the Trustee
or with a Paying Agent prior to the expiration of such period of 90 days);
or
(b)
default
in the payment of the principal of any Security of that Series at its Maturity;
or
(c)
default
in the deposit of any sinking fund payment, when and as due in respect of
any
Security of that Series; or
(d)
default
in the performance or breach of any covenant or warranty of the Company in
this
Indenture (other than a covenant or warranty that has been included in this
Indenture solely for the benefit of Series of Securities other than that
Series), which default continues uncured for a period of 90 days after there
has
been given, by registered or certified mail, to the Company by the Trustee
or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the outstanding Securities of that Series a written notice specifying
such
default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or
(e)
the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i)
commences
a voluntary case,
(ii)
consents
to the entry of an order for relief against it in an involuntary case,
(iii)
consents
to the appointment of a Custodian of it or for all or substantially all of
its
property,
(iv)
makes
a
general assignment for the benefit of its creditors, or
(v)
generally
is unable to pay its debts as the same become due; or
(f)
a
court
of competent jurisdiction enters an order or decree under any Bankruptcy
Law
that:
21
(i)
is
for
relief against the Company in an involuntary case,
(ii)
appoints
a Custodian for the Company or for all or substantially all of its property,
or
(iii)
orders
the liquidation of the Company and the order or decree remains unstayed and
in
effect for 90 days; or
(g)
any
other
Event of Default provided with respect to Securities of that Series, which
is
specified in a Board Resolution, a supplemental indenture hereto or an Officers’
Certificate, in accordance with Section 2.2.19.
The
term
“Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law
for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
Section
6.2 Acceleration of Maturity; Rescission and Annulment.
If
an
Event of Default with respect to Securities of any Series at the time
outstanding occurs and is continuing (other than an Event of Default referred
to
in Section 6.1(e) or (f) ) then in every such case the Trustee or the Holders
of
not less than 25% in principal amount of the outstanding Securities of that
Series may declare the principal amount (or, if any Securities of that Series
are Discount Securities, such portion of the principal amount as may be
specified in the terms of such Securities) of and accrued and unpaid interest,
if any, on all of the Securities of that Series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if
given
by Holders), and upon any such declaration such principal amount (or specified
amount) and accrued and unpaid interest, if any, shall become immediately
due
and payable. If an Event of Default specified in Section 6.1(e) or (f) shall
occur, the principal amount (or specified amount) of and accrued and unpaid
interest, if any, on all outstanding 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.
At
any
time after such a declaration of acceleration with respect to any Series
has
been made and before a judgment or decree for payment of the money due has
been
obtained by the Trustee as hereinafter in this Article provided, the Holders
of
a majority in principal amount of the outstanding Securities of that Series,
by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a)
the
Company has paid or deposited with the Trustee a sum sufficient to pay
(i)
all
overdue interest, if any, on all Securities of that Series,
(ii)
the
principal of any Securities of that Series which have become due otherwise
than
by such declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities,
22
(iii)
to
the
extent that payment of such interest is lawful, interest upon any overdue
principal and overdue interest at the rate or rates prescribed therefor in
such
Securities, and
(iv)
all
sums
paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and
(b)
all
Events of Default with respect to Securities of that Series, other than the
non-payment of the principal of Securities of that Series which have become
due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 6.13.
No
such
rescission shall affect any subsequent Default or impair any right consequent
thereon.
Section
6.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
The
Company covenants that if
(a)
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 90 days,
or
(b)
default
is made in the payment of principal of any Security at the Maturity thereof,
or
(c)
default
is made in the deposit of any sinking fund payment when and as due by the
terms
of a Security, then, the Company will, upon demand of the Trustee, pay to
it,
for the benefit of the Holders of such Securities, the whole amount then
due and
payable on such Securities for principal and interest and, to the extent
that
payment of such interest shall be legally enforceable, interest on any overdue
principal or any overdue interest, at the rate or rates prescribed therefor
in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If
the
Company fails to pay such amounts forthwith upon such demand, the Trustee,
in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute
such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the moneys
adjudged or deemed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities, wherever
situated.
If
an
Event of Default with respect to any Securities of any Series occurs and
is
continuing, the Trustee may in its discretion proceed to protect and enforce
its
rights and the rights of the Holders of Securities of such Series by such
appropriate judicial proceedings as the Trustee shall deem most effectual
to
protect and enforce any such rights, whether for the specific enforcement
of any
covenant or agreement in this Indenture or in aid of the exercise of any
power
granted herein, or to enforce any other proper remedy.
23
Section
6.4 Trustee May File Proofs of Claim.
In
case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or
the property of the Company or of such other obligor or their creditors,
the
Trustee (irrespective of whether the principal of the Securities shall then
be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a)
to
file
and prove a claim for the whole amount of principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, fees,
disbursements and advances of the Trustee, its agents and counsel) and of
the
Holders allowed in such judicial proceeding, and
(b)
to
collect and receive any moneys or other property payable or deliverable on
any
such claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of
such
payments directly to the Holders, to pay to the Trustee any amount due it
for
the reasonable compensation, expenses, fees, disbursements and advances of
the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder 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.
Section
6.5 Trustee May Enforce Claims Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto,
and any
such proceeding instituted by the Trustee shall be brought in its own name
as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit
of
the Holders of the Securities in respect of which such judgment has been
recovered.
24
Section
6.6 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 interest, upon
presentation of the Securities and the notation thereon of the payment if
only
partially paid and upon surrender thereof if fully paid:
First:
To
the payment of all amounts due the Trustee under Section 7.7; and
Second:
To the payment of the amounts then due and unpaid for principal of 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 interest,
respectively; and
Third:
To
the Company.
Section
6.7 Limitation on Suits.
No
Holder
of any Security of any Series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of
a receiver or trustee, or for any other remedy hereunder, unless
(a)
such
Holder has previously given written notice to the Trustee of a continuing
Event
of Default with respect to the Securities of that Series;
(b)
the
Holders of not less than 25% in principal amount of the outstanding Securities
of that Series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(c)
such
Holder or Holders have offered to the Trustee indemnity satisfactory to it
against the costs, expenses and liabilities to be incurred in compliance
with
such request;
(d)
the
Trustee for 90 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(e)
no
direction inconsistent with such written request has been given to the Trustee
during such 90-day period by the Holders of a majority in principal amount
of
the outstanding Securities of that Series;
it
being
understood and intended that no one or more of such Holders shall have any
right
in any manner whatever by virtue of, or by availing of, any provision of
this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any
other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders
(it being understood that the Trustee does not have an affirmative duty to
ascertain whether or not such actions or forbearances are unduly prejudicial
to
such Holders).
25
Section
6.8 Unconditional Right of Holders to Receive Principal and Interest.
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 interest, if any, on such Security on the Stated Maturity or Stated
Maturities expressed in such Security (or, in the case of redemption, on
the
redemption date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
Section
6.9 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
6.10 Rights and Remedies Cumulative.
Except
as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to
be
exclusive of any other right or remedy, and every right and remedy shall,
to the
extent permitted by law, be cumulative and in addition to every other right
and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder,
or
otherwise, shall not prevent the concurrent assertion or employment of any
other
appropriate right or remedy.
Section
6.11 Delay or Omission Not Waiver.
No
delay
or omission of the Trustee or of any Holder of any Securities to exercise
any
right or remedy accruing upon any Event of Default shall impair any such
right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may
be
deemed expedient, by the Trustee or by the Holders, as the case may be.
Section
6.12 Control by Holders.
The
Holders of a majority in principal amount of the outstanding Securities of
any
Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust
or power conferred on the Trustee, with respect to the Securities of such
Series, provided that
(a)
such
direction shall not be in conflict with any rule of law or with this Indenture,
26
(b)
the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(c)
subject
to the provisions of Section 6.1, the Trustee shall have the right to decline
to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability.
Section
6.13 Waiver of Past Defaults.
Subject
to Section 6.2, the Holders of not less than a majority in principal amount
of
the outstanding Securities of any Series may on behalf of the Holders of
all the
Securities of such Series waive any past Default hereunder with respect to
such
Series and its consequences, except a Default in the payment of the principal
of
or interest on any Security of such Series (provided, however, that the Holders
of a majority in principal amount of the outstanding Securities of any Series
may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). 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
6.14 Undertaking for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in
its
discretion require, in any suit for the enforcement of any right or remedy
under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in
such
suit of an undertaking to pay the costs of such suit, and that such court
may in
its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits
and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by
any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the outstanding Securities of any Series, or to any suit instituted
by
any Holder for the enforcement of the payment of the principal of or interest
on
any Security on or after the Stated Maturity or Stated Maturities expressed
in
such Security (or, in the case of redemption, on the redemption date).
ARTICLE
VII
TRUSTEE
Section
7.1 Duties of Trustee.
(a)
If
an
Event of Default has occurred and is continuing, the Trustee shall exercise
the
rights and powers vested in it by this Indenture and use the same degree
of care
and skill in their exercise as a prudent person would exercise or use under
the
circumstances in the conduct of such person’s own affairs.
27
(b)
Except
during the continuance of an Event of Default:
(i)
The
Trustee need perform only those duties that are specifically set forth in
this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
(ii)
In
the
absence of bad faith on its part, the Trustee may conclusively rely, as to
the
truth of the statements and the correctness of the opinions expressed therein,
upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and
conforming to the requirements of this Indenture; however, in the case of
any
such Officers’ Certificates or Opinions of Counsel which by any provisions
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine such Officers’ Certificates and Opinions of Counsel to determine
whether or not they conform to the requirements of this Indenture (but need
not
confirm or investigate the accuracy of mathematical calculations or other
facts
stated therein).
(c)
The
Trustee may not be relieved from liability for its own negligent action,
its own
negligent failure to act or its own willful misconduct, except that:
(i)
This
paragraph does not limit the effect of paragraph (b) of this Section.
(ii)
The
Trustee shall not be liable for any error of judgment made in good faith
by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii)
The
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it with respect to Securities of any Series in good
faith
in accordance with the direction of the Holders of a majority in principal
amount of the outstanding Securities of such Series relating to the time,
method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such Series.
(d)
Every
provision of this Indenture that in any way relates to the Trustee is subject
to
paragraph (a), (b) and (c) of this Section.
(e)
The
Trustee may refuse to perform any duty or exercise any right or power unless
it
receives indemnity satisfactory to it against any loss, liability, damage,
claim
or expense.
(f)
The
Trustee shall not be liable for interest on any money received by it except
as
the Trustee may agree in writing with the Company. Money held in trust by
the
Trustee need not be segregated from other funds except to the extent required
by
law.
28
(g)
No
provision of this Indenture shall require the Trustee to risk its own funds
or
otherwise incur any financial liability in the performance of any of its
duties,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against
such risk is not reasonably assured to it.
(h)
The
Paying Agent, the Registrar and any authenticating agent shall be entitled
to
the protections and immunities as are set forth in paragraphs (a), (b) and
(c)
of this Section with respect to the Trustee.
Section
7.2 Rights of Trustee.
(a)
The
Trustee may conclusively rely on and shall be protected in acting or refraining
from acting upon any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate
any
fact or matter stated in the document.
(b)
Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for
any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.
(c)
The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care. No Depositary shall be
deemed an agent of the Trustee and the Trustee shall not be responsible for
any
act or omission by any Depositary.
(d)
The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers;
provided,
however,
that
the Trustee’s conduct does not constitute willful misconduct, gross negligence
or bad faith.
(e)
The
Trustee may consult with counsel of its selection and the advice of such
counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(f)
The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders
of Securities unless such Holders shall have offered to the Trustee 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.
(g)
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, at reasonable times during normal business
hours, personally or by agent or attorney at the sole cost of the Company
and
shall incur no liability or additional liability of any kind by reason of
such
inquiry or investigation.
29
(h)
The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended
to, and
shall be enforceable by, the Trustee in each of its capacities hereunder,
and
each agent, custodian and other Person employed to act hereunder.
(i)
In
no
event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised
of the
likelihood of such loss or damage and regardless of the form of
action.
(j)
The
Trustee may request that the Company deliver a certificate setting forth
the
names of individuals and/or titles of officers authorized at such time to
take
specified actions pursuant to this Indenture.
In
addition, the Trustee shall not be deemed to have knowledge of any Default
or
Event of Default except (1) any Event of Default occurring pursuant to Sections
6.1(a)(1), 6.1(a)(2), 6.1(a)(3) and 4.1 hereof or (2) any Default or Event
of
Default of which the Trustee shall have received written notification in
the
manner set forth in this Indenture or a Responsible Officer of the Trustee
shall
have obtained actual knowledge. Delivery of reports, information and documents
to the Trustee under Section 4.2 is for informational purposes only and the
information and the Trustee’s receipt of the foregoing shall not constitute
constructive notice of any information contained therein, or determinable
from
information contained therein including the Company’s compliance with any of
their covenants thereunder (as to which the Trustee is entitled to rely
exclusively on an Officers’ Certificate).
Section
7.3 Individual Rights of Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or an Affiliate with
the
same rights it would have if it were not Trustee. Any Agent may do the same
with
like rights. The Trustee is also subject to Sections 7.10 and 7.11.
Section
7.4 Trustee’s Disclaimer.
The
Trustee makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities, and it shall not be responsible for any statement
in the Securities other than its authentication.
30
Section
7.5 Notice of Defaults.
If
a
Default or Event of Default occurs and is continuing with respect to the
Securities of any Series and if it is known to the Trustee, the Trustee shall
mail to each Securityholder of the Securities of that Series and, if any
Bearer
Securities are outstanding, publish on one occasion in an Authorized Newspaper,
notice of a Default or Event of Default within 90 days after it occurs or,
if
later, after the Trustee has knowledge of such Default or Event of Default.
Except in the case of a Default or Event of Default in payment of principal
of
or interest on any Security of any Series, the Trustee may withhold the notice
if and so long as its corporate trust committee or a committee of its
Responsible Officers in good faith determines that withholding the notice
is in
the interests of Securityholders of that Series.
Section
7.6 Reports by Trustee to Holders.
Within
60
days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept
by the
Registrar and, if any Bearer Securities are outstanding, publish in an
Authorized Newspaper, a brief report dated as of such May 15, in accordance
with, and to the extent required under, TIA Section 313.
A
copy of
each report at the time of its mailing to Securityholders of any Series shall
be
filed with the SEC and each stock exchange on which the Securities of that
Series are listed. The Company shall promptly notify the Trustee when Securities
of any Series are listed on any stock exchange.
Section
7.7 Compensation and Indemnity.
The
Company shall pay to the Trustee from time to time such compensation for
its
services as shall be agreed from time to time in writing. The Trustee’s
compensation shall not be limited by any law on compensation of a trustee
of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such expenses shall include
the reasonable compensation and expenses of the Trustee’s agents and counsel.
The
Company shall indemnify the Trustee (including the cost of defending itself)
against any loss, liability, damage, claim or expense incurred by it except
as
set forth in the next paragraph in the performance of its duties under this
Indenture as Trustee or Agent. The Trustee shall notify the Company promptly
of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld. This indemnification shall
apply to officers, directors, employees, shareholders and agents of the Trustee.
The
Company need not reimburse any expense or indemnify against any loss, liability,
damage, claim or expense incurred by the Trustee or by any officer, director,
employee, shareholder or agent of the Trustee through negligence or bad faith.
31
To
secure
the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities of any Series on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Securities of that Series.
When
the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(e) or (f) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section
7.8 Replacement of Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign with respect to the Securities of one or more Series by
so
notifying the Company. The Holders of a majority in principal amount of the
Securities of any Series may remove the Trustee with respect to that Series
by
so notifying the Trustee and the Company in writing. The Company may remove
the
Trustee with respect to Securities of one or more Series if:
(a)
the
Trustee fails to comply with Section 7.10;
(b)
the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered
with respect to the Trustee under any Bankruptcy Law;
(c)
a
Custodian or public officer takes charge of the Trustee or its property;
or
(d)
the
Trustee becomes incapable of acting.
If
the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the Holders of a majority
in
principal amount of the then outstanding Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If
a
successor Trustee with respect to the Securities of any one or more Series
does
not take office within 30 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in principal
amount of the Securities of the applicable Series may petition any court
of
competent jurisdiction for the appointment of a successor Trustee.
If
the
Trustee with respect to the Securities of any one or more Series fails to
comply
with Section 7.10, any Securityholder of the applicable Series may petition
any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
32
A
successor Trustee shall deliver a written acceptance of its appointment to
the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee subject to the lien provided for in Section 7.7, the resignation
or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with
respect
to each Series of Securities for which it is acting as Trustee under this
Indenture. A successor Trustee shall mail a notice of its succession to each
Securityholder of each such Series and, if any Bearer Securities are
outstanding, publish such notice on one occasion in an Authorized Newspaper.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the
Company’s obligations under Section 7.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by
it
prior to such replacement.
Section
7.9 Successor Trustee by Merger, etc.
If
the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation,
the
successor corporation without any further act shall be the successor Trustee.
Section
7.10 Eligibility; Disqualification.
This
Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a) (1), (2) and (5). The Trustee shall always have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
Section
7.11 Preferential Collection of Claims Against Company.
The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed
shall
be subject to TIA Section 311(a) to the extent indicated.
ARTICLE
VIII
SATISFACTION
AND DISCHARGE; DEFEASANCE
Section
8.1 Satisfaction and Discharge of Indenture.
This
Indenture shall upon Company Order cease to be of further effect (except
as
hereinafter provided in this Section 8.1), and the Trustee, at the expense
of
the Company, shall execute proper instruments acknowledging satisfaction
and
discharge of this Indenture, when
(a)
either
(i)
all
Securities theretofore authenticated and delivered (other than Securities
that
have been destroyed, lost or stolen and that have been replaced or paid)
have
been delivered to the Trustee for cancellation; or
33
(ii)
all
such
Securities not theretofore delivered to the Trustee for cancellation
(1)
have
become due and payable, or
(2)
will
become due and payable at their Stated Maturity within one year, or
(3)
are
to be
called for redemption within one year under arrangements satisfactory to
the
Trustee for the giving of notice of redemption by the Trustee in the name,
and
at the expense, of the Company, or
(4)
are
deemed paid and discharged pursuant to Section 8.3, as applicable;
and
the
Company, in the case of (1), (2) or (3) above, has deposited or caused to
be
deposited with the Trustee as trust funds in trust an amount sufficient for
the
purpose of paying and discharging the entire indebtedness on such Securities
not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable on or prior to the date of such deposit) or to the
Stated
Maturity or redemption date, as the case may be;
(b)
the
Company has paid or caused to be paid all other sums payable hereunder by
the
Company; and
(c)
the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Company
to the Trustee under Section 7.7, and, if money shall have been deposited
with
the Trustee pursuant to clause (a) of this Section, the provisions of Sections
2.4, 2.7, 2.8, 8.1, 8.2 and 8.5 shall survive.
Section
8.2 Application of Trust Funds; Indemnification.
(a)
Subject
to the provisions of Section 8.5, all money deposited with the Trustee pursuant
to Section 8.1, all money and U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and
all
money received by the Trustee in respect of U.S. Government Obligations or
Foreign Government Obligations deposited with the Trustee pursuant to Section
8.3 or 8.4, 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 interest for whose payment such money has been deposited with
or
received by the Trustee or to make mandatory sinking fund payments or analogous
payments as contemplated by Sections 8.3 or 8.4.
34
(b)
The
Company shall pay and shall indemnify the Trustee against any tax, fee or
other
charge imposed on or assessed against U.S. Government Obligations or Foreign
Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest
and principal received in respect of such obligations other than any payable
by
or on behalf of Holders.
(c)
The
Trustee shall deliver or pay to the Company from time to time upon Company
Request any U.S. Government Obligations or Foreign Government Obligations
or
money held by it as provided in Sections 8.3 or 8.4 which are then in excess
of
the amount thereof which then would have been required to be deposited for
the
purpose for which such U.S. Government Obligations or Foreign Government
Obligations or money were deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations or Foreign
Government Obligations held under this Indenture.
Section
8.3 Legal Defeasance of Securities of any Series.
Unless
this Section 8.3 is otherwise specified, pursuant to Section 2.2.21, to be
inapplicable to Securities of any Series, the Company shall be deemed to
have
paid and discharged the entire indebtedness on all the outstanding Securities
of
such Series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates
to
such outstanding Securities of such Series, shall no longer be in effect
(and
the Trustee, at the expense of the Company, shall, at Company Request, execute
proper instruments acknowledging the same), except as to:
(a)
the
rights of Holders of Securities of such Series to receive, from the trust
funds
described in subparagraph (d) hereof, (i) payment of the principal of and
each
installment of principal of and interest on the outstanding Securities of
such
Series on the Stated Maturity of such principal or installment of principal
or
interest and (ii) the benefit of any mandatory sinking fund payments applicable
to the Securities of such Series on the day on which such payments are due
and
payable in accordance with the terms of this Indenture and the Securities
of
such Series;
(b)
the
provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and
(c)
the
rights, powers, trust and immunities of the Trustee hereunder;
provided
that, the following conditions shall have been satisfied:
(d)
the
Company shall have deposited or caused to be deposited irrevocably with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities (i) in the case of Securities of
such
Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest
and
principal in respect thereof, in accordance with their terms, will provide
(and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money,
an
amount in cash, sufficient, in the opinion of a nationally recognized firm
of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of principal
(including mandatory sinking fund or analogous payments) of and interest,
if
any, on all the Securities of such Series on the dates such installments
of
interest or principal are due;
35
(e)
such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(f)
no
Default or Event of Default with respect to the Securities of such Series
shall
have occurred and be continuing on the date of such deposit or during the
period
ending on the 91st day after such date;
(g)
the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel to the effect that (i) the Company has received from,
or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of execution of this Indenture, there has been a change in
the
applicable Federal income tax law, in either case to the effect that, and
based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Securities of such Series will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge
and
will be subject to Federal income tax on the same amount and in the same
manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
(h)
the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring
the
Holders of the Securities of such Series over any other creditors of the
company
or with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(i)
such
deposit shall not result in the trust arising from such deposit constituting
an
investment company (as defined in the Investment Company Act of 1940, as
amended), or such trust shall be qualified under such Act or exempt from
regulation thereunder; and
(j)
the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this Section have been complied
with.
Section
8.4 Covenant Defeasance.
Unless
this Section 8.4 is otherwise specified pursuant to Section 2.2.21 to be
inapplicable to Securities of any Series, on and after the 91st day after
the
date of the deposit referred to in subparagraph (a) hereof, the Company may
omit
to comply with any term, provision or condition set forth under Sections
4.2,
4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained
in a
supplemental indenture hereto for a particular Series of Securities or a
Board
Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.21 (and
the failure to comply with any such covenants shall not constitute a Default
or
Event of Default under Section 6.1) and the occurrence of any event described
in
clause (e) of Section 6.1 shall not constitute a Default or Event of Default
hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:
36
(a)
With
reference to this Section 8.4, the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 8.2(c) ) with the Trustee
as trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities (i) in the case
of
Securities of such Series denominated in Dollars, cash in Dollars (or such
other
money or currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest
and
principal in respect thereof, in accordance with their terms, will provide
(and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money,
an
amount in cash, sufficient, in the opinion of a nationally recognized firm
of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, to pay principal and interest, if any,
on and
any mandatory sinking fund in respect of the Securities of such Series on
the
dates such installments of interest or principal are due;
(b)
Such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(c)
No
Default or Event of Default with respect to the Securities of such Series
shall
have occurred and be continuing on the date of such deposit or during the
period
ending on the 91st day after such date;
(d)
the
Company shall have delivered to the Trustee an Opinion of Counsel confirming
that Holders of the Securities of such Series will not recognize income,
gain or
loss for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit
and
defeasance had not occurred;
(e)
the
Company shall have delivered to the Trustee an Officers’ Certificate stating the
deposit was not made by the Company with the intent of preferring the Holders
of
the Securities of such Series over any other creditors of the Company or
with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company; and
37
(f)
The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance contemplated by this Section have been complied
with.
Section
8.5 Repayment to Company.
The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal and interest that remains unclaimed
for two years or such other shorter period set forth in applicable escheat
or
abandoned or unclaimed property law. After that, Securityholders entitled
to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
Section
8.6 Reinstatement.
If
the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Sections 8.1, 8.3 or 8.4, as the case may
be, by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1, 8.3 or 8.4, as the case may be, until such time
as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.1, 8.3 or 8.4, as the case may be;
provided, however, that if the Company makes any payment of principal of,
premium, if any, or interest on any Securities because of reinstatement of
its
obligations, the Company shall be subrogated to the rights of the holders
of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE
IX
AMENDMENTS
AND WAIVERS
Section
9.1 Without Consent of Holders.
The
Company and the Trustee may amend or supplement this Indenture or the Securities
of one or more Series without the consent of any Securityholder:
(a)
to
cure
any ambiguity, defect or inconsistency;
(b)
to
comply
with Article V;
(c)
to
provide for uncertificated Securities in addition to or in place of certificated
Securities;
(d)
to
make
any change that does not adversely affect the rights of any Securityholder
in
any material respect;
38
(e)
to
provide for the issuance of and establish the form and terms and conditions
of
Securities of any Series as permitted by this Indenture;
(f)
to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to
or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than
one
Trustee; or
(g)
to
comply
with requirements of the SEC in order to effect or maintain the qualification
of
this Indenture under the TIA.
Section
9.2 With Consent of Holders.
The
Company and the Trustee may enter into a supplemental indenture with the
written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities of each Series affected by such supplemental indenture
(including consents obtained in connection with a tender offer or exchange
offer
for the Securities of such Series), for the purpose of adding any provisions
to
or changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture or of modifying in any manner the rights
of the
Securityholders of each such Series. Except as provided in Section 6.13,
the
Holders of at least a majority in principal amount of the outstanding Securities
of each Series affected by such waiver by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for
the
Securities of such Series) may waive compliance by the Company with any
provision of this Indenture or the Securities with respect to such Series.
It
shall
not be necessary for the consent of the Holders of Securities under this
Section
9.2 to approve the particular form of any proposed supplemental indenture
or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After a supplemental indenture or waiver under this Section becomes
effective, the Company shall mail to the Holders of Securities affected thereby
and, if any Bearer Securities affected thereby are outstanding, publish on
one
occasion in an Authorized Newspaper, a notice briefly describing the
supplemental indenture or waiver. Any failure by the Company to mail or publish
such notice, or any defect therein, shall not, however, in any way impair
or
affect the validity of any such supplemental indenture or waiver.
Section
9.3 Limitations.
Without
the consent of each Securityholder affected, an amendment or waiver may not:
(a)
change
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver;
(b)
reduce
the rate of or extend the time for payment of interest (including default
interest) on any Security;
39
(c)
reduce
the principal or change the Stated Maturity of any Security or reduce the
amount
of, or postpone the date fixed for, the payment of any sinking fund or analogous
obligation;
(d)
reduce
the principal amount of Discount Securities payable upon acceleration of
the
maturity thereof;
(e)
waive
a
Default or Event of Default in the payment of the principal of or interest,
if
any, on any Security (except a rescission of acceleration of the Securities
of
any Series by the Holders of at least a majority in principal amount of the
outstanding Securities of such Series and a waiver of the payment default
that
resulted from such acceleration);
(f)
make
the
principal of or interest, if any, on any Security payable in any currency
other
than that stated in the Security;
(g)
make
any
change in Sections 6.8, 6.13, 9.3, 10.15 or 10.16; or
(h)
waive
a
redemption payment with respect to any Security or change any of the provisions
with respect to the redemption of any Securities.
Section
9.4 Compliance with Trust Indenture Act.
Every
amendment to this Indenture or the Securities of one or more Series shall
be set
forth in a supplemental indenture hereto that complies with the TIA as then
in
effect.
Section
9.5 Revocation and Effect of Consents.
Until
an
amendment or waiver becomes effective, a consent to it by a Holder of a Security
is a continuing consent by the Holder and every subsequent Holder of a Security
or portion of a Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security if the Trustee receives the notice of revocation
before
the date the amendment or waiver becomes effective.
Any
amendment or waiver once effective shall bind every Securityholder of each
Series affected by such amendment or waiver unless it is of the type described
in any of clauses (a) through (g) of Section 9.3. In that case, the amendment
or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same
debt as the consenting Holder’s Security.
Section
9.6 Notation on or Exchange of Securities.
The
Trustee may place an appropriate notation about an amendment or waiver on
any
Security of any Series thereafter authenticated. The Company in exchange
for
Securities of that Series may issue and the Trustee shall authenticate upon
request new Securities of that Series that reflect the amendment or waiver.
40
Section
9.7 Trustee Protected.
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 7.1) shall be fully protected in conclusively 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.
The
Trustee shall sign all supplemental indentures, except that the Trustee need
not
sign any supplemental indenture that adversely affects its rights.
ARTICLE
X
MISCELLANEOUS
Section
10.1 Trust Indenture Act Controls.
If
any
provision of this Indenture limits, qualifies, or conflicts with another
provision which is required or deemed to be included in this Indenture by
the
TIA, such required or deemed provision shall control.
Section
10.2 Notices.
Any
notice or communication by the Company or the Trustee to the other is duly
given
if in writing and delivered in person or mailed by first-class mail
if
to the
Company:
Discovery
Laboratories, Inc.
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976-3646
Attention:
General Counsel
if
to the
Trustee:
The
Bank
of New York
101
Barclay Street, Floor 8W
New
York,
New York 10286
Attention:
Corporate Trust Administration
The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any
notice or communication to a Securityholder shall be mailed by first-class
mail
to his address shown on the register kept by the Registrar and, if any Bearer
Securities are outstanding, published in an Authorized Newspaper. Failure
to
mail a notice or communication to a Securityholder of any Series or any defect
in it shall not affect its sufficiency with respect to other Securityholders
of
that or any other Series.
41
If
a
notice or communication is mailed or published in the manner provided above,
within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If
the
Company mails a notice or communication to Securityholders, it shall mail
a copy
to the Trustee and each Agent at the same time.
Section
10.3 Communication by Holders with Other Holders.
Securityholders
of any Series may communicate pursuant to TIA Section 312(b) with other
Securityholders of that Series or any other Series with respect to their
rights
under this Indenture or the Securities of that Series or all Series. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of
TIA Section 312(c).
Section
10.4 Certificate and Opinion as to Conditions Precedent.
Upon
any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a)
an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to
the
proposed action have been complied with; and
(b)
an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Section
10.5 Statements Required in Certificate or Opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant
to
TIA Section 314(a) (4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a)
a
statement that the person making such certificate or opinion has read such
covenant or condition;
(b)
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;
(c)
a
statement that, in the opinion of such person, he has made such examination
or
investigation as is necessary to enable him to express an informed opinion
as to
whether or not such covenant or condition has been complied with; and
(d)
a
statement as to whether or not, in the opinion of such person, such condition
or
covenant has been complied with.
42
Section
10.6 Rules by Trustee and Agents.
The
Trustee may make reasonable rules for action by or a meeting of Securityholders
of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
Section
10.7 Legal Holidays.
Unless
otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture for a particular Series, a “Legal Holiday” is any day that is not a
Business Day. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not
a Legal
Holiday, and no interest shall accrue for the intervening period.
Section
10.8 No Recourse Against Others.
A
director, officer, employee or stockholder, as such, of the Company shall
not
have any liability for any obligations of the Company under the Securities
or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of
the
consideration for the issue of the Securities.
Section
10.9 Counterparts.
This
Indenture 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.
Section
10.10 Governing Laws; Waiver of Jury Trial.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. EACH OF THE COMPANY AND
THE
TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF
OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED
HEREBY.
Section
10.11 No Adverse Interpretation of Other Agreements.
This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary. Any such indenture, loan or debt agreement
may
not be used to interpret this Indenture.
43
Section
10.12 Successors.
All
agreements of the Company in this Indenture and the Securities shall bind
its
successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section
10.13 Severability.
In
case
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
10.14 Table of Contents, Headings, Etc.
The
Table
of Contents, Cross Reference Table, and headings of the Articles and Sections
of
this Indenture have been inserted for convenience of reference only, are
not to
be considered a part hereof, and shall in no way modify or restrict any of
the
terms or provisions hereof.
Section
10.15 Securities in a Foreign Currency or in ECU.
Unless
otherwise specified in a Board Resolution, a supplemental indenture hereto
or an
Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with
respect to a particular Series of Securities, whenever for purposes of this
Indenture any action may be taken by the Holders of a specified percentage
in
aggregate principal amount of Securities of all Series or all Series affected
by
a particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or currency
other than Dollars (including ECUs), then the principal amount of Securities
of
such Series which shall be deemed to be outstanding for the purpose of taking
such action shall be that amount of Dollars that could be obtained for such
amount at the Market Exchange Rate at such time. For purposes of this Section
10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York
City for cable transfers of that currency as published by the Federal Reserve
Bank of New York; provided, however, in the case of ECUs, Market Exchange
Rate
shall mean the rate of exchange determined by the Commission of the European
Union (or any successor thereto) as published in the Official Journal of
the
European Union (such publication or any successor publication, the “Journal”).
If such Market Exchange Rate is not available for any reason with respect
to
such currency, the Trustee shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New
York
or, in the case of ECUs, the rate of exchange as published in the Journal,
as of
the most recent available date, or quotations or, in the case of ECUs, rates
of
exchange from one or more major banks in The City of New York or in the country
of issue of the currency in question or, in the case of ECUs, in Luxembourg
or
such other quotations or, in the case of ECUs, rates of exchange as the Trustee,
upon consultation with the Company, shall deem appropriate. The provisions
of
this paragraph shall apply in determining the equivalent principal amount
in
respect of Securities of a Series denominated in currency other than Dollars
in
connection with any action taken by Holders of Securities pursuant to the
terms
of this Indenture.
44
All
decisions and determinations of the Trustee regarding the Market Exchange
Rate
or any alternative determination provided for in the preceding paragraph
shall
be in its sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and irrevocably
binding upon the Company and all Holders.
Section
10.16 Judgment Currency.
The
Company agrees, to the fullest extent that it may effectively do so under
applicable law, that (a) if for the purpose of obtaining judgment in any
court
it is necessary to convert the sum due in respect of the principal of or
interest or other amount on the Securities of any Series (the “Required
Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of
New
York the Required Currency with the Judgment Currency on the day on which
final
unappealable judgment is entered, unless such day is not a New York Banking
Day,
then, the rate of exchange used shall be the rate at which in accordance
with
normal banking procedures the Trustee could purchase in The City of New York
the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b)
its
obligations under this Indenture to make payments in the Required Currency
(i)
shall not be discharged or satisfied by any tender, any recovery pursuant
to any
judgment (whether or not entered in accordance with clause (a) ), in any
currency other than the Required Currency, except to the extent that such
tender
or recovery shall result in the actual receipt, by the payee, of the full
amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action
for
the purpose of recovering in the Required Currency the amount, if any, by
which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a
legal holiday in The City of New York on which banking institutions are
authorized or required by law, regulation or executive order to close.
Section
10.17 Force Majeure.
In
no
event shall the Trustee be responsible or liable for any failure or delay
in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including, without limitation,
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and interruptions,
loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable
efforts which are consistent with accepted practices in the banking industry
to
resume performance as soon as practicable under the circumstances.
45
ARTICLE
XI
SINKING
FUNDS
Section
11.1 Applicability of Article.
The
provisions of this Article shall be applicable to any sinking fund for the
retirement of the Securities of a Series, except as otherwise permitted or
required by any form of Security of such Series issued pursuant to this
Indenture.
The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any Series is herein referred to as a “mandatory sinking fund
payment” and any other amount provided for by the terms of Securities of such
Series is herein referred to as an “optional sinking fund payment.” If provided
for by the terms of Securities of any Series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 11.2. Each
sinking fund payment shall be applied to the redemption of Securities of
any
Series as provided for by the terms of the Securities of such Series.
Section
11.2 Satisfaction of Sinking Fund Payments with Securities.
The
Company may, in satisfaction of all or any part of any sinking fund payment
with
respect to the Securities of any Series to be made pursuant to the terms
of such
Securities (1) deliver outstanding Securities of such Series to which such
sinking fund payment is applicable (other than any of such Securities previously
called for mandatory sinking fund redemption) and (2) apply as credit Securities
of such Series to which such sinking fund payment is applicable and which
have
been redeemed either at the election of the Company pursuant to the terms
of
such Series of Securities (except pursuant to any mandatory sinking fund)
or
through the application of permitted optional sinking fund payments or other
optional redemptions pursuant to the terms of such Securities, provided that
such Securities have not been previously so credited. Such Securities shall
be
received by the Trustee, together with an Officers’ Certificate with respect
thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited
for
such purpose by the Trustee at the price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. If as a result of the delivery
or
credit of Securities in lieu of cash payments pursuant to this Section 11.2,
the
principal amount of Securities of such Series to be redeemed in order to
exhaust
the aforesaid cash payment shall be less than $100,000, the Trustee need
not
call Securities of such Series for redemption, except upon receipt of a Company
Order that such action be taken, and such cash payment shall be held by the
Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall from
time to time upon receipt of a Company Order pay over and deliver to the
Company
any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the
Company having an unpaid principal amount equal to the cash payment required
to
be released to the Company.
46
Section
11.3 Redemption of Securities for Sinking Fund.
Not
less
than 45 days (unless otherwise indicated in the Board Resolution, supplemental
indenture hereto or Officers’ Certificate in respect of a particular Series of
Securities) prior to each sinking fund payment date for any Series of
Securities, the Company will deliver to the Trustee an Officers’ Certificate
specifying the amount of the next ensuing mandatory sinking fund payment
for
that Series pursuant to the terms of that Series, the portion thereof, if
any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
Series pursuant to Section 11.2, and the optional amount, if any, to be added
in
cash to the next ensuing mandatory sinking fund payment, and the Company
shall
thereupon be obligated to pay the amount therein specified. Not less than
30
days (unless otherwise indicated in the Board Resolution, Officers’ Certificate
or supplemental indenture in respect of a particular Series of Securities)
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 and cause notice of the redemption thereof to be
given
in the name of and at the expense of the Company in the manner provided in
Section 3.3. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
3.4, 3.5 and 3.6.
ARTICLE
XII
SUBORDINATION
OF SECURITIES
Section
12.1 Agreement of Subordination.
The
Company covenants and agrees, and each Holder of Securities issued hereunder
by
his acceptance thereof likewise covenants and agrees, that all Securities
shall
be issued subject to the provisions of this Article XII; and each Person
holding
any Security, whether upon original issue or upon transfer, assignment or
exchange thereof, accepts and agrees to be bound by such provisions.
The
payment of the principal of, premium, if any, and interest on all Securities
(including, but not limited to, the redemption price with respect to the
Securities called for redemption in accordance with Article III as provided
in
the Indenture) issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to
the
prior payment in full of all Senior Indebtedness, whether outstanding at
the
date of this Indenture or thereafter incurred.
No
provision of this Article XII shall prevent the occurrence of any default
or
Event of Default hereunder.
Section
12.2 Payments to Holders.
No
payment shall be made with respect to the principal of, or premium, if any,
or
interest on the Securities (including, but not limited to, the redemption
price
with respect to the Securities to be called for redemption in accordance
with
Article III as provided in the Indenture), except payments and distributions
made by the Trustee as permitted by the first or second paragraph of Section
12.5, if:
47
(i)
a
default
in the payment of principal, premium, interest, rent or other obligations
due on
any Senior Indebtedness occurs and is continuing (or, in the case of Senior
Indebtedness for which there is a period of grace, in the event of such a
default that continues beyond the period of grace, if any, specified in the
instrument or lease evidencing such Senior Indebtedness), unless and until
such
default shall have been cured or waived or shall have ceased to exist; or
(ii)
a
default, other than a payment default, on a Designated Senior Indebtedness
occurs and is continuing that then permits holders of such Designated Senior
Indebtedness to accelerate its maturity and the Trustee receives a notice
of the
default (a “Payment Blockage Notice”) from a Representative or the Company.
If
the
Trustee receives any Payment Blockage Notice pursuant to clause (ii) above,
no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (a) at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice, and
(b)
all scheduled payments of principal, premium, if any, and interest on the
Securities that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
The
Company may and shall resume payments on and distributions in respect of
the
Securities upon the earlier of:
(1)
the
date
upon which the default is cured or waived or ceases to exist, or
(2)
in
the
case of a default referred to in clause (ii) above, 179 days pass after notice
is received if the maturity of such Designated Senior Indebtedness has not
been
accelerated, unless this Article XII otherwise prohibits the payment or
distribution at the time of such payment or distribution.
Upon
any
payment by the Company, or distribution of assets of the Company of any kind
or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership
or
other proceedings, all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in cash or other payment satisfactory to the
holders
of such Senior Indebtedness, or payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such
Senior
Indebtedness, before any payment is made on account of the principal of,
premium, if any, or interest on the Securities (except payments made pursuant
to
Article VI from monies deposited with the Trustee pursuant thereto prior
to
commencement of proceedings for such dissolution, winding-up, liquidation
or
reorganization); and upon any such dissolution or winding-up or liquidation
or
reorganization of the Company or bankruptcy, insolvency, receivership or
other
proceeding, any payment by the Company, or distribution of assets of the
Company
of any kind or character, whether in cash, property or securities, to which
the
Holders of the Securities or the Trustee would be entitled, except for the
provision of this Article XII, shall (except as aforesaid) be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or
other Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them or
it,
directly to the holders of Senior Indebtedness (pro rata to such holders
on the
basis of the respective amounts of Senior Indebtedness held by such holders,
or
as otherwise required by law or a court order) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay
all
Senior Indebtedness in full, in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness, before
any
payment or distribution or provision therefor is made to the Holders of the
Securities or to the Trustee.
48
For
purposes of this Article XII, the words, “cash, property or securities” shall
not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided
for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XII with respect
to
the Securities to the payment of all Senior Indebtedness which may at the
time
be outstanding; provided that (i) the Senior Indebtedness is assumed by the
new
corporation, if any, resulting from any reorganization or readjustment, and
(ii)
the rights of the holders of Senior Indebtedness (other than leases which
are
not assumed by the Company or the new corporation, as the case may be) are
not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety,
or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article V shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section
12.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article V.
In
the
event of the acceleration of the Securities because of an Event of Default,
no
payment or distribution shall be made to the Trustee or any Holder of Securities
in respect of the principal of, premium, if any, or interest on the Securities
(including, but not limited to, the redemption price with respect to the
Securities called for redemption in accordance with Article 3 as provided
in the
Indenture), except payments and distributions made by the Trustee as permitted
by the first or second paragraph of Section 12.5, until all Senior Indebtedness
has been paid in full in cash or other payment satisfactory to the holders
of
Senior Indebtedness or such acceleration is rescinded in accordance with
the
terms of this Indenture. If payment of the Securities is accelerated because
of
an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration at the address set forth in the notice from
the
Agent (or successor agent) to the Trustee as being the address to which the
Trustee should send its notice pursuant to this Section 12.2, unless there
are
no payment obligations of the Company thereunder and all obligations thereunder
to extend credit have been terminated or expired.
49
In
the
event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in
cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee
or the
Holders of the Securities before all Senior Indebtedness is paid in full
in cash
or other payment satisfactory to the holders of such Senior Indebtedness,
or
provision is made for such payment thereof in accordance with its terms in
cash
or other payment satisfactory to the holders of such Senior Indebtedness,
such
payment or distribution shall be held in trust for the benefit of and shall
be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in
cash or
other payment satisfactory to the holders of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders
of
such Senior Indebtedness.
Nothing
in this Section 12.2 shall apply to claims of, or payments to, the Trustee
under
or pursuant to Section 7.7. This Section 12.2 shall be subject to the further
provisions of Section 12.5.
Section
12.3 Subrogation of Securities.
Subject
to the payment in full of all Senior Indebtedness, the rights of 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 XII (equally 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 Senior Indebtedness to receive payments or distributions of
cash,
property or securities of the Company applicable to the Senior Indebtedness
until the principal, premium, if any, and interest on the Securities shall
be
paid in full; and, for the 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 XII, and no payment over
pursuant to the provisions of this Article XII, to or for the benefit of
the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment
by
the Company to or on account of the Senior Indebtedness; and no payments
or
distributions of cash, property or securities to or for the benefit of the
Holders of the Securities pursuant to the subrogation provisions of this
Article
XII, which would otherwise have been paid to the holders of Senior Indebtedness
shall be deemed to be a payment by the Company to or for the account of the
Securities. It is understood that the provisions of this Article XII are
and are
intended solely for the purposes of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of the Senior Indebtedness,
on the other hand.
50
Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than the 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 is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other
than
the holders of the Senior Indebtedness, nor shall anything herein or therein
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 XII of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Upon
any
payment or distribution of assets of the Company referred to in this Article
XII, the Trustee, subject to the provisions of Section 7.1, and the Holders
of
the Securities shall be entitled to rely upon any order or decree made by
any
court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent
or other person making such payment or distribution, delivered to the Trustee
or
to the Holders of the Securities, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article
XII.
Section
12.4 Authorization to Effect Subordination.
Each
Holder of a Security by the holder’s acceptance thereof authorizes and directs
the Trustee on the holder’s behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article XII
and
appoints the Trustee to act as the holder’s attorney-in-fact for any and all
such purposes. If the Trustee does not file a proper proof of claim or proof
of
debt in the form required in any proceeding referred to in Section 6.3 hereof
at
least 30 days before the expiration of the time to file such claim, the holders
of any Senior Indebtedness or their representatives are hereby authorized
to
file an appropriate claim for and on behalf of the Holders of the Securities.
Section
12.5 Notice to Trustee.
The
Company shall give prompt written notice in the form of an Officers’ Certificate
to a Responsible Officer of the Trustee and to any paying agent of any fact
known to the Company which would prohibit the making of any payment of monies
to
or by the Trustee or any paying agent in respect of the Securities pursuant
to
the provisions of this Article XII. Notwithstanding the provisions of this
Article XII 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 of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XII, unless and until
a
Responsible Officer of the Trustee shall have received written notice thereof
at
the Corporate Trust Office from the Company (in the form of an Officers’
Certificate) or a Representative or a holder or holders of Senior Indebtedness
or from any trustee thereof; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Section 7.1, shall be entitled
in all
respects to assume that no such facts exist; provided that if on a date not
fewer than two Business Days prior to the date upon which by the terms hereof
any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest
on
any Security) the Trustee shall not have received, with respect to such monies,
the notice provided for in this Section 12.5, then, anything herein contained
to
the contrary notwithstanding, the Trustee shall have full power and authority
to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may
be
received by it on or after such prior date.
51
Notwithstanding
anything in this Article XII to the contrary, nothing shall prevent any payment
by the Trustee to the Holders of monies deposited with it pursuant to Section
8.1, and any such payment shall not be subject to the provisions of Section
12.1
or 12.2.
The
Trustee, subject to the provisions of Section 7.1, shall be entitled to rely
on
the delivery to it of a written notice by a Representative or a person
representing himself to be a holder of Senior Indebtedness (or a trustee
on
behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf
of any
such holder or holders. 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 XII, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, the extent to which such person
is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article XII, 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
12.6 Trustee’s Relation to Senior Indebtedness.
The
Trustee in its individual capacity shall be entitled to all the rights set
forth
in this Article XII in respect of any Senior Indebtedness at any time held
by
it, to the same extent as any other holder of Senior Indebtedness, and nothing
in Section 7.11 or elsewhere in this Indenture shall deprive the Trustee
of any
of its rights as such holder.
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 XII, and no implied covenants or obligations with respect
to the holders of Senior Indebtedness shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to
the
holders of Senior Indebtedness and, subject to the provisions of Section
7.1,
the Trustee shall not be liable to any holder of Senior Indebtedness if it
shall
pay over or deliver to Holders of Securities, the Company or any other person
money or assets to which any holder of Senior Indebtedness shall be entitled
by
virtue of this Article XII or otherwise.
52
Section
12.7 No Impairment of Subordination.
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 of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
Section
12.8 Article Applicable to Paying Agents.
If
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 (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 the first paragraph of Section
12.5 shall not apply to the Company or any Affiliate of the Company if it
or
such Affiliate acts as Paying Agent.
Section
12.9 Senior Indebtedness Entitled to Rely.
The
holders of Senior Indebtedness (including, without limitation, Designated
Senior
Indebtedness) shall have the right to rely upon this Article XII, and no
amendment or modification of the provisions contained herein shall diminish
the
rights of such holders unless such holders shall have agreed in writing thereto.
53
IN
WITNESS WHEREOF,
the
parties hereto have caused this Indenture to be duly executed as of the day
and
year first above written.
DISCOVERY
LABORATORIES, INC.
By: _______________________
Name:
Title:
THE
BANK OF NEW YORK, as Trustee
By: _______________________
Name:
Title:
[Signature
Page to the Indenture]
Exhibit
5.1
[Letterhead
of]
Dickstein
Shapiro Morin & Oshinsky LLP
1177
Avenue of the Americas, 47th Floor
New
York,
New York 10036-2714
October
11, 2005
Board
of
Directors
Discovery
Laboratories, Inc.
2600
Kelly Road, Suite 100
Warrington,
PA 18976
Discovery
Laboratories, Inc.--
Registration
Statement on Form S-3
Ladies
and Gentlemen:
We
have
acted as counsel for Discovery Laboratories, Inc., a Delaware corporation (the
“Company”), in connection with the preparation of the Registration Statement on
Form S-3 (the “Registration Statement”), as filed by the Company with the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “Securities Act”), on October 11, 2005, with respect to
(i) senior debt securities, in one or more series (the “Senior Debt
Securities”), which may be issued under the Indenture (the “Senior Indenture”)
to be dated on or about the first issuance of the Senior Debt Securities
thereunder, by and between the Company and The Bank of New York, as trustee
(the
“Trustee”), the form of which is filed as Exhibit 4.3 to the Registration
Statement; (ii) subordinated debt securities, in one or more series (the
“Subordinated Debt Securities” and together with the Senior Debt Securities, the
“Debt Securities”), which may be issued under the Indenture (the “Subordinated
Indenture”) to be dated on or about the date of the first issuance of the
Subordinated Debt Securities thereunder, by and between the Company and the
Trustee, the form of which is filed as Exhibit 4.4 to the Registration
Statement; (iii) shares of the preferred stock, par value $0.001 per share,
of
the Company (the “Preferred Stock”); and (iv) shares of the common stock, par
value $0.001 per share, of the Company (the “Common Stock”). The Debt
Securities, Preferred Stock and Common Stock are collectively referred to herein
as the “Securities”. The Securities being registered under the Registration
Statement will have an aggregate offering price of up to $100,000,000 and will
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act. The Registration Statement provides that the Securities may
be
offered in such amounts and at such prices, terms and conditions as the Company
shall, from time to time, set forth in one or more prospectus supplements (each,
a “Prospectus Supplement”) to the prospectus contained in the Registration
Statement.
In
connection with this opinion, we have examined originals or copies, certified
or
otherwise identified to our satisfaction, of (i) the Company’s Restated
Certificate of Incorporation; (ii) the Company’s Amended and Restated By-Laws;
and (iii) resolutions adopted by the Company’s Board of Directors on October 10,
2005. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company, and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein. As to various questions of fact material to this opinion,
we
have also relied upon representations and warranties of the Company and upon
such certificates and other instruments of officers of the Company and public
officials furnished to us by the Company, in each case without independent
investigation or verification of their accuracy.
In
our
examination, we have assumed (i) the genuineness of all signatures, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to original documents of all documents submitted to us as certified, conformed,
photostatic, electronic or facsimile copies and the authenticity of the
originals of such documents, (iv) the authority of all persons signing any
document, and (v) the truth and accuracy of all matters of fact set forth in
all
certificates and other instruments furnished to us.
Discovery
Laboratories, Inc.
October
11, 2005
Page
2
To
the
extent relevant to any opinion expressed herein, we have assumed that (i) the
Company will have sufficient authorized but unissued shares of Common Stock
or
Preferred Stock, as applicable, on the date of issuance of any shares of Common
Stock or Preferred Stock registered pursuant to the Registration Statement;
(ii)
the Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and comply with all applicable laws;
(iii) the Registration Statement will be effective and will comply with all
applicable laws at the time the Securities are offered or issued as contemplated
by the Registration Statement; (iv) a prospectus supplement or term sheet will
have been prepared and filed with the Commission describing the Securities
offered thereby and will comply with all applicable laws; (v) all Securities
will be issued and sold in compliance with applicable federal and state
securities laws and in the manner stated in the Registration Statement and
the
appropriate prospectus supplement or term sheet; (vi) a definitive purchase,
underwriting or similar agreement and any other necessary agreement with respect
to any Securities offered or issued will have been duly authorized and validly
executed and delivered by the Company and the other parties thereto; and (vii)
any Securities issuable upon conversion, exchange or exercise of any Security
being offered or issued will be duly authorized, created and, if appropriate,
reserved for issuance upon such conversion, exchange or exercise. We have also
assumed that none of the terms of any Security to be established subsequent
to
the date hereof, nor the issuance and delivery of such Security, nor the
compliance by the Company with the terms of such Security will violate any
applicable law or will result in a violation of any provision of any instrument
or agreement then binding upon the Company, or any restriction imposed by any
court or governmental body having jurisdiction over the Company.
Based
on
and subject to the assumptions, qualifications and limitations set forth herein,
we are of the opinion that:
1. With
respect to Debt Securities to be issued under either the Senior Indenture or
the
Subordinated Indenture, when (A) the Trustee is qualified to act as Trustee
under the Senior Indenture or Subordinated Indenture, as applicable, (B) the
Trustee has duly executed and delivered the Senior Indenture or Subordinated
Indenture, as applicable, (C) the Senior Indenture or Subordinated Indenture,
as
applicable, has been duly authorized and validly executed and delivered by
the
Company to the Trustee, (D) the Senior Indenture or Subordinated Indenture,
as
applicable, has been duly qualified under the Trust Indenture Act of 1939,
as
amended, (E) the Board of Directors of the Company or a duly constituted and
acting committee thereof (such Board of Directors or committee being hereinafter
referred to as the "Board") and any officers of the Company to whom such
authority has been delegated by the Board has taken all necessary corporate
action to approve the issuance and terms of a particular issue of such Debt
Securities, the terms of the offering thereof and related matters, and (F)
such
Debt Securities have been duly executed, authenticated, issued and delivered
in
accordance with the provisions of (i) the Senior Indenture or Subordinated
Indenture, as applicable, and (ii) the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of the
consideration therefor provided for therein, then such Debt Securities will
be
validly issued and will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights generally from
time
to time in effect and subject to general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
Discovery
Laboratories, Inc.
October
11, 2005
Page
3
2. With
respect to shares of Preferred Stock, when both (A) the Board has taken all
necessary corporate action to approve the issuance and terms of a particular
issue of the shares of Preferred Stock, the terms of the offering thereof,
and
related matters, including the adoption of a Certificate of Designations
relating to such Preferred Stock and the filing of such Certificate of
Designations with the Secretary of State of the State of Delaware, and (B)
certificates representing the shares of Preferred Stock have been duly executed,
countersigned, registered and delivered either (i) in accordance with the
applicable definitive purchase, underwriting or similar agreement approved
by
the Board upon payment of the consideration therefor (not less than the par
value of the Preferred Stock) provided for therein or (ii) upon conversion
or
exercise of any other Security, in accordance with the terms of such Security
or
the instrument governing such Security providing for such conversion or exercise
as approved by the Board, for the consideration approved by the Board (not
less
than the par value of the Preferred Stock), then the shares of Preferred Stock
will be validly issued, fully paid and nonassessable.
3. With
respect to shares of Common Stock, when both (A) the Board has taken all
necessary corporate action to approve the issuance of and the terms of the
offering of the shares of Common Stock and related matters and (B) certificates
representing the shares of Common Stock have been duly executed, countersigned,
registered and delivered either (i) in accordance with the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon payment
of the consideration therefor (not less than the par value of the Company Stock)
provided for therein or (ii) upon conversion or exercise of any other Security,
in accordance with terms of such Security or the instrument governing such
Security providing for such conversion or exercise as approved by the Board,
for
the consideration approved by the Board (not less than the par value of the
Common Stock), then the shares of Common Stock will be validly issued, fully
paid and nonassessable.
No
opinion is expressed herein with respect to any laws other than the Federal
laws
of the United States of America, the General Corporation Law of the State of
Delaware, and, as to the Debt Securities constituting valid and legally binding
obligations of the Company, the laws of the State of New York. No opinion is
expressed as to the effect that the law of any other jurisdiction may have
upon
the subject matter of the opinion expressed herein under conflicts of law
principles, rules and regulations or otherwise.
Discovery
Laboratories, Inc.
October
11, 2005
Page
4
This
opinion is expressed as of the date hereof. We assume no obligation to
supplement this letter if any applicable laws change after the date hereof
or if
we become aware of any new facts that might effect any view expressed herein
after the date hereof.
We
hereby
consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement and to the reference to our Firm under the heading “Legal Matters” in
the prospectus forming a part of the Registration Statement. In giving this
consent, we do not hereby admit that we are within the category of persons
whose
consent is required by Section 7 of the Securities Act or the rules and
regulations promulgated thereunder by the Commission.
The
foregoing opinion is delivered to the Board of Directors of the Company in
connection with the Registration Statement and not for any other
purpose.
We
wish
to call your attention to the fact that the fair market value of all securities
of the Company that are beneficially owned by attorneys of this Firm exceeds
$50,000.
Very
truly yours,
/s/
Dickstein Shapiro Morin & Oshinsky LLP
Exhibit
12.1
Discovery
Laboratories, Inc.
Computation
of Ratio of Earnings to Fixed Charges
|
|
|
Fiscal
year Ended December 31,
|
Six Months
Ended
June
30,
|
|
||||||||||||||||||||
|
|
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
|||||||||||||||||
|
|
|
(in
thousands)
|
|
|||||||||||||||||||||
|
Net
Loss
|
$
|
(10,861)
|
|
$
|
(11,146)
|
|
$
|
(17,443)
|
|
$
|
(24,280)
|
|
$
|
(46,203)
|
|
$
|
(19,142)
|
|||||||
|
Add:
Fixed Charges
|
38
|
61
|
199
|
353
|
952
|
527
|
||||||||||||||||||
|
Adjusted
Earnings
|
(10,823)
|
(11,085)
|
(17,244)
|
(23,927)
|
(45,251)
|
(18,615)
|
||||||||||||||||||
|
Estimated
interest component of rent
|
33
|
35
|
55
|
56
|
70
|
93
|
||||||||||||||||||
|
Interest
expense
|
5
|
26
|
144
|
297
|
882
|
434
|
||||||||||||||||||
|
Total
fixed charges
|
38
|
61
|
199
|
353
|
952
|
527
|
||||||||||||||||||
|
Ratio
(1)
|
|
|
__
|
|
|
|
__
|
|
|
|
__
|
|
|
|
__
|
|
|
|
__
|
|
|
|
__
|
|
|
(1)
|
Adjusted
earnings, as shown above, were insufficient to cover fixed charges
in each
period. We have not included a ratio of earnings to combined fixed
charges
and preferred stock dividends because we do not have any preferred
stock
outstanding.
|
Exhibit
23.1
Consent
of Independent Registered Public Accounting Firm
We
consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-00000) and related Prospectus of
Discovery Laboratories, Inc. for the registration of up to $100,000,000 of
shares of its common and preferred stock and debt securities and to the
incorporation by reference therein of our reports dated March 11, 2005, with
respect to the consolidated financial statements of Discovery Laboratories,
Inc., Discovery Laboratories, Inc. management's assessment of the effectiveness
of internal control over financial reporting, and the effectiveness of internal
control over financial reporting of Discovery Laboratories, Inc., included
in
its Annual Report (Form 10-K) for the year ended December 31, 2004, filed
with
the Securities and Exchange Commission.
Ernst
& Young LLP
Philadelphia,
Pennsylvania
October
7, 2005
Exhibit
25.1
FORM
T-1
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
STATEMENT
OF ELIGIBILITY
UNDER
THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK
IF
AN APPLICATION TO DETERMINE
ELIGIBILITY
OF A TRUSTEE PURSUANT TO
SECTION
305(b)(2) |__|
___________________________
THE
BANK
OF NEW YORK
(Exact
name of trustee as specified in its charter)
|
New
York
(State
of incorporation
if
not a U.S. national bank)
|
13-5160382
(I.R.S.
employer
identification
no.)
|
|
One
Wall Street, New York, N.Y.
(Address
of principal executive offices)
|
10286
(Zip
code)
|
___________________________
DISCOVERY
LABORATORIES, INC.
(Exact
name of obligor as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
94-3171943
(I.R.S.
employer
identification
no.)
|
|
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania
(Address
of principal executive offices)
|
18976
(Zip
code)
|
___________________________
Senior
Debt Securities
(Title
of
the indenture securities)
|
1.
|
General
information. Furnish the following information as to the
Trustee:
|
| (a) |
Name
and address of each examining or supervising authority to which
it is
subject.
|
|
Name
|
Address
|
|
Superintendent
of Banks of the State of New York
|
One
State Street, New York, N.Y. 10004-1417, and Albany, N.Y.
12223
|
|
Federal
Reserve Bank of New York
|
33
Liberty Street, New York, N.Y. 10045
|
|
Federal
Deposit Insurance Corporation
|
Washington,
D.C. 20429
|
|
New
York Clearing House Association
|
New
York, New York 10005
|
| (b) |
Whether
it is authorized to exercise corporate trust
powers.
|
| Yes. |
| 2. |
Affiliations
with Obligor.
|
|
If
the obligor is an affiliate of the trustee, describe
each such
affiliation.
|
|
None.
|
| 16. |
List
of Exhibits.
|
|
Exhibits
identified in parentheses below, on file with the Commission,
are
incorporated herein by reference as an exhibit hereto, pursuant
to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and
17 C.F.R.
229.10(d).
|
|
1.
|
A
copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority
to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form
T-1 filed
with Registration Statement No. 33-21672, Exhibit 1 to Form T-1
filed with
Registration Statement No. 33-29637 and Exhibit 1 to Form T-1
filed with Registration Statement No.
333-121195.)
|
|
4.
|
A
copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed
with Registration Statement No.
333-121195.)
|
|
6.
|
The
consent of the Trustee required by Section 321(b) of the Act. (Exhibit
6
to Form T-1 filed with Registration Statement No.
333-106702.)
|
|
7.
|
A
copy of the latest report of condition of the Trustee published
pursuant
to law or to the requirements of its supervising or examining
authority.
|
-
2
-
SIGNATURE
Pursuant
to the requirements of the Act, the Trustee, The Bank of New York, a corporation
organized and existing under the laws of the State of New York, has duly
caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New
York,
on the 7th
day of
October, 2005.
|
THE BANK OF NEW YORK
|
||
| |
|
|
| By: | /s/ KISHA A. HOLDER | |
|
|
||
|
Name:
KISHA A. HOLDER Title ASSISTANT VICE
PRESIDENT |
||
-
3
-
Exhibit
7
Consolidated Report of Condition of
THE
BANK
OF NEW YORK
of
One
Wall Street, New York, N.Y. 10286
And
Foreign and Domestic Subsidiaries,
a
member
of the Federal Reserve System, at the close of business June 30, 2005, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
|
ASSETS
|
Dollar
Amounts
In
Thousands
|
|||
|
Cash
and balances due from depository institutions:
|
||||
|
Noninterest-bearing
balances and currency and coin
|
$
|
2,753,000
|
||
|
Interest-bearing
balances
|
6,045,000
|
|||
|
Securities:
|
||||
|
Held-to-maturity
securities
|
2,183,000
|
|||
|
Available-for-sale
securities
|
21,741,000
|
|||
|
Federal
funds sold and securities purchased under agreements to
resell
|
||||
|
Federal
funds sold in domestic offices
|
5,486,000
|
|||
|
Securities
purchased under agreements to resell
|
192,000
|
|||
|
Loans
and lease financing receivables:
|
||||
|
Loans
and leases held for sale
|
0
|
|||
|
Loans
and leases, net of unearned income
|
32,953,000
|
|||
|
LESS:
Allowance for loan and lease
losses
|
558,000
|
|||
|
Loans
and leases, net of unearned income
and allowance
|
32,395,000
|
|||
|
Trading
Assets
|
6,114,000
|
|||
|
Premises
and fixed assets (including capitalized leases)
|
812,000
|
|||
|
Other
real estate owned
|
0
|
|||
|
Investments
in unconsolidated subsidiaries and associated companies
|
278,000
|
|||
|
Customers'
liability to this bank on acceptances outstanding
|
68,000
|
|||
|
Intangible
assets:
|
||||
|
Goodwill
|
2,039,000
|
|||
|
Other
intangible assets
|
736,000
|
|||
|
Other
assets
|
5,237,000
|
|||
|
Total
assets
|
$
|
86,079,000
|
||
- 1
-
|
LIABILITIES
|
||||
|
Deposits:
|
||||
|
In
domestic offices
|
$
|
38,768,000
|
||
|
Noninterest-bearing
|
18,417,000
|
|||
|
Interest-bearing
|
20,351,000
|
|||
|
In
foreign offices, Edge and Agreement subsidiaries, and IBFs
|
26,246,000
|
|||
|
Noninterest-bearing
|
462,000
|
|||
|
Interest-bearing
|
25,784,000
|
|||
|
Federal
funds purchased and securities sold under agreements to
repurchase
|
||||
|
Federal
funds purchased in domestic offices
|
1,224,000
|
|||
|
Securities
sold under agreements to repurchase
|
126,000
|
|||
|
Trading
liabilities
|
2,927,000
|
|||
|
Other
borrowed money:
(includes
mortgage indebtedness and obligations under capitalized
leases)
|
1,245,000
|
|||
|
Not
applicable
|
||||
|
Bank's
liability on acceptances executed and outstanding
|
69,000
|
|||
|
Subordinated
notes and debentures
|
1,440,000
|
|||
|
Other
liabilities
|
5,976,000
|
|||
|
Total
liabilities
|
$
|
78,021,000
|
||
|
Minority
interest in consolidated subsidiaries
|
139,000
|
|||
|
EQUITY
CAPITAL
|
||||
|
Perpetual
preferred stock and related surplus
|
0
|
|||
|
Common
stock
|
1,135,000
|
|||
|
Surplus
(exclude all surplus related to preferred stock)
|
2,089,000
|
|||
|
Retained
earnings
|
4,716,000
|
|||
|
Accumulated
other comprehensive income
|
-21,000
|
|||
|
Other
equity capital components
|
0
|
|||
|
Total
equity capital
|
7,919,000
|
|||
|
Total
liabilities, minority interest, and equity capital
|
$
|
86,079,000
|
- 2
-
I,
Thomas
J. Mastro, Senior Vice President and Comptroller of the above-named bank
do
hereby declare that this Report of Condition is true and correct to the best
of
my knowledge and belief.
Thomas
J.
Mastro,
Senior
Vice President and Comptroller
We,
the
undersigned directors, attest to the correctness of this statement of resources
and liabilities. We declare that it has been examined by us, and to the best
of
our knowledge and belief has been prepared in conformance with the instructions
and is true and correct.
|
Thomas
A. Renyi
Gerald
L. Hassell
Alan
R. Griffith
|
Directors
|
- 3
-
Exhibit
25.2
FORM
T-1
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
STATEMENT
OF ELIGIBILITY
UNDER
THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK
IF
AN APPLICATION TO DETERMINE
ELIGIBILITY
OF A TRUSTEE PURSUANT TO
SECTION
305(b)(2) |__|
___________________________
THE
BANK
OF NEW YORK
(Exact
name of trustee as specified in its charter)
|
New
York
(State
of incorporation
if
not a U.S. national bank)
|
13-5160382
(I.R.S.
employer
identification
no.)
|
|
|
|
|
One
Wall Street, New York, N.Y.
(Address
of principal executive offices)
|
10286
(Zip
code)
|
___________________________
DISCOVERY
LABORATORIES, INC.
(Exact
name of obligor as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
94-3171943
(I.R.S.
employer
identification
no.)
|
|
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania
(Address
of principal executive offices)
|
18976
(Zip
code)
|
___________________________
Subordinated
Debt Securities
(Title
of
the indenture securities)
| 1. |
General
information. Furnish the following information as to the
Trustee:
|
| (a) |
Name
and address of each examining or supervising authority to which
it is
subject.
|
|
Name
|
Address
|
|
Superintendent
of Banks of the State of New York
|
One
State Street, New York, N.Y. 10004-1417, and Albany, N.Y.
12223
|
|
Federal
Reserve Bank of New York
|
33
Liberty Street, New York, N.Y. 10045
|
|
Federal
Deposit Insurance Corporation
|
Washington,
D.C. 20429
|
|
New
York Clearing House Association
|
New
York, New York 10005
|
| (b) |
Whether
it is authorized to exercise corporate trust
powers.
|
|
Yes.
|
| 2. |
Affiliations
with Obligor.
|
|
If
the obligor is an affiliate of the trustee, describe
each such
affiliation.
|
| None. |
|
16.
|
List
of Exhibits.
|
|
|
Exhibits
identified in parentheses below, on file with the Commission,
are
incorporated herein by reference as an exhibit hereto, pursuant
to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R.
229.10(d).
|
|
1.
|
A
copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority
to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form
T-1 filed
with Registration Statement No. 33-21672, Exhibit 1 to Form T-1
filed with
Registration Statement No. 33-29637 and Exhibit 1 to Form T-1
filed with Registration Statement No.
333-121195.)
|
|
4.
|
A
copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed
with Registration Statement No.
333-121195.)
|
|
6.
|
The
consent of the Trustee required by Section 321(b) of the Act. (Exhibit
6
to Form T-1 filed with Registration Statement No.
333-106702.)
|
|
7.
|
A
copy of the latest report of condition of the Trustee published
pursuant
to law or to the requirements of its supervising or examining
authority.
|
-
2
-
SIGNATURE
Pursuant
to the requirements of the Act, the Trustee, The Bank of New York, a corporation
organized and existing under the laws of the State of New York, has duly
caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New
York,
on the 7th
day of
October, 2005.
|
|
||
|
THE BANK OF NEW YORK
|
||
| |
|
|
| By: | /s/ KISHA A. HOLDER | |
|
|
||
| Name:
KISHA A. HOLDER Title:
ASSISTANT VICE PRESIDENT
|
||
-
3
-
Consolidated Report of Condition of
THE
BANK
OF NEW YORK
of
One
Wall Street, New York, N.Y. 10286
And
Foreign and Domestic Subsidiaries,
a
member
of the Federal Reserve System, at the close of business June 30, 2005, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
|
ASSETS
|
Dollar
Amounts
In
Thousands
|
|||
|
Cash
and balances due from depository institutions:
|
||||
|
Noninterest-bearing
balances and currency and coin
|
$
|
2,753,000
|
||
|
Interest-bearing
balances
|
6,045,000
|
|||
|
Securities:
|
||||
|
Held-to-maturity
securities
|
2,183,000
|
|||
|
Available-for-sale
securities
|
21,741,000
|
|||
|
Federal
funds sold and securities purchased under agreements to
resell
|
||||
|
Federal
funds sold in domestic offices
|
5,486,000
|
|||
|
Securities
purchased under agreements to resell
|
192,000
|
|||
|
Loans
and lease financing receivables:
|
||||
|
Loans
and leases held for sale
|
0
|
|||
|
Loans
and leases, net of unearned income
|
32,953,000
|
|||
|
LESS:
Allowance for loan and lease
losses
|
558,000
|
|||
|
Loans
and leases, net of unearned
income
and allowance
|
32,395,000
|
|||
|
Trading
Assets
|
6,114,000
|
|||
|
Premises
and fixed assets (including capitalized leases)
|
812,000
|
|||
|
Other
real estate owned
|
0
|
|||
|
Investments
in unconsolidated subsidiaries and associated companies
|
278,000
|
|||
|
Customers'
liability to this bank on acceptances outstanding
|
68,000
|
|||
|
Intangible
assets:
|
||||
|
Goodwill
|
2,039,000
|
|||
|
Other
intangible assets
|
736,000
|
|||
|
Other
assets
|
5,237,000
|
|||
|
Total
assets
|
$
|
86,079,000
|
||
|
LIABILITIES
|
||||
|
Deposits:
|
||||
|
In
domestic offices
|
$
|
38,768,000
|
||
|
Noninterest-bearing
|
18,417,000
|
|||
|
Interest-bearing
|
20,351,000
|
|||
|
In
foreign offices, Edge and Agreement subsidiaries, and IBFs
|
26,246,000
|
|||
|
Noninterest-bearing
|
462,000
|
|||
|
Interest-bearing
|
25,784,000
|
|||
|
Federal
funds purchased and securities sold under agreements to
repurchase
|
||||
|
Federal
funds purchased in domestic offices
|
1,224,000
|
|||
|
Securities
sold under agreements to repurchase
|
126,000
|
|||
|
Trading
liabilities
|
2,927,000
|
|||
|
Other
borrowed money:
(includes
mortgage indebtedness and obligations under capitalized
leases)
|
1,245,000
|
|||
|
Not
applicable
|
||||
|
Bank's
liability on acceptances executed and outstanding
|
69,000
|
|||
|
Subordinated
notes and debentures
|
1,440,000
|
|||
|
Other
liabilities
|
5,976,000
|
|||
|
Total
liabilities
|
$
|
78,021,000
|
||
|
Minority
interest in consolidated subsidiaries
|
139,000
|
|||
|
EQUITY
CAPITAL
|
||||
|
Perpetual
preferred stock and related surplus
|
0
|
|||
|
Common
stock
|
1,135,000
|
|||
|
Surplus
(exclude all surplus related to preferred stock)
|
2,089,000
|
|||
|
Retained
earnings
|
4,716,000
|
|||
|
Accumulated
other comprehensive income
|
-21,000
|
|||
|
Other
equity capital components
|
0
|
|||
|
Total
equity capital
|
7,919,000
|
|||
|
Total
liabilities, minority interest, and equity capital
|
$
|
86,079,000
|
-
2
-
I,
Thomas
J. Mastro, Senior Vice President and Comptroller of the above-named bank
do
hereby declare that this Report of Condition is true and correct to the best
of
my knowledge and belief.
Thomas
J.
Mastro,
Senior
Vice President and Comptroller
We,
the
undersigned directors, attest to the correctness of this statement of resources
and liabilities. We declare that it has been examined by us, and to the best
of
our knowledge and belief has been prepared in conformance with the instructions
and is true and correct.
|
Thomas
A. Renyi
Gerald
L. Hassell
Alan
R. Griffith
|
Directors
|
-
3
-