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As filed with the Securities and Exchange Commission on January 31, 2011
Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VANDA PHARMACEUTICALS INC.
(Exact name of Registrant as specified in its charter)
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Delaware
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03-0491827 |
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number) |
9605 Medical Center Drive
Suite 300
Rockville, Maryland 20850
(240) 599-4500
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
Mihael H. Polymeropoulos, M.D.
President and Chief Executive Officer
9605 Medical Center Drive
Suite 300
Rockville, Maryland 20850
(240) 599-4500
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Gregg A. Griner, Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
850 Winter Street
Waltham, MA 02451
Telephone: (781) 890-8800
Telecopy: (781) 622-1622
Approximate date of commencement of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities
Act) other than securities offered only in connection with dividend or interest reinvestment
plans, check the following box. þ
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. o
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. o
If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or classes of additional
securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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CALCULATION OF REGISTRATION FEE
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Proposed |
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Maximum |
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Proposed Maximum |
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Title of Each Class of |
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Amount to be |
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Offering Price |
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Aggregate Offering |
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Amount of |
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Securities to be Registered |
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Registered (1) (2) |
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Per Share (1) (2) |
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Price(1) (3) |
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Registration Fee |
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Preferred Stock, par value $0.001 per share |
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Common Stock, par value $0.001 per share (5) |
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Debt Securities |
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Warrants |
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Total |
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$ |
50,000,000 |
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$ |
5,805 |
(4) |
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(1) |
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Such indeterminate amount or number of debt securities, shares of
preferred stock, shares of common stock, and warrants to purchase any
combination of the foregoing securities, as may from time to time be
issued at indeterminate prices, with an aggregate initial offering
price not to exceed $50,000,000. If any debt securities are issued at
an original issue discount, then the issue price, and not the
principal amount of such debt securities shall be used for purposes of
calculating the aggregate initial offering price of all securities
issued. Securities registered hereunder may be sold separately,
together or as units with other securities registered hereunder. The
securities also include such indeterminate number of shares of
preferred stock, shares of common stock or principal amounts of debt
securities as may be issued upon conversion or exchange for debt
securities that provide for conversion or exchange, upon exercise of
warrants to purchase preferred stock, common stock or debt securities,
upon conversion of shares of preferred stock or pursuant to the
anti-dilution provisions of any such securities. |
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With respect to the primary offering, such information is not required
to be included pursuant to General Instruction II.D of Form S-3 under
the Securities Act of 1933, as amended, or the Securities Act. |
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The proposed maximum aggregate price has been estimated solely for the
purpose of calculating the registration fee pursuant to Rule 457(o)
under the Securities Act. |
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Calculated pursuant to Rule 457(o) under the Securities Act. |
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(5) |
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Includes rights to purchase shares of the registrants Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement dated
September 25, 2008, as amended. No separate consideration is paid for
these rights and, as a result, the registration fee for these rights
is included in the fee for the common stock. |
The Registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further amendment that
specifically states that the Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may
determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT
BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 31, 2011
PROSPECTUS
$50,000,000
Preferred Stock
Common Stock
Debt Securities
Warrants
From time to time, we may offer and sell shares of preferred stock, common stock, debt
securities or warrants to purchase preferred stock, common stock or any combination of these
securities, either separately or in units, in one or more offerings in amounts, at prices and on
terms that we will determine at the time of the offering. The debt securities and warrants may be
convertible into or exercisable or exchangeable for preferred stock, common stock or debt
securities and the preferred stock may be convertible into or exchangeable for common stock. The
aggregate initial offering price of all securities sold by us under this prospectus will not exceed
$50,000,000.
Each time we offer securities, we will provide you with specific terms of the securities
offered in supplements to this prospectus. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read this prospectus, the information
incorporated by reference in this prospectus, any applicable prospectus supplement and the
additional information described below under the heading Where You Can Find More Information
carefully before you invest in any securities.
The securities offered by this prospectus may be sold directly by us to investors, through
agents designated from time to time or to or through underwriters or dealers. We will set forth the
names of any underwriters or agents in an accompanying prospectus supplement. For additional
information on the methods of sale, you should refer to the section entitled Plan of
Distribution. The price to the public of such securities and the net proceeds we expect to receive
from such sale will also be set forth in a prospectus supplement.
Our common stock is listed on The NASDAQ Global Market under the symbol VNDA. The last
reported sale price of our common stock on January 28, 2011 was $8.01 per share.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISKS. SEE RISK FACTORS ON PAGE 6 OF
THIS PROSPECTUS AND IN THE OTHER DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE
APPLICABLE PROSPECTUS SUPPLEMENT TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING OUR
SECURITIES.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus or the accompanying
prospectus supplement is truthful or complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is January 31, 2011.
TABLE OF CONTENTS
You should rely only on the information contained or incorporated by reference in this
prospectus or any applicable prospectus supplement. We have not authorized anyone to provide you
with information in addition to or different from that contained in this prospectus or any
applicable prospectus supplement. We will be offering to sell, and seeking offers to buy, the
shares only in jurisdictions whether offers and sales are permitted. You should not assume that the
information in this prospectus or any applicable prospectus supplement is accurate as of any date
other than the date on the front of those documents.
Unless the context otherwise requires, throughout this prospectus and any applicable prospectus
supplement, the words Vanda we, us, the registrant or the company refer to Vanda
Pharmaceuticals Inc.; the term securities refers collectively to our preferred stock, common
stock, debt securities or warrants to purchase preferred stock, common stock or debt securities, or
any combination of the foregoing securities.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and
Exchange Commission, or the SEC, using a shelf registration process. Using this process, we may,
from time to time, sell any combination of the securities described in this prospectus in one or
more offering transactions up to a total dollar amount of $50,000,000. This prospectus provides
you with a general description of the securities we may offer. Each time we sell any securities
under this prospectus, we will provide a prospectus supplement that will contain more specific
information about the specific terms of that particular offering. Each such prospectus supplement
may also add, update or change information contained in this prospectus or in documents we have
incorporated by reference into this prospectus. To the extent that any statements that we make in a
prospectus supplement are inconsistent with statements made in this prospectus, the statements made
in this prospectus will be deemed modified or superseded by those made in the prospectus
supplement. This prospectus, together with the applicable prospectus supplements and the documents
incorporated by reference into this prospectus, includes all material information relating to the
offering of the securities described in this prospectus. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery
of this prospectus or any sales of securities. To obtain additional information that may be
important to you, you should read the exhibits filed by us with the registration statement of which
this prospectus is a part or our other filings with the SEC. You should read this prospectus, any
applicable prospectus supplement and the additional information described below under Where You
Can Find More Information before making any investment decision with respect to the securities
offered hereby.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with
respect to the securities offered by this prospectus. This prospectus, which is part of the
registration statement, omits certain information, exhibits, schedules and undertakings set forth
in the registration statement, as permitted by the SEC. For further information pertaining to us
and the securities offered in this prospectus, reference is made to that registration statement and
the exhibits and schedules to the registration statement. Statements contained in this prospectus
as to the contents or provisions of any documents referred to in this prospectus are not
necessarily complete, and in each instance where a copy of the document has been filed as an
exhibit to the registration statement, reference is made to the exhibit for a more complete
description of the matters involved.
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. Our SEC filings can be read and copied at the SECs Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website at
www.sec.gov that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including us.
Our common stock is listed on the NASDAQ Global Market under the symbol VNDA. General
information about our company, including our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as any amendments and exhibits to those reports, are
available free of charge through our website at www.vandapharma.com as soon as reasonably
practicable after we file them with, or furnish them to, the SEC. Information on, or than can be
accessed through, our website is not incorporated into this prospectus or other securities filings
and is not a part of these filings.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference into this prospectus the information we file
with it, which means that we can disclose important information to you by referring you to those
documents. The information we incorporate by reference is an important part of this prospectus, and
later information that we file with the SEC will automatically update and supersede some of this
information. We incorporate by reference the documents listed below and any future filings we make
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the Exchange Act) (other than Current Reports on Form 8-K containing only information
furnished under Item 2.02 or Item 7.01 of Form 8-K, unless otherwise indicated therein), including
filings made after the date of the initial registration statement, until we sell all of the shares
covered by this prospectus or the sale of shares by us pursuant to this prospectus is terminated.
The documents we incorporate by reference are:
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our Annual Report on Form 10-K for the year ended December 31, 2009; |
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010
and September 30, 2010; |
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our Proxy Statement on Schedule 14A filed with the SEC on April 28, 2010; |
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our Current Reports on Form 8-K filed on January 11, 2010, March 10, 2010, March 25,
2010, April 19, 2010, April 20, 2010, June 7, 2010, July 1, 2010, July 9, 2010, November 12,
2010 and December 17, 2010 in each case only to the extent filed and not furnished; |
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the description of our common stock contained in our registration statement on Form 8-A
(File No. 000-51863) filed under the Exchange Act on March 28, 2006, including any amendment
or reports filed for the purpose of updating such descriptions; and |
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the description of the Rights to Purchase Series A Junior Participating Preferred Stock
contained in our registration statement on Form 8-A (File No. 001-34186) filed under the
Exchange Act on September 25, 2008, including any amendment or report filed for the purpose
of updating such description. |
Any statement contained in a document incorporated or deemed to be incorporated by reference
into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or any other subsequently filed document
that is deemed to be incorporated by reference into this prospectus modifies or supersedes the
statement. Any statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
We will provide each person to whom a prospectus is delivered a copy of all of the information
that has been incorporated by reference in this prospectus but not delivered with the prospectus.
You may obtain copies of these filings, at no cost, through the Investor Relations section of our
website (www.vandapharma.com) and you may request a copy of these filings (other than an exhibit to
any filing unless we have specifically incorporated that exhibit by reference into the filing), at
no cost, by writing or telephoning us at the following address:
Corporate Secretary
Vanda Pharmaceuticals Inc.
9605 Medical Center Drive, Suite 300
Rockville, Maryland 20850
(240) 599-4500
Information on, or that can be accessed through, our website is not incorporated into this
prospectus or other securities filings and is not a part of these filings.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any applicable prospectus supplement and the documents incorporated by
reference contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Various statements in this prospectus, and any prospectus
supplement, may be forward-looking statements, under the securities laws. Words such as, but not
limited to, believe, expect, anticipate, estimate, intend, plan, targets, likely,
will, would, and could, and similar expressions or words, identify forward-looking
statements. Forward-looking statements are based upon current expectations that involve risks,
changes in circumstances, assumptions and uncertainties. Important factors that could cause actual
results to differ materially from those reflected in our forward-looking statements include, among
others:
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the extent and effectiveness of the development, sales and marketing and distribution
support Fanapt® receives; |
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our ability to successfully commercialize Fanapt® outside of the U.S. and Canada; |
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delays in the completion of our clinical trials; |
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a failure of our products, product candidates or partnered products to be demonstrably safe
and effective; |
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our failure to obtain regulatory approval for our products or product candidates or to
comply with ongoing regulatory requirements; |
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a lack of acceptance of our products, product candidates or partnered products in the
marketplace, or a failure to become or remain profitable; |
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our expectations regarding trends with respect to our costs and expenses; |
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our inability to obtain the capital necessary to fund additional research and development
activities; |
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our failure to identify or obtain rights to new products or product candidates; |
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our failure to develop or obtain sales, marketing and distribution resources and expertise
or to otherwise manage our growth; |
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a loss of any of our key scientists or management personnel; |
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losses incurred from product liability claims made against us; and |
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a loss of rights to develop and commercialize our products or product candidates under
our license and sublicense agreements. |
All written and verbal forward-looking statements attributable to us or any person acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained or
referred to in this section. We caution investors not to rely too heavily on the forward-looking
statements we make or that are made on our behalf. We undertake no obligation, and specifically
decline any obligation, to update or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
We encourage you to read the discussion and analysis of our financial condition and our
condensed consolidated financial statements contained in or incorporated by reference in this
prospectus, and any prospectus supplement. We also encourage you to read the statements under
Risk Factors and other sections of this prospectus, which contains a more complete discussion of
the risks and uncertainties associated with our business. In addition to the risks described above
and in the section entitled Risk Factors of this prospectus, other unknown or unpredictable
factors also could affect our results. There can be no assurance that the actual results or
developments anticipated by us will be realized or, even if substantially realized, that they will
have the expected consequences to, or effects on, us. Therefore, no assurance can be given that the
outcomes stated in such forward-looking statements and estimates will be achieved.
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THE COMPANY
We are a biopharmaceutical company focused on the development and commercialization of
products for central nervous system disorders. We believe that each of our products and partnered
products will address a large market with significant unmet medical needs by offering advantages
over currently available therapies. Our product portfolio includes:
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Fanapt® (iloperidone). We have developed Fanapt®, and will continue to
develop it outside the U.S. and Canada, to treat schizophrenia. On May 6, 2009, the
United States Food and Drug Administration (FDA) granted U.S. marketing approval of
Fanapt® for the acute treatment of schizophrenia in adults. On October 12,
2009, we entered into an amended and restated sublicense agreement with Novartis. We had
originally entered into a sublicense agreement with Novartis on June 4, 2004 pursuant to
which we obtained certain worldwide exclusive licenses from Novartis relating to
Fanapt®. Pursuant to the amended and restated sublicense agreement, Novartis
has exclusive commercialization rights to all formulations of Fanapt® in the
U.S. and Canada. On January 11, 2010, Novartis launched Fanapt® in the U.S.
Novartis is responsible for the further clinical development activities in the U.S. and
Canada, including the development of a long-acting injectable (or depot) formulation of
Fanapt®. Pursuant to the amended and restated sublicense agreement, we
received an upfront payment of $200.0 million and are eligible for additional payments
totaling up to $265.0 million upon the achievement of certain commercial and development
milestones for Fanapt® in the U.S. and Canada. We also receive royalties,
which, as a percentage of net sales, are in the low double-digits, on net sales of
Fanapt® in the U.S. and Canada. In addition, we are no longer required to make
any future milestone payments with respect to sales of Fanapt® or any future
royalty payments with respect to sales of Fanapt® in the U.S. and Canada. We
retain exclusive rights to Fanapt® outside the U.S. and Canada and we have
exclusive rights to use any of Novartis data for Fanapt® for developing and
commercializing Fanapt® outside the U.S. and Canada. At Novartis option, we
will enter into good faith discussions with Novartis relating to the co-commercialization
of Fanapt® outside of the U.S. and Canada or, alternatively, Novartis will
receive a royalty on net sales of Fanapt® outside of the U.S. and Canada. On
February 23, 2010, the U.S. Patent and Trademark Office (PTO) issued a notice of
allowance for our patent application for the microsphere long acting injectable (or
depot) formulation of Fanapt®. On August 3, 2010, the PTO informed us that
the patent has been issued with a patent term adjustment of 605 days, extending the
patent expiration date to June 27, 2023. Subsequently, on October 28, 2010, the PTO
informed us that it has granted an additional patent term adjustment of 59 days, making
the total extension 664 days and making the patent expiration date August 25, 2023. We
continue to explore the regulatory path and commercial opportunity for Fanapt®
oral formulation outside of the U.S. and Canada. On November 1, 2010, the Therapeutic
Goods Administration of Australias Department of Health and Ageing, accepted for
evaluation our application for marketing approval. |
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As a result of the FDAs approval of the new drug application (NDA) for Fanapt®, we met a
milestone under the original sublicense agreement which required us to make a milestone
payment of $12.0 million to Novartis. The $12.0 million was capitalized and will be
amortized over the remaining life of the U.S. patent for Fanapt®. |
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Tasimelteon. Tasimelteon is an oral compound in development for sleep and mood
disorders, including Circadian Rhythm Sleep Disorders (CRSD). The compound binds
selectively to the brains melatonin receptors, which are thought to govern the bodys
natural sleep/wake cycle. Compounds that bind selectively to these receptors are thought
to be able to help treat sleep disorders, and additionally are believed to offer
potential benefits in mood disorders. We announced positive top-line results from our
Phase III trial of tasimelteon in transient insomnia in November 2006. In June 2008, we
announced positive top-line results from the Phase III trial of tasimelteon in chronic
primary insomnia. The trial was a randomized, double-blind, and placebo-controlled study
with 324 patients. The trial measured time to fall asleep and sleep maintenance, as well
as next-day performance. On January 19, 2010, the FDA granted orphan drug designation
status for tasimelteon in a specific CRSD, Non-24-Hour Sleep/Wake Disorder (N24HSWD) in
blind individuals with no light perception. The FDA grants orphan drug designation to
drugs that may provide significant therapeutic advantage over existing treatments and
target conditions affecting 200,000 or fewer U.S. patients per year. Orphan drug
designation provides potential financial and regulatory incentives, including study
design assistance, tax credits, waiver of FDA user fees, and up to seven years of market
exclusivity upon marketing approval. We initiated two clinical trials to pursue FDA
approval of tasimelteon for the treatment of N24HSWD in blind individuals with no light
perception in the third quarter of 2010. The first trial is a randomized, double-blind,
placebo-controlled study with a planned enrollment of approximately 160 patients with
N24HSWD. The trial has a six month treatment period and includes measures of both
nighttime and daytime sleep, as well as laboratory measures of the synchronization
between the internal body clock and the 24-hour environmental light/dark cycle. We also
initiated a one-year safety study of tasimelteon for the treatment of N24HSWD. This trial
is an open-label safety study with a planned enrollment of approximately 140 patients
with N24HSWD. We plan to conduct additional clinical trials over the next one to two
years to support the use of tasimelteon as a circadian regulator and the submission |
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of a NDA to the FDA and a marketing authorization application to the European Medicines
Agency (EMA). The application for orphan designation from the EMA is pending.Tasimelteon is
also ready for Phase II trials for the treatment of depression. Given the range of
potential indications for tasimelteon, we may pursue one or more partnerships for the
development and commercialization of tasimelteon worldwide. |
OUR CORPORATE INFORMATION
We were incorporated in Delaware in November 2002. Vanda commenced its operations in 2003.
Our principal executive offices are located at 9605 Medical Center Drive, Suite 300, Rockville,
Maryland, 20850 and our telephone number is (240) 599-4500. Our website address is
www.vandapharma.com. The information on, or that can be accessed through, our website is not part
of this prospectus.
Vanda is a trademark of Vanda Pharmaceuticals Inc. This prospectus may also include other
registered and unregistered trademarks of Vanda Pharmaceuticals Inc. and other persons.
Throughout this prospectus, we refer to Fanapt® within the U.S. and
Canada as our partnered product and we refer to Fanapt® outside the U.S. and
Canada and tasimelteon as our products. All other compounds are referred to herein as our product
candidates. In addition, we refer to our partnered products, products and product candidates
collectively as our compounds. Moreover, we refer to drug products generally as drugs or products.
5
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider
the following information, together with the other information contained in this prospectus, any
applicable prospectus supplement and other documents that are incorporated by reference into this
prospectus and any applicable prospectus supplement, including the section entitled Risk Factors
in our most recent annual report on Form 10-K as revised and supplemented by our most recent
quarterly report on Form 10-Q, each of which are on file with the SEC and are incorporated herein
by reference, and which may be amended, supplemented or superseded from time to time by other
reports we file with the SEC in the future before buying our securities. These risks are not the
only risks facing Vanda. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our business, financial
condition and/or operating results. If any of these risks actually occurs, our business, financial
condition, results of operations and future prospects would likely be materially and adversely
affected. In that event, the market price of our common stock could decline and you could lose all
or part of your investment.
Risks related to our business and industry
Novartis began selling, marketing and distributing our first approved product, Fanapt®, in the U.S.
in the first quarter of 2010 and we will depend heavily on the success of this product in the
marketplace.
Our ability to generate revenue for the next few years will depend substantially on the
success of Fanapt® and the sales of this product by Novartis in the U.S. and Canada. The ability of
Fanapt® to generate revenue at the levels we expect will depend on many factors, including the
following:
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the ability of patients to be able to afford Fanapt® or obtain health care coverage
that covers Fanapt® in the current uncertain economic climate |
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acceptance of, and ongoing satisfaction, with Fanapt® by the medical community,
patients receiving therapy and third party payers |
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a satisfactory efficacy and safety profile as demonstrated in a broad patient
population |
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the size of the market for Fanapt® |
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successfully expanding and sustaining manufacturing capacity to meet demand |
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cost and availability of raw materials |
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the extent and effectiveness of the sales and marketing and distribution support
Fanapt® receives |
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safety concerns in the marketplace for schizophrenia therapies |
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regulatory developments relating to the manufacture or continued use of Fanapt® |
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decisions as to the timing of product launches, pricing and discounts |
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the competitive landscape for approved and developing therapies that will compete
with Fanapt® |
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Novartis ability to successfully develop and commercialize a longacting
injectable (or depot) formulation of Fanapt® in the U.S. and Canada |
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Novartis ability to expand the indications for which Fanapt® can be marketed in the
U.S. |
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Novartis ability to obtain regulatory approval in Canada for Fanapt® and our
ability to obtain regulatory approval for Fanapt® in countries outside the U.S. and
Canada |
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our ability to successfully develop and commercialize Fanapt®, including a longacting
injectable (or depot) formulation of Fanapt®, outside of the U.S. and Canada |
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the unfavorable outcome of any potential litigation relating to Fanapt® |
We entered into an amended and restated sublicense agreement with Novartis to commercialize
Fanapt® in the U.S. and Canada and to further develop and commercialize a long-acting injectable
(or depot) formulation of Fanapt® in the U.S. and Canada. As such, we will not be involved in the
marketing or sales efforts for Fanapt® in the U.S. and Canada. Our future revenues depend
substantially on royalties and milestone payments we may receive from Novartis. Pursuant to the
amended and restated sublicense agreement with Novartis, we received an upfront payment of $200.0
million and are eligible for additional payments totaling up to $265.0 million upon Novartis
achievement of certain commercial and development milestones for Fanapt® in the U.S. and Canada,
which may or may not be achieved or met. We also receive royalties, which, as a percentage of net
sales, are in the low double-digits, on net sales of Fanapt® in the U.S. and Canada. Such royalties
may not be significant and will depend on numerous factors. We cannot control the amount and timing
of resources that Novartis may devote to Fanapt® or the depot formulation of Fanapt®. If Novartis
fails to successfully commercialize Fanapt® in the U.S., fails to develop and commercialize Fanapt®
in Canada or further develop a long-acting injectable (or depot) formulation of Fanapt®, if
Novartis efforts are not effective, or if Novartis focuses its efforts on other
6
schizophrenia therapies or schizophrenia drug candidates, our business will be negatively
affected. If Novartis does not successfully commercialize Fanapt® in the U.S. or Canada, we will
receive limited revenues from them.
Although we have developed and continue to develop additional products and product candidates
for commercial introduction, we expect to be substantially dependent on sales from Fanapt® for the
foreseeable future. For reasons outside of our control, including those mentioned above, sales of
Fanapt® may not meet our expectations. Any significant negative developments relating to Fanapt®,
such as safety or efficacy issues, the introduction or greater acceptance of competing products or
adverse regulatory or legislative developments, will have a material adverse effect on our results
of operations.
If our compounds are determined to be unsafe or ineffective in humans, whether commercially or in
clinical trials, our business will be materially harmed.
Despite the FDAs approval of the NDA for Fanapt® and the positive results of our completed
trials for Fanapt® and tasimelteon, we are uncertain whether either of these products will
ultimately prove to be effective and safe in humans. Frequently, products that have shown promising
results in clinical trials have suffered significant setbacks in later clinical trials or even
after they are approved for commercial sale. Future uses of our compounds, whether in clinical
trials or commercially, may reveal that the product is ineffective, unacceptably toxic, has other
undesirable side effects, is difficult to manufacture on a large scale, is uneconomical, infringes
on proprietary rights of another party or is otherwise not fit for further use. If our compounds
are determined to be unsafe or ineffective in humans, our business will be materially harmed.
Clinical trials for our compounds are expensive and their outcomes are uncertain. Any failure or
delay in completing clinical trials for our compounds could severely harm our business.
Pre-clinical studies and clinical trials required to demonstrate the safety and efficacy of
our compounds are time-consuming and expensive and together take several years to complete. Before
obtaining regulatory approvals for the commercial sale of any of our compounds, we or our partners
must demonstrate through preclinical testing and clinical trials that such compound is safe and
effective for use in humans. We have incurred, and we will continue to incur, substantial expense
for, and devote a significant amount of time to, preclinical testing and clinical trials.
Historically, the results from preclinical testing and early clinical trials often have not
predicted results of later clinical trials. A number of new drugs have shown promising results in
clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain
necessary regulatory approvals. Clinical trials conducted by us, by our partners or by third
parties on our or our partners behalf may not demonstrate sufficient safety and efficacy to obtain
the requisite regulatory approvals for our compounds. Regulatory authorities may not permit us or
our partners to undertake any additional clinical trials for our compounds, and it may be difficult
to design efficacy studies for our compounds in new indications.
Clinical development efforts performed by us or our partners may not be successfully
completed. Completion of clinical trials may take several years or more. The length of time can
vary substantially with the type, complexity, novelty and intended use of the compounds. The
commencement and rate of completion of clinical trials for our compounds may be delayed by many
factors, including:
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the inability to manufacture or obtain from third parties materials sufficient for
use in pre-clinical studies and clinical trials |
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delays in beginning a clinical trial |
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delays in patient enrollment and variability in the number and types of patients
available for clinical trials |
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difficulty in maintaining contact with patients after treatment, resulting in
incomplete data |
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poor effectiveness of our compounds during clinical trials |
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unforeseen safety issues or side effects and |
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governmental or regulatory delays and changes in regulatory requirements and
guidelines |
If we or our partners fail to complete successfully one or more clinical trials for our
compounds, we or they may not receive the regulatory approvals needed to market that compound.
Therefore, any failure or delay in commencing or completing these clinical trials would harm our
business materially.
7
We and our partners face heavy government regulation. FDA regulatory approval of our compounds is
uncertain and we and our
partners are continually at risk of the FDA requiring us or them to discontinue marketing any
compounds that have obtained, or in the future may obtain, regulatory approval.
The research, testing, manufacturing and marketing of compounds such as those that we have
developed or we or in regard to partnered products, our partners, are developing are subject to
extensive regulation by federal, state and local government authorities, including the FDA. To
obtain regulatory approval of such compounds, we or our partners must demonstrate to the
satisfaction of the applicable regulatory agency that, among other things, the compound is safe and
effective for its intended use. In addition, we or our partners must show that the manufacturing
facilities used to produce such compounds are in compliance with current Good Manufacturing
Practices regulations or cGMP.
The process of obtaining FDA and other required regulatory approvals and clearances can take
many years and will require us and, in the case of partnered products, our partners to expend
substantial time and capital. Despite the time and expense expended, regulatory approval is never
guaranteed. The number of pre-clinical and clinical trials that will be required for FDA approval
varies depending on the compound, the disease or condition that the compound is in development for,
and the requirements applicable to that particular compound. The FDA can delay, limit or deny
approval of a compound for many reasons, including that:
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a compound may not be shown to be safe or effective |
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the FDA may interpret data from pre-clinical and clinical trials in different ways
than we or our partners do |
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the FDA may not approve our or our partners manufacturing processes or facilities |
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a compound may not be approved for all the indications we or our partners request |
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the FDA may change its approval policies or adopt new regulations |
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the FDA may not meet, or may extend, the Prescription Drug User Fee Act (PDUFA) date
with respect to a particular NDA and |
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the FDA may not agree with our or our partners regulatory approval strategies or
components of the regulatory filings, such as clinical trial designs |
For example, if certain of our or our partners methods for analyzing trial data are not
accepted by the FDA, we or our partners may fail to obtain regulatory approval for our compounds.
Moreover, the marketing, distribution and manufacture of approved products remain subject to
extensive ongoing regulatory requirements. Failure to comply with applicable regulatory
requirements could result in, among other things:
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warning letters |
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fines |
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civil penalties |
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injunctions |
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recall or seizure of products |
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total or partial suspension of production |
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refusal of the government to grant future approvals |
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withdrawal of approvals and |
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criminal prosecution |
Any delay or failure to obtain regulatory approvals for our compounds will result in increased
costs, could diminish competitive advantages that we may attain and would adversely affect the
marketing of our compounds. Other than Fanapt® in the U.S., which is being marketed and sold by
Novartis, we have not received regulatory approval to market any of our compounds in any
jurisdiction.
Even following regulatory approval of our compounds, the FDA may impose limitations on the
indicated uses for which such compounds may be marketed, subsequently withdraw approval or take
other actions against us, our partners or such compounds that are adverse to our business. The FDA
generally approves drugs for particular indications. An approval for a more limited indication
reduces the size of the potential market for the product. Product approvals, once granted, may be
withdrawn if problems occur after initial marketing.
We and our partners also are subject to numerous federal, state and local laws, regulations
and recommendations relating to safe working conditions, laboratory and manufacturing practices,
the environment and the use and disposal of hazardous substances used in connection with discovery,
research and development work. In addition, we cannot predict the extent to which new governmental
8
regulations might significantly impede the discovery, development, production and marketing of
our compounds. We or our partners may be required to incur significant costs to comply with current
or future laws or regulations, and we may be adversely affected by the cost of such compliance.
We intend to seek regulatory approvals for our compounds in foreign jurisdictions, but we may not
obtain any such approvals.
Pursuant to our amended and restated sublicense agreement with Novartis, we retained the right
to develop and commercialize Fanapt® outside the U.S. and Canada. We intend to market our compounds
outside the U.S. and Canada with one or more commercial partners. In order to market our compounds
in foreign jurisdictions, we may be required to obtain separate regulatory approvals and to comply
with numerous and varying regulatory requirements. The approval procedure varies among countries
and jurisdictions and can involve additional trials, and the time required to obtain approval may
differ from that required to obtain FDA approval. We have no experience obtaining any such foreign
approvals. Additionally, the foreign regulatory approval process may include all of the risks
associated with obtaining FDA approval. For all of these reasons, we may not obtain foreign
regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by
regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory
authority does not ensure approval by regulatory authorities in other foreign countries or
jurisdictions or by the FDA. We may not be able to file for regulatory approvals and may not
receive necessary approvals to commercialize our compounds in any market. The failure to obtain
these approvals could harm our business materially.
Our compounds may cause undesirable side effects or have other properties that could delay or
prevent their regulatory approval or limit their marketability.
Undesirable side effects caused by our compounds could interrupt, delay or halt clinical
trials and could result in the denial of regulatory approval by the FDA or other regulatory
authorities for any or all targeted indications, and in turn prevent us or our partners from
commercializing or continuing the commercialization of such compounds and generating revenues from
their sale. We and our partners, as applicable, will continue to assess the side effect profile of
our compounds in ongoing clinical development programs. However, we cannot predict whether the
commercial use of our approved compounds (or our compounds in development, if and when they are
approved for commercial use) will produce undesirable or unintended side effects that have not been
evident in the use of, or in clinical trials conducted for, such compounds to date. Additionally,
incidents of product misuse may occur. These events, among others, could result in product recalls,
product liability actions or withdrawals or additional regulatory controls, all of which could have
a material adverse effect on our business, results of operations and financial condition.
In addition, if after receiving marketing approval of a compound, we, our partners or others
later identify undesirable side effects caused by such compound, we or our partners could face one
or more of the following:
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regulatory authorities may require the addition of labeling statements, such as a
black box warning or a contraindication |
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regulatory authorities may withdraw their approval of the compound |
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we or our partners may be required to change the way the compound is administered,
conduct additional clinical trials or change the labeling of the compound and |
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our reputation may suffer |
Any of these events could prevent us or our partners from achieving or maintaining market
acceptance of the affected compound or could substantially increase the costs and expenses of
commercializing the compound, which in turn could delay or prevent us from generating significant
revenues from its sale.
Even after we or our partners obtain regulatory approvals of a product, acceptance of such compound
in the marketplace is uncertain and failure to achieve market acceptance will prevent or delay our
ability to generate revenues.
Even after obtaining regulatory approvals for the sale of our compounds, the commercial
success of these compounds will depend, among other things, on their acceptance by physicians,
patients, third-party payors and other members of the medical community as a therapeutic and
cost-effective alternative to competing products and treatments. The degree of market acceptance of
any compound will depend on a number of factors, including the demonstration of its safety and
efficacy, its cost-effectiveness, its potential advantages over other therapies, the reimbursement
policies of government and third-party payors with respect to such compound, our ability to attract
corporate partners, including pharmaceutical companies, to assist in commercializing our compounds,
receipt of regulatory clearance of marketing claims for the uses that we or our partners are
developing and the effectiveness of our and our partners marketing and distribution capabilities.
If our approved compounds fail to gain market acceptance, we may be unable to earn
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sufficient revenue to continue our business. If our approved compounds do not become widely
accepted by physicians, patients, third-party payors and other members of the medical community, it
is unlikely that we will ever become profitable.
If we fail to obtain the capital necessary to fund our research and development activities and
commercialization efforts, we may be unable to continue operations or we may be forced to share our
rights to commercialize our products and product candidates with third parties on terms that may
not be attractive to us.
Our activities will necessitate significant uses of working capital throughout 2010 and
beyond. As of September 30, 2010, our total cash and cash equivalents and marketable securities
were approximately $202.1 million. Our long term capital requirements are expected to depend on
many factors, including, among others:
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the amount of royalty and milestone payments received from our commercial partners |
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our ability to commercialize Fanapt® outside the U.S. and Canada |
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costs of developing sales, marketing and distribution channels and our ability to
sell our products |
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costs involved in establishing manufacturing capabilities for commercial quantities
of our products |
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the number of potential formulations, products and product candidates in development |
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progress with pre-clinical studies and clinical trials |
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time and costs involved in obtaining regulatory (including FDA) clearance |
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costs involved in preparing, filing, prosecuting, maintaining and enforcing patent,
trademark and other intellectual property claims |
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competing technological and market developments |
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market acceptance of our products |
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costs for recruiting and retaining employees and consultants |
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costs for training physicians and |
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legal, accounting, insurance and other professional and business related costs |
We expect to receive royalty payments and hope to receive milestone payments relating to
Fanapt® in connection with our amended and restated sublicense agreement with Novartis. However, if
Fanapt® is not as commercially successful as we expect and we do not receive such payments, we may
need to raise additional capital to fund our anticipated operating expenses and execute on our
business plans. In our capital-raising efforts, we may seek to sell debt securities or additional
equity securities or obtain a bank credit facility, or enter into partnerships or other
collaboration agreements. The sale of additional equity or debt securities, if convertible, could
result in dilution to our stockholders and may also result in a lower price for our common stock.
The incurrence of indebtedness would result in increased fixed obligations and could also result in
covenants that could restrict our operations. However, given the current global economic climate,
we may have more difficulty raising funds than we would during a period of economic stability, and
we may not be able to raise additional funds on acceptable terms, or at all. If we are unable to
secure sufficient capital to fund our activities, we may not be able to continue operations, or we
may have to enter into partnerships or other collaboration agreements that could require us to
share commercial rights to our products to a greater extent or at earlier stages in the drug
development process than is currently intended. These partnerships or collaborations, if
consummated prior to proof-of-efficacy or safety of a given product, could impair our ability to
realize value from that product. If additional financing is not available when required or is not
available on acceptable terms, we may be unable to fund our operations and planned growth, develop
or enhance our technologies or products, take advantage of business opportunities or respond to
competitive market pressures, any of which would materially harm our business, financial condition
and results of operations.
We have a history of operating losses, anticipate future losses and may never become profitable on
a sustained basis.
We have been engaged in identifying and developing compounds since March 2003, which has
required, and will continue to require, significant research and development expenditures. As of
September 30, 2010, we had accumulated net losses of approximately $256 million, and we cannot
estimate with precision the extent of our future losses. Our ability to generate revenue and
achieve profitability largely depends on Novartis and our ability to sell Fanapt®. Although
Novartis launched Fanapt® in the U.S. in the first quarter of 2010, it is too early to determine
whether or not Fanapt® will be a commercial success. Fanapt® may not be as commercially successful
as we expect, Novartis may not succeed in gaining market acceptance of Fanapt® in the U.S. or
developing and commercializing Fanapt® in Canada, and we may not succeed in commercializing Fanapt®
outside of the U.S. and Canada. In addition, we may not succeed in commercializing any other
compounds. We cannot assure you that we will be profitable even if our compounds are successfully
commercialized. We may be unable to fully develop, obtain regulatory approval for, commercialize,
manufacture, market, sell and derive revenue from our compounds in the timeframes we project, if at
all, and our inability to do so
10
would materially and adversely impact the market price of our common stock and our ability to
raise capital and continue operations.
There can be no assurance that we will achieve sustained profitability. Our ability to achieve
sustained profitability in the future depends, in part, upon:
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our and our partners ability to obtain and maintain regulatory approval for our
compounds, both in the U.S. and in foreign countries |
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Novartis ability to successfully market and sell Fanapt® in the U.S. and Canada and
achieve certain product development and sales milestones |
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our ability to successfully commercialize Fanapt® outside the U.S. and Canada |
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our ability to enter into agreements to develop and commercialize our products and
product candidates |
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our ability to develop, have manufactured and market our products and product
candidates |
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our and our partners ability to obtain adequate reimbursement coverage for our
compounds from insurance companies, government programs and other third party payors |
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our ability to obtain additional research and development funding from collaborative
partners or funding for our products and product candidates |
In addition, the amount we spend will impact our profitability. Our spending will depend, in
part, upon:
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the progress of our research and development programs for our products and product
candidates, including clinical trials |
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the time and expense that will be required to pursue FDA and/or foreign regulatory
approvals for our compounds and whether such approvals are obtained |
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the time and expense required to prosecute, enforce and/or challenge patent and
other intellectual property rights |
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the cost of operating and maintaining development and research facilities |
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the cost of third party manufacturers |
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the number of product candidates we pursue |
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how competing technological and market developments affect our compounds |
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the cost of possible acquisitions of technologies, compounds, product rights or
companies |
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the cost of obtaining licenses to use technology owned by others for proprietary
products and otherwise |
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the costs of potential litigation and |
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the costs associated with recruiting and compensating a highly skilled workforce in
an environment where competition for such employees may be intense |
We may not achieve all or any of these goals and, thus, we cannot provide assurances that we
will ever be profitable on a sustained basis or achieve significant revenues. Even if we do achieve
some or all of these goals, we may not achieve significant or sustained commercial success.
If our contract research organizations do not successfully carry out their duties or if we lose our
relationships with contract research organizations, our drug development efforts could be delayed.
Our arrangements with contract research organizations are critical to our success in bringing
our products and product candidates to the market and promoting such marketed products profitably.
We are dependent on contract research organizations, third-party vendors and investigators for
pre-clinical testing and clinical trials related to our drug discovery and development efforts and
we will likely continue to depend on them to assist in our future discovery and development
efforts. These parties are not our employees and we cannot control the amount or timing of
resources that they devote to our programs. As such, they may not complete activities on schedule
or may not conduct our clinical trials in accordance with regulatory requirements or our stated
protocols. The parties with which we contract for execution of our clinical trials play a
significant role in the conduct of the trials and the subsequent collection and analysis of data.
If they fail to devote sufficient time and resources to our drug development programs or if their
performance is substandard, it will delay the development, approval and commercialization of our
products and product candidates. Moreover, these parties may also have relationships with other
commercial entities, some of which may compete with us. If they assist our competitors, it could
harm our competitive position.
Our contract research organizations could merge with or be acquired by other companies or
experience financial or other setbacks unrelated to our collaboration that could, nevertheless,
materially adversely affect our business, results of operations and financial
condition.
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If we lose our relationship with any one or more of these parties, we could experience a
significant delay in both identifying another comparable provider and then contracting for its
services. We may be unable to retain an alternative provider on reasonable terms, if at all. Even
if we locate an alternative provider, it is likely that this provider may need additional time to
respond to our needs and may not provide the same type or level of service as the original
provider. In addition, any provider that we retain will be subject to current Good Laboratory
Practices or cGLP, and similar foreign standards and we do not have control over compliance with
these regulations by these providers. Consequently, if these practices and standards are not
adhered to by these providers, the development and commercialization of our products or product
candidates could be delayed.
We rely on a limited number of third party manufacturers to formulate and manufacture our products
and product candidates and our business will be seriously harmed if these manufacturers are not
able to satisfy our demand and alternative sources are not available.
Our expertise is primarily in the research and development and pre-clinical and clinical trial
phases of product development. We do not have an in-house manufacturing capability and depend
completely on a small number of third-party manufacturers and active pharmaceutical ingredient
formulators for the manufacture of our products and product candidates. Therefore, we are dependent
on third parties for our formulation development and manufacturing of our products and product
candidates. This may expose us to the risk of not being able to directly oversee the production and
quality of the manufacturing process and provide ample commercial supplies to successfully launch
and maintain the marketing of our products and product candidates. Furthermore, these third party
contractors, whether foreign or domestic, may experience regulatory compliance difficulty,
mechanical shut downs, employee strikes, or other unforeseeable events that may delay or limit
production. Our inability to adequately establish, supervise and conduct (either ourselves or
through third parties) all aspects of the formulation and manufacturing processes would have a
material adverse effect on our ability to develop and commercialize our products and product
candidates.
We do not have long-term agreements with any of these third parties, and if they are unable or
unwilling to perform for any reason, we may not be able to locate alternative acceptable
manufacturers or formulators or enter into favorable agreements with them. Any inability to acquire
sufficient quantities of our products or product candidates in a timely manner from these third
parties could adversely affect sales of our products, delay clinical trials and prevent us from
developing our products and product candidates in a cost-effective manner or on a timely basis. In
addition, manufacturers of our products and product candidates are subject to cGMP and similar
foreign standards and we do not have control over compliance with these regulations by our
manufacturers. If one of our contract manufacturers fails to maintain compliance, the production of
our products or product candidates could be interrupted, resulting in delays and additional costs.
In addition, if the facilities of such manufacturers do not pass a pre-approval or post-approval
plant inspection, the FDA will not grant approval and may institute restrictions on the marketing
or sale of our products or product candidates.
Our manufacturing strategy presents the following additional risks:
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because most of our third-party manufacturers and formulators are located outside of
the U.S., there may be difficulties in importing our products and product candidates or
their components into the U.S. as a result of, among other things, FDA import
inspections, incomplete or inaccurate import documentation or defective packaging |
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because of the complex nature of our products and product candidates, our
manufacturers may not be able to successfully manufacture our products and product
candidates in a cost-effective and/or timely manner. |
Materials necessary to manufacture our compounds may not be available on commercially reasonable
terms, or at all, which may delay the development, regulatory approval and commercialization of our
compounds.
We and our partners rely on manufacturers to purchase from third-party suppliers the materials
necessary to produce our compounds for our clinical trials and commercialization. Suppliers may not
sell these materials to such manufacturers at the times we or our partners need them or on
commercially reasonable terms. We do not have any control over the process or timing of the
acquisition of these materials by these manufacturers. Moreover, we currently do not have any
agreements for the commercial production of these materials. If the manufacturers are unable to
obtain these materials for our or our partners clinical trials, product testing, potential
regulatory approval of our compounds and commercial scale manufacturing could be delayed,
significantly affecting our and our partners ability to further develop and commercialize our
compounds. If we, our manufacturers or, in the case of our partnered products, our partners are
unable to purchase these materials for our products or partnered products, as applicable, there
would be a shortage in supply or the commercial launch of such products or partnered products would
be delayed, which would
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materially affect our or our partners ability to generate revenues from the sale of such
products or partnered products.
We face substantial competition which may result in others developing or commercializing products
before or more successfully than we do.
Our future success will depend on our or our partners ability to demonstrate and maintain a
competitive advantage with respect to our compounds and our ability to identify and develop
additional products or product candidates through the application of our pharmacogenetics and
pharmacogenomics expertise. Large, fully integrated pharmaceutical companies, either alone or
together with collaborative partners, have substantially greater financial resources and have
significantly greater experience than we do in:
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developing products and product candidates |
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undertaking pre-clinical testing and clinical trials |
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obtaining FDA and other regulatory approvals of products and product candidates and |
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manufacturing, marketing and selling products |
These companies may invest heavily and quickly to discover and develop novel products that
could make our compounds obsolete. Accordingly, our competitors may succeed in obtaining patent
protection, receiving FDA approval or commercializing superior products or other competing products
before we do. Technological developments or the FDAs approval of new therapeutic indications for
existing products may make our compounds obsolete or may make them more difficult to market
successfully, any of which could have a material adverse effect on our business, results of
operations and financial condition.
Fanapt®, and our other compounds, if successfully developed and approved for commercial sale,
will compete with a number of drugs and therapies currently manufactured and marketed by major
pharmaceutical and other biotechnology companies. Our compounds may also compete with new products
currently under development by others or with products which may cost less than our compounds.
Physicians, patients, third party payors and the medical community may not accept or utilize any of
our compounds that may be approved. If Fanapt® (and our other compounds, if and when approved) do
not achieve significant market acceptance, our business, results of operations and financial
condition would be materially adversely affected. We believe the primary competitors for Fanapt®
and tasimelteon are as follows:
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For Fanapt® in the treatment of schizophrenia, the atypical antipsychotics
Risperdal® (risperidone), including the depot formulation
Risperdal® Consta®, and
Invega® (paliperidone),
including the depot formulation Invega®
Sustennatm, each
by Ortho-McNeil-Janssen Pharmaceuticals, Inc., Zyprexa®
(olanzapine),
including the depot formulation Zyprexa®
Relprevvtm, by
Eli Lilly and Company, Seroquel®
(quetiapine) by AstraZeneca PLC,
Abilify® (aripiprazole) by BMS/Otsuka
Pharmaceutical Co., Ltd.,
Geodon® (ziprasidone) by Pfizer Inc.,
Saphris® (asenapine) by
Schering-Plough, Latuda® (lurasidone) by Dainippon Sumitomo
Pharma, and generic
clozapine, as well as the typical antipsychotics haloperidol, chlorpromazine,
thioridazine, and sulpiride (all of which are generic). |
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For tasimelteon in the treatment of insomnia, Rozeremtm
(ramelteon) by Takeda Pharmaceuticals Company Limited, hypnotics such as
Ambien® (zolpidem) by sanofi-aventis (including Ambien CR®),
Lunesta® (eszopiclone) by Sepracor Inc. and Sonata® (zaleplon) by
King Pharmaceuticals, Inc., Silenor® (doxepin) by Somaxon Pharmaceuticals, Inc.,
generic compounds such as zolpidem, trazodone and doxepin, and over-the-counter
remedies such as Benadryl® and Tylenol PM®. |
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For tasimelteon in the treatment of depression, antidepressants such as
Paxil® (paroxetine) by GlaxoSmithKline (GSK), Zoloft®
(sertraline) by Pfizer, Prozac® (fluoxetine) by Eli Lilly, Lexapro
(escitalopram) by Lundbeck A/S /Forest Pharmaceuticals Inc.,
Viibryd (vilazodone HCL) by Clinical Data Inc.
and Effexor®
(venlafaxine) by Wyeth as well as other compounds such as Wellbutrin®
(buproprion) by GSK, Cymbalta® (duloxetine) by Eli Lilly, and Valdoxan
(agomelatine) by Novartis and Les Laboratories Servier. |
Additionally, our ability to compete may be affected because insurers and other third-party
payors in some cases seek to encourage the use of cheaper, generic products, which could make our
compounds less attractive.
13
We have no experience selling, marketing or distributing products and no internal capability to do
so, which may make commercializing our products and product candidates difficult.
At present, we have no marketing experience or sales capabilities. Therefore, in order for us
to commercialize Fanapt® outside the U.S. and Canada or our other compounds, we must either acquire
or internally develop sales, marketing and distribution capabilities, or enter into collaborations
with partners to perform these services for us. We may, in some instances, rely significantly on
sales, marketing and distribution arrangements with our collaborative partners and other third
parties. For example, we rely completely on Novartis to market, sell and distribute Fanapt® in the
U.S. and Canada and our future revenues are materially dependent on the success of the efforts of
Novartis.
For the commercialization of Fanapt® outside the U.S. and Canada or our other compounds, we
may not be able to establish sales and distribution partnerships on acceptable terms or at all, and
if we do enter into a distribution arrangement, our success will be materially dependent upon the
performance of our partner. In the event that we attempt to acquire or develop our own in-house
sales, marketing and distribution capabilities, factors that may inhibit our efforts to
commercialize our products and product candidates without partners or licensees include:
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our inability to recruit and retain adequate numbers of effective sales and
marketing personnel |
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the inability of sales personnel to obtain access to or persuade adequate numbers of
physicians to prescribe our products |
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the lack of complementary products to be offered by our sales personnel, which may
put us at a competitive disadvantage against companies with broader product lines and |
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unforeseen costs associated with creating our own sales and marketing team or with
entering into a partnering agreement with an independent sales and marketing
organization |
The cost of establishing and maintaining a sales, marketing and distribution organization may
exceed its cost effectiveness. If we fail to develop sales and marketing capabilities, if sales
efforts are not effective or if costs of developing sales and marketing capabilities exceed their
cost effectiveness, our business, results of operations and financial condition could be materially
adversely affected.
If we cannot identify, or enter into licensing arrangements for, new products or product
candidates, our ability to develop a diverse product portfolio will be limited.
A component of our business strategy is acquiring rights to develop and commercialize
compounds discovered or developed by other pharmaceutical and biotechnology companies for which we
may find effective uses and markets through our unique pharmacogenetics and pharmacogenomics
expertise. Competition for the acquisition of these compounds is intense. If we are not able to
identify opportunities to acquire rights to commercialize additional products or product
candidates, we may not be able to develop a diverse portfolio of products and product candidates
and our business may be harmed. Additionally, it may take substantial human and financial resources
to secure commercial rights to promising products or product candidates. Moreover, if other firms
develop pharmacogenetics and pharmacogenomics capabilities, we may face increased competition in
identifying and acquiring additional products or product candidates.
We may not be successful in the development of products for our own account.
In addition to our business strategy of acquiring rights to develop and commercialize products
and product candidates, we may develop products and product candidates for our own account by
applying our technologies to off-patent drugs as well as developing our own proprietary molecules.
Because we will be funding the development of such programs, there is a risk that we may not be
able to continue to fund all such programs to completion or to provide the support necessary to
perform the clinical trials, obtain regulatory approvals or market any approved products. We expect
the development of products for our own account to consume substantial resources. If we are able to
develop commercial products on our own, the risks associated with these programs may be greater
than those associated with our programs with collaborative partners.
If we lose key scientists or management personnel, or if we fail to recruit additional highly
skilled personnel, it will impair our ability to identify, develop and commercialize products.
We are highly dependent on principal members of our management team and scientific staff,
including our Chief Executive Officer, Mihael H. Polymeropoulos, M.D. These executives each have
significant pharmaceutical industry experience. The loss of any
14
such executives, including Dr. Polymeropoulos, or any other principal member of our management
team or scientific staff, would impair our ability to identify, develop and market new products.
Our management and other employees may voluntarily terminate their employment with us at any time.
The loss of the services of these or other key personnel, or the inability to attract and retain
additional qualified personnel, could result in delays to development or approval, loss of sales
and diversion of management resources. In addition, we depend on our ability to attract and retain
other highly skilled personnel, including research scientists. Competition for qualified personnel
is intense, and the process of hiring and integrating such qualified personnel is often lengthy. We
may be unable to recruit such personnel on a timely basis, if at all, which would negatively impact
our development and commercialization programs.
Additionally, we do not currently maintain key person life insurance on the lives of our
executives or any of our employees. This lack of insurance means that we may not have adequate
compensation for the loss of the services of these individuals.
Product liability lawsuits could divert our resources, result in substantial liabilities and reduce
the commercial potential of our compounds.
The risk that we may be sued on product liability claims is inherent in the development and
sale of pharmaceutical products. For example, we face a risk of product liability exposure related
to the testing of our products and product candidates in clinical trials and will face even greater
risks upon commercialization by us or our partners of our compounds. We believe that we may be at a
greater risk of product liability claims relative to other pharmaceutical companies because our
compounds are intended to treat behavioral disorders, and it is possible that we may be held liable
for the behavior and actions of patients who use our compounds. These lawsuits may divert our
management from pursuing our business strategy and may be costly to defend. In addition, if we are
held liable in any of these lawsuits, we may incur substantial liabilities and we or our partners
may be forced to limit or forego further commercialization of one or more of our compounds.
Although we maintain product liability insurance, our aggregate coverage limit under this insurance
is $10.0 million, and while we believe this amount of insurance is sufficient to cover our product
liability exposure, these limits may not be high enough to fully cover potential liabilities. As
our development activities and commercialization efforts progress and we and our partners sell our
compounds, this coverage may be inadequate, we may be unable to obtain adequate coverage at an
acceptable cost or we may be unable to get adequate coverage at all or our insurer may disclaim
coverage as to a future claim. This could prevent the commercialization or limit the commercial
potential of our compounds. Even if we are able to maintain insurance that we believe is adequate,
our results of operations and financial condition may be materially adversely affected by a product
liability claim. Uncertainties resulting from the initiation and continuation of products liability
litigation or other proceedings could have a material adverse effect on our ability to compete in
the marketplace. Product liability litigation and other related proceedings may also require
significant management time.
Legislative or regulatory reform of the healthcare system in the U.S. and foreign jurisdictions may
affect our or our partners ability to sell our products or partnered products profitably.
The continuing efforts of the U.S. and foreign governments, insurance companies, managed care
organizations and other payors of health care services to contain or reduce health care costs may
adversely affect our or our partners ability to set prices for our products or partnered products
which we or our partners believe are fair, and our ability to generate revenues and achieve and
maintain profitability.
Specifically, in both the U.S. and some foreign jurisdictions there have been a number of
legislative and regulatory proposals to change the healthcare system in ways that could affect our
or our partners ability to sell our products or partnered products profitably. In the U.S., the
Medicare Prescription Drug Improvement and Modernization Act of 2003 reformed the way Medicare
covered and provided reimbursement for pharmaceutical products. This legislation could decrease the
coverage and price that we or our partners may receive for our products or partnered products.
Other third-party payors are increasingly challenging the prices charged for medical products and
services. It will be time-consuming and expensive for us or our partners to go through the process
of seeking reimbursement from Medicare and private payors. Our products or partnered products may
not be considered cost effective, and coverage and reimbursement may not be available or sufficient
to allow the sale of such products on a competitive and profitable basis. Further federal and state
proposals and healthcare reforms are likely which could limit the prices that can be charged for
the drugs we develop and may further limit our commercial opportunity. Our results of operations
could be materially adversely affected by the Medicare prescription drug coverage legislation, by
the possible effect of this legislation on amounts that private insurers will pay and by other
healthcare reforms that may be enacted or adopted in the future.
The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and
Education Reconciliation Act of 2010, or PPACA, is a sweeping measure intended to expand healthcare
coverage within the U.S., primarily through the imposition of health insurance mandates on
employers and individuals and expansion of the Medicaid program. Several provisions of the new law,
which
15
have varying effective dates, may affect us and will likely increase certain of our costs. For
example, an increase in the Medicaid rebate rate from 15.1% to 23.1% is effective as of January 1,
2010, and the volume of rebated drugs has been expanded to include beneficiaries in Medicaid
managed care organizations, effective as of March 23, 2010. The PPACA also imposes an annual fee on
pharmaceutical manufacturers beginning in 2011, based on the manufacturers sale of branded
pharmaceuticals and biologics (excluding orphan drugs); expands the 340B drug discount program
(excluding orphan drugs) including the creation of new penalties for non-compliance; and includes a
50% discount on brand name drugs for Medicare Part D participants in the coverage gap, or doughnut
hole. The law also revises the definition of average manufacturer price for reporting purposes
(effective October 1, 2010), which could increase the amount of the Companys Medicaid drug rebates
to states, once the provision is effective. Substantial new provisions affecting compliance also
have been added, which may require us to modify our business practices with health care
practitioners.
The reforms imposed by the new law will significantly impact the pharmaceutical industry;
however, the full effects of the PPACA cannot be known until these provisions are implemented and
the Centers for Medicare & Medicaid Services and other federal and state agencies issue applicable
regulations or guidance. Moreover, in the coming years, additional changes could be made to
governmental healthcare programs that could significantly impact the success of our products or
product candidates. We will continue to evaluate the PPACA, as amended, the implementation of
regulations or guidance related to various provisions of the PPACA by federal agencies, as well as
trends and changes that may be encouraged by the legislation and that may potentially impact on our
business over time.
In some foreign countries, including major markets in the European Union and Japan, the
pricing of prescription pharmaceuticals is subject to governmental control. In these countries,
pricing negotiations with governmental authorities can take nine to twelve months or longer after
the receipt of regulatory marketing approval for a product. To obtain reimbursement or pricing
approval in some countries, we may be required to conduct a clinical trial that compares the
cost-effectiveness of our product to other available therapies. Our business could be materially
harmed if reimbursement of our products is unavailable or limited in scope or amount or if pricing
is set at unsatisfactory levels.
Our business is subject to extensive governmental regulation and oversight and changes in laws
could adversely affect our revenues and profitability.
Our business is subject to extensive government regulation and oversight. As a result, we may
become subject to governmental actions which could materially adversely affect our business,
results of operations and financial condition, including:
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new laws, regulations or judicial decisions, or new interpretations of existing
laws, regulations or decisions, related to patent protection and enforcement, health
care availability, method of delivery and payment for health care products and services
or our business operations generally |
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changes in the FDA and foreign regulatory approval processes that may delay or
prevent the approval of new products and result in lost market opportunity |
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new laws, regulations and judicial decisions affecting pricing or marketing and |
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changes in the tax laws relating to our operations |
In addition, the Food and Drug Administration Amendments Act of 2007 or the FDAAA included new
authorization for the FDA to require post-market safety monitoring, along with a clinical trials
registry, and expanded authority for the FDA to impose civil monetary penalties on companies that
fail to meet certain commitments. The amendments among other things, require some new drug
applicants to submit risk evaluation and minimization strategies to monitor and address potential
safety issues for products upon approval, grant the FDA the authority to impose risk management
measures for marketed products and to mandate labeling changes in certain circumstances, and
establish new requirements for disclosing the results of clinical trials. Companies that violate
the law are subject to substantial civil monetary penalties. Additional measures have also been
enacted to address the perceived shortcomings in the FDAs handling of drug safety issues, and to
limit pharmaceutical company sales and promotional practices. While we expect the FDAAA to have a
substantial effect on the pharmaceutical industry, the extent of that effect is not yet known. As
the FDA issues regulations, guidance and interpretations relating to the new legislation, the
impact on the industry as well as our business will become clearer. The requirements and other
changes that the FDAAA imposes may make it more difficult, and likely more costly, to obtain
approval of new pharmaceutical products and to produce, market and distribute existing products.
Our and our partners ability to commercialize approved products successfully may be hindered, and
our business may be harmed as a result.
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Failure to comply with government regulations regarding the sale and marketing of our products or
partnered products could harm our business.
Our and our partners activities, including the sale and marketing of our products or
partnered products, are subject to extensive government regulation and oversight, including
regulation under the federal Food, Drug and Cosmetic Act and other federal and state statutes. We
are also subject to the provisions of the Federal Anti-Kickback Statute and several similar state
laws, which prohibit payments intended to induce physicians or others either to purchase or arrange
for or recommend the purchase of healthcare products or services. While the federal law applies
only to products or services for which payment may be made by a federal healthcare program, state
laws may apply regardless of whether federal funds may be involved. These laws constrain the sales,
marketing and other promotional activities of manufacturers of drugs and biologicals, such as us,
by limiting the kinds of financial arrangements, including sales programs, with hospitals,
physicians, and other potential purchasers of drugs and biologicals. Other federal and state laws
generally prohibit individuals or entities from knowingly presenting, or causing to be presented,
claims for payment from Medicare, Medicaid, or other third party payors that are false or
fraudulent, or are for items or services that were not provided as claimed. Anti-kickback and false
claims laws prescribe civil and criminal penalties for noncompliance that can be substantial,
including the possibility of exclusion from federal healthcare programs (including Medicare and
Medicaid).
Pharmaceutical and biotechnology companies have been the target of lawsuits and investigations
alleging violations of government regulation, including claims asserting antitrust violations,
violations of the Federal False Claim Act, the Anti-Kickback Statute, the Prescription Drug
Marketing Act and other violations in connection with off-label promotion of products and Medicare
and/or Medicaid reimbursement or related to environmental matters and claims under state laws,
including state anti-kickback and fraud laws.
While we continually strive to comply with these complex requirements, interpretations of the
applicability of these laws to marketing practices are ever evolving. If any such actions are
instituted against us or our partners and we or they are not successful in defending such actions
or asserting our rights, those actions could have a significant and material impact on our
business, including the imposition of significant fines or other sanctions. Even an unsuccessful
challenge could cause adverse publicity and be costly to respond to, and thus could have a material
adverse effect on our business, results of operations and financial condition.
Future transactions may harm our business or the market price of our stock.
We regularly review potential transactions related to technologies, products or product rights
and businesses complementary to our business. These transactions could include:
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mergers |
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acquisitions |
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strategic alliances |
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licensing agreements and |
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co-promotion and similar agreements |
We may choose to enter into one or more of these transactions at any time, which may cause
substantial fluctuations in the market price of our stock. Moreover, depending upon the nature of
any transaction, we may experience a charge to earnings, which could also materially adversely
affect our results of operations and could harm the market price of our stock.
We may undertake strategic acquisitions in the future, and difficulties integrating such
acquisitions could damage our ability to achieve or sustain profitability.
Although we have no experience in acquiring businesses, we may acquire businesses that
complement or augment our existing business. If we acquire businesses with promising product
candidates or technologies, we may not be able to realize the benefit of acquiring such businesses
if we are unable to move one or more products or product candidates through preclinical and/or
clinical development to regulatory approval and commercialization. Integrating any newly acquired
businesses or technologies could be expensive and time-consuming, resulting in the diversion of
resources from our current business. We may not be able to integrate any acquired business
successfully. We cannot assure you that, following an acquisition, we will achieve revenues,
specific net income or loss levels that justify the acquisition or that the acquisition will result
in increased earnings, or reduced losses, for the combined company in any future period. Moreover,
we may need to raise additional funds through public or private debt or equity financing to acquire
any businesses, which would result in dilution for stockholders or the incurrence of indebtedness.
We may not be able to operate acquired businesses profitably or otherwise implement our growth
strategy successfully.
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Our quarterly operating results may fluctuate significantly.
Our operating results will continue to be subject to quarterly fluctuations. The revenues we
generate, if any, and our operating results will be affected by numerous factors, including:
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our addition or termination of development programs |
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variations in the level of expenses related to our products, product candidates or
future development programs |
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our execution of collaborative, licensing or other arrangements, and the timing of
payments we may make or receive under these arrangements |
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the timing of royalties or milestone payments, if any, from the sales of Fanapt® |
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regulatory developments affecting our compounds or those of our competitors |
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product sales |
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cost of product sales |
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marketing and other expenses |
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manufacturing or supply issues and |
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any intellectual property infringement lawsuit in which we may become involved |
If our quarterly operating results fall below the expectations of investors or securities
analysts, the price of our common stock could decline substantially. Furthermore, any quarterly
fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate
substantially. We believe that quarterly comparisons of our financial results are not necessarily
meaningful and should not be relied upon as an indication of our future performance.
Risks related to intellectual property and other legal matters
Our rights to develop and commercialize our product and, product candidates are subject in part to
the terms and conditions of licenses or sublicenses granted to us by other pharmaceutical
companies. With respect to tasimelteon, these terms and conditions include an option in favor of
the licensor to reacquire rights to commercialize and develop this product in certain
circumstances.
Fanapt® (iloperidone) is based in part on patents and other intellectual property owned by
sanofi-aventis and Novartis. Titan Pharmaceuticals, Inc. (Titan) holds an exclusive license from
sanofi-aventis to the intellectual property owned by sanofi-aventis, and Titan has sublicensed its
rights under such license on an exclusive basis to Novartis. We acquired exclusive rights to this
and other intellectual property through a further sublicense from Novartis. The sublicense with
Novartis was amended and restated in October of 2009 to provide Novartis with exclusive rights to
commercialize Fanapt® in the U.S. and Canada and further develop and commercialize a long-acting
injectable or depot formulation of Fanapt® in the U.S. and Canada. We retained exclusive rights to
Fanapt® outside the U.S. and Canada and we will have exclusive rights to use any of Novartis data
for Fanapt® for developing and commercializing Fanapt® outside the U.S. and Canada. At Novartis
option, we will enter into good faith discussions with Novartis relating to the
co-commercialization of Fanapt® outside of the U.S. and Canada or, alternatively, Novartis will
receive a royalty on net sales of Fanapt® outside of the U.S. and Canada. We may lose our rights to
develop and commercialize Fanapt® outside the U.S. and Canada if we fail to comply with certain
requirements in the amended and restated sublicense agreement regarding our financial condition, or
if we fail to comply with certain diligence obligations regarding our development or
commercialization activities or if we otherwise breach the amended and restated sublicense
agreement and fail to cure such breach. Our rights to develop and commercialize Fanapt® outside the
U.S. and Canada may be impaired if we do not cure breaches by Novartis of similar obligations
contained in its sublicense agreement with Titan, although we are not aware of any such breach by
Novartis. Our loss of rights in Fanapt® to Novartis would have a material adverse effect on our
business. In addition, if Novartis breaches the amended and restated sublicense agreement with
respect to its commercialization activities in the U.S. or Canada, we may terminate Novartis
commercialization rights in the applicable country. We would no longer receive royalty payments
from Novartis in connection with such country in the event of such termination.
Tasimelteon is based in part on patents that we have licensed on an exclusive basis and other
intellectual property licensed from Bristol-Myers Squibb Company (BMS). BMS holds certain rights
with respect to tasimelteon in the license agreement. If we have not agreed to one or more
partnering arrangements to develop and commercialize tasimelteon in certain significant markets
with one or more third parties by a certain date, BMS has the option to exclusively develop and
commercialize tasimelteon on its own on pre-determined financial terms, including milestone and
royalty payments. BMS may terminate our license if we fail to meet certain milestones or if we
otherwise breach our royalty or other obligations in the agreement. In the event that we terminate
our license, or if BMS terminates our license due to our breach, all of our rights to tasimelteon
(including any intellectual property we develop with respect to tasimelteon) will revert back to
BMS or otherwise be licensed back to BMS on an exclusive basis. Any termination or reversion of our
rights to develop or commercialize tasimelteon, including any reacquisition by BMS of our rights,
may have a
18
material adverse effect on our business.
If our efforts to protect the proprietary nature of the intellectual property related to our
compounds are not adequate, we may not be able to compete effectively in our markets.
In addition to the rights we have licensed from Novartis and BMS relating to our compounds, we
rely upon intellectual property we own relating to these compounds, including patents, patent
applications and trade secrets. As of September 30, 2010, we had twenty pending Patent Cooperation
Treaty applications, fourteen of which have already been entered into the national stage in the
U.S. and other countries, relating to our compounds in clinical development. In addition, we have
one patent and three patent applications that have been filed in the U.S. Our patent applications
may be challenged or fail to result in issued patents and our existing or future patents may be too
narrow to prevent third parties from developing or designing around these patents. In addition, we
generally rely on trade secret protection and confidentiality agreements to protect certain
proprietary know-how that is not patentable, for processes for which patents are difficult to
enforce and for any other elements of our drug development processes that involve proprietary
know-how, information and technology that is not covered by patent applications. While we require
all of our employees, consultants, advisors and any third parties who have access to our
proprietary know-how, information and technology to enter into confidentiality agreements, we
cannot be certain that this know-how, information and technology will not be disclosed or that
competitors will not otherwise gain access to our trade secrets or independently develop
substantially equivalent information and techniques. Further, the laws of some foreign countries do
not protect proprietary rights to the same extent as the laws of the U.S. As a result, we may
encounter significant problems in protecting and defending our intellectual property both in the
U.S. and abroad. If we are unable to protect or defend the intellectual property related to our
technologies, we will not be able to establish or maintain a competitive advantage in our market.
If we do not obtain protection under the Hatch-Waxman Act and similar foreign legislation to extend
our patents and to obtain market exclusivity for our products and partnered products, our business
will be materially harmed.
The United States Drug Price Competition and Patent Term Restoration Act of 1984, more
commonly known as the Hatch-Waxman Act, provides for an extension of patent term for drugs for a
period of up to five years to compensate for time spent in development. Assuming we gain a
five-year patent term restoration for tasimelteon, and that we continue to have rights under our
license agreement with respect to this product, we would have exclusive rights to tasimelteons
U.S. new chemical entity patent (the primary patent covering the compound as a new composition of
matter) until 2022. During the second quarter of 2009, we submitted to the PTO our application to
extend the term of our patent relating to Fanapt® under the Hatch-Waxman Act. As of this time, the
PTO has preliminarily determined that the patent is eligible for patent term restoration under the
Hatch-Waxman Act. Assuming we gain a five-year extension for Fanapt®, pursuant to the terms and
conditions of our amended and restated sublicense agreement, Novartis would have the benefit of
exclusive rights to the new chemical entity patent until 2016, with the possibility of a further
six months of pediatric exclusivity. A directive in the European Union provides that companies that
receive regulatory approval for a new compound will have a 10-year period of market exclusivity for
that compound (with the possibility of a further one-year extension) in most countries in Europe,
beginning on the date of such European regulatory approval, regardless of when the European new
chemical entity patent covering such compound expires. A generic version of the approved drug may
not be marketed or sold in Europe during such market exclusivity period. This directive may be of
particular importance with respect to Fanapt®, since the European new chemical entity patent for
Fanapt® will expire prior to the end of this 10-year period of market exclusivity. However, there
is no assurance that we will receive the extensions of our patents or other exclusive rights
available under the Hatch-Waxman Act or similar foreign legislation. If we fail to receive such
extensions and exclusive rights, our ability or our partners ability to prevent competitors from
manufacturing, marketing and selling generic versions of our products or partnered products will be
materially impaired.
Litigation or third-party claims of intellectual property infringement could require us to divert
resources and may prevent or delay our drug discovery and development efforts.
Our commercial success depends in part on our not infringing the patents and proprietary
rights of third parties. Third parties may assert that we are employing their proprietary
technology without authorization. In addition, third parties may obtain patents in the future and
claim that use of our technologies infringes upon these patents. Furthermore, parties making claims
against us may obtain injunctive or other equitable relief, which could effectively block our
ability to develop and commercialize one or more of our products. Defense of these claims,
regardless of their merit, would divert substantial financial and employee resources from our
business. In the event of a successful claim of infringement against us, we may have to pay
substantial damages, obtain one or more licenses from third parties or pay royalties. In addition,
even in the absence of litigation, we may need to obtain additional licenses from third parties to
advance our research or allow commercialization of our products. We may fail to obtain any of these
licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable
to develop and commercialize further one or more of our products.
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In addition, in the future we could be required to initiate litigation to enforce our
proprietary rights against infringement by third parties. Prosecution of these claims to enforce
our rights against others could divert substantial financial and employee resources from our
business. If we fail to enforce our proprietary rights against others, our business will be harmed.
If we use hazardous and biological materials in a manner that causes injury or violates applicable
law, we may be liable for damages.
Our research, development and commercialization activities involve the controlled use of
potentially hazardous substances, including toxic chemical and biological materials. Although we
believe that our safety procedures for handling and disposing of such materials comply with state
and federal standards, there will always be the risk of contamination, injury or other damages
resulting from these hazardous substances. If we were to become liable for an accident, or if we or
our partners were to suffer an extended facility shutdown, we could incur significant costs,
damages and penalties that could materially harm our business, results of operations and financial
condition.
In addition, our operations produce hazardous waste products. While third parties are
responsible for disposal of our hazardous waste, we could be liable under environmental laws for
any required cleanup of sites at which our waste is disposed. Federal, state, foreign and local
laws and regulations govern the use, manufacture, storage, handling and disposal of these hazardous
materials. If we fail to comply with these laws and regulations at any time, or if they change, we
may be subject to criminal sanctions and substantial civil liabilities, which may adversely affect
our business.
Even if we continue to comply with all applicable laws and regulations regarding hazardous
materials, we cannot eliminate the risk of accidental contamination or discharge and our resultant
liability for any injuries or other damages caused by these accidents. Although we maintain
pollution liability insurance, our coverage limit under this insurance is $2.0 million, and while
we believe this amount and type of insurance is sufficient to cover risks typically associated with
our handling of materials, the insurance may not cover all environmental liabilities, and these
limits may not be high enough to cover potential liabilities for these damages fully. The amount of
uninsured liabilities may exceed our financial resources and materially harm our business.
Risks related to the offering and ownership of our securities
Our stock price has been highly volatile and may be volatile in the future, and purchasers of our
common stock could incur substantial losses.
The realization of any of the risks described in these risk factors or other unforeseen risks
could have a dramatic and adverse effect on the market price of our common stock. Between December
31, 2009 and December 31, 2010, the high and low sale prices of our common stock as reported on the
NASDAQ Global Market varied between $12.62 and $6.04. Additionally, market prices for securities of
biotechnology and pharmaceutical companies, including ours, have historically been very volatile.
The market for these securities has from time to time experienced significant price and volume
fluctuations for reasons that were unrelated to the operating performance of any one company.
The following factors, in addition to the other risk factors described in this section, may
also have a significant impact on the market price of our common stock:
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publicity regarding actual or potential testing or trial results relating to
products under development by us or our competitors |
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the outcome of regulatory review relating to products under development by us or our
competitors |
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regulatory developments in the U.S. and foreign countries |
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developments concerning any collaboration or other strategic transaction we may
undertake |
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announcements of patent issuances or denials, technological innovations or new
commercial products by us or our competitors |
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termination or delay of development or commercialization program(s) by our partners |
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safety issues with our products or those of our competitors |
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our partners ability to successfully commercialize our partnered products |
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our ability to successfully execute our commercialization strategies |
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announcements of technological innovations or new therapeutic products or methods by
us or others |
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actual or anticipated variations in our quarterly operating results |
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changes in estimates of our financial results or recommendations by securities
analysts or failure to meet such financial expectations |
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changes in government regulations or policies or patent decisions |
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changes in patent legislation or adverse changes to patent law |
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additions or departures of key personnel or members of our board of directors |
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publicity regarding actual or potential transactions involving us or |
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economic and other external factors beyond our control |
As a result of these factors, holders of our common stock might be unable to sell their shares
at or above the price they paid for such shares.
If there are substantial sales of our common stock, our stock price could decline.
A small number of institutional investors and private equity funds hold a significant number
of shares of our common stock. Sales by these stockholders of a substantial number of shares, or
the expectation of such sales, could cause a significant reduction in the market price of our
common stock. Additionally, a small number of early investors in our company have rights, subject
to certain conditions, to require us to file registration statements to permit the resale of their
shares in the public market or to include their shares in registration statements that we may file
for ourselves or other stockholders.
In addition to our outstanding common stock, as of December 31, 2010, there were a total of
4,377,794 shares of common stock that we have registered and that we are obligated to issue upon
the exercise of currently outstanding options and vesting of restricted stock unit awards granted
under our Second Amended and Restated Management Equity Plan and 2006 Equity Incentive Plan. Upon
the exercise or settlement of these options or restricted stock units, as the case may be, in
accordance with their respective terms, these shares may be resold freely, subject to restrictions
imposed on our affiliates under Rule 144. If significant sales of these shares occur in short
periods of time, these sales could reduce the market price of our common stock. Any reduction in
the trading price of our common stock could impede our ability to raise capital on attractive
terms.
Our management will have broad discretion over the use of the proceeds we receive in this offering
and might not apply the proceeds in ways that increase the value of your investment.
Our management will have broad discretion to use the net proceeds from any offerings
under this prospectus, and you will be relying on the judgment of our management regarding the
application of these proceeds. They might not apply the net proceeds of this offering in ways that
increase the value of your investment. Unless otherwise indicated in an accompanying prospectus
supplement, we expect to use the net proceeds from this offering for general corporate purposes. We
have not allocated these net proceeds for any specific purposes. Our management might not be able
to yield a significant return, if any, on any investment of these net proceeds. You will not have
the opportunity to influence our decisions on how to use the proceeds.
If securities or industry analysts do not publish research or reports or publish unfavorable
research about our business, our stock price and trading volume could decline.
The trading market for our securities will depend in part on the research and reports
that securities or industry analysts publish about us or our business. We currently have research
coverage by securities and industry analysts. If one or more of the analysts who covers us
downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases
coverage of our company or fails to regularly publish reports on us, interest in the purchase of
our stock could decrease, which could cause our stock price or trading volume to decline.
Our business could be negatively affected as a result of the actions of activist stockholders.
Proxy contests have been waged against many companies in the biopharmaceutical industry,
including us, over the last few years. If faced with another proxy contest, we may not be able to
respond successfully to the contest, which would be disruptive to our business. Even if we are
successful, our business could be adversely affected by a proxy contest involving us or our
partners because:
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responding to proxy contests and other actions by activist stockholders can be
costly and time-consuming, disrupting operations and diverting the attention of
management and employees |
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perceived uncertainties as to future direction may result in the loss of potential
acquisitions, collaborations or in-licensing opportunities, and may make it more
difficult to attract and retain qualified personnel and business partners and |
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if individuals are elected to a board of directors with a specific agenda, it may
adversely affect our ability to effectively and timely implement our strategic plan and
create additional value for our stockholders |
These actions could cause our stock price to experience periods of volatility.
Anti-takeover provisions in our charter and bylaws, and in Delaware law, and our rights plan could
prevent or delay a change in control of our company.
We are a Delaware corporation and the anti-takeover provisions of Section 203 of the Delaware
General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from
engaging in a business combination with an interested stockholder for a period of three years after
the person becomes an interested stockholder, even if a change of control would be beneficial to
our existing stockholders. In addition, our amended and restated certificate of incorporation and
bylaws may discourage, delay or prevent a change in our management or control over us that
stockholders may consider favorable. Our amended and restated certificate of incorporation and
bylaws:
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authorize the issuance of blank check preferred stock that could be issued by our
board of directors to thwart a takeover attempt |
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do not provide for cumulative voting in the election of directors, which would allow
holders of less than a majority of the stock to elect some directors |
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establish a classified board of directors, as a result of which the successors to
the directors whose terms have expired will be elected to serve from the time of
election and qualification until the third annual meeting following their election |
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require that directors only be removed from office for cause |
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provide that vacancies on the board of directors, including newly-created
directorships, may be filled only by a majority vote of directors then in office |
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limit who may call special meetings of stockholders |
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prohibit stockholder action by written consent, requiring all actions to be taken at
a meeting of the stockholders |
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establish advance notice requirements for nominating candidates for election to the
board of directors or for proposing matters that can be acted upon by stockholders at
stockholder meetings |
Moreover, on September 25, 2008, our board of directors adopted a rights agreement, the
provisions of which could result in significant dilution of the proportionate ownership of a
potential acquirer and, accordingly, could discourage, delay or prevent a change in our management
or control over us.
Unstable market, credit and financial conditions may exacerbate certain risks affecting our
business and have serious adverse consequences on our business.
The recent economic downturn and market instability has made the business climate more
volatile and more costly. Our general business strategy may be adversely affected by unpredictable
and unstable market conditions. If the current equity and credit markets deteriorate further, or do
not improve, it may make any necessary debt or equity financing more difficult, more costly, and
more dilutive. While we believe we have adequate capital resources to meet current working capital
and capital expenditure requirements, a lingering economic downturn or significant increase in our
expenses could require additional financing on less than attractive rates or on terms that are
excessively dilutive to existing stockholders. Failure to secure any necessary financing in a
timely manner and on favorable terms could have a material adverse effect on our stock price and
could require us to delay or abandon clinical development plans.
Sales of our products and partnered products will be dependent, in large part, on
reimbursement from government health administration authorities, private health insurers,
distribution partners and other organizations. As a result of the current credit and financial
market conditions, these organizations may be unable to satisfy their reimbursement obligations or
may delay payment. In addition, federal and state health authorities may reduce Medicare and
Medicaid reimbursements, and private insurers may increase
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their scrutiny of claims. A reduction in the availability or extent of reimbursement could
negatively affect our or our partners product sales and revenue. Customers may also reduce
spending during times of economic uncertainty.
In addition, we rely on third parties for several important aspects of our business. For
example, we depend upon Novartis for both royalty revenue and the further clinical development of
Fanapt®, we use third party contract research organizations for many of our clinical trials, and we
rely upon several single source providers of raw materials and contract manufacturers for the
manufacture of our products and product candidates. Due to the recent tightening of global credit
and the continued deterioration in the financial markets, there may be a disruption or delay in the
performance of our third party contractors, suppliers or partners. If such third parties are unable
to satisfy their commitments to us, our business would be adversely affected.
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DESCRIPTION OF SECURITIES
PREFERRED STOCK
We currently have authorized 20,000,000 shares of preferred stock, par value $0.001, the
rights and preferences of which may be established from time to time by our board of directors. As
of the date of this prospectus, our board of directors has designated 30,000 of the shares of
authorized preferred stock as Series A Junior Participating Preferred Stock in connection with our
stockholder rights plan, which is described in greater detail under Rights Plan.
Under Delaware law and our amended and restated certificate of incorporation, our board of
directors is authorized, without stockholder approval, to issue shares of preferred stock from time
to time in one or more series. Subject to limitations prescribed by Delaware law and our amended
and restated certificate of incorporation and by-laws, the board of directors can determine the
number of shares constituting each series of preferred stock and the designation, preferences,
voting powers, qualifications, and special or relative rights or privileges of that series. These
may include provisions concerning voting, redemption, dividends, dissolution or the distribution of
assets, conversion or exchange, and other subjects or matters as may be fixed by resolution of the
board or an authorized committee of the board. The preferred stock offered by this prospectus will,
when issued, be fully paid and nonassessable.
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 our common stock might believe to be in their best interests or
in which holders of some, or a majority, of our common stock might receive a premium for their
shares over the then market price of those shares.
If we offer a specific series of preferred stock under this prospectus, we will describe the
terms of the preferred stock in the prospectus supplement for such offering and will file a copy of
the certificate establishing the terms of the preferred stock with the SEC. To the extent required,
this description will include:
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the title and stated value; |
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the number of shares offered, the liquidation preference per share, and the purchase
price; |
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the dividend rate(s), period(s), and/or payment date(s), or method(s) of calculation for
such dividends; |
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whether dividends will be cumulative or non-cumulative and, if cumulative, the date from
which dividends will accumulate; |
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the procedures for any auction and remarketing, if any; |
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the provisions for a sinking fund, if any; |
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any listing of the preferred stock on any securities exchange or market; |
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whether the preferred stock will be convertible into Vanda common stock, and, if
applicable, the conversion price (or how it will be calculated) and conversion period; |
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whether the preferred stock will be exchangeable into debt securities, and, if
applicable, the exchange price (or how it will be calculated) and exchange period; |
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voting rights, if any, of the preferred stock; |
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a discussion of any material and/or special U.S. federal income tax considerations
applicable to the preferred stock; |
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the relative ranking and preferences of the preferred stock as to dividend rights and
rights upon liquidation, dissolution, or winding up of the affairs of Vanda; and |
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any material limitations on issuance of any class or series of preferred stock ranking
senior to or on a parity with the series of preferred stock as to dividend rights and rights
upon liquidation, dissolution, or winding up of Vanda. |
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Transfer Agent and Registrar. The transfer agent and registrar for any series or class of
preferred stock will be set forth in the applicable prospectus supplement.
COMMON STOCK
We currently have authorized 150,000,000 shares of common stock, par value $0.001 per share.
As of January 24, 2011, there were 28,041,379 shares of common stock outstanding held of record
by 12 stockholders. Holders of our common stock have no preemptive rights and no right to
convert their common stock into any other securities. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of our common stock are fully
paid and nonassessable.
The following summary of the terms of our common stock is subject to and qualified in its
entirety by reference to our amended and restated certificate of incorporation and by-laws, copies
of which are on file with the SEC as exhibits to previous SEC filings. Please refer to the section
entitled Where You Can Find More Information for directions on obtaining these documents.
Voting Rights. The holders of our common stock are entitled to one vote for each share held
of record on all matters submitted to a vote of stockholders, including, without limitation, the
election of our board of directors. Our stockholders have no right to cumulate their votes in the
election of directors.
Dividends. Subject to preferences that may apply to shares of preferred stock outstanding at
the time, the holders of our common stock are entitled to receive ratably those dividends declared
from time to time by the board of directors.
Rights Upon Liquidation. Subject to preferences that may apply to shares of preferred stock
outstanding at the time, in the event of liquidation, dissolution or winding up, holders of our
common stock are entitled to share ratably in assets remaining after payment of liabilities.
Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation, Bylaws and
Delaware Law. Some provisions of Delaware law and our amended and restated certificate of
incorporation and bylaws could make the following transactions more difficult: our acquisition by
means of a tender offer; our acquisition by means of a proxy contest or otherwise; or removal of
our incumbent officers and directors.
Section 203 of the Delaware General Corporation Law is applicable to takeovers of Delaware
corporations. Subject to exceptions enumerated in Section 203, Section 203 provides that a
corporation shall not engage in any business combination with any interested stockholder for a
three-year period following the date that the stockholder becomes an interested stockholder unless:
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prior to that date, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder becoming an
interested stockholder; |
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upon consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the voting stock of
the corporation outstanding at the time the transaction commenced, though some shares may be
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on or subsequent to that date, the business combination is approved by the board of
directors of the corporation and by the affirmative votes of holders of at least two-thirds
of the outstanding voting stock that is not owned by the interested stockholder. |
Except as specified in Section 203, an interested stockholder is generally defined to include
any person who, together with any affiliates or associates of that person, beneficially owns,
directly or indirectly, 15% or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation, any time within three years immediately prior to the relevant
date. Under certain circumstances, Section 203 makes it more difficult for an interested
stockholder to effect various business combinations with a corporation for a three-year period,
although the stockholders may elect not to be governed by this section, by adopting an amendment to
the certificate of incorporation or by-laws, effective 12 months after adoption. Our amended and
restated certificate of incorporation and by-laws do not opt out from the restrictions imposed
under Section 203. We anticipate that the provisions of Section 203 may encourage companies
interested in acquiring us to negotiate in advance with the board because the stockholder approval
requirement would be avoided if a majority of the directors then in office excluding an interested
stockholder approve either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder. These provisions may have the effect of deterring
hostile takeovers or delaying changes in control, which could depress the market price of our
common stock and deprive stockholders of opportunities to realize a premium on shares of common
stock held by them.
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In addition to our board of directors ability to issue shares of preferred stock, our amended
and restated certificate of incorporation and by-laws contain provisions that may discourage, delay
or prevent a change in our management or control over us that stockholders may consider favorable.
Our amended and restated certificate of incorporation and bylaws:
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authorize the issuance of blank check preferred stock that could be issued by our board
of directors to thwart a takeover attempt; |
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do not provide for cumulative voting in the election of directors, which would allow
holders of less than a majority of the stock to elect some directors; |
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establish a classified board of directors, as a result of which the successors to the
directors whose terms have expired will be elected to serve from the time of election and
qualification until the third annual meeting following their election; |
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require that directors only be removed from office for cause; |
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provide that vacancies on the board of directors, including newly-created directorships,
may be filled only by a majority vote of directors then in office; |
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limit who may call special meetings of stockholders; |
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prohibit stockholder action by written consent, requiring all actions to be taken at a
meeting of the stockholders; and |
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establish advance notice requirements for nominating candidates for election to the board
of directors or for proposing matters that can be acted upon by stockholders at stockholder
meetings. |
Rights Plan. Our board of directors adopted a Rights Plan (the Plan) as set forth in the
Rights Agreement, dated as of September 25, 2008, between us and American Stock Transfer & Trust
Company, as Rights Agent (as amended, the Rights Agreement). A series of our preferred stock,
designated as Series A Junior Participating Preferred Stock, par value $0.001 per share, was
created in accordance with the Rights Agreement. The Plan is designed to deter coercive takeover
tactics, including the accumulation of shares in the open market or through private transactions,
and to prevent an acquirer from gaining control of us without offering a fair and adequate price
and terms to all of our stockholders. As such, the Plan enhances our board of directors ability
to protect stockholder interests and ensure that stockholders receive fair and equal treatment in
the event any proposed takeover of Vanda is made in the future. Pursuant to the Rights Agreement,
our board of directors declared a dividend distribution of one preferred stock purchase right for
each outstanding share of our common stock. The preferred stock purchase rights are attached to,
and trade with, our common stock. The purchase rights are currently exercisable upon the occurrence
of certain triggering events described in the Rights Agreement.
Transfer Agent and Registrar. The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.
Listing. Our common stock is listed on the NASDAQ Global Market under the symbol VNDA.
DEBT SECURITIES
We may issue, from time to time, debt securities in one or more series that will consist of
either senior debt or subordinated debt under one or more trust indentures to be executed by us and
a specified trustee. The terms of the debt securities will include those stated in the indenture
and those made a part of the indenture (before any supplements) by reference to the Trust Indenture
Act of 1939. The indentures will be qualified under the Trust Indenture Act. Debt securities,
whether senior or subordinated, may be issued as convertible debt securities or exchangeable debt
securities.
The following description sets forth certain anticipated general terms and provisions of the
debt securities to which any prospectus supplement may relate. The particular terms of the debt
securities offered by any prospectus supplement (which terms may be different than those stated
below) and the extent, if any, to which such general provisions may apply to the debt securities so
offered will be described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of debt securities, investors
should review both the prospectus supplement relating thereto and the following description. Forms
of the senior indenture (as discussed herein) and the subordinated indenture (as discussed herein)
are included as exhibits to the registration statement of which this prospectus is a part.
General
The debt securities will be our direct obligations and may be either senior debt securities or
subordinated debt securities. The indebtedness represented by subordinated securities will be
subordinated in right of payment to the prior payment in full of our senior
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debt (as defined in the applicable indenture). Senior securities and subordinated securities
will be issued pursuant to separate indentures (respectively, a senior indenture and a subordinated
indenture), in each case between us and a trustee.
Except as set forth in the applicable indenture and described in a prospectus supplement
relating thereto, the debt securities may be issued without limit as to aggregate principal amount,
in one or more series, secured or unsecured, in each case as established from time to time in or
pursuant to authority granted by a resolution of our board of directors or as established in the
applicable indenture. All debt securities of one series need not be issued at the time and, unless
otherwise provided, a series may be reopened, without the consent of the holders of the debt
securities of such series, for issuance of additional debt securities of such series. The
applicable indenture may provide that we may issue debt securities in any currency or currency unit
designated by us. Except for any limitations on consolidation, merger and sale of all or
substantially all of our assets that may be contained in the applicable indenture, the terms of
such indenture will not contain any covenants or other provisions designed to afford holders of any
debt securities protection with respect to our operations, financial condition or transactions
involving us.
The prospectus supplement relating to any series of debt securities being offered will contain
the specific terms thereof, including, without limitation:
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the title of such debt securities and whether such debt securities are senior securities
or subordinated securities and the terms of any such subordination; |
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the aggregate principal amount of such debt securities and any limit on such aggregate
principal amount; |
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the percentage of the principal amount at which such debt securities will be issued and,
if other than the principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof, or (if applicable) the
portion of the principal amount of such debt securities which is convertible into common
stock or preferred stock, or the method by which any such portion shall be determined; |
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the date or dates, or the method for determining the date or dates, on which the
principal of such debt securities will be payable; |
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the rate or rates (which may be fixed or variable), or the method by which the rate or
rates shall be determined, at which such debt securities will bear interest, if any; |
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the date or dates, or the method for determining such date or dates, from which any
interest will accrue, the interest payment dates on which any such interest will be payable,
the regular record dates for such interest payment dates, or the method by which any such
date shall be determined, the person to whom such interest shall be payable, and the basis
upon which interest shall be calculated if other than that of a 360-day year of twelve
30-day months; |
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the right, if any, to extend the interest payment periods and the duration of the
extensions; |
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the place or places where the principal of (and premium, if any) and interest, if any, on
such debt securities will be payable, such debt securities may be surrendered for conversion
or registration of transfer or exchange and notices or demands to or upon us in respect of
such debt securities and the applicable indenture may be served; |
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the period or periods within which, the price or prices at which and the terms and
conditions upon which such debt securities may be redeemed, as a whole or in part, at our
option, if we have such an option; |
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our obligation, if any, to redeem, repay or purchase such debt securities pursuant to any
sinking fund or analogous provision 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
such debt securities will be redeemed, repaid or purchased, as a whole or in part, pursuant
to such obligation; |
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if other than U.S. dollars, the currency or currencies in which such debt securities are
denominated and payable, which may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the terms and conditions relating
thereto; |
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whether the amount of payments of principal of (and premium, if any) or interest, if any,
on such debt securities may be determined with reference to an index, formula or other
method (which index, formula or method may, but need not be, based |
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on a currency, currencies, currency unit or units or composite currencies) and the manner in
which such amounts shall be determined; |
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any additions to, modifications of or deletions from the terms of such debt securities
with respect to the events of default or covenants set forth in the indenture; |
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any provisions for collateral security for repayment of such debt securities; |
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whether such debt securities will be issued in certificated and/or book-entry form; |
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whether such debt securities will be in registered or bearer form and, if in registered
form, the denominations thereof if other than $1,000 and any integral multiple thereof and,
if in bearer form, the denominations thereof and terms and conditions relating thereto; |
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whether issued in the form of one or more global securities and whether all or a portion
of the principal amount of the debt securities is represented thereby; |
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if other than the entire principal amount of the debt securities when issued, the portion
of the principal amount payable upon acceleration of maturity, and the terms and conditions
of any acceleration; |
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if applicable, covenants affording holders of debt protection with respect to our
operations, financial condition or transactions involving us; |
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the applicability, if any, of defeasance and covenant defeasance provisions of the
applicable indenture; |
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the terms, if any, upon which such debt securities may be convertible into our common
stock or preferred stock and the terms and conditions upon which such conversion will be
effected, including, without limitation, the initial conversion price or rate and the
conversion period; |
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if applicable, any limitations on the ownership or transferability of the common stock or
preferred stock into which such debt securities are convertible; |
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whether and under what circumstances we will pay additional amounts as contemplated in
the indenture on such debt securities in respect of any tax, assessment or governmental
charge and, if so, whether we will have the option to redeem such debt securities in lieu of
making such payment; and |
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any other material terms of such debt securities. |
The debt securities may provide for less than the entire principal amount thereof to be
payable upon declaration of acceleration of the maturity thereof. Special federal income tax,
accounting and other considerations applicable to these original issue discount securities will be
described in the applicable prospectus supplement. The applicable prospectus supplement will set
forth material U.S. federal income tax considerations for holders of any debt securities and the
securities exchange or quotation system on which any debt securities are listed or quoted, if any.
The applicable indenture may contain provisions that would limit our ability to incur
indebtedness or that would afford holders of debt securities protection in the event of a highly
leveraged or similar transaction involving us or in the event of a change of control.
Senior Debt Securities
Payment of the principal of premium, if any, and interest on senior debt securities will rank
on parity with all of our other senior unsecured and unsubordinated debt.
Subordinated Debt Securities
Payment of the principal of, premium, if any, and interest on subordinated debt securities
will be subordinated and junior in right of payment to the prior payment in full of all of our
senior debt. We will set forth in the applicable prospectus supplement relating to any
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subordinated debt securities the subordination terms of such securities as well as the
aggregate amount of outstanding indebtedness, as of the most recent practicable date, that by its
terms would be senior to the subordinated debt securities. We will also set forth in such
prospectus supplement limitations, if any, on issuance of additional senior debt.
Merger, Consolidation or Sale
The applicable indenture will provide that we may consolidate with, or sell, lease or convey
all or substantially all of our assets to, or merge with or into, any other corporation, provided
that:
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either we shall be the continuing corporation, or the successor corporation (if other
than the Company) formed by or resulting from any such consolidation or merger or which
shall have received the transfer of such assets shall expressly assume payment of the
principal of (and premium, if any), and interest on, all of the applicable debt securities
and the due and punctual performance and observance of all of the covenants and conditions
contained in the applicable indenture; |
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immediately after giving effect to such transaction and treating any indebtedness which
becomes our obligation or an obligation of one of our subsidiaries as a result thereof as
having been incurred by us or such subsidiary at the time of such transaction, no event of
default under the applicable indenture, and no event which, after notice or the lapse of
time, or both, would become such an event of default, shall have occurred and be continuing;
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an officers certificate and legal opinion covering such conditions shall be delivered to
the applicable trustee. |
Covenants
The applicable indenture will contain covenants requiring us to take certain actions and
prohibiting us from taking certain actions. The covenants with respect to any series of debt
securities will be described in the prospectus supplement relating thereto.
Events of Default, Notice and Waiver
Each indenture will describe specific events of default with respect to any series of debt
securities issued thereunder. Such events of default are likely to include (with grace and cure
periods):
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default in the payment of any installment of interest on any debt security of such
series; |
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default in the payment of principal of (or premium, if any, on) any debt security of such
series at its maturity or upon any redemption, by declaration or otherwise; |
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default in making any required sinking fund payment for any debt security of such series; |
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default in the performance or breach of any other covenant or warranty of the Company
contained in the applicable indenture (other than a covenant added to the indenture solely
for the benefit of a series of debt securities issued thereunder other than such series),
continued for a specified period of days after written notice as provided in the applicable
indenture; |
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default in the payment of specified amounts of indebtedness of the Company or any
mortgage, indenture or other instrument under which such indebtedness is issued or by which
such indebtedness is secured, such default having occurred after the expiration of any
applicable grace period and having resulted in the acceleration of the maturity of such
indebtedness, but only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled; |
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certain events of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any of our significant subsidiaries or
their property; and |
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any other event of default provided in the applicable resolution of our board of
directors or the supplemental indenture under which we issue series of debt securities. |
An event of default for a particular series of debt securities does not necessarily constitute
an event of default for any other series of debt securities issued under the indenture. Unless
otherwise indicated in the applicable prospectus supplement, if an event of default under any
indenture with respect to debt securities of any series at the time outstanding occurs and is
continuing, then the applicable
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trustee or the holders of not less than a majority of the principal amount of the outstanding
debt securities of that series may declare the principal amount (or, if the debt securities of that
series are original issue discount securities or indexed securities, such portion of the principal
amounts may be specified in the terms thereof) of all the debt securities of that series to be due
and payable immediately by written notice thereof to us (and to the applicable trustee if given by
the holders). However, at any time after such a declaration of acceleration with respect to debt
securities of such series (or of all debt securities then outstanding under any indenture, as the
case may be) has been made, but before a judgment or decree for payment of the money due has been
obtained by the applicable trustee, the holders of not less than a majority in principal amount of
outstanding debt securities of such series (or of all debt securities then outstanding under the
applicable indenture, as the case may be) may rescind and annul such declaration and its
consequences if:
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we shall have deposited with the applicable trustee all required payments of the
principal of (and premium, if any) and interest on the debt securities of such series (or of
all debt securities then outstanding under the applicable indenture, as the case may be),
plus certain fees, expenses, disbursements and advances of the applicable trustee; and |
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all events of default, other than the non-payment of accelerated principal (or specified
portion thereof), with respect to debt securities of such series (or of all debt securities
then outstanding under the applicable indenture, as the case may be) have been cured or
waived as provided in such indenture. |
If an event of default relating to events of bankruptcy, insolvency or reorganization of the
Company occurs and is continuing, then the principal amount of all of the debt securities
outstanding, and any accrued interest, will automatically become due and payable immediately,
without any declaration or other act by the trustee or any holder.
Each indenture also will provide that the holders of not less than a majority in principal
amount of the outstanding debt securities of any series (or of all debt securities then outstanding
under the applicable indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default:
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in the payment of the principal of (or premium, if any) or interest on any debt security
of such series; or |
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in respect of a covenant or provision contained in the applicable indenture that cannot
be modified or amended without the consent of the holder of each outstanding debt security
affected thereby. |
Each trustee will be required to give notice to the holders of debt securities within 90 days
of a default under the applicable indenture unless such default shall have been cured or waived;
provided, however, that such trustee may withhold notice to the holders of any series of debt
securities of any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any debt security of such series or in the payment
of any sinking fund installment in respect of any debt security of such series) if specified
responsible officers of such trustee consider such withholding to be in the interest of such
holders.
Each indenture will provide that no holders of debt securities of any series may institute any
proceedings, judicial or otherwise, with respect to such indenture or for any remedy thereunder,
except in the case of failure of the applicable trustee, for 60 days, to act after it has received
a written request to institute proceedings in respect of an event of default from the holders of
not less than 25% in principal amount of the outstanding debt securities of such series, as well as
an offer of indemnity reasonably satisfactory to it. This provision will not prevent, however, any
holder of debt securities from instituting suit for the enforcement of payment of the principal of
(and premium, if any) and interest on such debt securities at the respective due dates thereof.
Each indenture provides that in case an event of default shall occur and be known to any
trustee and not be cured, the trustee must use the same degree of care as a prudent person would
use in the conduct of his or her own affairs in the exercise of the trustees power. Subject to
provisions in each indenture relating to its duties in case of default, no trustee will be under
any obligation to exercise any of its rights or powers under an indenture at the request or
direction of any holders of any series of debt securities then outstanding under such indenture,
unless such holders shall have offered to the trustee thereunder reasonable security or indemnity.
The holders of not less than a majority in principal amount of the outstanding debt securities of
any series (or of all debt securities then outstanding under an indenture, as the case may be)
shall have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the applicable trustee, or of exercising any trust or power conferred upon such
trustee. However, a trustee may refuse to follow any direction which is in conflict with any law or
the applicable indenture, which may involve such trustee in personal liability or which may be
unduly prejudicial to the holders of debt securities of such series not joining therein.
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Within 120 days after the close of each fiscal year, we will be required to deliver to each
trustee a certificate, signed by one of several specified officers, stating whether or not such
officer has knowledge of any default under the applicable indenture and, if so, specifying each
such default and the nature and status thereof.
Modification of the Indenture
Each indenture provides that we and the trustee may enter into supplemental indentures without
the consent of the holders of debt securities to:
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secure any debt securities; |
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evidence the assumption by a successor corporation of our obligations; |
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add covenants for the protection of the holders of debt securities; |
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cure any ambiguity or correct any inconsistency in the indenture; |
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establish the forms or terms of debt securities of any series; and |
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evidence and provide for the acceptance of appointment by a successor trustee. |
It is anticipated that modifications and amendments of an indenture may be made by us and the
trustee, with the consent of the holders of not less than a majority in principal amount of each
series of the outstanding debt securities issued under the indenture that are affected by the
modification or amendment, provided that no such modification or amendment may, without the consent
of each holder of such debt securities affected thereby:
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change the stated maturity date of the principal of (or premium, if any) or any
installment of interest, if any, on any such debt security; |
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reduce the principal amount of (or premium, if any) or the interest, if any, on any such
debt security or the principal amount due upon acceleration of an original issue discount
security; |
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change the time or place or currency of payment of principal of (or premium, if any) or
interest, if any, on any such debt security; |
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impair the right to institute suit for the enforcement of any such payment on or with
respect to any such debt security; |
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reduce any amount payable on redemption; |
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modify any of the subordination provisions or the definition of senior indebtedness
applicable to any subordinated debt securities in a manner adverse to the holders of those
securities; |
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reduce the above-stated percentage of holders of debt securities necessary to modify or
amend the indenture; or |
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modify the foregoing requirements or reduce the percentage of outstanding debt securities
necessary to waive compliance with certain provisions of the indenture or for waiver of
certain defaults. |
A record date may be set for any act of the holders with respect to consenting to any
amendment. The holders of not less than a majority in principal amount of outstanding debt
securities of each series affected thereby will have the right to waive our compliance with certain
covenants in such indenture. Each indenture will contain provisions for convening meetings of the
holders of debt securities of a series to take permitted action.
A prospectus supplement may set forth modifications or additions to these provisions with
respect to a particular series of debt securities.
Conversion or Exchange Rights
A prospectus supplement will describe the terms, if any, on which a series of debt securities
may be convertible into or exchangeable for our common stock, preferred stock or other securities.
These terms will also include provisions as to whether
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conversion or exchange is mandatory, at the option of the holder or at our option. Such
provisions will also include the conversion or exchange price (or manner or calculation thereof),
the conversion or exchange period, the events requiring an adjustment of the conversion or exchange
price, and provisions affecting conversion or exchange in the event of the redemption of such
series of debt securities.
Registered Global Securities
We may issue the debt securities of a series in whole or in part in the form of one or more
fully registered global securities that we will deposit with a depositary or with a nominee for a
depositary identified in the applicable prospectus supplement and registered in the name of such
depositary or nominee. In such case, we will issue one or more registered global securities
denominated in an amount equal to the aggregate principal amount of all of the debt securities of
the series to be issued and represented by such registered global security or securities.
Unless and until it is exchanged in whole or in part for debt securities in definitive
registered form, a registered global security may not be transferred except as a whole:
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by the depositary for such registered global security to its nominee; |
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by a nominee of the depositary to the depositary or another nominee of the depositary; or |
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by the depositary or its nominee to a successor of the depositary or a nominee of the
successor. |
The prospectus supplement relating to a series of debt securities will describe the specific
terms of the depositary arrangement with respect to any portion of such series represented by a
registered global security. We anticipate that the following provisions will apply to all
depositary arrangements for debt securities:
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ownership of beneficial interests in a registered global security will be limited to
persons that have accounts with the depositary for the registered global security, those
persons being referred to as participants, or persons that may hold interests through
participants; |
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upon the issuance of a registered global security, the depositary for the registered
global security will credit, on its book-entry registration and transfer system, the
participants accounts with the respective principal amounts of the debt securities
represented by the registered global security beneficially owned by the participants; |
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any dealers, underwriters, or agents participating in the distribution of the debt
securities will designate the accounts to be credited; and |
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ownership of any beneficial interest in the registered global security will be shown on,
and the transfer of any ownership interest will be effected only through, records maintained
by the depositary for the registered global security (with respect to interests of
participants) and on the records of participants (with respect to interests of persons
holding through participants). |
The laws of some states may require that certain purchasers of securities take physical
delivery of the securities in definitive form. These laws may limit the ability of those persons to
own, transfer or pledge beneficial interests in registered global securities.
So long as the depositary for a registered global security, or its nominee, is the registered
owner of the registered global security, the depositary or the nominee, as the case may be, will be
considered the sole owner or holder of the debt securities represented by the registered global
security for all purposes under the indenture. Except as set forth below, owners of beneficial
interests in a registered global security:
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will not be entitled to have the debt securities represented by a registered global
security registered in their names; |
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will not receive or be entitled to receive physical delivery of the debt securities in
the definitive form; and |
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will not be considered the owners or holders of the debt securities under the indenture. |
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Accordingly, each person owning a beneficial interest in a registered global security must
rely on the procedures of the depositary for the registered global security and, if the person is
not a participant, on the procedures of a participant through which the person owns its interest,
to exercise any rights of a holder under the indenture.
We understand that under existing industry practices, if we request any action of holders or
if an owner of a beneficial interest in a registered global security desires to give or take any
action that a holder is entitled to give or take under the indenture, the depositary for the
registered global security would authorize the participants holding the relevant beneficial
interests to give or take the action, and those participants would authorize beneficial owners
owning through those participants to give or take the action or would otherwise act upon the
instructions of beneficial owners holding through them.
We will make payments of principal and premium, if any, and interest, if any, on debt
securities represented by a registered global security registered in the name of a depositary or
its nominee to the depositary or its nominee, as the case may be, as the registered owners of the
registered global security. None of the Company, the trustee or any other agent of the Company or
the trustee will be responsible or liable for any aspect of the records relating to, or payments
made on account of, beneficial ownership interests in the registered global security or for
maintaining, supervising or reviewing any records relating to the beneficial ownership interests.
We expect that the depositary for any debt securities represented by a registered global
security, upon receipt of any payments of principal and premium, if any, and interest, if any, in
respect of the registered global security, will immediately credit participants accounts with
payments in amounts proportionate to their respective beneficial interests in the registered global
security as shown on the records of the depositary. We also expect that standing customer
instructions and customary practices will govern payments by participants to owners of beneficial
interests in the registered global security held through the participants, as is now the case with
the securities held for the accounts of customers in bearer form or registered in street name. We
also expect that any of these payments will be the responsibility of the participants.
If the depositary for any debt securities represented by a registered global security is at
any time unwilling or unable to continue as depositary or ceases to be a clearing agency registered
under the Exchange Act, we will appoint an eligible successor depositary. If we fail to appoint an
eligible successor depositary within 90 days, we will issue the debt securities in definitive form
in exchange for the registered global security. In addition, we may at any time and in our sole
discretion decide not to have any of the debt securities of a series represented by one or more
registered global securities. In such event, we will issue debt securities of that series in a
definitive form in exchange for all of the registered global securities representing the debt
securities. The trustee will register any debt securities issued in definitive form in exchange for
a registered global security in such name or names as the depositary, based upon instructions from
its participants, shall instruct the trustee.
We may also issue bearer debt securities of a series in the form of one or more global
securities, referred to as bearer global securities. We will deposit these bearer global
securities with a common depositary for Euroclear System and Clearstream Bank Luxembourg, Societe
Anonyme, or with a nominee for the depositary identified in the prospectus supplement relating to
that series. The prospectus supplement relating to a series of debt securities represented by a
bearer global security will describe the specific terms and procedures, including the specific
terms of the depositary arrangement and any specific procedures for the issuance of debt securities
in definitive form in exchange for a bearer global security, with respect to the position of the
series represented by a bearer global security.
Discharge, Defeasance and Covenant Defeasance
We can discharge or defease our obligations under the indenture as set forth below. Unless
otherwise set forth in the applicable prospectus supplement, the subordination provisions
applicable to any subordinated debt securities will be expressly subject to the discharge and
defeasance provisions of the indenture.
We may discharge some of our obligations to holders of any series of debt securities that have
not already been delivered to the trustee for cancellation and that have either become due and
payable or are by their terms to become due and payable within one year (or are scheduled for
redemption within one year). We may effect a discharge by irrevocably depositing with the trustee
cash or U.S. government obligations, as trust funds, in an amount certified to be sufficient to pay
when due, whether at maturity, upon redemption or otherwise, the principal of, premium, if any, and
interest on the debt securities and any mandatory sinking fund payments.
Unless otherwise provided in the applicable prospectus supplement, we may also discharge any
and all of our obligations to holders of any series of debt securities at any time (defeasance).
We also may be released from the obligations imposed by any covenants of
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any outstanding series of debt securities and provisions of the indenture, and we may omit to
comply with those covenants without creating an event of default (covenant defeasance). We may
effect defeasance and covenant defeasance only if, among other things:
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we irrevocably deposit with the trustee cash or U.S. government obligations, as trust
funds, in an amount certified to be sufficient to pay at maturity (or upon redemption) the
principal, premium, if any, and interest on all outstanding debt securities of the series;
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we deliver to the trustee an opinion of counsel from a nationally recognized law firm to
the effect that the holders of the series of debt securities will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of the defeasance or covenant
defeasance and that defeasance or covenant defeasance will not otherwise alter the holders
U.S. federal income tax treatment of principal, premium, if any, and interest payments on
the series of debt securities, which opinion, in the case of legal defeasance, must be based
on a ruling of the Internal Revenue Service issued, or a change in U.S. federal income tax
law. |
Although we may discharge or defease our obligations under the indenture as described in the
two preceding paragraphs, we may not avoid, among other things, our duty to register the transfer
or exchange of any series of debt securities, to replace any temporary, mutilated, destroyed, lost
or stolen series of debt securities or to maintain an office or agency in respect of any series of
debt securities.
Redemption of Securities
Debt securities may also be subject to optional or mandatory redemption on terms and
conditions described in the applicable prospectus supplement.
From and after notice has been given as provided in the applicable indenture, if funds for the
redemption of any debt securities called for redemption shall have been made available on such
redemption date, such debt securities will cease to bear interest on the date fixed for such
redemption specified in such notice, and the only right of the holders of the debt securities will
be to receive payment of the redemption price.
Notices
Holders of our debt securities will receive notices by mail at their addresses as they appear
in the security register.
Title
We may treat the person in whose name a debt security is registered on the applicable record
date as the owner of the debt security for all purposes, whether or not it is overdue.
Governing Law
Unless otherwise set forth in the applicable prospectus supplement, New York law will govern
the indentures and the debt securities, without regard to its conflicts of law principles.
Concerning the Trustee
Each indenture provides that there may be more than one trustee under the indenture, each with
respect to one or more series of debt securities. If there are different trustees for different
series of debt securities, each trustee will be a trustee of a trust under the indenture separate
and apart from the trust administered by any other trustee under the indenture. Except as otherwise
indicated in this prospectus or any prospectus supplement, any action permitted to be taken by a
trustee may be taken by such trustee only with respect to the one or more series of debt securities
for which it is the trustee under the indenture. Any trustee under the indenture may resign or be
removed with respect to one or more series of debt securities. All payments of principal of,
premium, if any, and interest on, and all registration, transfer, exchange, authentication and
delivery (including authentication and delivery on original issuance of the debt securities) of,
the debt securities of a series will be effected by the trustee with respect to that series at an
office designated by the trustee in New York, New York.
Each indenture contains limitations on the right of the trustee, should it become a creditor
of the Company, to obtain payment of claims in some cases or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee may engage in other
transactions. If it acquires any conflicting interest relating to any duties with respect to the
debt securities, however, it must eliminate the conflict or resign as trustee.
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WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock, common stock, or
any combination thereof. We may issue warrants independently or together with any other securities
offered by any prospectus supplement and may be attached to or separate from the other offered
securities. Each series of warrants will be issued under a separate warrant agreement to be entered
into by us with a warrant agent. The warrant agent will act solely as our agent in connection with
the warrants and will not assume any obligation or relationship of agency or trust for or with any
holders or beneficial owners of warrants. Further terms of the warrants and the applicable warrant
agreements will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement relating to any particular issue of warrants will
describe the terms of the warrants, including, as applicable, the following:
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the title of the warrants; |
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the aggregate number of the warrants; |
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the price or prices at which the warrants will be issued; |
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the designation, terms and number of shares of preferred stock or common stock or
principal amount of debt securities purchasable upon exercise of the warrants; |
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the designation and terms of the offered securities, if any, with which the warrants are
issued and the number of the warrants issued with each offered security; |
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the date, if any, on and after which the warrants and the related debt securities,
preferred stock or common stock will be separately transferable; |
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the price at which each share of preferred stock, common stock or underlying debt
securities purchasable upon exercise of the warrants may be purchased or the manner of
determining such price; |
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the date on which the right to exercise the warrants shall commence and the date on which
that right shall expire; |
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the minimum or maximum amount of the warrants which may be exercised at any one time; |
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information with respect to book-entry procedures, if any; |
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a discussion of certain federal income tax considerations; and |
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any other material terms of the warrants, including terms, procedures and limitations
relating to the exchange and exercise of the warrants. |
We and the warrant agent may amend or supplement the warrant agreement for a series of
warrants without the consent of the holders of the warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the warrants and that do not materially and
adversely affect the interests of the holders of the warrants.
USE OF PROCEEDS
We currently intend to use the net proceeds from the sale of our securities for general
corporate purposes, which may include commercial launch activities, sales and marketing
expenditures, funding of clinical trials, research and development, regulatory activities,
acquisitions of companies, products, intellectual property or other technology, investments,
capital expenditures, and for any other purposes that we may specify in any prospectus supplement.
While we have no current plans for any specific acquisitions at this time, we believe opportunities
may exist from time to time to expand our current business through strategic alliances or
acquisitions of other companies, products or compounds. We have not yet determined the amount of
net proceeds to be used specifically for any of the foregoing purposes. Accordingly, our management
will have significant discretion and flexibility in applying the net proceeds from the sale of
these securities. Pending any use, as described above, we intend to invest the net proceeds in
high-quality, short-term,
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interest-bearing securities. Our plans to use the estimated net proceeds from the sale of
these securities may change, and if they do, we will update this information in a prospectus
supplement.
RATIO OF FIXED CHARGES AND PREFERENCE DIVIDENDS TO EARNINGS
Our ratio of combined fixed charges and preference dividends to earnings for each of the five
most recently completed fiscal years and any required interim periods will each be specified in a
prospectus supplement or in a document that we file with the SEC and incorporate by reference
pertaining to the issuance, if any, by us of preference securities in the future.
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DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We currently intend to
retain all available funds and any future earnings for use in the operation of our business and do
not anticipate paying any cash dividends in the foreseeable future. Any future determination to
declare cash dividends will be made at the discretion of our board of directors, subject to
compliance with certain covenants under our credit facilities, which restrict or limit our ability
to declare of pay dividends, and will depend on our financial condition, results of operations,
capital requirements, general business conditions and other factors that our board of directors may
deem relevant.
PLAN OF DISTRIBUTION
We may sell the securities covered by this prospectus in any of three ways (or in any
combination):
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to or through underwriters or dealers; |
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directly to a limited number of purchasers or to a single purchaser; or |
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through agents. |
Each time we offer and sell securities, we will provide a prospectus supplement that will set
forth the terms of the offering of the securities covered by this prospectus, including:
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the name or names of any underwriters, dealers or agents and the amounts of securities
underwritten or purchased by each of them; |
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the purchase price of the securities and the proceeds we will receive from the sale; |
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any over-allotment options under which underwriters may purchase additional securities; |
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any underwriting discounts or commissions or agency fees and other items constituting
underwriters or agents compensation; |
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the initial public offering price of the securities; |
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any discounts, commissions or concessions allowed or reallowed or paid to dealers; and |
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any securities exchange or market on which the securities may be listed. |
Any public offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Underwriters or dealers may offer and sell the securities from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. If underwriters or dealers are used in the sale of any
securities, the securities will be acquired by such underwriters or dealers for their own account
and may be resold from time to time in one or more transactions described above. We may offer the
securities to the public through underwriting syndicates represented by managing underwriters, or
directly by underwriters or dealers. Subject to certain conditions, the underwriters or dealers
will be obligated to purchase all the securities of the series offered by the prospectus
supplement. We will describe the nature of any such relationship in the prospectus supplement,
naming the underwriter or dealer.
We may use underwriters with whom we have a material relationship. We may sell the securities
through agents from time to time. The prospectus supplement will name any agent involved in the
offer or sale of the securities and any commissions we pay to them. Unless the prospectus
supplement states otherwise, any agent will be acting on a best efforts basis for the period of its
appointment.
We may authorize underwriters, dealers or agents to solicit offers by certain purchasers to
purchase securities from us at the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on a specified date in
the future. The prospectus supplement will set forth the conditions to these contracts and any
commissions we pay for solicitation of these contracts.
37
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon by Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, Waltham, Massachusetts.
EXPERTS
The consolidated financial statements and managements assessment of the effectiveness of
internal control over financial reporting (which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report
on Form 10-K for the year ended December 31, 2009 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated expenses in connection with the
issuance and distribution of the securities being registered.
|
|
|
|
|
|
|
Amount to be |
|
|
|
Paid by Registrant |
|
SEC Registration Fee |
|
$ |
5,805 |
|
Legal Fees and Expenses |
|
|
* |
|
Accounting Fees and Expenses |
|
|
* |
|
Printing and Engraving Fees |
|
|
* |
|
Blue Sky Fees and Expenses |
|
|
* |
|
Transfer Agent and Registrar Fees |
|
|
* |
|
Miscellaneous Expenses |
|
|
* |
|
Total |
|
|
* |
|
|
|
|
* |
|
The amount of securities and number of offerings are indeterminable
and the expenses cannot be estimated at this time. |
Item 15. Indemnification of Directors and Officers
The Delaware General Corporation Law and the registrants certificate of incorporation and
bylaws provide for indemnification of the registrants directors and officers for liabilities and
expenses that they may incur in such capacities. In general, directors and officers are indemnified
with respect to actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the registrant, and with respect to any criminal action or
proceeding, actions that the indemnitee had no reasonable cause to believe were unlawful.
The registrant has also entered into identification agreements with its directors and
executive officers. These identification agreements generally require that the registrant pay, on
behalf of each director and officer party thereto, all amounts that he or she is or becomes legally
obligated to pay because of any claim or claims made against him or her because of any act or
omission which he or she commits or suffers while acting in his or her capacity as the registrants
director and/or officer and because of his or her being a director and/or officer. Under the
Delaware General Corporation Law, absent an identification agreement or a provision in a
corporations bylaws or certificate of incorporation, indemnification of a director or officer is
discretionary rather than mandatory (except in the case of a proceeding in which a director or
officer is successful on the merits).
The registrant currently maintains a directors and officers liability insurance policy.
The Company is a party to tax indemnity agreements with certain of its executive officers.
Under these tax indemnity agreements, the Company or its successor will reimburse the executive
officers for any excise tax that they are required to pay under Section 4999 of the Internal
Revenue Code of 1986, as amended, as well as the income and excise taxes imposed on the
reimbursement. Section 4999 imposes a 20% excise tax on payments and distributions that are made
or accelerated (or the vesting of which is accelerated) as a result of a change in control of the
Company. The excise tax applies only if the aggregate value of those payments and distributions
equals or exceeds 300% of the executive officers average annual compensation from the Company for
the last five completed calendar years or, if less, all years of his employment with the Company.
If the tax applies, it attaches to the excess of the aggregate value of the payments and
distributions over 100% of the executive officers average annual compensation. In the Companys
case, the payments and distributions consist of the continuation of salary, incentive bonus and
health insurance coverage for varying periods of time and accelerated vesting of stock options to
varying degrees.
Item 16. Exhibits
The exhibits to this registration statement are listed in the Exhibit Index to this
registration statement, which Exhibit Index is hereby incorporated by reference.
39
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a further
post-effective amendment to the registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act;
(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 SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration statement; and
(iii) 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:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration
statement is on Form S-8, and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the SEC by
the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the
registration statement is on Form S-3 or Form F-3 and the information required to be included
in a post-effective amendment by those paragraphs is contained in reports filed with or
furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
(C) Provided, further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is for an offering of asset-backed securities on Form S-1 or Form
S-3, and the information required to be included in a post-effective amendment is provided
pursuant to Item 1100(c) of Regulation AB.
(2) That, for the purpose of determining any liability under the Securities Act, 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.
(4) That, for the purpose of determining liability under the Securities Act to any
purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed
to be part of the registration statement as of the date the filed prospectus was deemed part
of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
as part of a registration statement in reliance on Rule 430B relating to an offering made
pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act shall be deemed to be part of and included in
the registration statement as of the earlier of the date such form of prospectus is first
used after effectiveness or the date of the first contract of
40
sale of securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or modify any statement that was
made in the registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time of contract of
sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any
such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities
Act to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will
be a seller to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the
offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrants annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plans annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration statement relating
to the securities offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of the registration statement in reliance
upon Rule 430A and contained in the 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 the
registration statement as of the time it was declared effective.
41
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Rockville, Maryland, on January 31, 2011.
|
|
|
|
|
|
VANDA PHARMACEUTICALS INC.
|
|
|
By: |
/s/ Mihael H. Polymeropoulos, M.D.
|
|
|
|
Mihael H. Polymeropoulos, M.D. |
|
|
|
Chief Executive Officer |
|
|
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Mihael H. Polymeropoulos, M.D. and James P. Kelly, and each of them singly, his true and
lawful attorney-in-fact and agent, with full power to act separately and full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this registration statement and all
additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute may lawfully do or cause to
be done by virtue hereof.
This Power of Attorney shall not revoke any powers of attorney previously executed by the
undersigned. This Power of Attorney shall not be revoked by any subsequent power of attorney that
the undersigned may execute, unless such subsequent power of attorney specifically provides that it
revokes this Power of Attorney by referring to the date of the undersigneds execution of this
Power of Attorney. For the avoidance of doubt, whenever two or more powers of attorney granting the
powers specified herein are valid, the agents appointed on each shall act separately unless
otherwise specified.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Mihael H. Polymeropoulos, M.D.
Mihael H. Polymeropoulos, M.D.
|
|
President, Chief Executive Officer and
Director
(Principal Executive Officer)
|
|
January 31, 2011 |
|
|
|
|
|
/s/ James P. Kelly
James P. Kelly
|
|
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
|
|
January 31, 2011 |
|
|
|
|
|
/s/ Howard H. Pien
Howard H. Pien
|
|
Director and Chairman of the Board
|
|
January 31, 2011 |
|
|
|
|
|
/s/ Richard W. Dugan
Richard W. Dugan
|
|
Director
|
|
January 31, 2011 |
|
|
|
|
|
/s/ Steven K. Galson, M.D.
Steven K. Galson, M.D.
|
|
Director
|
|
January 31, 2011 |
|
|
|
|
|
/s/ Argeris N. Karabelas, Ph.D.
Argeris N. Karabelas, Ph.D.
|
|
Director
|
|
January 31, 2011 |
|
|
|
|
|
/s/ Vincent J. Milano
Vincent J. Milano
|
|
Director
|
|
January 31, 2011 |
|
|
|
|
|
/s/ H. Thomas Watkins
H. Thomas Watkins
|
|
Director
|
|
January 31, 2011 |
42
EXHIBIT INDEX
|
|
|
Exhibit |
|
Description |
1.1**
|
|
Form of Underwriting Agreement |
|
|
|
3.1*
|
|
Form of Amended and Restated Certificate of Incorporation of the registrant (filed as Exhibit 3.8
to Amendment No. 2 to the registrants Registration Statement on Form S-1 (File No. 333-130759),
as filed on March 17, 2006, and incorporated herein by reference) |
|
|
|
3.2*
|
|
Second Amended and Restated Bylaws of the registrant, as amended and restated on December 16,
2008 (filed as Exhibit 3.11 to the registrants current report on Form 8-K (File No. 001-34186)
as filed on December 17, 2008 and incorporated herein by reference) |
|
|
|
3.3*
|
|
Form of Certificate of Designation of Series A Junior Participating Preferred Stock (filed as
Exhibit 3.10 to the registrants current report on Form 8-K (File No. 001-34186) as filed on
September 25, 2008 and incorporated herein by reference) |
|
|
|
4.1*
|
|
Specimen certificate representing the common stock of the registrant (filed as Exhibit 4.4 to
Amendment No. 2 to the registrants Registration Statement on Form S-1 (File No. 333-130759), as
filed on March 17, 2006, and incorporated herein by reference) |
|
|
|
4.2*
|
|
Rights Agreement, dated as of September 25, 2008, between the registrant and American Stock
Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.5 to the registrants current
report on Form 8-K (File No. 001-34186) as filed on September 25, 2008 and incorporated herein by
reference) |
|
|
|
4.3*
|
|
Amendment to Rights Agreement, dated as of December 22, 2009, between the registrant and American
Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.6 to the registrants
current report on Form 8-K (File No. 001-34186) as filed on December 22, 2009 and incorporated
herein by reference) |
|
|
|
4.4*
|
|
Form of Senior Indenture |
|
|
|
4.5**
|
|
Certificate of Designation of Preferred Stock |
|
|
|
4.6**
|
|
Form of Warrant |
|
|
|
4.7*
|
|
Form of Subordinated Indenture |
|
|
|
4.8*
|
|
2004 Securityholder Agreement (as amended) (filed as Exhibit 4.1 to the registrants Registration
Statement on Form S-1 (File No. 333-130759), as originally filed on December 29, 2005, and
incorporated herein by reference) |
|
|
|
5.1*
|
|
Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP |
|
|
|
12.1**
|
|
Computation of Ratios of Earnings to Fixed Charges and Preference Dividends |
|
|
|
23.1*
|
|
Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (included in Exhibit 5.1) |
|
|
|
23.2*
|
|
Consent of PricewaterhouseCoopers LLP |
|
|
|
24.1*
|
|
Power of Attorney (included on the signature page of this registration statement) |
|
|
|
25.1**
|
|
Statement of Eligibility under the Trust Indenture Act of 1930, as amended, of the Trustee, as
Trustee under the Indenture |
|
|
|
* |
|
Filed herewith. |
|
** |
|
To be filed, if necessary, subsequent to the effectiveness of this
registration statement by an amendment to this registration statement
or incorporated by reference pursuant to a Current Report on Form 8-K
in connection with an offering of securities. |
43
exv4w4
Exhibit 4.4
FORM OF SENIOR INDENTURE
VANDA PHARMACEUTICALS INC.
ISSUER
and
[ ],
TRUSTEE
INDENTURE
Dated as of [ ], 201[ ]
Senior Debt Securities
CROSS-REFERENCE TABLE (1)
|
|
|
|
|
|
|
Section of Trust Indenture Act of 1939, as amended |
|
Section of Indenture |
310(a)
|
|
|
|
7.09 |
|
310(b)
|
|
|
|
7.08 |
|
|
|
|
|
7.10 |
|
310(c)
|
|
|
|
Inapplicable
|
311(a)
|
|
|
|
7.13 |
|
311(b)
|
|
|
|
7.13 |
|
311(c)
|
|
|
|
Inapplicable
|
312(a)
|
|
|
|
5.01 |
|
|
|
|
|
5.02(a) |
312(b)
|
|
|
|
5.02(c) |
312(c)
|
|
|
|
5.02(c) |
313(a)
|
|
|
|
5.04(a) |
313(b)
|
|
|
|
5.04(b) |
313(c)
|
|
|
|
5.04(a) |
|
|
|
|
5.04(b) |
313(d)
|
|
|
|
5.04(b) |
|
|
|
|
5.04(c) |
314(a)
|
|
|
|
5.03 |
|
|
|
|
|
13.05(c) |
314(b)
|
|
|
|
Inapplicable
|
314(c)
|
|
|
|
13.05 |
|
314(d)
|
|
|
|
Inapplicable
|
314(e)
|
|
|
|
13.05 |
|
314(f)
|
|
|
|
Inapplicable
|
315(a)
|
|
|
|
7.01(b) |
|
|
|
|
7.02 |
|
315(b)
|
|
|
|
5.04(d) |
315(c)
|
|
|
|
7.01 |
|
315(d)
|
|
|
|
7.01 |
|
|
|
|
|
7.02 |
|
315(e)
|
|
|
|
6.07 |
|
316(a)
|
|
|
|
6.06 |
|
|
|
|
|
8.04 |
|
316(b)
|
|
|
|
6.04 |
|
316(c)
|
|
|
|
8.01 |
|
317(a)
|
|
|
|
6.02 |
|
317(b)
|
|
|
|
4.03 |
|
318(a)
|
|
|
|
13.06 |
|
|
|
|
(1) |
|
This Cross-Reference Table does not constitute part of the Indenture and shall not have any
bearing on the interpretation of any of its terms or provisions. |
i
TABLE OF CONTENTS (2)
|
|
|
|
|
|
|
Page |
|
ARTICLE I DEFINITIONS |
|
|
1 |
|
|
|
|
|
|
SECTION 1.01 Definitions of Terms |
|
|
1 |
|
|
|
|
|
|
ARTICLE II |
|
|
4 |
|
|
|
|
|
|
SECTION 2.01 Forms Generally |
|
|
4 |
|
SECTION 2.02 Form of Trustees Certificate of Authentication |
|
|
5 |
|
SECTION 2.03 Securities Issuable in Global Form |
|
|
5 |
|
|
|
|
|
|
ARTICLE III ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF
SECURITIES |
|
|
6 |
|
|
|
|
|
|
SECTION 3.01 Designation and Terms of Securities |
|
|
6 |
|
SECTION 3.02 Form of Securities and Trustees Certificate |
|
|
7 |
|
SECTION 3.03 Denominations; Provisions for Payment |
|
|
8 |
|
SECTION 3.04 Execution and Authentications |
|
|
9 |
|
SECTION 3.05 Registration of Transfer and Exchange |
|
|
9 |
|
SECTION 3.06 Temporary Securities |
|
|
10 |
|
SECTION 3.07 Mutilated, Destroyed, Lost or Stolen Securities |
|
|
11 |
|
SECTION 3.08 Cancellation |
|
|
11 |
|
SECTION 3.09 Benefits of Indenture |
|
|
12 |
|
SECTION 3.10 Authenticating Agent |
|
|
12 |
|
SECTION 3.11 Global Securities |
|
|
12 |
|
|
|
|
|
|
ARTICLE IV REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS |
|
|
13 |
|
|
|
|
|
|
SECTION 4.01 Redemption |
|
|
13 |
|
SECTION 4.02 Notice of Redemption |
|
|
13 |
|
SECTION 4.03 Payment Upon Redemption |
|
|
14 |
|
SECTION 4.04 Sinking Fund |
|
|
15 |
|
SECTION 4.05 Satisfaction of Sinking Fund Payments with Securities |
|
|
15 |
|
SECTION 4.06 Redemption of Securities for Sinking Fund |
|
|
15 |
|
|
|
|
|
|
ARTICLE V COVENANTS |
|
|
15 |
|
|
|
|
|
|
SECTION 5.01 Payment of Principal, Premium and Interest |
|
|
15 |
|
SECTION 5.02 Maintenance of Office or Agency |
|
|
16 |
|
SECTION 5.03 Paying Agents |
|
|
16 |
|
SECTION 5.04 Appointment to Fill Vacancy in Office of Trustee |
|
|
17 |
|
|
|
|
|
|
ARTICLE VI SECURITYHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE |
|
|
17 |
|
|
|
|
|
|
SECTION 6.01 Company to Furnish Trustee Names and Addresses of Securityholders |
|
|
17 |
|
SECTION 6.02 Preservation Of Information; Communications With Securityholders |
|
|
17 |
|
SECTION 6.03 Reports by the Company |
|
|
17 |
|
SECTION 6.04 Reports by the Trustee |
|
|
18 |
|
|
|
|
|
|
ARTICLE VII REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT |
|
|
19 |
|
|
|
|
|
|
SECTION 7.01 Events of Default |
|
|
19 |
|
SECTION 7.02 Suits for Enforcement by Trustee |
|
|
20 |
|
SECTION 7.03 Application of Moneys Collected |
|
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21 |
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ii
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SECTION 7.04 Limitation on Suits |
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SECTION 7.05 Rights and Remedies Cumulative; Delay or Omission Not Waiver |
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SECTION 7.06 Control by Securityholders |
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SECTION 7.07 Undertaking to Pay Costs |
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ARTICLE VIII CONCERNING THE TRUSTEE |
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SECTION 8.01 Certain Duties and Responsibilities of Trustee |
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SECTION 8.02 Certain Rights of Trustee |
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SECTION 8.03 Trustee Not Responsible for Recitals or Issuance or Securities |
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SECTION 8.04 May Hold Securities |
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SECTION 8.05 Moneys Held in Trust |
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SECTION 8.06 Compensation and Reimbursement |
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SECTION 8.07 Reliance on Officers Certificate |
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SECTION 8.08 Disqualification; Conflicting Interests |
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SECTION 8.09 Corporate Trustee Required; Eligibility |
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SECTION 8.10 Resignation and Removal; Appointment of Successor |
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SECTION 8.11 Acceptance of Appointment By Successor |
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SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business |
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SECTION 8.13 Preferential Collection of Claims Against the Company |
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ARTICLE IX CONCERNING THE SECURITYHOLDERS |
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SECTION 9.01 Evidence of Action by Securityholders |
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SECTION 9.02 Proof of Execution by Securityholders |
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SECTION 9.03 Who May be Deemed Owners |
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SECTION 9.04 Certain Securities Owned by Company Disregarded |
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SECTION 9.05 Actions Binding on Future Securityholders |
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ARTICLE X SUPPLEMENTAL INDENTURES |
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SECTION 10.01 Supplemental Indentures Without the Consent of Securityholders |
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SECTION 10.02 Supplemental Indentures With Consent of Securityholders |
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SECTION 10.03 Effect of Supplemental Indentures |
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SECTION 10.04 Securities Affected by Supplemental Indentures |
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SECTION 10.05 Execution of Supplemental Indentures |
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ARTICLE XI SUCCESSOR ENTITY |
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SECTION
11.01 Company May Consolidate, Etc. |
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SECTION 11.02 Successor Entity Substituted |
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SECTION 11.03 Evidence of Consolidation, Etc. to Trustee |
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ARTICLE XII SATISFACTION AND DISCHARGE |
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SECTION 12.01 Satisfaction and Discharge of Indenture |
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SECTION 12.02 Discharge of Obligations |
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SECTION 12.03 Deposited Moneys to be Held in Trust |
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SECTION 12.04 Payment of Moneys Held by Paying Agents |
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SECTION 12.05 Repayment to Company |
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ARTICLE XIII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS |
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SECTION 13.01 No Recourse |
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ARTICLE XIV MISCELLANEOUS PROVISIONS |
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SECTION 14.01 Effect on Successors and Assigns |
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SECTION 14.02 Actions by Successor |
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SECTION 14.03 Notices |
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SECTION 14.04 Governing Law |
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SECTION 14.05 Compliance Certificates and Opinions |
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SECTION 14.06 Payments on Business Days |
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SECTION 14.07 Conflict with Trust Indenture Act |
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SECTION 14.08 Counterparts |
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SECTION 14.09 Separability |
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SECTION 14.10 Assignment |
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(2) |
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This Table of Contents does not constitute part of the Indenture and shall not have any
bearing on the interpretation of any of its terms or provisions. |
iv
INDENTURE, dated as of [____________], 201[_], among Vanda Pharmaceuticals Inc., a
Delaware corporation (the Company), and [____________], as trustee (the Trustee):
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of unsecured debt securities (hereinafter
referred to as the Securities), in an unlimited aggregate principal amount to be issued from time
to time in one or more series as in this Indenture provided, as registered Securities without
coupons, to be authenticated by the certificate of the Trustee;
WHEREAS, to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered, the Company has duly authorized the execution of this
Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of the Securities by the
holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit
of the holders of Securities:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions of Terms.
The terms defined in this Section (except as in this Indenture otherwise expressly provided or
unless the context otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings specified in this Section and shall include
the plural as well as the singular. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, as amended, or that are by reference in such Act defined in the
Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture
Act and in said Securities Act as in force at the date of the execution of this instrument.
Authenticating Agent means an authenticating agent with respect to all or any of the series
of Securities appointed with respect to all or any series of the Securities by the Trustee pursuant
to Section 3.10.
Bankruptcy Law means Title 11, U.S. Code, or any similar federal or state law for the relief
of debtors.
Board of Directors means the Board of Directors of the Company or any duly authorized
committee of such Board.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification.
Business Day means, with respect to any series of Securities, any day other than a day on
which Federal or State banking institutions in the Borough of Manhattan, The City of New York, are
authorized or obligated by law, executive order or regulation to close.
Certificate means a certificate signed by the principal executive officer, the principal
financial officer or the principal accounting officer of the Company. The Certificate need not
comply with the provisions of Section 14.05.
Company means Vanda Pharmaceuticals Inc., a corporation duly organized and existing under
the laws of the State of Delaware, and, subject to the provisions of Article Eleven, shall also
include its successors and assigns.
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 [_________], except that whenever a provision herein refers to an office or agency of
the Trustee in the Borough of Manhattan, The City of New York, such office is located, at the date
hereof, at [____________].
Custodian means any receiver, trustee, assignee, liquidator, or similar official under any
Bankruptcy Law.
Default means any event, act or condition that with notice or lapse of time, or both, would
constitute an Event of Default.
Depositary means, with respect to Securities of any series, for which the Company shall
determine that such Securities will be issued as a Global Security, The Depository Trust Company,
New York, New York, another clearing agency, or any successor registered as a clearing agency under
the Securities Exchange Act of 1934, as amended (the Exchange Act), or other applicable statute
or regulation, which, in each case, shall be designated by the Company pursuant to either Section
3.01 or 3.11.
Event of Default means, with respect to Securities of a particular series any event
specified in Section 7.01, continued for the period of time, if any, therein designated.
Global Security means, with respect to any series of Securities, a Security executed by the
Company and delivered by the Trustee to the Depositary or pursuant to the Depositarys instruction,
all in accordance with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
Governmental Obligations means securities that 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 that, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to
any such Governmental Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of such depositary
receipt; provided, however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such depositary receipt.
Herein, hereof and hereunder, and other words of similar import, refer to this Indenture
as a whole and not to any particular Article, Section or other subdivision.
2
Indenture means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered into in accordance
with the terms hereof.
Interest Payment Date, when used with respect to any installment of interest on a Security
of a particular series, means the date specified in such Security or in a Board Resolution or in an
indenture supplemental hereto with respect to such series as the fixed date on which an installment
of interest with respect to Securities of that series is due and payable.
Officers Certificate means a certificate signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Controller or an Assistant Controller or the
Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance
with the terms hereof. Each such certificate shall include the statements provided for in Section
14.05, if and to the extent required by the provisions thereof.
Opinion of Counsel means an opinion in writing of legal counsel, who may be an employee of
or counsel for the Company, that is delivered to the Trustee in accordance with the terms hereof.
Each such opinion shall include the statements provided for in Section 14.05, if and to the extent
required by the provisions thereof.
Outstanding, when used with reference to Securities of any series, means, subject to the
provisions of Section 9.04, as of any particular time, all Securities of that series theretofore
authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore
canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Securities or portions thereof for the
payment or redemption of which moneys or Governmental Obligations in the necessary amount shall
have been deposited in trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that if such Securities or portions of such Securities are to
be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in
Article Four provided, or provision satisfactory to the Trustee shall have been made for giving
such notice; and (c) Securities in lieu of or in substitution for which other Securities shall have
been authenticated and delivered pursuant to the terms of Section 3.07.
Person means any individual, corporation, partnership, joint venture, joint-stock company,
unincorporated organization or government or any agency or political subdivision thereof.
Predecessor Security of any particular Security means every previous Security evidencing all
or a portion of the same debt as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under Section 3.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or
stolen Security.
Responsible Officer when used with respect to the Trustee means the Chairman of the Board of
Directors, the President, any Vice President, the Secretary, the Treasurer, any trust officer, any
corporate trust officer or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.
Securities means the debt Securities authenticated and delivered under this Indenture.
3
Securityholder, holder of Securities, registered holder or other similar term, means the
Person or Persons in whose name or names a particular Security shall be registered on the books of
the Company kept for that purpose in accordance with the terms of this Indenture.
Subsidiary means, with respect to any Person, (i) any corporation at least a majority of
whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (ii)
any general partnership, joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or by one or more of
its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general partner.
Trustee means [_____________], and, subject to the provisions of Article Eight, shall also
include its successors and assigns, and, if at any time there is more than one Person acting in
such capacity hereunder, Trustee shall mean each such Person. The term Trustee as used with
respect to a particular series of the Securities shall mean the trustee with respect to that
series.
Trust Indenture Act means the Trust Indenture Act of 1939, as amended, or any successor
statute.
Voting Stock, as applied to stock of any Person, means shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of such Person, other
than shares, interests, participations or other equivalents having such power only by reason of the
occurrence of a contingency.
ARTICLE II
SECTION 2.01 Forms Generally
The Securities, if any, to be endorsed thereon shall be in substantially the forms as shall be
established by, or pursuant to a Board Resolution or, subject to Section 3.04, set forth in, or
determined in the manner provided in, an Officers Certificate pursuant to a Board Resolution of
the Company, or in one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers of the Company executing such
Securities or coupons, as evidenced by their execution of the Securities or coupons. If the forms
of Securities or coupons of any series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or
Assistant Secretary of the Company, and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.04 for the authentication and delivery of such Securities
or coupons. Any portion of the text of any Security may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Security.
Unless otherwise specified as contemplated by Section 3.01, Securities in bearer form shall
have interest coupons attached.
The Trustees certificate of authentication on all Securities shall be in substantially the
form set forth in this Article.
4
The definitive Securities and coupons, if any, including the Guarantees, if any, shall be
printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner,
all as determined by the officers of the Company or the Guarantor, as the case may be, executing
such Securities, coupons or Guarantees, as evidenced by their execution of such Securities, coupons
or Guarantees.
SECTION 2.02 Form of Trustees Certificate of Authentication.
Subject to Section 3.10, the Trustees certificate of authentication shall be in substantially
the following form:
TRUSTEES CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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as Trustee
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By: |
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Authorized Officer |
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SECTION 2.03 Securities Issuable in Global Form
If Securities are issuable as a Global Security, as specified as contemplated by Section 3.01,
then, notwithstanding clause (10) of Section 3.01, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from time to time endorsed
thereon and that the aggregate amount of Outstanding Securities of such series represented thereby
may from time to time be increased or decreased to reflect exchanges. Any endorsement of a Global
Security to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and upon instructions
given by such Person or Persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 3.04 or Section 3.06. Subject to the provisions of
Section 3.04 and, if applicable, Section 3.06, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order pursuant to Section 3.04
or Section 3.06 has been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Global Security shall be in writing but need
not comply with Section 14.05 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 3.04 shall apply to any Security represented by
a Security in global form if such Security was never issued and sold by the Company and the Company
delivers to the Trustee the Security in global form together with written instructions (which need
not comply with Section 14.05 and need not be accompanied by an Opinion of Counsel) with regard to
the reduction in the principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of Section 3.04.
5
Notwithstanding any provisions of Section 5.01 to the contrary, unless otherwise specified as
contemplated by Section 3.01, payment of principal of (and premium, if any) and interest, if any,
on any Security in permanent global form shall be made to the Person or Persons specified therein.
ARTICLE III
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
SECTION 3.01 Designation and Terms of Securities.
(a) 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 up to the aggregate
principal amount of Securities of that series from time to time authorized by or pursuant to a
Board Resolution of the Company or pursuant to one or more indentures supplemental hereto. Prior to
the initial issuance of Securities of any series, there shall be established in or pursuant to a
Board Resolution, and set forth in an Officers Certificate, or established in one or more
indentures supplemental hereto:
(1) the title of the Security of the series (which shall distinguish the Securities of the
series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of that series that 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 that
series);
(3) the date or dates on which the principal of the Securities of the series is payable and
the place(s) of payment;
(4) the rate or rates at which the Securities of the series shall bear interest or the manner
of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall accrue, the Interest Payment Dates on
which such interest will be payable or the manner of determination of such Interest Payment Dates,
the place(s) of payment, and the record date for the determination of holders to whom interest is
payable on any such Interest Payment Dates;
(6) the right, if any, to extend the interest payment periods and the duration of such
extension;
(7) the period or periods within which, the price or prices at which and the terms and
conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option
of the Company;
(8) the obligation, if any, of the Company to redeem or purchase Securities of the series
pursuant to any sinking fund or analogous provisions (including payments made in cash in
satisfaction of future sinking fund obligations) 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;
6
(9) the form of the Securities of the series including the form of the certificate of
authentication for such series;
(10) if other than denominations of one thousand U.S. dollars ($1,000) or any integral
multiple thereof, the denominations in which the Securities of the series shall be issuable;
(11) any and all other terms with respect to such series (which terms shall not be
inconsistent with the terms of this Indenture, as amended by any supplemental indenture) including
any terms which may be required by or advisable under United States laws or regulations or
advisable in connection with the marketing of Securities of that series;
(12) whether the Securities are issuable as a Global Security and, in such case, the identity
of the Depositary for such series;
(13) whether the Securities will be convertible into shares of common stock or other
securities of the Company and, if so, the terms and conditions upon which such Securities will be
so convertible, including the conversion price and the conversion period;
(14) if other than the principal amount thereof, the portion of the principal amount of
Securities of the series which shall be payable upon declaration of acceleration of the maturity
thereof pursuant to Section 7.01; and
(15) any additional or different Events of Default or restrictive covenants provided for with
respect to the Securities of the series.
All Securities of any one series shall be substantially identical except as to denomination
and except as may otherwise be provided in or pursuant to any such Board Resolution or in any
indentures supplemental hereto.
If any of the terms of the series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of
the Officers Certificate setting forth the terms of the series.
Securities of any particular series may be issued at various times, with different dates on
which the principal or any installment of principal is payable, with different rates of interest,
if any, or different methods by which rates of interest may be determined, with different dates on
which such interest may be payable and with different redemption dates.
SECTION 3.02 Form of Securities and Trustees Certificate.
The Securities of any series and the Trustees certificate of authentication to be borne by
such Securities shall be substantially of the tenor and purpose as set forth in one or more
indentures supplemental hereto or as provided in a Board Resolution and as set forth in an
Officers Certificate and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or
as may be required to comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Securities of that series may be listed,
or to conform to usage.
7
SECTION 3.03 Denominations; Provisions for Payment.
The Securities shall be issuable as registered Securities and in the denominations of one
thousand U.S. dollars ($1,000) or any integral multiple thereof, subject to Section 3.01(10). The
Securities of a particular series shall bear interest payable on the dates and at the rate
specified with respect to that series. The principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be
payable in the coin or currency of the United States of America that at the time is legal tender
for public and private debt, at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, the City and State of New York. Each Security shall be dated the date of
its authentication. Interest on the Securities shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The interest installment on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date for Securities of that series shall be paid to the
Person in whose name said Security (or one or more Predecessor Securities) is registered at the
close of business on the regular record date for such interest installment. In the event that any
Security of a particular series or portion thereof is called for redemption and the redemption date
is subsequent to a regular record date with respect to any Interest Payment Date and prior to such
Interest Payment Date, interest on such Security will be paid upon presentation and surrender of
such Security, except as provided in Section 4.03.
Any interest on any Security that is payable, but is not punctually paid or duly provided for,
on any Interest Payment Date for Securities of the same series (herein called Defaulted Interest)
shall forthwith cease to be payable to the registered holder on the relevant regular record date by
virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its
election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on Securities to the Persons in
whose names such Securities (or their respective Predecessor Securities) are registered at the
close of business on a special record date for the payment of such Defaulted Interest, which shall
be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment,
and at the same time the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special
record date for the payment of such Defaulted Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company
of such special record date and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the special record date therefor to be
mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in
the Security Register (as hereinafter defined), not less than 10 days prior to such special record
date. Notice of the proposed payment of such Defaulted Interest and the special record date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names such Securities (or their respective Predecessor Securities) are registered on such
special record date.
(2) The Company may make payment of any Defaulted Interest on any Securities in any other
lawful manner not inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
8
Unless otherwise set forth in a Board Resolution or one or more indentures supplemental hereto
establishing the terms of any series of Securities pursuant to Section 3.01 hereof, the term
regular record date as used in this Section with respect to a series of Securities with respect
to any Interest Payment Date for such series shall mean either the fifteenth day of the month
immediately preceding the month in which an Interest Payment Date established for such series
pursuant to Section 3.01 hereof shall occur, if such Interest Payment Date is the first day of a
month, or the last day of the month immediately preceding the month in which an Interest Payment
Date established for such series pursuant to Section 3.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Security of a series delivered under
this Indenture upon transfer of or in exchange for or in lieu of any other Security of such series
shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such
other Security.
SECTION 3.04 Execution and Authentications.
The Securities shall be signed on behalf of the Company by its President, or one of its Vice
Presidents, or its Treasurer, or one of its Assistant Treasurers, or its Secretary, or one of its
Assistant Secretaries, under its corporate seal attested by its Secretary or one of its Assistant
Secretaries. Signatures may be in the form of a manual or facsimile signature. The Company may use
the facsimile signature of any Person who shall have been a President or Vice President thereof, or
of any Person who shall have been a Secretary or Assistant Secretary thereof, notwithstanding the
fact that at the time the Securities shall be authenticated and delivered or disposed of such
Person shall have ceased to be the President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company. The seal of the Company may be in the form of a facsimile of such seal
and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. The Securities
may contain such notations, legends or endorsements required by law, stock exchange rule or usage.
Each Security shall be dated the date of its authentication by the Trustee.
A Security shall not be valid until authenticated manually by an authorized signatory of the
Trustee, or by an Authenticating Agent. Such signature shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder and that the holder
is entitled to the benefits of this Indenture. At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a written order of the Company for
the authentication and delivery of such Securities, signed by its President or any Vice President
and its Secretary or any Assistant Secretary, and the Trustee in accordance with such written order
shall authenticate and deliver such Securities.
In authenticating such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to
Section 8.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form
and terms thereof have been established in conformity with the provisions of this Indenture.
The Trustee shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustees own rights, duties or immunities
under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable
to the Trustee.
SECTION 3.05 Registration of Transfer and Exchange.
(a) Securities of any series may be exchanged upon presentation thereof at the office or
agency of the Company designated for such purpose in the Borough of Manhattan, the City and State
of
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New York, for other Securities of such series of authorized denominations, and for a like
aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental
charge in relation thereto, all as provided in this Section. In respect of any Securities so
surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office
or agency shall deliver in exchange therefor the Security or Securities of the same series that the
Securityholder making the exchange shall be entitled to receive, bearing numbers not
contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or agency designated for such
purpose in the Borough of Manhattan, the City and State of New York, or such other location
designated by the Company a register or registers (herein referred to as the Security Register)
in which, subject to such reasonable regulations as it may prescribe, the Company shall register
the Securities and the transfers of Securities as in this Article provided and which at all
reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of
registering Securities and transfer of Securities as herein provided shall be appointed as
authorized by Board Resolution (the Security Registrar).
Upon surrender for transfer of any Security at the office or agency of the Company designated
for such purpose, the Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new Security or Securities of
the same series as the Security presented for a like aggregate principal amount.
All Securities presented or surrendered for exchange or registration of transfer, as provided
in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by
a written instrument or instruments of transfer, in form satisfactory to the Company or the
Security Registrar, duly executed by the registered holder or by such holders duly authorized
attorney in writing.
(c) No service charge shall be made for any exchange or registration of transfer of
Securities, or issue of new Securities in case of partial redemption of any series, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge in relation
thereto, other than exchanges pursuant to Section 3.06, Section 4.03(b) and Section 10.04 not
involving any transfer.
(d) The Company shall not be required (1) to issue, exchange or register the transfer of any
Securities during a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of less than all the Outstanding Securities of the same series
and ending at the close of business on the day of such mailing, nor (2) to register the transfer of
or exchange any Securities of any series or portions thereof called for redemption. The provisions
of this Section 3.05 are, with respect to any Global Security, subject to Section 3.11 hereof.
SECTION 3.06 Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company may execute, and
the Trustee shall authenticate and deliver, temporary Securities (printed, lithographed or
typewritten) of any authorized denomination. Such temporary Securities shall be substantially in
the form of the definitive Securities in lieu of which they are issued, but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as may be determined
by the Company. Every temporary Security of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Securities of such series. Without unnecessary delay the
Company will execute and will furnish definitive Securities of such series and thereupon any or all
temporary Securities of such series may be surrendered in exchange therefor (without charge to the
holders), at the office or agency of the Company designated for the purpose in the Borough of
Manhattan, the City and State of New York, and the Trustee shall authenticate and such office or
agency shall deliver in exchange for such temporary Securities an equal aggregate
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principal amount of definitive Securities of such series, unless the Company advises the
Trustee to the effect that definitive Securities need not be executed and furnished until further
notice from the Company. Until so exchanged, the temporary Securities of such series shall be
entitled to the same benefits under this Indenture as definitive Securities of such series
authenticated and delivered hereunder.
SECTION 3.07 Mutilated, Destroyed, Lost or Stolen Securities.
In case any temporary or definitive Security shall become mutilated or be destroyed, lost or
stolen, the Company (subject to the next succeeding sentence) shall execute, and upon the Companys
request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Security of the
same series, bearing a number not contemporaneously outstanding, in exchange and substitution for
the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or
stolen. In every case the applicant for a substituted Security shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of them harmless, and,
in every case of destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicants
Security and of the ownership thereof. The Trustee may authenticate any such substituted Security
and deliver the same upon the written request or authorization of any officer of the Company. Upon
the issuance of any substituted Security, 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. In case any Security
that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company and the Trustee such security or indemnity as they may require
to save each of them harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and
of the ownership thereof.
Every replacement Security issued pursuant to the provisions of this Section shall constitute
an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost
or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and all other Securities
of the same series duly issued hereunder. All Securities shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and
all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 3.08 Cancellation.
All Securities surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for
cancellation, or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall
be issued in lieu thereof except as expressly required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the Trustee shall deliver
to the Company canceled Securities held by the Trustee. In the absence of such request the Trustee
may dispose of canceled Securities in accordance with its standard procedures and deliver a
certificate of disposition to the Company. If the Company shall otherwise acquire any of the
Securities, however, such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are delivered to the Trustee
for cancellation.
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SECTION 3.09 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give or be construed
to give to any Person, other than the parties hereto and the holders of the Securities, any legal
or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant,
condition or provision herein contained; all such covenants, conditions and provisions being for
the sole benefit of the parties hereto and of the holders of the Securities.
SECTION 3.10 Authenticating Agent.
So long as any of the Securities of any series remain Outstanding there may be an
Authenticating Agent for any or all such series of Securities which the Trustee shall have the
right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, transfer or partial redemption
thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All
references in this Indenture to the authentication of Securities by the Trustee shall be deemed to
include authentication by an Authenticating Agent for such series. Each Authenticating Agent shall
be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as
most recently reported or determined by it, sufficient under the laws of any jurisdiction under
which it is organized or in which it is doing business to conduct a trust business, and that is
otherwise authorized under such laws to conduct such business and is subject to supervision or
examination by Federal or State authorities. If at any time any Authenticating Agent shall cease to
be eligible in accordance with these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the
Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall)
terminate the agency of any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility
of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent
acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder
as if originally named as an Authenticating Agent pursuant hereto.
SECTION 3.11 Global Securities.
(a) If the Company shall establish pursuant to Section 3.01 that the Securities of a
particular series are to be issued as a Global Security, then the Company shall execute and the
Trustee shall, in accordance with Section 3.04, authenticate and deliver, a Global Security that
(1) shall represent, and shall be denominated in an amount equal to the aggregate principal amount
of, all of the Outstanding Securities of such series, (2) shall be registered in the name of the
Depositary or its nominee, (3) shall be delivered by the Trustee to the Depositary or pursuant to
the Depositarys instruction and (4) shall bear a legend substantially to the following effect:
Except as otherwise provided in Section 3.11 of the Indenture, this Security may be transferred,
in whole but not in part, only to another nominee of the Depositary or to a successor Depositary or
to a nominee of such successor Depositary.
(b) Notwithstanding the provisions of Section 3.05, the Global Security of a series may be
transferred, in whole but not in part and in the manner provided in Section 3.05, only to another
nominee of the Depositary for such series, or to a successor Depositary for such series selected or
approved by the Company or to a nominee of such successor Depositary.
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(c) If at any time the Depositary for a series of the Securities notifies the Company that it
is unwilling or unable to continue as Depositary for such series or if at any time the Depositary
for such series shall no longer be registered or in good standing under the Exchange Act, or other
applicable statute or regulation, and a successor Depositary for such series is not appointed by
the Company within 90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, this Section 3.11 shall no longer be applicable to the Securities of
such series and the Company will execute and, subject to Section 3.05, the Trustee will
authenticate and deliver the Securities of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global Security. In addition, the
Company may at any time determine that the Securities of any series shall no longer be represented
by a Global Security and that the provisions of this Section 3.11 shall no longer apply to the
Securities of such series. In such event the Company will execute and, subject to Section 3.05, the
Trustee, upon receipt of an Officers Certificate evidencing such determination by the Company,
will authenticate and deliver the Securities of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global Security. Upon the
exchange of the Global Security for such Securities in definitive registered form without coupons,
in authorized denominations, the Global Security shall be canceled by the Trustee. Such Securities
in definitive registered form issued in exchange for the Global Security pursuant to this Section
3.11(c) shall be registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.
ARTICLE IV
REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS
SECTION 4.01 Redemption.
The Company may redeem the Securities of any series issued hereunder on and after the dates
and in accordance with the terms established for such series pursuant to Section 3.01 hereof.
SECTION 4.02 Notice of Redemption.
(a) In case the Company shall desire to exercise such right to redeem all or, as the case may
be, a portion of the Securities of any series in accordance with the right reserved so to do, the
Company shall, or shall cause the Trustee to, give notice of such redemption to holders of the
Securities of such series to be redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 90 days before the date fixed for redemption of
that series to such holders at their last addresses as they shall appear upon the Security Register
unless a shorter period is specified in the Securities to be redeemed. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have been duly given, whether or not
the registered holder receives the notice. In any case, failure duly to give such notice to the
holder of any Security of any series designated for redemption in whole or in part, or any defect
in the notice, shall not affect the validity of the proceedings for the redemption of any other
Securities of such series or any other series. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers Certificate
evidencing compliance with any such restriction.
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Each such notice of redemption shall specify the date fixed for redemption and the redemption
price at which Securities of that series are to be redeemed, and shall state that payment of the
redemption price of such Securities to be redeemed will be made at the office or agency of the Company in
the Borough of Manhattan, the City and State of New York, upon presentation and surrender of such
Securities, that interest accrued to the date fixed for redemption will be paid as specified in
said notice, that from and after said date interest will cease to accrue and that the redemption is
for a sinking fund, if such is the case. If less than all the Securities of a series are to be
redeemed, the notice to the holders of Securities of that series to be redeemed in whole or in part
shall specify the particular Securities to be so redeemed. In case any Security is to be redeemed
in part only, the notice that relates to such Security shall state the portion of the principal
amount thereof to be redeemed, and shall state that on and after the redemption date, upon
surrender of such Security, a new Security or Securities of such series in principal amount equal
to the unredeemed portion thereof will be issued.
(b) If less than all the Securities of a series are to be redeemed, the Company shall give the
Trustee at least 45 days notice in advance of the date fixed for redemption as to the aggregate
principal amount of Securities of the series to be redeemed, and thereupon the Trustee shall
select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and
that may provide for the selection of a portion or portions (equal to one thousand U.S. dollars
($1,000) or any integral multiple thereof) of the principal amount of such Securities of a
denomination larger than $1,000, the Securities to be redeemed and shall thereafter promptly notify
the Company in writing of the numbers of the Securities to be redeemed, in whole or in part. The
Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by
its President or any Vice President, instruct the Trustee or any paying agent to call all or any
part of the Securities of a particular series for redemption and to give notice of redemption in
the manner set forth in this Section, such notice to be in the name of the Company or its own name
as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption
is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such
Security Register, transfer books or other records, or suitable copies or extracts therefrom,
sufficient to enable the Trustee or such paying agent to give any notice by mail that may be
required under the provisions of this Section.
SECTION 4.03 Payment Upon Redemption.
(a) If the giving of notice of redemption shall have been completed as above provided, the
Securities or portions of Securities of the series to be redeemed specified in such notice shall
become due and payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for redemption and interest on
such Securities or portions of Securities shall cease to accrue on and after the date fixed for
redemption, unless the Company shall default in the payment of such redemption price and accrued
interest with respect to any such Security or portion thereof. On presentation and surrender of
such Securities on or after the date fixed for redemption at the place of payment specified in the
notice, said Securities shall be paid and redeemed at the applicable redemption price for such
series, together with interest accrued thereon to the date fixed for redemption (but if the date
fixed for redemption is an interest payment date, the interest installment payable on such date
shall be payable to the registered holder at the close of business on the applicable record date
pursuant to Section 3.03).
(b) Upon presentation of any Security of such series that is to be redeemed in part only, the
Company shall execute and the Trustee shall authenticate and the office or agency where the
Security is presented shall deliver to the holder thereof, at the expense of the Company, a new
Security of the same series of authorized denominations in principal amount equal to the unredeemed
portion of the Security so presented.
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SECTION 4.04 Sinking Fund.
The provisions of Sections 4.04, 4.05 and 4.06 shall be applicable to any sinking fund for the
retirement of Securities of a series, except as otherwise specified as contemplated by Section 3.01
for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any
series is herein referred to as a mandatory sinking fund payment, and any payment in excess of
such minimum amount provided for by the terms of Securities of any 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 4.05.
Each sinking fund payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 4.05 Satisfaction of Sinking Fund Payments with Securities.
The Company (a) may deliver Outstanding Securities of a series (other than any Securities
previously called for redemption) and (b) may apply as a credit Securities of a series that have
been redeemed either at the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of such series required to be made pursuant to the terms of such
Securities, provided that such Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at the redemption 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.
SECTION 4.06 Redemption of Securities for Sinking Fund.
Not less than 45 days 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 sinking fund payment for that series pursuant to the terms of the series, the portion
thereof, if any, that is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 4.05 and the basis for such credit and will, together with such Officers
Certificate, deliver to the Trustee any Securities to be so delivered. Not less than 30 days 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 4.02 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 4.02. Such notice having been duly given, the redemption of such Securities
shall be made upon the terms and in the manner stated in Section 4.03.
ARTICLE V
COVENANTS
SECTION 5.01 Payment of Principal, Premium and Interest.
The Company will duly and punctually pay or cause to be paid the principal of (and premium, if
any) and interest on the Securities of that series at the time and place and in the manner provided
herein and established with respect to such Securities.
15
SECTION 5.02 Maintenance of Office or Agency.
So long as any series of the Securities remain Outstanding, the Company agrees to maintain an
office or agency in the Borough of Manhattan, the City and State of New York, with respect to each
such series and at such other location or locations as may be designated as provided in this
Section 5.02, where (a) Securities of that series may be presented for payment, (b) Securities of
that series may be presented as herein above authorized for registration of transfer and exchange,
and (c) notices and demands to or upon the Company in respect of the Securities of that series and
this Indenture may be given or served, such designation to continue with respect to such office or
agency until the Company shall, by written notice signed by its President or a Vice President and
delivered to the Trustee, designate some other office or agency for such purposes or any of them.
If at any time the Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, 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, notices and demands.
SECTION 5.03 Paying Agents.
(a) If the Company shall appoint one or more paying agents for all or any series of the
Securities, other than the Trustee, the Company will cause each such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to
the provisions of this Section:
(1) that it will hold all sums held by it as such agent for the payment of the principal of
(and premium, if any) or interest on the Securities of that series (whether such sums have been
paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of
the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company (or by any other
obligor of such Securities) to make any payment of the principal of (and premium, if any) or
interest on the Securities of that series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure referred to in the
preceding paragraph (a)(2) above, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent; and
(4) that it will perform all other duties of paying agent as set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to any series of the
Securities, it will on or before each due date of the principal of (and premium, if any) or
interest on Securities of that series, set aside, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay such principal (and premium, if any) or
interest so becoming due on Securities of that series until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or
any failure (by it or any other obligor on such Securities) to take such action. Whenever the
Company shall have one or more paying agents for any series of Securities, it will, prior to each
due date of the principal of (and premium, if any) or interest on any Securities of that series,
deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will
promptly notify the Trustee of this action or failure so to act.
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(c) Notwithstanding anything in this Section to the contrary, (1) the agreement to hold sums
in trust as provided in this Section is subject to the provisions of Section 12.05, and (2) the
Company may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the
same terms and conditions as those upon which such sums were held by the Company or such paying
agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be
released from all further liability with respect to such money.
SECTION 5.04 Appointment to Fill Vacancy in Office of Trustee.
The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a
Trustee hereunder.
ARTICLE VI
SECURITYHOLDERS LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 6.01 Company to Furnish Trustee Names and Addresses of Securityholders.
The Company will furnish or cause to be furnished to the Trustee (a) on each regular record
date (as defined in Section 3.03) a list, in such form as the Trustee may reasonably require, of
the names and addresses of the holders of each series of Securities as of such regular record date,
provided that the Company shall not be obligated to furnish or cause to be furnished such list at
any time that the list shall not differ in any respect from the most recent list furnished to the
Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30
days after the receipt by the Company of any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list is furnished; provided, however, that, in
either case, no such list need be furnished for any series for which the Trustee shall be the
Security Registrar.
SECTION 6.02 Preservation Of Information; Communications With Securityholders.
(a) The Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Securities contained in the most recent
list furnished to it as provided in Section 6.01 and as to the names and addresses of holders of
Securities received by the Trustee in its capacity as Security Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt
of a new list so furnished.
(c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act
with other Securityholders with respect to their rights under this Indenture or under the
Securities. The Company, the Trustee, the Security Registrar and any other Person shall have the
protection of the Trust Indenture Act Section 312(c).
SECTION 6.03 Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of the annual reports and of the
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information, documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations prescribe) that the
Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information, documents or reports pursuant
to either of such sections, then to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents and reports that may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from to time by the Commission, such
additional information, documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or
reputable overnight delivery service that provides for evidence of receipt, to the Securityholders,
as their names and addresses appear upon the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission.
SECTION 6.04 Reports by the Trustee.
(a) On or before [_________] in each year in which any of the Securities are Outstanding, the
Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names
and addresses appear upon the Security Register, a brief report dated as of the preceding
[__________], if and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust Indenture Act.
(c) A copy of each such report shall, at the time of such transmission to Securityholders, be
filed by the Trustee with the Company, with each stock exchange upon which any Securities are
listed (if so listed) and also with the Commission. The Company agrees to notify the Trustee when
any Securities become listed on any stock exchange.
(d) If an Event of Default occurs and is continuing and the Trustee receives actual notice of
such Event of Default, the Trustee shall mail to each Securityholder notice of the uncured Event of
Default within 90 days after the occurrence thereof. Except in the case of an Event of Default in
payment of principal of, or interest on, any Securities, or in the payment of any sinking or
purchase fund installment, the Trustee may withhold the notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in the interest of the
Securityholder.
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ARTICLE VII
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 7.01 Events of Default.
(a) Whenever used herein with respect to Securities of a particular series, Event of Default
means any one or more of the following events that has occurred and is continuing:
(1) the Company defaults in the payment of any installment of interest upon any of the
Securities of that series, as and when the same shall become due and payable, and such default
continues for a period of 30 days; provided, however, that a valid extension of an interest payment
period by the Company in accordance with the terms of any indenture supplemental hereto, shall not
constitute a default in the payment of interest for this purpose;
(2) the Company defaults in the payment of the principal of (or premium, if any, on) any of
the Securities of that series as and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking
or analogous fund established with respect to that series; provided, however, that a valid
extension of the maturity of such Securities in accordance with the terms of any indenture
supplemental hereto shall not constitute a default in the payment of principal or premium, if any;
(3) the Company fails to observe or perform any other of its covenants or agreements with
respect to that series contained in this Indenture or otherwise established with respect to that
series of Securities pursuant to Section 3.01 hereof (other than a covenant or agreement that has
been expressly included in this Indenture solely for the benefit of one or more series of
Securities other than such series) for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such notice is a Notice of
Default hereunder, shall have been given to the Company by the Trustee, by registered or certified
mail, or to the Company and the Trustee by the holders of a majority in principal amount of the
Securities of that series at the time Outstanding;
(4) 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 or (iv) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order under any Bankruptcy Law that (i) is for
relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company 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.
(b) In each and every such case, unless the principal of all the Securities of that series
shall have already become due and payable, either the Trustee or the holders of a majority in
aggregate principal amount of the Securities of that series then Outstanding hereunder, by notice
in writing to the Company (and to the Trustee if given by such Securityholders), may declare the
principal of all the Securities of that series to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable.
(c) At any time after the principal of the Securities of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of the moneys due shall
have been obtained or entered as hereinafter provided, the holders of a majority in aggregate
principal amount of the Securities of that series then Outstanding hereunder, by written notice to
the Company and the Trustee,
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may rescind and annul such declaration and its consequences if: (1) the Company has paid or
deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all
the Securities of that series and the principal of (and premium, if any, on) all Securities of that
series that shall have become due otherwise than by acceleration (with interest upon such principal
and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon
overdue installments of interest, at the rate per annum expressed in the Securities of that series
to the date of such payment or deposit) and any amount payable to the Trustee under Section 8.06,
and (2) any and all other Events of Default under the Indenture with respect to such series, other
than the nonpayment of principal on Securities of that series that shall not have become due by
their terms, shall have been remedied or waived as provided in Section 7.06.
No such rescission and annulment shall extend to or shall affect any subsequent default or
impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with respect to Securities
of that series under this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case, subject to any determination in such
proceedings, the Company and the Trustee shall be restored respectively to their former positions
and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall
continue as though no such proceedings had been taken.
SECTION 7.02 Suits for Enforcement by Trustee.
(a) If an Event of Default specified in Section 7.01(a)(1) or (2) hereof occurs and is
continuing, the Trustee, in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any action or proceedings at law or in equity for the collection of the sums
so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and
may enforce any such judgment or final decree against the Company or other obligor upon the
Securities of that series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or other obligor upon the Securities of that
series, wherever situated.
(b) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization,
readjustment, arrangement, composition or judicial proceedings affected the Company, or its
creditors or property, the Trustee shall have power to intervene in such proceedings and take any
action therein that may be permitted by the court and shall (except as may be otherwise provided by
law) be entitled to file such proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claims of the Trustee and of the holders of Securities of a series
allowed for the entire amount due and payable by the Company under this Indenture at the date of
institution of such proceedings and for any additional amount that may become due and payable by
the Company after such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of the amount payable
to the Trustee under Section 8.06; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of Securities of such series to make
such payments to the Trustee, and, in the event that the Trustee shall consent to the making of
such payments directly to such Securityholders, to pay to the Trustee any amount due it under
Section 8.06.
(c) All rights of action and of asserting claims under this Indenture, or under any of the
terms established with respect to Securities of a series, may be enforced by the Trustee without
the possession of any of such Securities, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its own name as trustee of an
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express trust, and any recovery of judgment shall, after provision for payment to the Trustee of
any amounts due under Section 8.06, be for the ratable benefit of the holders of the Securities of
such series.
In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or
in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture
or by law.
Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities of that series or the rights of any holder
thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any
such proceeding.
SECTION 7.03 Application of Moneys Collected.
Any moneys collected by the Trustee pursuant to this Article with respect to a particular
series of Securities shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal (or premium, if
any) or interest, upon presentation of the Securities of that series, and notation thereon the
payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all amounts payable to the
Trustee under Section 8.06; and
SECOND: To the payment of the amounts then due and unpaid upon Securities of such series for
principal (and premium, if any) and interest, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if any) and interest,
respectively.
SECTION 7.04 Limitation on Suits.
No holder of any Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or
under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (a) such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof with respect to the Securities of such
series specifying such Event of Default, as hereinbefore provided; (b) the holders of not less than
25% in aggregate principal amount of the Securities of such series then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in its own name as
trustee hereunder; (c) such holder or holders shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred therein or
thereby; (d) the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding; and (e) during such
60-day period, the holders of a majority in principal amount of the Securities of that series shall
not have given the Trustee a direction inconsistent with the request.
Notwithstanding anything contained herein to the contrary, the right of any holder of any
Security to receive payment of the principal of (and premium, if any) and interest on such
Security, as therein provided, on or after the respective due dates expressed in such Security (or
in the case of redemption, on the redemption date), or to institute suit for the enforcement of any
such payment on or after such
21
respective dates or redemption date, shall not be impaired or affected without the consent of such
holder. By accepting a Security hereunder it is expressly understood, intended and covenanted by
the taker and holder of every Security of such series with every other such taker and holder and
the Trustee, that no one or more holders of Securities of such series shall have any right in any
manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable and common benefit of all holders
of Securities of such series. For the protection and enforcement of the provisions of this Section,
each and every Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 7.05 Rights and Remedies Cumulative; Delay or Omission Not Waiver.
(a) Except as otherwise provided in Section 14.07, all powers and remedies given by this
Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or otherwise established
with respect to such Securities.
(b) No delay or omission of the Trustee or of any holder of any of the Securities to exercise
any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such default or on
acquiescence therein; and, subject to the provisions of Section 7.04, every power and remedy given
by this Article or by law to the Trustee or the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 7.06 Control by Securityholders.
The holders of a majority in aggregate principal amount of the Securities of any series at the
time Outstanding, determined in accordance with Section 9.01, 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 such series; provided,
however, that such direction shall not be in conflict with any rule of law or with this Indenture
or be unduly prejudicial to the rights of holders of Securities of any other series at the time
Outstanding determined in accordance with Section 9.01. Subject to the provisions of Section 9.01,
the Trustee shall have the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so
directed would involve the Trustee in personal liability. The holders of a majority in aggregate
principal amount of the Securities of any series at the time Outstanding affected thereby,
determined in accordance with Section 9.01, may on behalf of the holders of all of the Securities
of such series waive any past default in the performance of any of the covenants contained herein
or established pursuant to Section 3.01 with respect to such series and its consequences, except a
default in the payment of the principal of (or premium, if any) or interest on, any of the
Securities of that series as and when the same shall become due by the terms of such Securities
otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal and any premium has been deposited with the Trustee
(in accordance with Section 7.01(c)). Upon any such waiver, the default covered thereby shall be
deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders
of the Securities of such series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
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SECTION 7.07 Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Securities by such holders
acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys fees, against any party
litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Securities
of any series, or to any suit instituted by any Securityholder for the enforcement of the payment
of the principal of (or premium, if any) or interest on any Security of such series, on or after
the respective due dates expressed in such Security or established pursuant to this Indenture.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01 Certain Duties and Responsibilities of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default with respect to the Securities
of a series and after the curing of all Events of Default with respect to the Securities of that
series that may have occurred, shall undertake to perform with respect to the Securities of such
series such duties and only such duties as are specifically set forth in this Indenture, and no
implied covenants shall be read into this Indenture against the Trustee. In case an Event of
Default with respect to the Securities of a series has occurred (that has not been cured or
waived), the Trustee shall exercise with respect to Securities of that series such of the rights
and powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in the conduct of his
own affairs.
(b) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct,
except that:
(1) prior to the occurrence of an Event of Default with respect to the Securities of a series
and after the curing or waiving of all such Events of Default with respect to that series that may
have occurred:
(i) the duties and obligations of the Trustee shall with respect to the Securities of such
series be determined solely by the express provisions of this Indenture, and the Trustee shall not
be liable with respect to the Securities of such series except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to
the Securities of such series conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions that by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture;
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(2) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the holders of not less than a majority in
principal amount of the Securities of any series at the time Outstanding 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 that series; and
(4) none of the provisions contained in this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.
SECTION 8.02 Certain Rights of Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, security or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company, by
the President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee may consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of any action taken
or suffered or omitted hereunder in good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to
the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default with respect to a series of the Securities (that has not
been cured or waived) to exercise with respect to Securities of that series such of the rights and
powers vested in it by this Indenture, and to 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 his
own affairs;
(e) The Trustee shall not be liable for any action taken or omitted to be taken by it in good
faith and believed by it to be authorized or within the discretion or rights or powers conferred
upon it by this Indenture;
(f) The Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, security or other papers or documents, unless requested in writing so to do
by the holders
24
of not less than a majority in principal amount of the Outstanding Securities of the particular
series affected thereby (determined as provided in Section 9.04); provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a
condition to so proceeding. The reasonable expense of every such examination shall be paid by the
Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and
(g) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
SECTION 8.03 Trustee Not Responsible for Recitals or Issuance or Securities.
(a) The recitals contained herein and in the Securities shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or sufficiency of this Indenture
or of the Securities.
(c) The Trustee shall not be accountable for the use or application by the Company of any of
the Securities or of the proceeds of such Securities, or for the use or application of any moneys
paid over by the Trustee in accordance with any provision of this Indenture or established pursuant
to Section 3.01, or for the use or application of any moneys received by any paying agent other
than the Trustee.
SECTION 8.04 May Hold Securities.
The Trustee or any paying agent or Security Registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it would have if it
were not Trustee, paying agent or Security Registrar.
SECTION 8.05 Moneys Held in Trust.
Subject to the provisions of Section 12.05, all moneys received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any moneys received by it hereunder except such as it may
agree with the Company to pay thereon.
SECTION 8.06 Compensation and Reimbursement.
(a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled
to, such reasonable compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), as the Company and the Trustee may from time to
time agree in writing, for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties hereunder of the
Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and
25
disbursements of its counsel and of all Persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith. The Company also
covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to
hold it harmless against, any loss, liability or expense incurred without negligence or bad faith
on the part of the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending itself against any
claim of liability in the premises.
(b) The obligations of the Company under this Section to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Securities upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of particular Securities.
SECTION 8.07 Reliance on Officers Certificate.
Except as otherwise provided in Section 8.01, whenever in the administration of the provisions
of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting to take any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers Certificate delivered to the Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee
for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 8.08 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire any conflicting interest within the meaning of Section
310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with
the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 8.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Securities issued hereunder which
shall at all times be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person directly or indirectly
controlling, controlled by or under common control with the Company, serve as Trustee. In case at
any time the Trustee shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect specified in Section 8.10.
SECTION 8.10 Resignation and Removal; Appointment of Successor.
(a) The Trustee or any successor hereafter appointed, may at any time resign with respect to
the Securities of one or more series by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of
such series, as their
26
names and addresses appear upon the Security Register. Upon receiving such notice of resignation,
the Company shall promptly appoint a successor trustee with respect to Securities of such series by
written instrument, in duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment within 30 days after
the mailing of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee with respect to Securities of
such series, or any Securityholder of that series who has been a bona fide holder of a Security or
Securities for at least six months may on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court may thereupon after
such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of Section 8.08 after written request
therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.09
and shall fail to resign after written request therefor by the Company or by any such
Securityholder; or
(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its
property shall be appointed or consented to, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, the Company may remove the Trustee with respect to all
Securities and appoint a successor trustee by written instrument, in duplicate, executed by order
of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or any Securityholder who has been a bona fide
holder of a Security or Securities for at least six months may, on behalf of that holder and all
others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if
any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the Securities of any series at
the time Outstanding may at any time remove the Trustee with respect to such series by so notifying
the Trustee and the Company and may appoint a successor Trustee for such series with the consent of
the Company.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee with
respect to the Securities of a series pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as provided in Section
8.11.
(e) Any successor trustee appointed pursuant to this Section may be appointed with respect to
the Securities of one or more series or all of such series, and at any time there shall be only one
Trustee with respect to the Securities of any particular series.
SECTION 8.11 Acceptance of Appointment By Successor.
(a) In case of the appointment hereunder of a successor trustee with respect to all
Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal
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of the retiring Trustee shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such
successor trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor trustee with respect to the Securities
of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee
with respect to the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment of such successor
trustee relates, (2) shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and that no Trustee shall be responsible for any
act or failure to act on the part of any other Trustee hereunder; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein, such retiring Trustee shall with respect to the
Securities of that or those series to which the appointment of such successor trustee relates have
no further responsibility for the exercise of rights and powers or for the performance of the
duties and obligations vested in the Trustee under this Indenture, and each such successor trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor trustee relates; but, on request of the Company or any
successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor
trustee, to the extent contemplated by such supplemental indenture, the property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those series to which the
appointment of such successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor trustee all
such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may
be.
(d) No successor trustee shall accept its appointment unless at the time of such acceptance
such successor trustee shall be qualified and eligible under this Article.
(e) Upon acceptance of appointment by a successor trustee as provided in this Section, the
Company shall transmit notice of the succession of such trustee hereunder by mail, first class
postage prepaid, to the Securityholders, as their names and addresses appear upon the Security
Register. If the Company fails to transmit such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the
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Trustee shall be a party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 8.08 and eligible under the provisions of Section 8.09,
without the execution or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such successor Trustee had
itself authenticated such Securities.
SECTION 8.13 Preferential Collection of Claims Against the Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.
ARTICLE IX
CONCERNING THE SECURITYHOLDERS
SECTION 9.01 Evidence of Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a majority or specified
percentage in aggregate principal amount of the Securities of a particular series may take any
action (including the making of any demand or request, the giving of any notice, consent or waiver
or the taking of any other action), the fact that at the time of taking any such action the holders
of such majority or specified percentage of that series have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by such holders of Securities of
that series in Person or by agent or proxy appointed in writing.
If the Company shall solicit from the Securityholders of any series any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company may, at its option,
as evidenced by an Officers Certificate, fix in advance a record date for such series for the
determination of Securityholders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such
a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or
other action may be given before or after the record date, but only the Securityholders of record
at the close of business on the record date shall be deemed to be Securityholders for the purposes
of determining whether Securityholders of the requisite proportion of Outstanding Securities of
that series have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the Outstanding Securities
of that series shall be computed as of the record date; provided, however, that no such
authorization, agreement or consent by such Securityholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
SECTION 9.02 Proof of Execution by Securityholders.
Subject to the provisions of Section 8.01, proof of the execution of any instrument by a
Securityholder (such proof will not require notarization) or his agent or proxy and proof of the
holding by any Person of any of the Securities shall be sufficient if made in the following manner:
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(a) The fact and date of the execution by any such Person of any instrument may be proved in
any reasonable manner acceptable to the Trustee.
(b) The ownership of Securities shall be proved by the Security Register of such Securities or
by a certificate of the Security Registrar thereof.
(c) The Trustee may require such additional proof of any matter referred to in this Section as
it shall deem necessary.
SECTION 9.03 Who May be Deemed Owners.
Prior to the due presentment for registration of transfer of any Security, the Company, the
Trustee, any paying agent and any Security Registrar may deem and treat the Person in whose name
such Security shall be registered upon the books of the Company as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership
or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal of (and premium, if any) and (subject to Section 3.03)
interest on such Security and for all other purposes; and neither the Company nor the Trustee nor
any paying agent nor any Security Registrar shall be affected by any notice to the contrary.
SECTION 9.04 Certain Securities Owned by Company Disregarded.
In determining whether the holders of the requisite aggregate principal amount of Securities
of a particular series have concurred in any direction, consent or waiver under this Indenture, the
Securities of that series that are owned by the Company or any other obligor on the Securities of
that series or by any Person directly or indirectly controlling or controlled by or under common
control with the Company or any other obligor on the Securities of that series shall be disregarded
and deemed not to be Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any such direction,
consent or waiver, only Securities of such series that the Trustee actually knows are so owned
shall be so disregarded. The Securities so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the
satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that
the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other obligor. In case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 9.05 Actions Binding on Future Securityholders.
At any time prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the majority or percentage in aggregate
principal amount of the Securities of a particular series specified in this Indenture in connection
with such action, any holder of a Security of that series that is shown by the evidence to be
included in the Securities the holders of which have consented to such action may, by filing
written notice with the Trustee, and upon proof of holding as provided in Section 9.02, revoke such
action so far as concerns such Security. Except as aforesaid any such action taken by the holder of
any Security shall be conclusive and binding upon such holder and upon all future holders and
owners of such Security, and of any Security issued in exchange therefor, on registration of
transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto
is made upon such Security. Any action taken by the holders of the majority or percentage in
aggregate principal amount of the Securities of a particular series specified in this Indenture in
connection with such action shall be conclusively binding upon the Company, the Trustee and the
holders of all the Securities of that series.
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ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01 Supplemental Indentures Without the Consent of Securityholders.
In addition to any supplemental indenture otherwise authorized by this Indenture, the Company
and the Trustee may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in
effect), without the consent of the Securityholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency herein or in the Securities of any series;
(b) to comply with Article Eleven;
(c) to provide for uncertificated Securities in addition to or in place of certificated
Securities;
(d) to add to the covenants of the Company for the benefit of the holders of all or any series
of Securities (and if such covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company;
(e) to add to, delete from or revise the conditions, limitations and restrictions on the
authorized amount, terms, purposes of issue, authentication and delivery of Securities, as herein
set forth;
(f) to make any change that does not adversely affect the rights of any Securityholder in any
material respect; or
(g) to provide for the issuance of and establish the form and terms and conditions of the
Securities of any series as provided in Section 3.01, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or any series of Securities, or to
add to the rights of the holders of any series of Securities.
The Trustee is hereby authorized to join with the Company in the execution of any such
supplemental indenture, and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into any such supplemental
indenture that affects the Trustees own rights, duties or immunities under this Indenture or
otherwise.
Any supplemental indenture authorized by the provisions of this Section may be executed by the
Company and the Trustee without the consent of the holders of any of the Securities at the time
Outstanding, notwithstanding any of the provisions of Section 10.02.
SECTION 10.02 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Section 9.01) of the holders of not less than a
majority in aggregate principal amount of the Securities of each series affected by such
supplemental indenture or indentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as
then in effect) 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 not covered by Section 10.01
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the rights of the holders of the Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the holders of each Security then
Outstanding and affected thereby, (i) extend the fixed maturity of any Securities of any series, or
reduce the principal amount thereof, or reduce the rate of interest thereon, or reduce any premium
payable upon the redemption thereof or (ii) reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders of any series affected
thereby under this Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
SECTION 10.03 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions of this Article or
of Section 11.01, this Indenture shall, with respect to such series, be and be deemed to be
modified and amended in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders
of Securities of the series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 10.04 Securities Affected by Supplemental Indentures.
Securities of any series affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of this Article or of
Section 11.01, may bear a notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities of that series so
modified as to conform, in the opinion of the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Securities of that series then
Outstanding.
SECTION 10.05 Execution of Supplemental Indentures.
Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of
any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of
Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company
in the execution of such supplemental indenture unless such supplemental indenture affects the
Trustees own rights, duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture.
The Trustee, subject to the provisions of Section 8.01, may receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized
or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee
under the provisions of this Article to join in the execution thereof; provided, however, that such
Opinion of Counsel need not be provided in connection with the execution of a supplemental
indenture that establishes the terms of a series of Securities pursuant to Section 3.01 hereof.
Promptly after the execution by the Company and the Trustee of any supplemental indenture
pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage
prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to
the Securityholders of all series affected thereby as their names and addresses appear upon the
Security Register. Any failure
32
of the Trustee to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
ARTICLE XI
SUCCESSOR ENTITY
SECTION 11.01 Company May Consolidate, Etc.
Nothing contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other Person (whether or not affiliated
with the Company) or successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other
disposition of the property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not affiliated with the Company
or its successor or successors) authorized to acquire and operate the same; provided, however, the
Company hereby covenants and agrees that, upon any such consolidation or merger (in each case, if
the Company is not the survivor of such transaction), sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of (premium, if any) and interest on all
of the Securities of all series in accordance with the terms of each series, according to their
tenor and the due and punctual performance and observance of all the covenants and conditions of
this Indenture with respect to each series or established with respect to such series pursuant to
Section 3.01 to be kept or performed by the Company shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by
such consolidation, or into which the Company shall have been merged, or by the entity which shall
have acquired such property.
SECTION 11.02 Successor Entity Substituted.
(a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition
and upon the assumption by the successor entity by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the
principal of (and premium, if any) and interest on all of the Securities of all series Outstanding
and the due and punctual performance of all of the covenants and conditions of this Indenture or
established with respect to each series of the Securities pursuant to Section 3.01 to be performed
by the Company with respect to each series, such successor entity shall succeed to and be
substituted for the Company with the same effect as if it had been named as the Company herein, and
thereupon the predecessor corporation shall be relieved of all obligations and covenants under this
Indenture and the Securities.
(b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition
such changes in phraseology and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.
(c) Nothing contained in this Article shall apply to limit or impose any requirements upon the
consolidation or merger of any Person into the Company where the Company is the survivor of such
transaction, or the acquisition by the Company, by purchase or otherwise, of all or any part of the
property of any other Person (whether or not affiliated with the Company).
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SECTION 11.03 Evidence of Consolidation, Etc. to Trustee.
The Trustee, subject to the provisions of Section 8.01, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other
disposition, and any such assumption, comply with the provisions of this Article.
ARTICLE XII
SATISFACTION AND DISCHARGE
SECTION 12.01 Satisfaction and Discharge of Indenture.
If at any time: (a) the Company shall have delivered to the Trustee for cancellation all
Securities of a series theretofore authenticated (other than any Securities that have been
destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.07) and
Securities for whose payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to the Company or
discharged from such trust, as provided in Section 12.05); or (b) all such Securities of a
particular series not theretofore delivered to the Trustee for cancellation shall have become due
and payable, or are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as
trust funds the entire amount in moneys or Governmental Obligations or a combination thereof,
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 at maturity or upon
redemption all Securities of that series not theretofore delivered to the Trustee for cancellation,
including principal (and premium, if any) and interest due or to become due to such date of
maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder with respect to such series by the Company then
this Indenture shall thereupon cease to be of further effect with respect to such series except for
the provisions of Sections 3.03, 3.05, 3.07, 5.01, 5.02, 5.03 and 8.10, that shall survive until
the date of maturity or redemption date, as the case may be, and Sections 8.06 and 12.05, that
shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the
cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture with respect to such series.
SECTION 12.02 Discharge of Obligations.
If at any time all such Securities of a particular series not heretofore delivered to the
Trustee for cancellation or that have not become due and payable as described in Section 12.01
shall have been paid by the Company by depositing irrevocably with the Trustee as trust funds
moneys or an amount of Governmental Obligations sufficient to pay at maturity or upon redemption
all such Securities of that series not theretofore delivered to the Trustee for cancellation,
including principal (and premium, if any) and interest due or to become due to such date of
maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company with respect to such series, then
after the date such moneys or Governmental Obligations, as the case may be, are deposited with the
Trustee the obligations of the Company under this Indenture with respect to such series shall cease
to be of further effect except for the provisions of Sections 3.03, 3.05, 3.07, 5.01, 5.02, 5.03,
8.06, 8.10 and 12.05 hereof that shall survive until such Securities shall mature and be paid.
Thereafter, Sections 8.06 and 12.05 shall survive.
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SECTION 12.03 Deposited Moneys to be Held in Trust.
All moneys or Governmental Obligations deposited with the Trustee pursuant to Sections 12.01
or 12.02 shall be held in trust and shall be available for payment as due, either directly or
through any paying agent (including the Company acting as its own paying agent), to the holders of
the particular series of Securities for the payment or redemption of which such moneys or
Governmental Obligations have been deposited with the Trustee.
SECTION 12.04 Payment of Moneys Held by Paying Agents.
In connection with the satisfaction and discharge of this Indenture all moneys or Governmental
Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand
of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all
further liability with respect to such moneys or Governmental Obligations.
SECTION 12.05 Repayment to Company.
Any moneys or Governmental Obligations deposited with any paying agent or the Trustee, or then
held by the Company, in trust for payment of principal of (and premium, if any) or interest on the
Securities of a particular series that are not applied but remain unclaimed by the holders of such
Securities for at least two years after the date upon which the principal of (and premium, if any)
or interest on such Securities shall have respectively become due and payable, shall be repaid to
the Company or (if then held by the Company) shall be discharged from such trust; and thereupon the
paying agent and the Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the holder of any of the Securities entitled to receive
such payment shall thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01 No Recourse.
No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any
Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, past, present or future as such, of the Company or
of any predecessor or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood
that this Indenture and the obligations issued hereunder are solely corporate obligations, and that
no such personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or
successor corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such incorporator, stockholder,
officer or director as such, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this Indenture or in
any of the Securities or implied therefrom, are hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issuance of such
Securities.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01 Effect on Successors and Assigns.
All the covenants, stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 14.02 Actions by Successor.
Any act or proceeding by any provision of this Indenture authorized or required to be done or
performed by any board, committee or officer of the Company shall and may be done and performed
with like force and effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful successor of the Company.
SECTION 14.03 Notices.
Except as otherwise expressly provided herein any notice or demand that by any provision of
this Indenture is required or permitted to be given or served by the Trustee or by the holders of
Securities to or on the Company may be given or served by being deposited first class postage
prepaid in a post-office letterbox addressed (until another address is filed in writing by the
Company with the Trustee), as follows: [_____________]. Any notice, election, request or demand by
the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.
SECTION 14.04 Governing Law.
This Indenture and each Security shall be deemed to be a contract made under the internal laws
of the State of New York, and for all purposes shall be construed in accordance with the laws of
said State.
SECTION 14.05 Compliance Certificates and Opinions.
(a) Upon any application or demand by the Company to the Trustee to take any action under any
of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers
Certificate stating that all conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
(b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee
with respect to compliance with a condition or covenant in this Indenture shall include (1) a
statement that the Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based; (3) 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 (4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
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(c) The Company shall furnish to the Trustee, on [____________] of each year, a brief
certificate from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of such obligors compliance with all conditions and
covenants under this Indenture. For purposes of this subsection, such compliance shall be
determined without regard to any period of grace or requirement of notice provided hereunder.
SECTION 14.06 Payments on Business Days.
Except as provided pursuant to Section 3.01 pursuant to a Board Resolution, and as set forth
in an Officers Certificate, or established in one or more indentures supplemental to this
Indenture, in any case where the date of maturity of interest or principal of any Security or the
date of redemption of any Security shall not be a Business Day, then payment of interest or
principal (and premium, if any) may be made on the next succeeding Business Day with the same force
and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue
for the period after such nominal date.
SECTION 14.07 Conflict with Trust Indenture Act.
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 14.08 Counterparts.
This Indenture may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same instrument.
SECTION 14.09 Separability.
In case any one or more of the provisions contained in this Indenture or in the Securities of
any series shall for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provisions of this
Indenture or of such Securities, but this Indenture and such Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained herein or therein.
SECTION 14.10 Assignment.
The Company will have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in
the event of any such assignment, the Company will remain liable for all such obligations. Subject
to the foregoing, the Indenture is binding upon and inures to the benefit of the parties thereto
and their respective successors and assigns. This Indenture may not otherwise be assigned by the
parties thereto.
37
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as
of the day and year first above written.
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VANDA PHARMACEUTICALS INC.
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By: |
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Name: |
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Title: |
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[
],
as Trustee
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By: |
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Name: |
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Title: |
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exv4w7
Exhibit 4.7
FORM OF SUBORDINATED INDENTURE
VANDA PHARMACEUTICALS INC.
ISSUER
and
[ ],
TRUSTEE
INDENTURE
Dated as of [ ], 201[ ]
Subordinated Debt Securities
CROSS-REFERENCE TABLE (1)
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Section of Trust Indenture |
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Section of |
Act of 1939, as amended |
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Indenture |
310(a)
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7.09 |
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310(b)
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7.08 |
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7.10 |
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310(c)
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Inapplicable
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311(a)
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7.13 |
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311(b)
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7.13 |
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311(c)
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Inapplicable
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312(a)
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5.01 |
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5.02 |
(a) |
312(b)
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5.02 |
(c) |
312(c)
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5.02 |
(c) |
313(a)
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5.04 |
(a) |
313(b)
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5.04 |
(b) |
313(c)
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5.04 |
(a) |
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5.04 |
(b) |
313(d)
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5.04 |
(b) |
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5.04 |
(c) |
314(a)
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5.03 |
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13.05 |
(c) |
314(b)
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Inapplicable
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314(c)
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13.05 |
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314(d)
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Inapplicable
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314(e)
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13.05 |
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314(f)
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Inapplicable
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315(a)
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7.01 |
(b) |
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7.02 |
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315(b)
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5.04 |
(d) |
315(c)
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7.01 |
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315(d)
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7.01 |
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7.02 |
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315(e)
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6.07 |
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316(a)
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6.06 |
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8.04 |
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316(b)
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6.04 |
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316(c)
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8.01 |
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317(a)
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6.02 |
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317(b)
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4.03 |
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318(a)
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13.06 |
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(1) |
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This Cross-Reference Table does not constitute part of the Indenture and shall not have any
bearing on the interpretation of any of its terms or provisions. |
i
TABLE OF CONTENTS (2)
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ARTICLE I DEFINITIONS |
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1 |
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SECTION 1.01 Definitions of Terms |
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1 |
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ARTICLE II |
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4 |
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SECTION 2.01 Forms Generally |
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4 |
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SECTION 2.02 Form of Trustees Certificate of Authentication |
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5 |
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SECTION 2.03 Securities Issuable in Global Form |
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5 |
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ARTICLE III ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES |
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6 |
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SECTION 3.01 Designation and Terms of Securities |
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6 |
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SECTION 3.02 Form of Securities and Trustees Certificate |
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7 |
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SECTION 3.03 Denominations; Provisions for Payment |
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8 |
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SECTION 3.04 Execution and Authentications |
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9 |
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SECTION 3.05 Registration of Transfer and Exchange |
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9 |
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SECTION 3.06 Temporary Securities |
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10 |
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SECTION 3.07 Mutilated, Destroyed, Lost or Stolen Securities |
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11 |
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SECTION 3.08 Cancellation |
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11 |
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SECTION 3.09 Benefits of Indenture |
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12 |
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SECTION 3.10 Authenticating Agent |
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12 |
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SECTION 3.11 Global Securities |
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12 |
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ARTICLE IV REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS |
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13 |
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SECTION 4.01 Redemption |
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13 |
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SECTION 4.02 Notice of Redemption |
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13 |
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SECTION 4.03 Payment Upon Redemption |
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14 |
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SECTION 4.04 Sinking Fund |
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15 |
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SECTION 4.05 Satisfaction of Sinking Fund Payments with Securities |
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15 |
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SECTION 4.06 Redemption of Securities for Sinking Fund |
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15 |
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ARTICLE V COVENANTS |
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15 |
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SECTION 5.01 Payment of Principal, Premium and Interest |
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15 |
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SECTION 5.02 Maintenance of Office or Agency |
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16 |
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SECTION 5.03 Paying Agents |
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16 |
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SECTION 5.04 Appointment to Fill Vacancy in Office of Trustee |
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17 |
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ARTICLE VI SECURITYHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE |
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17 |
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SECTION 6.01 Company to Furnish Trustee Names and Addresses of Securityholders |
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17 |
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SECTION 6.02 Preservation Of Information; Communications With Securityholders |
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17 |
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SECTION 6.03 Reports by the Company |
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17 |
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SECTION 6.04 Reports by the Trustee |
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18 |
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ARTICLE VII REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT |
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19 |
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SECTION 7.01 Events of Default |
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19 |
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SECTION 7.02 Suits for Enforcement by Trustee |
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20 |
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SECTION 7.03 Application of Moneys Collected |
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21 |
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ii
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SECTION 7.04 Limitation on Suits |
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21 |
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SECTION 7.05 Rights and Remedies Cumulative; Delay or Omission Not Waiver |
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22 |
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SECTION 7.06 Control by Securityholders |
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SECTION 7.07 Undertaking to Pay Costs |
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23 |
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ARTICLE VIII CONCERNING THE TRUSTEE |
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23 |
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SECTION 8.01 Certain Duties and Responsibilities of Trustee |
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23 |
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SECTION 8.02 Certain Rights of Trustee |
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24 |
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SECTION 8.03 Trustee Not Responsible for Recitals or Issuance or Securities |
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SECTION 8.04 May Hold Securities |
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SECTION 8.05 Moneys Held in Trust |
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25 |
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SECTION 8.06 Compensation and Reimbursement |
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26 |
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SECTION 8.07 Reliance on Officers Certificate |
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26 |
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SECTION 8.08 Disqualification; Conflicting Interests |
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26 |
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SECTION 8.09 Corporate Trustee Required; Eligibility |
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26 |
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SECTION 8.10 Resignation and Removal; Appointment of Successor |
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27 |
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SECTION 8.11 Acceptance of Appointment By Successor |
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28 |
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SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business |
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29 |
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SECTION 8.13 Preferential Collection of Claims Against the Company |
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29 |
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ARTICLE IX CONCERNING THE SECURITYHOLDERS |
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29 |
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SECTION 9.01 Evidence of Action by Securityholders |
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29 |
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SECTION 9.02 Proof of Execution by Securityholders |
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30 |
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SECTION 9.03 Who May be Deemed Owners |
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30 |
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SECTION 9.04 Certain Securities Owned by Company Disregarded |
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30 |
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SECTION 9.05 Actions Binding on Future Securityholders |
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30 |
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ARTICLE X SUPPLEMENTAL INDENTURES |
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31 |
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SECTION 10.01 Supplemental Indentures Without the Consent of Securityholders |
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31 |
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SECTION 10.02 Supplemental Indentures With Consent of Securityholders |
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32 |
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SECTION 10.03 Effect of Supplemental Indentures |
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32 |
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SECTION 10.04 Securities Affected by Supplemental Indentures |
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32 |
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SECTION 10.05 Execution of Supplemental Indentures |
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32 |
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ARTICLE XI SUCCESSOR ENTITY |
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33 |
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SECTION
11.01 Company May Consolidate, Etc. |
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33 |
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SECTION 11.02 Successor Entity Substituted |
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33 |
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SECTION 11.03 Evidence of Consolidation, Etc. to Trustee |
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34 |
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ARTICLE XII SATISFACTION AND DISCHARGE |
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34 |
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SECTION 12.01 Satisfaction and Discharge of Indenture |
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34 |
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SECTION 12.02 Discharge of Obligations |
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34 |
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SECTION 12.03 Deposited Moneys to be Held in Trust |
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35 |
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SECTION 12.04 Payment of Moneys Held by Paying Agents |
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35 |
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SECTION 12.05 Repayment to Company |
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35 |
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ARTICLE XIII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS |
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35 |
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SECTION 13.01 No Recourse |
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35 |
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iii
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ARTICLE XIV MISCELLANEOUS PROVISIONS |
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36 |
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SECTION 14.01 Effect on Successors and Assigns |
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36 |
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SECTION 14.02 Actions by Successor |
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36 |
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SECTION 14.03 Notices |
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36 |
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SECTION 14.04 Governing Law |
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36 |
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SECTION 14.05 Compliance Certificates and Opinions |
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36 |
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SECTION 14.06 Payments on Business Days |
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37 |
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SECTION 14.07 Conflict with Trust Indenture Act |
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37 |
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SECTION 14.08 Counterparts |
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37 |
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SECTION 14.09 Separability |
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37 |
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SECTION 14.10 Assignment |
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37 |
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ARTICLE XV SUBORDINATION OF SECURITIES |
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38 |
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SECTION 15.01 Subordination Terms |
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38 |
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(2) |
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This Table of Contents does not constitute part of the Indenture and shall not have any bearing
on the interpretation of any of its terms or provisions. |
iv
INDENTURE, dated as of [__________], 201[_], among Vanda Pharmaceuticals Inc., a Delaware
corporation (the Company), and [__________], as trustee (the Trustee):
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of unsecured subordinated debt securities
(hereinafter referred to as the Securities), in an unlimited aggregate principal amount to be
issued from time to time in one or more series as in this Indenture provided, as registered
Securities without coupons, to be authenticated by the certificate of the Trustee;
WHEREAS, to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered, the Company has duly authorized the execution of this
Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of the Securities by the
holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit
of the holders of Securities:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions of Terms.
The terms defined in this Section (except as in this Indenture otherwise expressly provided or
unless the context otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings specified in this Section and shall include
the plural as well as the singular. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, as amended, or that are by reference in such Act defined in the
Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture
Act and in said Securities Act as in force at the date of the execution of this instrument.
Authenticating Agent means an authenticating agent with respect to all or any of the series
of Securities appointed with respect to all or any series of the Securities by the Trustee pursuant
to Section 3.10.
Bankruptcy Law means Title 11, U.S. Code, or any similar federal or state law for the relief
of debtors.
Board of Directors means the Board of Directors of the Company or any duly authorized
committee of such Board.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification.
Business Day means, with respect to any series of Securities, any day other than a day on
which Federal or State banking institutions in the Borough of Manhattan, The City of New York, are
authorized or obligated by law, executive order or regulation to close.
Certificate means a certificate signed by the principal executive officer, the principal
financial officer or the principal accounting officer of the Company. The Certificate need not
comply with the provisions of Section 14.05.
Company means Vanda Pharmaceuticals Inc., a corporation duly organized and existing under
the laws of the State of Delaware, and, subject to the provisions of Article Eleven, shall also
include its successors and assigns.
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 [__________], except that whenever a provision herein refers to an office or agency of
the Trustee in the Borough of Manhattan, The City of New York, such office is located, at the date
hereof, at [__________].
Custodian means any receiver, trustee, assignee, liquidator, or similar official under any
Bankruptcy Law.
Default means any event, act or condition that with notice or lapse of time, or both, would
constitute an Event of Default.
Depositary means, with respect to Securities of any series, for which the Company shall
determine that such Securities will be issued as a Global Security, The Depository Trust Company,
New York, New York, another clearing agency, or any successor registered as a clearing agency under
the Securities Exchange Act of 1934, as amended (the Exchange Act), or other applicable statute
or regulation, which, in each case, shall be designated by the Company pursuant to either Section
3.01 or 3.11.
Event of Default means, with respect to Securities of a particular series any event
specified in Section 7.01, continued for the period of time, if any, therein designated.
Global Security means, with respect to any series of Securities, a Security executed by the
Company and delivered by the Trustee to the Depositary or pursuant to the Depositarys instruction,
all in accordance with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
Governmental Obligations means securities that 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 that, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to
any such Governmental Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of such depositary
receipt; provided, however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such depositary receipt.
Herein, hereof and hereunder, and other words of similar import, refer to this Indenture
as a whole and not to any particular Article, Section or other subdivision.
2
Indenture means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered into in accordance
with the terms hereof.
Interest Payment Date, when used with respect to any installment of interest on a Security
of a particular series, means the date specified in such Security or in a Board Resolution or in an
indenture supplemental hereto with respect to such series as the fixed date on which an installment
of interest with respect to Securities of that series is due and payable.
Officers Certificate means a certificate signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Controller or an Assistant Controller or the
Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance
with the terms hereof. Each such certificate shall include the statements provided for in Section
14.05, if and to the extent required by the provisions thereof.
Opinion of Counsel means an opinion in writing of legal counsel, who may be an employee of
or counsel for the Company, that is delivered to the Trustee in accordance with the terms hereof.
Each such opinion shall include the statements provided for in Section 14.05, if and to the extent
required by the provisions thereof.
Outstanding, when used with reference to Securities of any series, means, subject to the
provisions of Section 9.04, as of any particular time, all Securities of that series theretofore
authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore
canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Securities or portions thereof for the
payment or redemption of which moneys or Governmental Obligations in the necessary amount shall
have been deposited in trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that if such Securities or portions of such Securities are to
be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in
Article Four provided, or provision satisfactory to the Trustee shall have been made for giving
such notice; and (c) Securities in lieu of or in substitution for which other Securities shall have
been authenticated and delivered pursuant to the terms of Section 3.07.
Person means any individual, corporation, partnership, joint venture, joint-stock company,
unincorporated organization or government or any agency or political subdivision thereof.
Predecessor Security of any particular Security means every previous Security evidencing all
or a portion of the same debt as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under Section 3.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or
stolen Security.
Responsible Officer when used with respect to the Trustee means the Chairman of the Board of
Directors, the President, any Vice President, the Secretary, the Treasurer, any trust officer, any
corporate trust officer or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.
Securities means the debt Securities authenticated and delivered under this Indenture.
3
Securityholder, holder of Securities, registered holder or other similar term, means the
Person or Persons in whose name or names a particular Security shall be registered on the books of
the Company kept for that purpose in accordance with the terms of this Indenture.
Subsidiary means, with respect to any Person, (i) any corporation at least a majority of
whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (ii)
any general partnership, joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or by one or more of
its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general partner.
Trustee means [ ], and, subject to the provisions of Article Eight, shall also
include its successors and assigns, and, if at any time there is more than one Person acting in
such capacity hereunder, Trustee shall mean each such Person. The term Trustee as used with
respect to a particular series of the Securities shall mean the trustee with respect to that
series.
Trust Indenture Act means the Trust Indenture Act of 1939, as amended, or any successor
statute.
Voting Stock, as applied to stock of any Person, means shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of such Person, other
than shares, interests, participations or other equivalents having such power only by reason of the
occurrence of a contingency.
ARTICLE II
SECURITY FORMS
SECTION 2.01 Forms Generally
The Securities, if any, to be endorsed thereon shall be in substantially the forms as shall be
established by, or pursuant to a Board Resolution or, subject to Section 3.04, set forth in, or
determined in the manner provided in, an Officers Certificate pursuant to a Board Resolution of
the Company, or in one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers of the Company executing such
Securities or coupons, as evidenced by their execution of the Securities or coupons. If the forms
of Securities or coupons of any series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or
Assistant Secretary of the Company, and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.04 for the authentication and delivery of such Securities
or coupons. Any portion of the text of any Security may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Security.
Unless otherwise specified as contemplated by Section 3.01, Securities in bearer form shall
have interest coupons attached.
The Trustees certificate of authentication on all Securities shall be in substantially the
form set forth in this Article.
4
The definitive Securities and coupons, if any, including the Guarantees, if any, shall be
printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner,
all as determined by the officers of the Company or the Guarantor, as the case may be, executing
such Securities, coupons or Guarantees, as evidenced by their execution of such Securities, coupons
or Guarantees.
SECTION 2.02 Form of Trustees Certificate of Authentication.
Subject to Section 3.10, the Trustees certificate of authentication shall be in substantially
the following form:
TRUSTEES CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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as Trustee |
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By: |
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Authorized Officer
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SECTION 2.03 Securities Issuable in Global Form
If Securities are issuable as a Global Security, as specified as contemplated by Section 3.01,
then, notwithstanding clause (10) of Section 3.01, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from time to time endorsed
thereon and that the aggregate amount of Outstanding Securities of such series represented thereby
may from time to time be increased or decreased to reflect exchanges. Any endorsement of a Global
Security to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and upon instructions
given by such Person or Persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 3.04 or Section 3.06. Subject to the provisions of
Section 3.04 and, if applicable, Section 3.06, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order pursuant to Section 3.04
or Section 3.06 has been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Global Security shall be in writing but need
not comply with Section 14.05 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 3.04 shall apply to any Security represented by
a Security in global form if such Security was never issued and sold by the Company and the Company
delivers to the Trustee the Security in global form together with written instructions (which need
not comply with Section 14.05 and need not be accompanied by an Opinion of Counsel) with regard to
the reduction in the principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of Section 3.04.
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Notwithstanding any provisions of Section 5.01 to the contrary, unless otherwise specified as
contemplated by Section 3.01, payment of principal of (and premium, if any) and interest, if any,
on any Security in permanent global form shall be made to the Person or Persons specified therein.
ARTICLE III
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
SECTION 3.01 Designation and Terms of Securities.
(a) 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 up to the aggregate
principal amount of Securities of that series from time to time authorized by or pursuant to a
Board Resolution of the Company or pursuant to one or more indentures supplemental hereto. Prior to
the initial issuance of Securities of any series, there shall be established in or pursuant to a
Board Resolution, and set forth in an Officers Certificate, or established in one or more
indentures supplemental hereto:
(1) the title of the Security of the series (which shall distinguish the Securities of the
series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of that series that 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 that
series);
(3) the date or dates on which the principal of the Securities of the series is payable and
the place(s) of payment;
(4) the rate or rates at which the Securities of the series shall bear interest or the manner
of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall accrue, the Interest Payment Dates on
which such interest will be payable or the manner of determination of such Interest Payment Dates,
the place(s) of payment, and the record date for the determination of holders to whom interest is
payable on any such Interest Payment Dates;
(6) the right, if any, to extend the interest payment periods and the duration of such
extension;
(7) the period or periods within which, the price or prices at which and the terms and
conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option
of the Company;
(8) the obligation, if any, of the Company to redeem or purchase Securities of the series
pursuant to any sinking fund or analogous provisions (including payments made in cash in
satisfaction of future sinking fund obligations) 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;
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(9) the form of the Securities of the series including the form of the certificate of
authentication for such series;
(10) if other than denominations of one thousand U.S. dollars ($1,000) or any integral
multiple thereof, the denominations in which the Securities of the series shall be issuable;
(11) any and all other terms with respect to such series (which terms shall not be
inconsistent with the terms of this Indenture, as amended by any supplemental indenture) including
any terms which may be required by or advisable under United States laws or regulations or
advisable in connection with the marketing of Securities of that series;
(12) whether the Securities are issuable as a Global Security and, in such case, the identity
of the Depositary for such series;
(13) whether the Securities will be convertible into shares of common stock or other
securities of the Company and, if so, the terms and conditions upon which such Securities will be
so convertible, including the conversion price and the conversion period;
(14) if other than the principal amount thereof, the portion of the principal amount of
Securities of the series which shall be payable upon declaration of acceleration of the maturity
thereof pursuant to Section 7.01;
(15) the subordination terms of the Securities of the series; and
(16) any additional or different Events of Default or restrictive covenants provided for with
respect to the Securities of the series.
All Securities of any one series shall be substantially identical except as to denomination
and except as may otherwise be provided in or pursuant to any such Board Resolution or in any
indentures supplemental hereto.
If any of the terms of the series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of
the Officers Certificate setting forth the terms of the series.
Securities of any particular series may be issued at various times, with different dates on
which the principal or any installment of principal is payable, with different rates of interest,
if any, or different methods by which rates of interest may be determined, with different dates on
which such interest may be payable and with different redemption dates.
SECTION 3.02 Form of Securities and Trustees Certificate.
The Securities of any series and the Trustees certificate of authentication to be borne by
such Securities shall be substantially of the tenor and purpose as set forth in one or more
indentures supplemental hereto or as provided in a Board Resolution and as set forth in an
Officers Certificate and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or
as may be required to comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Securities of that series may be listed,
or to conform to usage.
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SECTION 3.03 Denominations; Provisions for Payment.
The Securities shall be issuable as registered Securities and in the denominations of one
thousand U.S. dollars ($1,000) or any integral multiple thereof, subject to Section 3.01(10). The
Securities of a particular series shall bear interest payable on the dates and at the rate
specified with respect to that series. The principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be
payable in the coin or currency of the United States of America that at the time is legal tender
for public and private debt, at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, the City and State of New York. Each Security shall be dated the date of
its authentication. Interest on the Securities shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The interest installment on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date for Securities of that series shall be paid to the
Person in whose name said Security (or one or more Predecessor Securities) is registered at the
close of business on the regular record date for such interest installment. In the event that any
Security of a particular series or portion thereof is called for redemption and the redemption date
is subsequent to a regular record date with respect to any Interest Payment Date and prior to such
Interest Payment Date, interest on such Security will be paid upon presentation and surrender of
such Security, except as provided in Section 3.03.
Any interest on any Security that is payable, but is not punctually paid or duly provided for,
on any Interest Payment Date for Securities of the same series (herein called Defaulted Interest)
shall forthwith cease to be payable to the registered holder on the relevant regular record date by
virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its
election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on Securities to the Persons in
whose names such Securities (or their respective Predecessor Securities) are registered at the
close of business on a special record date for the payment of such Defaulted Interest, which shall
be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment,
and at the same time the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special
record date for the payment of such Defaulted Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company
of such special record date and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the special record date therefor to be
mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in
the Security Register (as hereinafter defined), not less than 10 days prior to such special record
date. Notice of the proposed payment of such Defaulted Interest and the special record date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names such Securities (or their respective Predecessor Securities) are registered on such
special record date.
(2) The Company may make payment of any Defaulted Interest on any Securities in any other
lawful manner not inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
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Unless otherwise set forth in a Board Resolution or one or more indentures supplemental hereto
establishing the terms of any series of Securities pursuant to Section 3.01 hereof, the term
regular record date as used in this Section with respect to a series of Securities with respect
to any Interest Payment Date for such series shall mean either the fifteenth day of the month
immediately preceding the month in which an Interest Payment Date established for such series
pursuant to Section 3.01 hereof shall occur, if such Interest Payment Date is the first day of a
month, or the last day of the month immediately preceding the month in which an Interest Payment
Date established for such series pursuant to Section 3.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Security of a series delivered under
this Indenture upon transfer of or in exchange for or in lieu of any other Security of such series
shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such
other Security.
SECTION 3.04 Execution and Authentications.
The Securities shall be signed on behalf of the Company by its President, or one of its Vice
Presidents, or its Treasurer, or one of its Assistant Treasurers, or its Secretary, or one of its
Assistant Secretaries, under its corporate seal attested by its Secretary or one of its Assistant
Secretaries. Signatures may be in the form of a manual or facsimile signature. The Company may use
the facsimile signature of any Person who shall have been a President or Vice President thereof, or
of any Person who shall have been a Secretary or Assistant Secretary thereof, notwithstanding the
fact that at the time the Securities shall be authenticated and delivered or disposed of such
Person shall have ceased to be the President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company. The seal of the Company may be in the form of a facsimile of such seal
and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. The Securities
may contain such notations, legends or endorsements required by law, stock exchange rule or usage.
Each Security shall be dated the date of its authentication by the Trustee.
A Security shall not be valid until authenticated manually by an authorized signatory of the
Trustee, or by an Authenticating Agent. Such signature shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder and that the holder
is entitled to the benefits of this Indenture. At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a written order of the Company for
the authentication and delivery of such Securities, signed by its President or any Vice President
and its Secretary or any Assistant Secretary, and the Trustee in accordance with such written order
shall authenticate and deliver such Securities.
In authenticating such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to
Section 8.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form
and terms thereof have been established in conformity with the provisions of this Indenture.
The Trustee shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustees own rights, duties or immunities
under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable
to the Trustee.
SECTION 3.05 Registration of Transfer and Exchange.
(a) Securities of any series may be exchanged upon presentation thereof at the office or
agency of the Company designated for such purpose in the Borough of Manhattan, the City and State
of
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New York, for other Securities of such series of authorized denominations, and for a like
aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental
charge in relation thereto, all as provided in this Section. In respect of any Securities so
surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office
or agency shall deliver in exchange therefor the Security or Securities of the same series that the
Securityholder making the exchange shall be entitled to receive, bearing numbers not
contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or agency designated for such
purpose in the Borough of Manhattan, the City and State of New York, or such other location
designated by the Company a register or registers (herein referred to as the Security Register)
in which, subject to such reasonable regulations as it may prescribe, the Company shall register
the Securities and the transfers of Securities as in this Article provided and which at all
reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of
registering Securities and transfer of Securities as herein provided shall be appointed as
authorized by Board Resolution (the Security Registrar).
Upon surrender for transfer of any Security at the office or agency of the Company designated
for such purpose, the Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new Security or Securities of
the same series as the Security presented for a like aggregate principal amount.
All Securities presented or surrendered for exchange or registration of transfer, as provided
in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by
a written instrument or instruments of transfer, in form satisfactory to the Company or the
Security Registrar, duly executed by the registered holder or by such holders duly authorized
attorney in writing.
(c) No service charge shall be made for any exchange or registration of transfer of
Securities, or issue of new Securities in case of partial redemption of any series, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge in relation
thereto, other than exchanges pursuant to Section 3.06, Section 4.03(b) and Section 10.04 not
involving any transfer.
(d) The Company shall not be required (1) to issue, exchange or register the transfer of any
Securities during a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of less than all the Outstanding Securities of the same series
and ending at the close of business on the day of such mailing, nor (2) to register the transfer of
or exchange any Securities of any series or portions thereof called for redemption. The provisions
of this Section 3.05 are, with respect to any Global Security, subject to Section 3.11 hereof.
SECTION 3.06 Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company may execute, and
the Trustee shall authenticate and deliver, temporary Securities (printed, lithographed or
typewritten) of any authorized denomination. Such temporary Securities shall be substantially in
the form of the definitive Securities in lieu of which they are issued, but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as may be determined
by the Company. Every temporary Security of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Securities of such series. Without unnecessary delay the
Company will execute and will furnish definitive Securities of such series and thereupon any or all
temporary Securities of such series may be surrendered in exchange therefor (without charge to the
holders), at the office or agency of the Company designated for the purpose in the Borough of
Manhattan, the City and State of New York, and the Trustee shall authenticate and such office or
agency shall deliver in exchange for such temporary Securities an equal aggregate
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principal amount of definitive Securities of such series, unless the Company advises the
Trustee to the effect that definitive Securities need not be executed and furnished until further
notice from the Company. Until so exchanged, the temporary Securities of such series shall be
entitled to the same benefits under this Indenture as definitive Securities of such series
authenticated and delivered hereunder.
SECTION 3.07 Mutilated, Destroyed, Lost or Stolen Securities.
In case any temporary or definitive Security shall become mutilated or be destroyed, lost or
stolen, the Company (subject to the next succeeding sentence) shall execute, and upon the Companys
request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Security of the
same series, bearing a number not contemporaneously outstanding, in exchange and substitution for
the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or
stolen. In every case the applicant for a substituted Security shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of them harmless, and,
in every case of destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicants
Security and of the ownership thereof. The Trustee may authenticate any such substituted Security
and deliver the same upon the written request or authorization of any officer of the Company. Upon
the issuance of any substituted Security, 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. In case any Security
that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company and the Trustee such security or indemnity as they may require
to save each of them harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and
of the ownership thereof.
Every replacement Security issued pursuant to the provisions of this Section shall constitute
an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost
or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and all other Securities
of the same series duly issued hereunder. All Securities shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and
all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 3.08 Cancellation.
All Securities surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for
cancellation, or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall
be issued in lieu thereof except as expressly required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the Trustee shall deliver
to the Company canceled Securities held by the Trustee. In the absence of such request the Trustee
may dispose of canceled Securities in accordance with its standard procedures and deliver a
certificate of disposition to the Company. If the Company shall otherwise acquire any of the
Securities, however, such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are delivered to the Trustee
for cancellation.
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SECTION 3.09 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give or be construed
to give to any Person, other than the parties hereto and the holders of the Securities (and, with
respect to the provisions of Article Fifteen, the holders of Senior Indebtedness), any legal or
equitable right, remedy or claim under or in respect of this Indenture, or under any covenant,
condition or provision herein contained; all such covenants, conditions and provisions being for
the sole benefit of the parties hereto and of the holders of the Securities (and, with respect to
the provisions of Article Fifteen, the holders of Senior Indebtedness).
SECTION 3.10 Authenticating Agent.
So long as any of the Securities of any series remain Outstanding there may be an
Authenticating Agent for any or all such series of Securities which the Trustee shall have the
right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, transfer or partial redemption
thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All
references in this Indenture to the authentication of Securities by the Trustee shall be deemed to
include authentication by an Authenticating Agent for such series. Each Authenticating Agent shall
be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as
most recently reported or determined by it, sufficient under the laws of any jurisdiction under
which it is organized or in which it is doing business to conduct a trust business, and that is
otherwise authorized under such laws to conduct such business and is subject to supervision or
examination by Federal or State authorities. If at any time any Authenticating Agent shall cease to
be eligible in accordance with these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the
Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall)
terminate the agency of any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility
of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent
acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder
as if originally named as an Authenticating Agent pursuant hereto.
SECTION 3.11 Global Securities.
(a) If the Company shall establish pursuant to Section 3.01 that the Securities of a
particular series are to be issued as a Global Security, then the Company shall execute and the
Trustee shall, in accordance with Section 3.04, authenticate and deliver, a Global Security that
(1) shall represent, and shall be denominated in an amount equal to the aggregate principal amount
of, all of the Outstanding Securities of such series, (2) shall be registered in the name of the
Depositary or its nominee, (3) shall be delivered by the Trustee to the Depositary or pursuant to
the Depositarys instruction and (4) shall bear a legend substantially to the following effect:
Except as otherwise provided in Section 3.11 of the Indenture, this Security may be transferred,
in whole but not in part, only to another nominee of the Depositary or to a successor Depositary or
to a nominee of such successor Depositary.
(b) Notwithstanding the provisions of Section 3.05, the Global Security of a series may be
transferred, in whole but not in part and in the manner provided in Section 3.05, only to another
nominee of the Depositary for such series, or to a successor Depositary for such series selected or
approved by the Company or to a nominee of such successor Depositary.
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(c) If at any time the Depositary for a series of the Securities notifies the Company that it
is unwilling or unable to continue as Depositary for such series or if at any time the Depositary
for such series shall no longer be registered or in good standing under the Exchange Act, or other
applicable statute or regulation, and a successor Depositary for such series is not appointed by
the Company within 90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, this Section 3.11 shall no longer be applicable to the Securities of
such series and the Company will execute and, subject to Section 3.05, the Trustee will
authenticate and deliver the Securities of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global Security. In addition, the
Company may at any time determine that the Securities of any series shall no longer be represented
by a Global Security and that the provisions of this Section 3.11 shall no longer apply to the
Securities of such series. In such event the Company will execute and, subject to Section 3.05, the
Trustee, upon receipt of an Officers Certificate evidencing such determination by the Company,
will authenticate and deliver the Securities of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global Security. Upon the
exchange of the Global Security for such Securities in definitive registered form without coupons,
in authorized denominations, the Global Security shall be canceled by the Trustee. Such Securities
in definitive registered form issued in exchange for the Global Security pursuant to this Section
3.11(c) shall be registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.
ARTICLE IV
REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS
SECTION 4.01 Redemption.
The Company may redeem the Securities of any series issued hereunder on and after the dates
and in accordance with the terms established for such series pursuant to Section 3.01 hereof.
SECTION 4.02 Notice of Redemption.
(a) In case the Company shall desire to exercise such right to redeem all or, as the case may
be, a portion of the Securities of any series in accordance with the right reserved so to do, the
Company shall, or shall cause the Trustee to, give notice of such redemption to holders of the
Securities of such series to be redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 90 days before the date fixed for redemption of
that series to such holders at their last addresses as they shall appear upon the Security Register
unless a shorter period is specified in the Securities to be redeemed. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have been duly given, whether or not
the registered holder receives the notice. In any case, failure duly to give such notice to the
holder of any Security of any series designated for redemption in whole or in part, or any defect
in the notice, shall not affect the validity of the proceedings for the redemption of any other
Securities of such series or any other series. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers Certificate
evidencing compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for redemption and the redemption
price at which Securities of that series are to be redeemed, and shall state that payment of the
redemption price of such Securities to be redeemed will be made at the office or agency of the
Company in the
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Borough of Manhattan, the City and State of New York, upon presentation and surrender of such
Securities, that interest accrued to the date fixed for redemption will be paid as specified in
said notice, that from and after said date interest will cease to accrue and that the redemption is
for a sinking fund, if such is the case. If less than all the Securities of a series are to be
redeemed, the notice to the holders of Securities of that series to be redeemed in whole or in part
shall specify the particular Securities to be so redeemed. In case any Security is to be redeemed
in part only, the notice that relates to such Security shall state the portion of the principal
amount thereof to be redeemed, and shall state that on and after the redemption date, upon
surrender of such Security, a new Security or Securities of such series in principal amount equal
to the unredeemed portion thereof will be issued.
(b) If less than all the Securities of a series are to be redeemed, the Company shall give the
Trustee at least 45 days notice in advance of the date fixed for redemption as to the aggregate
principal amount of Securities of the series to be redeemed, and thereupon the Trustee shall
select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and
that may provide for the selection of a portion or portions (equal to one thousand U.S. dollars
($1,000) or any integral multiple thereof) of the principal amount of such Securities of a
denomination larger than $1,000, the Securities to be redeemed and shall thereafter promptly notify
the Company in writing of the numbers of the Securities to be redeemed, in whole or in part. The
Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by
its President or any Vice President, instruct the Trustee or any paying agent to call all or any
part of the Securities of a particular series for redemption and to give notice of redemption in
the manner set forth in this Section, such notice to be in the name of the Company or its own name
as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption
is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such
Security Register, transfer books or other records, or suitable copies or extracts therefrom,
sufficient to enable the Trustee or such paying agent to give any notice by mail that may be
required under the provisions of this Section.
SECTION 4.03 Payment Upon Redemption.
(a) If the giving of notice of redemption shall have been completed as above provided, the
Securities or portions of Securities of the series to be redeemed specified in such notice shall
become due and payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for redemption and interest on
such Securities or portions of Securities shall cease to accrue on and after the date fixed for
redemption, unless the Company shall default in the payment of such redemption price and accrued
interest with respect to any such Security or portion thereof. On presentation and surrender of
such Securities on or after the date fixed for redemption at the place of payment specified in the
notice, said Securities shall be paid and redeemed at the applicable redemption price for such
series, together with interest accrued thereon to the date fixed for redemption (but if the date
fixed for redemption is an interest payment date, the interest installment payable on such date
shall be payable to the registered holder at the close of business on the applicable record date
pursuant to Section 3.03).
(b) Upon presentation of any Security of such series that is to be redeemed in part only, the
Company shall execute and the Trustee shall authenticate and the office or agency where the
Security is presented shall deliver to the holder thereof, at the expense of the Company, a new
Security of the same series of authorized denominations in principal amount equal to the unredeemed
portion of the Security so presented.
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SECTION 4.04 Sinking Fund.
The provisions of Sections 4.04, 4.05 and 4.06 shall be applicable to any sinking fund for the
retirement of Securities of a series, except as otherwise specified as contemplated by Section 3.01
for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any
series is herein referred to as a mandatory sinking fund payment, and any payment in excess of
such minimum amount provided for by the terms of Securities of any 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 4.05.
Each sinking fund payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 4.05 Satisfaction of Sinking Fund Payments with Securities.
The Company (a) may deliver Outstanding Securities of a series (other than any Securities
previously called for redemption) and (b) may apply as a credit Securities of a series that have
been redeemed either at the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of such series required to be made pursuant to the terms of such
Securities, provided that such Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at the redemption 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.
SECTION 4.06 Redemption of Securities for Sinking Fund.
Not less than 45 days 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 sinking fund payment for that series pursuant to the terms of the series, the portion
thereof, if any, that is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 4.05 and the basis for such credit and will, together with such Officers
Certificate, deliver to the Trustee any Securities to be so delivered. Not less than 30 days 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 4.02 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 4.02. Such notice having been duly given, the redemption of such Securities
shall be made upon the terms and in the manner stated in Section 4.03.
ARTICLE V
COVENANTS
SECTION 5.01 Payment of Principal, Premium and Interest.
The Company will duly and punctually pay or cause to be paid the principal of (and premium, if
any) and interest on the Securities of that series at the time and place and in the manner provided
herein and established with respect to such Securities.
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SECTION 5.02 Maintenance of Office or Agency.
So long as any series of the Securities remain Outstanding, the Company agrees to maintain an
office or agency in the Borough of Manhattan, the City and State of New York, with respect to each
such series and at such other location or locations as may be designated as provided in this
Section 5.02, where (a) Securities of that series may be presented for payment, (b) Securities of
that series may be presented as herein above authorized for registration of transfer and exchange,
and (c) notices and demands to or upon the Company in respect of the Securities of that series and
this Indenture may be given or served, such designation to continue with respect to such office or
agency until the Company shall, by written notice signed by its President or a Vice President and
delivered to the Trustee, designate some other office or agency for such purposes or any of them.
If at any time the Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, 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, notices and demands.
SECTION 5.03 Paying Agents.
(a) If the Company shall appoint one or more paying agents for all or any series of the
Securities, other than the Trustee, the Company will cause each such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to
the provisions of this Section:
(1) that it will hold all sums held by it as such agent for the payment of the principal of
(and premium, if any) or interest on the Securities of that series (whether such sums have been
paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of
the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company (or by any other
obligor of such Securities) to make any payment of the principal of (and premium, if any) or
interest on the Securities of that series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure referred to in the
preceding paragraph (a)(2) above, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent; and
(4) that it will perform all other duties of paying agent as set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to any series of the
Securities, it will on or before each due date of the principal of (and premium, if any) or
interest on Securities of that series, set aside, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay such principal (and premium, if any) or
interest so becoming due on Securities of that series until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or
any failure (by it or any other obligor on such Securities) to take such action. Whenever the
Company shall have one or more paying agents for any series of Securities, it will, prior to each
due date of the principal of (and premium, if any) or interest on any Securities of that series,
deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will
promptly notify the Trustee of this action or failure so to act.
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(c) Notwithstanding anything in this Section to the contrary, (1) the agreement to hold sums
in trust as provided in this Section is subject to the provisions of Section 12.05, and (2) the
Company may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the
same terms and conditions as those upon which such sums were held by the Company or such paying
agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be
released from all further liability with respect to such money.
SECTION 5.04 Appointment to Fill Vacancy in Office of Trustee.
The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a
Trustee hereunder.
ARTICLE VI
SECURITYHOLDERS LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 6.01 Company to Furnish Trustee Names and Addresses of Securityholders.
The Company will furnish or cause to be furnished to the Trustee (a) on each regular record
date (as defined in Section 3.03) a list, in such form as the Trustee may reasonably require, of
the names and addresses of the holders of each series of Securities as of such regular record date,
provided that the Company shall not be obligated to furnish or cause to be furnished such list at
any time that the list shall not differ in any respect from the most recent list furnished to the
Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30
days after the receipt by the Company of any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list is furnished; provided, however, that, in
either case, no such list need be furnished for any series for which the Trustee shall be the
Security Registrar.
SECTION 6.02 Preservation Of Information; Communications With Securityholders.
(a) The Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Securities contained in the most recent
list furnished to it as provided in Section 6.01 and as to the names and addresses of holders of
Securities received by the Trustee in its capacity as Security Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt
of a new list so furnished.
(c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act
with other Securityholders with respect to their rights under this Indenture or under the
Securities. The Company, the Trustee, the Security Registrar and any other Person shall have the
protection of the Trust Indenture Act Section 312(c).
SECTION 6.03 Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of the annual reports and of the
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information, documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that the Company may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act;
or, if the Company is not required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the supplementary and periodic
information, documents and reports that may be required pursuant to Section 13 of the Exchange Act,
in respect of a security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from to time by the Commission, such
additional information, documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or
reputable overnight delivery service that provides for evidence of receipt, to the Securityholders,
as their names and addresses appear upon the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission.
SECTION 6.04 Reports by the Trustee.
(a) On or before [__________] in each year in which any of the Securities are Outstanding, the
Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names
and addresses appear upon the Security Register, a brief report dated as of the preceding
[__________], if and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust Indenture Act.
(c) A copy of each such report shall, at the time of such transmission to Securityholders, be
filed by the Trustee with the Company, with each stock exchange upon which any Securities are
listed (if so listed) and also with the Commission. The Company agrees to notify the Trustee when
any Securities become listed on any stock exchange.
(d) If an Event of Default occurs and is continuing and the Trustee receives actual notice of
such Event of Default, the Trustee shall mail to each Securityholder notice of the uncured Event of
Default within 90 days after the occurrence thereof. Except in the case of an Event of Default in
payment of principal of, or interest on, any Securities, or in the payment of any sinking or
purchase fund installment, the Trustee may withhold the notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in the interest of the
Securityholder.
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ARTICLE VII
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 7.01 Events of Default.
(a) Whenever used herein with respect to Securities of a particular series, Event of Default
means any one or more of the following events that has occurred and is continuing:
(1) the Company defaults in the payment of any installment of interest upon any of the
Securities of that series, as and when the same shall become due and payable, and such default
continues for a period of 30 days; provided, however, that a valid extension of an interest payment
period by the Company in accordance with the terms of any indenture supplemental hereto, shall not
constitute a default in the payment of interest for this purpose;
(2) the Company defaults in the payment of the principal of (or premium, if any, on) any of
the Securities of that series as and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking
or analogous fund established with respect to that series; provided, however, that a valid
extension of the maturity of such Securities in accordance with the terms of any indenture
supplemental hereto shall not constitute a default in the payment of principal or premium, if any;
(3) the Company fails to observe or perform any other of its covenants or agreements with
respect to that series contained in this Indenture or otherwise established with respect to that
series of Securities pursuant to Section 3.01 hereof (other than a covenant or agreement that has
been expressly included in this Indenture solely for the benefit of one or more series of
Securities other than such series) for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such notice is a Notice of
Default hereunder, shall have been given to the Company by the Trustee, by registered or certified
mail, or to the Company and the Trustee by the holders of a majority in principal amount of the
Securities of that series at the time Outstanding;
(4) 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 or (iv) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order under any Bankruptcy Law that (i) is for
relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company 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.
(b) In each and every such case, unless the principal of all the Securities of that series
shall have already become due and payable, either the Trustee or the holders of a majority in
aggregate principal amount of the Securities of that series then Outstanding hereunder, by notice
in writing to the Company (and to the Trustee if given by such Securityholders), may declare the
principal of all the Securities of that series to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable.
(c) At any time after the principal of the Securities of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of the moneys due shall
have been obtained or entered as hereinafter provided, the holders of a majority in aggregate
principal amount of the
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Securities of that series then Outstanding hereunder, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company
has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest
upon all the Securities of that series and the principal of (and premium, if any, on) all
Securities of that series that shall have become due otherwise than by acceleration (with interest
upon such principal and premium, if any, and, to the extent that such payment is enforceable under
applicable law, upon overdue installments of interest, at the rate per annum expressed in the
Securities of that series to the date of such payment or deposit) and any amount payable to the
Trustee under Section 8.06, and (2) any and all other Events of Default under the Indenture with
respect to such series, other than the nonpayment of principal on Securities of that series that
shall not have become due by their terms, shall have been remedied or waived as provided in Section
7.06.
No such rescission and annulment shall extend to or shall affect any subsequent default or
impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with respect to Securities
of that series under this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case, subject to any determination in such
proceedings, the Company and the Trustee shall be restored respectively to their former positions
and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall
continue as though no such proceedings had been taken.
SECTION 7.02 Suits for Enforcement by Trustee.
(a) If an Event of Default specified in Section 7.01(a)(1) or (2) hereof occurs and is
continuing, the Trustee, in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any action or proceedings at law or in equity for the collection of the sums
so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and
may enforce any such judgment or final decree against the Company or other obligor upon the
Securities of that series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or other obligor upon the Securities of that
series, wherever situated.
(b) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization,
readjustment, arrangement, composition or judicial proceedings affected the Company, or its
creditors or property, the Trustee shall have power to intervene in such proceedings and take any
action therein that may be permitted by the court and shall (except as may be otherwise provided by
law) be entitled to file such proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claims of the Trustee and of the holders of Securities of a series
allowed for the entire amount due and payable by the Company under this Indenture at the date of
institution of such proceedings and for any additional amount that may become due and payable by
the Company after such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of the amount payable
to the Trustee under Section 8.06; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of Securities of such series to make
such payments to the Trustee, and, in the event that the Trustee shall consent to the making of
such payments directly to such Securityholders, to pay to the Trustee any amount due it under
Section 8.06.
(c) All rights of action and of asserting claims under this Indenture, or under any of the
terms established with respect to Securities of a series, may be enforced by the Trustee without
the possession of any of such Securities, or the production thereof at any trial or other
proceeding relative thereto, and
20
any such suit or proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision for payment to the
Trustee of any amounts due under Section 8.06, be for the ratable benefit of the holders of the
Securities of such series.
In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or
in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture
or by law.
Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities of that series or the rights of any holder
thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any
such proceeding.
SECTION 7.03 Application of Moneys Collected.
Any moneys collected by the Trustee pursuant to this Article with respect to a particular
series of Securities shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal (or premium, if
any) or interest, upon presentation of the Securities of that series, and notation thereon the
payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all amounts payable to the
Trustee under Section 8.06;
SECOND: To the payment of all Senior Indebtedness of the Company if and to the extent required
by Article Fifteen; and
THIRD: To the payment of the amounts then due and unpaid upon Securities of such series for
principal (and premium, if any) and interest, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if any) and interest,
respectively.
SECTION 7.04 Limitation on Suits.
No holder of any Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or
under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (a) such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof with respect to the Securities of such
series specifying such Event of Default, as hereinbefore provided; (b) the holders of not less than
25% in aggregate principal amount of the Securities of such series then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in its own name as
trustee hereunder; (c) such holder or holders shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred therein or
thereby; (d) the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding; and (e) during such
60-day period, the holders of a majority in principal amount of the Securities of that series shall
not have given the Trustee a direction inconsistent with the request.
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Notwithstanding anything contained herein to the contrary, the right of any holder of any
Security to receive payment of the principal of (and premium, if any) and interest on such
Security, as therein provided, on or after the respective due dates expressed in such Security (or
in the case of redemption, on the redemption date), or to institute suit for the enforcement of any
such payment on or after such respective dates or redemption date, shall not be impaired or
affected without the consent of such holder. By accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Security of such series with
every other such taker and holder and the Trustee, that no one or more holders of Securities of
such series shall have any right in any manner whatsoever by virtue or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such
Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or
to enforce any right under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all holders of Securities of such series. For the protection and
enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
SECTION 7.05 Rights and Remedies Cumulative; Delay or Omission Not Waiver.
(a) Except as otherwise provided in Section 14.07, all powers and remedies given by this
Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or otherwise established
with respect to such Securities.
(b) No delay or omission of the Trustee or of any holder of any of the Securities to exercise
any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such default or on
acquiescence therein; and, subject to the provisions of Section 7.04, every power and remedy given
by this Article or by law to the Trustee or the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 7.06 Control by Securityholders.
The holders of a majority in aggregate principal amount of the Securities of any series at the
time Outstanding, determined in accordance with Section 9.01, 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 such series; provided,
however, that such direction shall not be in conflict with any rule of law or with this Indenture
or be unduly prejudicial to the rights of holders of Securities of any other series at the time
Outstanding determined in accordance with Section 9.01. Subject to the provisions of Section 8.01,
the Trustee shall have the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so
directed would involve the Trustee in personal liability. The holders of a majority in aggregate
principal amount of the Securities of any series at the time Outstanding affected thereby,
determined in accordance with Section 9.01, may on behalf of the holders of all of the Securities
of such series waive any past default in the performance of any of the covenants contained herein
or established pursuant to Section 3.01 with respect to such series and its consequences, except a
default in the payment of the principal of (or premium, if any) or interest on, any of the
Securities of that series as and when the same shall become due by the terms of such Securities
otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal and any premium has been deposited with the Trustee
(in accordance with Section 7.01(c)). Upon any such waiver, the default covered thereby shall be
deemed to be cured for all purposes of this
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Indenture and the Company, the Trustee and the holders of the Securities of such series shall
be restored to their former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent thereon.
SECTION 7.07 Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Securities by such holders
acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys fees, against any party
litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Securities
of any series, or to any suit instituted by any Securityholder for the enforcement of the payment
of the principal of (or premium, if any) or interest on any Security of such series, on or after
the respective due dates expressed in such Security or established pursuant to this Indenture.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01 Certain Duties and Responsibilities of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default with respect to the Securities
of a series and after the curing of all Events of Default with respect to the Securities of that
series that may have occurred, shall undertake to perform with respect to the Securities of such
series such duties and only such duties as are specifically set forth in this Indenture, and no
implied covenants shall be read into this Indenture against the Trustee. In case an Event of
Default with respect to the Securities of a series has occurred (that has not been cured or
waived), the Trustee shall exercise with respect to Securities of that series such of the rights
and powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in the conduct of his
own affairs.
(b) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct,
except that:
(1) prior to the occurrence of an Event of Default with respect to the Securities of a series
and after the curing or waiving of all such Events of Default with respect to that series that may
have occurred:
(i) the duties and obligations of the Trustee shall with respect to the Securities of such
series be determined solely by the express provisions of this Indenture, and the Trustee shall not
be liable with respect to the Securities of such series except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to
the Securities of such series conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions furnished to the
Trustee
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and conforming to the requirements of this Indenture; but in the case of any such certificates
or opinions that by any provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the holders of not less than a majority in
principal amount of the Securities of any series at the time Outstanding 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 that series; and
(4) none of the provisions contained in this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.
SECTION 8.02 Certain Rights of Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, security or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company, by
the President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee may consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of any action taken
or suffered or omitted hereunder in good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to
the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default with respect to a series of the Securities (that has not
been cured or waived) to exercise with respect to Securities of that series such of the rights and
powers vested in it by this Indenture, and to 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 his
own affairs;
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(e) The Trustee shall not be liable for any action taken or omitted to be taken by it in good
faith and believed by it to be authorized or within the discretion or rights or powers conferred
upon it by this Indenture;
(f) The Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, security or other papers or documents, unless requested in writing so to do
by the holders of not less than a majority in principal amount of the Outstanding Securities of the
particular series affected thereby (determined as provided in Section 9.04); provided, however,
that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities
as a condition to so proceeding. The reasonable expense of every such examination shall be paid by
the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and
(g) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
SECTION 8.03 Trustee Not Responsible for Recitals or Issuance or Securities.
(a) The recitals contained herein and in the Securities shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or sufficiency of this Indenture
or of the Securities.
(c) The Trustee shall not be accountable for the use or application by the Company of any of
the Securities or of the proceeds of such Securities, or for the use or application of any moneys
paid over by the Trustee in accordance with any provision of this Indenture or established pursuant
to Section 3.01, or for the use or application of any moneys received by any paying agent other
than the Trustee.
SECTION 8.04 May Hold Securities.
The Trustee or any paying agent or Security Registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it would have if it
were not Trustee, paying agent or Security Registrar.
SECTION 8.05 Moneys Held in Trust.
Subject to the provisions of Section 12.05, all moneys received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any moneys received by it hereunder except such as it may
agree with the Company to pay thereon.
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SECTION 8.06 Compensation and Reimbursement.
(a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled
to, such reasonable compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), as the Company and the Trustee may from time to
time agree in writing, for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties hereunder of the
Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all Persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from its negligence or
bad faith. The Company also covenants to indemnify the Trustee (and its officers, agents, directors
and employees) for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Securities upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of particular Securities.
SECTION 8.07 Reliance on Officers Certificate.
Except as otherwise provided in Section 8.01, whenever in the administration of the provisions
of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting to take any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers Certificate delivered to the Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee
for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 8.08 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire any conflicting interest within the meaning of Section
310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with
the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 8.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Securities issued hereunder which
shall at all times be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
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recent report of condition so published. The Company may not, nor may any Person directly or
indirectly controlling, controlled by or under common control with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the effect specified in
Section 8.10.
SECTION 8.10 Resignation and Removal; Appointment of Successor.
(a) The Trustee or any successor hereafter appointed, may at any time resign with respect to
the Securities of one or more series by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of
such series, as their names and addresses appear upon the Security Register. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee with respect to
Securities of such series by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a successor trustee with
respect to Securities of such series, or any Securityholder of that series who has been a bona fide
holder of a Security or Securities for at least six months may on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor trustee. Such court
may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any one of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of Section 8.08 after written request
therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.09
and shall fail to resign after written request therefor by the Company or by any such
Securityholder; or
(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its
property shall be appointed or consented to, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the Trustee with respect to all Securities and
appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months may, on behalf of that holder and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and the appointment of
a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the Securities of any series at
the time Outstanding may at any time remove the Trustee with respect to such series by so notifying
the Trustee and the Company and may appoint a successor Trustee for such series with the consent of
the Company.
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(d) Any resignation or removal of the Trustee and appointment of a successor trustee with
respect to the Securities of a series pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as provided in Section
8.11.
(e) Any successor trustee appointed pursuant to this Section may be appointed with respect to
the Securities of one or more series or all of such series, and at any time there shall be only one
Trustee with respect to the Securities of any particular series.
SECTION 8.11 Acceptance of Appointment By Successor.
(a) In case of the appointment hereunder of a successor trustee with respect to all
Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on the request of the Company or the successor
trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor trustee with respect to the Securities
of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee
with respect to the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment of such successor
trustee relates, (2) shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and that no Trustee shall be responsible for any
act or failure to act on the part of any other Trustee hereunder; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein, such retiring Trustee shall with respect to the
Securities of that or those series to which the appointment of such successor trustee relates have
no further responsibility for the exercise of rights and powers or for the performance of the
duties and obligations vested in the Trustee under this Indenture, and each such successor trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor trustee relates; but, on request of the Company or any
successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor
trustee, to the extent contemplated by such supplemental indenture, the property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those series to which the
appointment of such successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor trustee all
such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may
be.
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(d) No successor trustee shall accept its appointment unless at the time of such acceptance
such successor trustee shall be qualified and eligible under this Article.
(e) Upon acceptance of appointment by a successor trustee as provided in this Section, the
Company shall transmit notice of the succession of such trustee hereunder by mail, first class
postage prepaid, to the Securityholders, as their names and addresses appear upon the Security
Register. If the Company fails to transmit such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 8.08 and eligible under the provisions of Section 8.09,
without the execution or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such successor Trustee had
itself authenticated such Securities.
SECTION 8.13 Preferential Collection of Claims Against the Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.
ARTICLE IX
CONCERNING THE SECURITYHOLDERS
SECTION 9.01 Evidence of Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a majority or specified
percentage in aggregate principal amount of the Securities of a particular series may take any
action (including the making of any demand or request, the giving of any notice, consent or waiver
or the taking of any other action), the fact that at the time of taking any such action the holders
of such majority or specified percentage of that series have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by such holders of Securities of
that series in Person or by agent or proxy appointed in writing.
If the Company shall solicit from the Securityholders of any series any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company may, at its option,
as evidenced by an Officers Certificate, fix in advance a record date for such series for the
determination of Securityholders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such
a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or
other action may be given before or after the record date, but only the Securityholders of record
at the close of business on the record date shall be deemed to be Securityholders for the purposes
of determining whether Securityholders of the requisite proportion of Outstanding Securities of
that series have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that
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purpose the Outstanding Securities of that series shall be computed as of the record date;
provided, however, that no such authorization, agreement or consent by such Securityholders on the
record date shall be deemed effective unless it shall become effective pursuant to the provisions
of this Indenture not later than six months after the record date.
SECTION 9.02 Proof of Execution by Securityholders.
Subject to the provisions of Section 8.01, proof of the execution of any instrument by a
Securityholder (such proof will not require notarization) or his agent or proxy and proof of the
holding by any Person of any of the Securities shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any instrument may be proved in
any reasonable manner acceptable to the Trustee.
(b) The ownership of Securities shall be proved by the Security Register of such Securities or
by a certificate of the Security Registrar thereof.
(c) The Trustee may require such additional proof of any matter referred to in this Section as
it shall deem necessary.
SECTION 9.03 Who May be Deemed Owners.
Prior to the due presentment for registration of transfer of any Security, the Company, the
Trustee, any paying agent and any Security Registrar may deem and treat the Person in whose name
such Security shall be registered upon the books of the Company as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership
or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal of (and premium, if any) and (subject to Section 3.03)
interest on such Security and for all other purposes; and neither the Company nor the Trustee nor
any paying agent nor any Security Registrar shall be affected by any notice to the contrary.
SECTION 9.04 Certain Securities Owned by Company Disregarded.
In determining whether the holders of the requisite aggregate principal amount of Securities
of a particular series have concurred in any direction, consent or waiver under this Indenture, the
Securities of that series that are owned by the Company or any other obligor on the Securities of
that series or by any Person directly or indirectly controlling or controlled by or under common
control with the Company or any other obligor on the Securities of that series shall be disregarded
and deemed not to be Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any such direction,
consent or waiver, only Securities of such series that the Trustee actually knows are so owned
shall be so disregarded. The Securities so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the
satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that
the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other obligor. In case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 9.05 Actions Binding on Future Securityholders.
At any time prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the majority or percentage in aggregate
principal amount of the
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Securities of a particular series specified in this Indenture in connection with such action,
any holder of a Security of that series that is shown by the evidence to be included in the
Securities the holders of which have consented to such action may, by filing written notice with
the Trustee, and upon proof of holding as provided in Section 9.02, revoke such action so far as
concerns such Security. Except as aforesaid any such action taken by the holder of any Security
shall be conclusive and binding upon such holder and upon all future holders and owners of such
Security, and of any Security issued in exchange therefor, on registration of transfer thereof or
in place thereof, irrespective of whether or not any notation in regard thereto is made upon such
Security. Any action taken by the holders of the majority or percentage in aggregate principal
amount of the Securities of a particular series specified in this Indenture in connection with such
action shall be conclusively binding upon the Company, the Trustee and the holders of all the
Securities of that series.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01 Supplemental Indentures Without the Consent of Securityholders.
In addition to any supplemental indenture otherwise authorized by this Indenture, the Company
and the Trustee may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in
effect), without the consent of the Securityholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency herein or in the Securities of any series;
(b) to comply with Article Eleven;
(c) to provide for uncertificated Securities in addition to or in place of certificated
Securities;
(d) to add to the covenants of the Company for the benefit of the holders of all or any series
of Securities (and if such covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company;
(e) to add to, delete from or revise the conditions, limitations and restrictions on the
authorized amount, terms, purposes of issue, authentication and delivery of Securities, as herein
set forth;
(f) to make any change that does not adversely affect the rights of any Securityholder in any
material respect; or
(g) to provide for the issuance of and establish the form and terms and conditions of the
Securities of any series as provided in Section 3.01, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or any series of Securities, or to
add to the rights of the holders of any series of Securities.
The Trustee is hereby authorized to join with the Company in the execution of any such
supplemental indenture, and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into any such supplemental
indenture that affects the Trustees own rights, duties or immunities under this Indenture or
otherwise.
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Any supplemental indenture authorized by the provisions of this Section may be executed by the
Company and the Trustee without the consent of the holders of any of the Securities at the time
Outstanding, notwithstanding any of the provisions of Section 10.02.
SECTION 10.02 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Section 9.01) of the holders of not less than a
majority in aggregate principal amount of the Securities of each series affected by such
supplemental indenture or indentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as
then in effect) 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 not covered by Section 10.01 the rights of the holders of the Securities of
such series under this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the holders of each Security then Outstanding and affected thereby, (i)
extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof,
or reduce the rate of interest thereon, or reduce any premium payable upon the redemption thereof
or (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent
to any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders of any series affected
thereby under this Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
SECTION 10.03 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions of this Article or
of Section 11.01, this Indenture shall, with respect to such series, be and be deemed to be
modified and amended in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders
of Securities of the series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 10.04 Securities Affected by Supplemental Indentures.
Securities of any series affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of this Article or of
Section 11.01, may bear a notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities of that series so
modified as to conform, in the opinion of the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Securities of that series then
Outstanding.
SECTION 10.05 Execution of Supplemental Indentures.
Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of
any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of
Securityholders required to consent thereto as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental indenture affects
the Trustees own
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rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental indenture. The Trustee,
subject to the provisions of Section 8.01, may receive an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant to this Article is authorized or permitted by,
and conforms to, the terms of this Article and that it is proper for the Trustee under the
provisions of this Article to join in the execution thereof; provided, however, that such Opinion
of Counsel need not be provided in connection with the execution of a supplemental indenture that
establishes the terms of a series of Securities pursuant to Section 3.01 hereof.
Promptly after the execution by the Company and the Trustee of any supplemental indenture
pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage
prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to
the Securityholders of all series affected thereby as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental indenture.
ARTICLE XI
SUCCESSOR ENTITY
SECTION 11.01 Company May Consolidate, Etc.
Nothing contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other Person (whether or not affiliated
with the Company) or successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other
disposition of the property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not affiliated with the Company
or its successor or successors) authorized to acquire and operate the same; provided, however, the
Company hereby covenants and agrees that, upon any such consolidation or merger (in each case, if
the Company is not the survivor of such transaction), sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of (premium, if any) and interest on all
of the Securities of all series in accordance with the terms of each series, according to their
tenor and the due and punctual performance and observance of all the covenants and conditions of
this Indenture with respect to each series or established with respect to such series pursuant to
Section 3.01 to be kept or performed by the Company shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by
such consolidation, or into which the Company shall have been merged, or by the entity which shall
have acquired such property.
SECTION 11.02 Successor Entity Substituted.
(a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition
and upon the assumption by the successor entity by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the
principal of (and premium, if any) and interest on all of the Securities of all series Outstanding
and the due and punctual performance of all of the covenants and conditions of this Indenture or
established with respect to each series of the Securities pursuant to Section 3.01 to be performed
by the Company with respect to each series, such successor entity shall succeed to and be
substituted for the Company with the same effect as if it had been named as the Company herein, and
thereupon the predecessor corporation shall be relieved of all obligations and covenants under this
Indenture and the Securities.
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(b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition
such changes in phraseology and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.
(c) Nothing contained in this Article shall apply to limit or impose any requirements upon the
consolidation or merger of any Person into the Company where the Company is the survivor of such
transaction, or the acquisition by the Company, by purchase or otherwise, of all or any part of the
property of any other Person (whether or not affiliated with the Company).
SECTION 11.03 Evidence of Consolidation, Etc. to Trustee.
The Trustee, subject to the provisions of Section 8.01, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other
disposition, and any such assumption, comply with the provisions of this Article.
ARTICLE XII
SATISFACTION AND DISCHARGE
SECTION 12.01 Satisfaction and Discharge of Indenture.
If at any time: (a) the Company shall have delivered to the Trustee for cancellation all
Securities of a series theretofore authenticated (other than any Securities that have been
destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.07) and
Securities for whose payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to the Company or
discharged from such trust, as provided in Section 12.05); or (b) all such Securities of a
particular series not theretofore delivered to the Trustee for cancellation shall have become due
and payable, or are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as
trust funds the entire amount in moneys or Governmental Obligations or a combination thereof,
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 at maturity or upon
redemption all Securities of that series not theretofore delivered to the Trustee for cancellation,
including principal (and premium, if any) and interest due or to become due to such date of
maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder with respect to such series by the Company then
this Indenture shall thereupon cease to be of further effect with respect to such series except for
the provisions of Sections 3.03, 3.05, 3.07, 5.01, 5.02, 5.03 and 8.10, that shall survive until
the date of maturity or redemption date, as the case may be, and Sections 8.06 and 12.05, that
shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the
cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture with respect to such series.
SECTION 12.02 Discharge of Obligations.
If at any time all such Securities of a particular series not heretofore delivered to the
Trustee for cancellation or that have not become due and payable as described in Section 12.01
shall have been paid by the Company by depositing irrevocably with the Trustee as trust funds
moneys or an amount of Governmental Obligations sufficient to pay at maturity or upon redemption
all such Securities of that series not theretofore delivered to the Trustee for cancellation,
including principal (and premium, if any) and interest due or to become due to such date of
maturity or date fixed for redemption, as the case may
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be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by
the Company with respect to such series, then after the date such moneys or Governmental
Obligations, as the case may be, are deposited with the Trustee the obligations of the Company
under this Indenture with respect to such series shall cease to be of further effect except for the
provisions of Sections 3.03, 3.05, 3.07, 5.01, 5.02, 5.03, 8.06, 8.10 and 12.05 hereof that shall
survive until such Securities shall mature and be paid. Thereafter, Sections 8.06 and 12.05 shall
survive.
SECTION 12.03 Deposited Moneys to be Held in Trust.
All moneys or Governmental Obligations deposited with the Trustee pursuant to Sections 12.01
or 12.02 shall be held in trust and shall be available for payment as due, either directly or
through any paying agent (including the Company acting as its own paying agent), to the holders of
the particular series of Securities for the payment or redemption of which such moneys or
Governmental Obligations have been deposited with the Trustee.
SECTION 12.04 Payment of Moneys Held by Paying Agents.
In connection with the satisfaction and discharge of this Indenture all moneys or Governmental
Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand
of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all
further liability with respect to such moneys or Governmental Obligations.
SECTION 12.05 Repayment to Company.
Any moneys or Governmental Obligations deposited with any paying agent or the Trustee, or then
held by the Company, in trust for payment of principal of (and premium, if any) or interest on the
Securities of a particular series that are not applied but remain unclaimed by the holders of such
Securities for at least two years after the date upon which the principal of (and premium, if any)
or interest on such Securities shall have respectively become due and payable, shall be repaid to
the Company or (if then held by the Company) shall be discharged from such trust; and thereupon the
paying agent and the Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the holder of any of the Securities entitled to receive
such payment shall thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01 No Recourse.
No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any
Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, past, present or future as such, of the Company or
of any predecessor or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood
that this Indenture and the obligations issued hereunder are solely corporate obligations, and that
no such personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or
successor corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or implied therefrom; and that any and all such
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personal liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer or director as such, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this Indenture and the
issuance of such Securities.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01 Effect on Successors and Assigns.
All the covenants, stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 14.02 Actions by Successor.
Any act or proceeding by any provision of this Indenture authorized or required to be done or
performed by any board, committee or officer of the Company shall and may be done and performed
with like force and effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful successor of the Company.
SECTION 14.03 Notices.
Except as otherwise expressly provided herein any notice or demand that by any provision of
this Indenture is required or permitted to be given or served by the Trustee or by the holders of
Securities to or on the Company may be given or served by being deposited first class postage
prepaid in a post-office letterbox addressed (until another address is filed in writing by the
Company with the Trustee), as follows: [__________]. Any notice, election, request or demand by the
Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.
SECTION 14.04 Governing Law.
This Indenture and each Security shall be deemed to be a contract made under the internal laws
of the State of New York, and for all purposes shall be construed in accordance with the laws of
said State.
SECTION 14.05 Compliance Certificates and Opinions.
(a) Upon any application or demand by the Company to the Trustee to take any action under any
of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers
Certificate stating that all conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
(b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee
with respect to compliance with a condition or covenant in this Indenture shall include (1) a
statement that the Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as
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to the nature and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion
of 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 (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant
has been complied with.
(c) The Company shall furnish to the Trustee, on [ ] of each year, a brief
certificate from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of such obligors compliance with all conditions and
covenants under this Indenture. For purposes of this subsection, such compliance shall be
determined without regard to any period of grace or requirement of notice provided hereunder.
SECTION 14.06 Payments on Business Days.
Except as provided pursuant to Section 3.01 pursuant to a Board Resolution, and as set forth
in an Officers Certificate, or established in one or more indentures supplemental to this
Indenture, in any case where the date of maturity of interest or principal of any Security or the
date of redemption of any Security shall not be a Business Day, then payment of interest or
principal (and premium, if any) may be made on the next succeeding Business Day with the same force
and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue
for the period after such nominal date.
SECTION 14.07 Conflict with Trust Indenture Act.
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 14.08 Counterparts.
This Indenture may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same instrument.
SECTION 14.09 Separability.
In case any one or more of the provisions contained in this Indenture or in the Securities of
any series shall for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provisions of this
Indenture or of such Securities, but this Indenture and such Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained herein or therein.
SECTION 14.10 Assignment.
The Company will have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in
the event of any such assignment, the Company will remain liable for all such obligations. Subject
to the foregoing, the Indenture is binding upon and inures to the benefit of the parties thereto
and their respective successors and assigns. This Indenture may not otherwise be assigned by the
parties thereto.
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ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 Subordination Terms.
The payment by the Company of the principal of (and premium, if any) and interest on any
series of Securities issued hereunder shall be subordinated to the extent set forth in an indenture
supplemental hereto relating to such Securities.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as
of the day and year first above written.
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VANDA PHARMACEUTICALS INC.
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By: |
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Name: |
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Title: |
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[
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as Trustee
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By: |
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exv5w1
Exhibit 5.1
January 31, 2011
Vanda Pharmaceuticals Inc.
9605 Medical Center Drive, Suite 300
Rockville, MD 20850
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Re: |
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Registration Statement on Form S-3 |
Ladies and Gentlemen:
This opinion is furnished to Vanda Pharmaceuticals Inc. (the Company), in connection with
the filing with the Securities and Exchange Commission on January 31, 2011 of a registration
statement on Form S-3 (the Registration Statement), including the prospectus that is part of the
Registration Statement (the Prospectus), under the Securities Act of 1933, as amended (the
Act). The Prospectus provides that it will be supplemented in the future by one or more
prospectus supplements (each, a Prospectus Supplement). The Prospectus, as supplemented by the
various Prospectus Supplements, relates to the registration of the offering by the Company from
time to time of (a) shares of common stock, $0.001 par value per share (the Common Stock) of the
Company, (b) shares of preferred stock, $0.001 par value per share (the Preferred Stock) of the
Company, (c) one or more series of the debt securities of the Company (the Debt Securities),
which may be either senior securities or subordinated securities and which may be convertible into
or exchangeable for shares of the Common Stock or Preferred Stock or (d) warrants to purchase
shares of Common Stock, shares of Preferred Stock and/or Debt Securities (the Warrants).
The Common Stock, the Preferred Stock, the Debt Securities and the Warrants are collectively
referred to herein as the Securities. The Securities are being registered for offering and sale
from time to time pursuant to Rule 415 under the Securities Act. The maximum aggregate public
offering price of the Common Stock, the Preferred Stock, the Debt Securities and the Warrants being
registered is $50,000,000.
The Debt Securities will be issued pursuant to one or more indentures in the form filed as an
exhibit to the Registration Statement, as amended or supplemented from time to time (each, an
Indenture), between the Company, as obligor, and a trustee chosen by the Company and qualified to
act as such under the Trust Indenture Act of 1939, as amended (each, a Trustee).
In connection with this opinion, we have examined the Registration Statement and such other
documents, records, certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness of all signatures, the legal capacity of natural
persons, the genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof and the due execution
and delivery of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof. As to questions of fact material to this opinion, we have relied upon
certificates or comparable documents of public officials and of officers and representatives of the
Company.
Based upon the foregoing and subject to the additional qualifications set forth below, we are
of the opinion that:
1. When the issuance and the terms of the sale of the shares of Common Stock have been duly
authorized by the board of directors of the Company in conformity with its certificate of
incorporation,
and such shares have been issued and delivered against payment of the purchase price therefor
in an amount in excess of the par value thereof, in accordance with the applicable definitive
purchase, underwriting or similar agreement, and as contemplated by the Registration Statement, the
Prospectus and the related Prospectus Supplement, and, if issued upon the conversion, exchange or
exercise of Debt Securities or Warrants, when such shares have been duly issued and delivered as
contemplated by the terms of the applicable Indenture or Warrant, such shares of Common Stock will
be validly issued, fully paid and nonassessable.
2. When the issuance and the terms of the sale of the shares of Preferred Stock have been duly
authorized by the board of directors of the Company in conformity with its certificate of
incorporation; an appropriate certificate or certificates of designation relating to a series of
the Preferred Stock to be sold under the Registration Statement has or have been duly authorized
and adopted and filed with the Secretary of State of Delaware; the terms of issuance and sale of
shares of such series of Preferred Stock have been duly established in conformity with the
Companys certificate of incorporation and by-laws so as to not violate any applicable law or
result in a default under or breach of any agreement or instrument binding upon the Company and
comply with any requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company or any of its property; and such shares have been issued and
delivered against payment of the purchase price therefor in an amount in excess of the par value
thereof, in accordance with the applicable definitive purchase, underwriting or similar agreement,
and as contemplated by the Registration Statement, the Prospectus and the related Prospectus
Supplement, and, if issued upon the conversion, exchange or exercise of any Debt Securities or
Warrants, when such shares have been duly issued and delivered as contemplated by the terms of the
applicable Indenture or Warrant, the shares of Preferred Stock will be validly issued, fully paid
and nonassessable.
3. When the issuance and the terms of the sale of the Debt Securities have been duly
authorized by the board of directors of the Company and duly established in conformity with the
applicable Indenture so as not to violate any applicable law or result in a default under, or
breach of, any agreement or instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental or regulatory body having
jurisdiction over the Company or any of its property, and the Debt Securities have been duly
executed, authenticated, issued, delivered and sold in accordance with the applicable definitive
purchase, underwriting or similar agreement, as contemplated by the Registration Statement, the
Prospectus and the related Prospectus Supplement, and in the manner provided for in the applicable
Indenture against payment of the purchase price therefor, the Debt Securities will constitute valid
and binding obligations of the Company enforceable against the Company in accordance with their
respective terms.
4. When the issuance and the terms of the sale of the Warrants have been duly authorized by
the board of directors of the Company; the terms of the Warrants and of their issuance and sale
have been duly established so as to not violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon the Company and comply with any requirement or
restriction imposed by any court or governmental body having jurisdiction over the Company or any
of its property; and the Warrants have been duly executed and issued and sold in accordance with
the applicable definitive purchase, underwriting or similar agreement, as contemplated by the
Registration Statement, the Prospectus and the related Prospectus Supplement, the Warrants will
constitute valid and binding obligations of the Company enforceable against the Company in
accordance with their terms.
We do not express any opinion herein concerning any law other than the Delaware General
Corporation Law (including the statutory provisions, all applicable provisions of the Delaware
Constitution and reported judicial decisions interpreting the foregoing), the laws of the State of
New York and the laws of the Commonwealth of Massachusetts.
In rendering the opinions set forth above, we have assumed that (i) the Registration Statement
will have become effective under the Securities Act, a Prospectus Supplement will have been
prepared and filed with the SEC describing the Securities offered thereby and such Securities will
have been issued and/or sold in accordance with the terms of such Prospectus Supplement; (ii) a
definitive purchase, underwriting or similar agreement with respect to such Securities (if
applicable) will have been duly authorized, executed and delivered by the Company and the other
parties thereto; (iii) the Securities issued by the Company will be duly authorized by all
necessary corporate action by the Company and any Indenture, any applicable supplemental indenture
thereto, and other agreement pursuant to which such Securities may be issued will be duly
authorized, executed and delivered by the Company and the other parties thereto; (iv) the Company
is and will remain duly organized, validly existing and in good standing under applicable state
law; and (v) the Company will have reserved a sufficient number of shares of its duly authorized,
but unissued, Common Stock and Preferred Stock as is necessary to provide for the issuance of the
shares of Common Stock and Preferred Stock pursuant to the Registration Statement.
The opinions set forth above are subject to the following exceptions, limitations and
qualifications: (i) the effect of bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors; (ii) the effect of general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court before which any
proceeding therefore may be brought; (iii) the unenforceability under certain circumstances under
law or court decisions of provision providing for the indemnification of, or contribution to, a
party with respect to a liability where such indemnification or contribution is contrary to public
policy. We express no opinion (i) concerning the enforceability of any waiver of rights or defenses
with respect to stay, extension or usury laws or (ii) with respect to whether acceleration of Debt
Securities may affect the collectability of any portion of the stated principal amount thereof
which might be determined to constitute unearned interest thereon. Our opinions expressed herein
are also subject to the qualification that no term or provision shall be included in any Indenture,
any Warrant or any other agreement or instrument pursuant to which any of the Securities are to be
issued that would affect the validity of such opinions.
We consent to the use of this opinion as Exhibit 5.1 to the Registration Statement, and
further consent to the use of our name under the caption Legal Matters in the prospectus included
in the Registration Statement, and in any amendment or supplement thereto.
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Very truly yours,
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/s/ Gunderson Dettmer Stough
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Villeneuve Franklin & Hachigian, LLP |
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GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
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exv23w2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of
our report dated March 15, 2010 relating to the financial statements and the effectiveness of
internal control over financial reporting, which appears in Vanda Pharmaceuticals Inc.s Annual
Report on Form 10-K for the year ended December 31, 2009. We also consent to the reference to us
under the heading Experts in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Baltimore, MD
January 31, 2011