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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PACIFICARE HEALTH SYSTEMS, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-4591529
(STATE OR OTHER JURISDICTION OF (I.R.S EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
3120 LAKE CENTER DRIVE, SANTA ANA, CALIFORNIA (714) 825-5200
92704
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP (TELEPHONE NUMBER)
CODE)
</TABLE>
ALAN R. HOOPS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PACIFICARE HEALTH SYSTEMS, INC.
3120 LAKE CENTER DRIVE
SANTA ANA, CALIFORNIA 92704
(714) 825-5200
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENTS FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
MICHAEL R. JACOBSON, ESQ. JAMES R. WALTHER, ESQ.
COOLEY GODWARD LLP MAYER, BROWN & PLATT
5 PALO ALTO SQUARE 350 SOUTH GRAND AVENUE
3000 EL CAMINO REAL 25TH FLOOR
PALO ALTO, CALIFORNIA 94306-2155 LOS ANGELES, CALIFORNIA 90071-1503
(650) 843-5000 (213) 229-9500
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
=========================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
Senior Debt Securities... $250,000,000 100% $250,000,000(2) $73,750
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) If any Debt Securities are issued at an original issue discount, such
greater amount as shall result in an aggregate initial offering price of
$250 million.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION: MAY , 1998
PROSPECTUS
PACIFICARE HEALTH SYSTEMS, INC.
SENIOR DEBT SECURITIES
PacifiCare Health Systems, Inc., a Delaware corporation ("PacifiCare" or
the "Company"), may offer, from time to time, one or more series of its
unsecured senior debt securities consisting of debentures, notes, bonds or other
evidences of indebtedness (the "Debt Securities"). The Debt Securities offered
by the Company may be offered separately or together, in separate series, in
amounts, at prices and on terms to be determined at the time of the offering and
to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement") up to an aggregate principal amount of $250,000,000 (or
if issued at an original issue discount, such greater amount as shall result in
aggregate gross proceeds of $250,000,000).
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable, the specific title, series,
aggregate principal amount, maturity, interest rate (or manner of calculation
thereof), time of payment of interest, form (which may be certificated or
global), authorized denominations, terms for redemption at the option of the
Company, terms for sinking fund payments and the initial public offering price.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and listing on a securities exchange, of the Debt Securities
covered by such Prospectus Supplement.
Unless otherwise specified in an accompanying Prospectus Supplement, the
Debt Securities will be senior securities of the Company, ranking equally with
all other unsubordinated and unsecured indebtedness of the Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Company may sell all or a portion of any offering of the Debt
Securities directly to investors, through agents designated from time to time,
or to or through underwriters or dealers. If any agents or any underwriters are
involved in the sale of the Debt Securities, their names and any applicable
purchase price, commission or discount arrangements between or among them will
be set forth, or will be calculable from the information set forth in, the
applicable Prospectus Supplement. See "Plan of Distribution." No Debt Securities
will be offered or sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such Debt Securities.
THE DATE OF THIS PROSPECTUS IS MAY , 1998.
<PAGE> 3
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or any Prospectus Supplement, and,
if given or made, such information or representations must not be relied upon as
having been authorized. Neither this Prospectus nor any Prospectus Supplement
shall constitute an offer to sell or the solicitation of an offer to buy any of
the Debt Securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale made hereunder or thereunder shall, under any
circumstances, create any implication that the information incorporated by
reference herein or therein is correct as of any time subsequent to the
respective dates of this Prospectus and any Prospectus Supplement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, information statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements, information statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at the principal offices of the Commission, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's
regional offices located at Room 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661-2511, and at Room 1300, Seven World
Trade Center, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Additionally the Commission
maintains a website (http://www.sec.gov) that contains reports, proxy statements
and information statements and other information regarding registrants that file
electronically with the Commission. The Series A Cumulative Convertible
Preferred Stock and the Class A and Class B Common Stock of PacifiCare are
traded on the Nasdaq National Market ("Nasdaq"). Reports, proxy statements and
other information concerning PacifiCare can be inspected at the offices of
Nasdaq.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Act"), with respect to the Debt Securities. This Prospectus does not
contain all the information set forth or incorporated by reference in the
Registration Statement and the exhibits and schedules relating thereto, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the Company and the Debt
Securities, reference is made to the Registration Statement and the exhibits and
schedules thereto which are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission, or may be
examined without charge at the above offices of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and are qualified in all
respects by such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
All reports and other documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all Debt Securities
offered have been sold or which deregisters all Debt Securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the time of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is, or is
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deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herewith. The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents that are incorporated herein by reference, other than exhibits to
such documents not specifically incorporated by reference herein. Such requests
should be addressed to: Investor Relations, Attn.: David Erickson, PacifiCare
Health Systems, Inc., 3120 Lake Center Drive, Santa Ana, California 92704,
telephone: (714) 825-5200.
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<PAGE> 5
THE COMPANY
PacifiCare(R) Health Systems, Inc. (the "Company" or "PacifiCare") is one
of the nation's leading managed health care services companies, serving nearly
3.7 million health maintenance organization ("HMO") members in its commercial
and government product lines as of March 31, 1998. Commercial members join the
Company's programs primarily through employer groups while members of the
Company's government product lines are Medicare and Medicaid beneficiaries. On
February 14, 1997, the Company acquired FHP International Corporation ("FHP")
for a total purchase price, including transaction costs, of approximately $2.2
billion (the "FHP Acquisition").The Company's commercial and government
membership substantially increased as a result of the FHP Acquisition. The FHP
Acquisition has been accounted for as a purchase and the Company's consolidated
results of operations include the results of FHP from the date of the FHP
Acquisition. Also during 1997, the Company consummated the sale of its Florida,
Illinois and New Mexico subsidiaries and announced a proposed exit strategy for
its Utah subsidiary, including its potential sale.
The Company is also a leader in the management, development and marketing
of diversified HMO products and related services. The Company operates HMOs in
10 states and Guam, and as of March 31, 1998, had a combined commercial HMO
membership of nearly 2.7 million members. The Company's Secure Horizons(R)
programs, which operate the largest Medicare risk programs in the United States
(as measured by membership), had over 1.0 million members enrolled as of March
31, 1998. The Company believes that its Secure Horizons programs are attractive
to Medicare beneficiaries because such programs provide a more comprehensive
package of benefits than traditional Medicare and substantially reduce the
members' administrative responsibilities.
The Company believes that its ability to offer a comprehensive range of
products and services, combined with its long-term relationships with health
care providers, will enable the Company to respond effectively to the changing
needs of the health care marketplace.
In connection with the FHP Acquisition, the Company entered into a $1.5
billion credit facility with a syndicate of commercial banks for which Bank of
America, NT & SA is agent (the "Credit Facility"). The interest rate under the
Credit Facility is presently based on the London Interbank Offering Rate plus a
spread with the average interest rate under the Credit Facility at March 31,
1998 being approximately six percent. As of March 31, 1998, the Company had $940
million outstanding under the Credit Facility. The terms of the Credit Facility
require mandatory reductions of its outstanding principal balance beginning
January 1999 with final maturity on January 1, 2002. Such terms would not
require a reduction below the current $940 million outstanding principal balance
until July 1, 2001.
The Company's principal executive offices are located at 3120 Lake Center
Drive, Santa Ana, California 92704 and its telephone number is (714) 825-5200.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, all net
proceeds from the sale of the Debt Securities will be used to repay a portion of
the amount outstanding under the Credit Facility.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated. The ratio reflects the historical results
of the Company, excluding FHP, for all periods prior to 1997. For 1997, the
ratio includes FHP results from February 14, 1997.
<TABLE>
<CAPTION>
(TRANSITION
PERIOD)
TWELVE THREE
THREE MONTHS MONTHS MONTHS
ENDED YEAR ENDED ENDED ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------------------------
1998 1997 1997(1) 1996(1) 1996 1996(1) 1995 1994 1993
----- ----- ------------ ------------ ------------ ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(2).............. 4.7x 7.3x 1.8x 13.9x 31.5x 12.3x 17.5x 21.5x 23.5x
===== ===== ===== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Earnings for the year ended December 31, 1997, twelve months ended
December 31, 1996 and the fiscal year ended September 30, 1996 include
pretax charges of $155 million, $101 million and $101 million,
respectively. Excluding these pretax charges for the year ended December
31, 1997, the twelve months ended December 31, 1996 and the fiscal year
ended September 30, 1996, the ratio of earnings to fixed charges would have
been 3.7x, 24.0x and 21.6x, respectively.
(2) For purposes of computing the ratio of earnings to fixed charges,
earnings include income before fixed charges, provision for federal and
state income taxes and cumulative effect of accounting change. Fixed
charges consist of interest expense, including the interest component of
capitalized leases, and that portion of operating lease expense which
management believes is representative of the interest component of rental
expense.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Company and The
Chase Manhattan Bank, as trustee (the "Trustee"). A form of the Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series, or of Debt Securities forming a part of a
series, which are offered by a Prospectus Supplement, will be described in such
Prospectus Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture, including the definitions
therein of certain terms, and with respect to any particular Debt Securities, to
the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular sections or defined terms of the Indenture
are referred to herein or in a Prospectus Supplement, such sections or defined
terms are incorporated by reference herein or therein, as the case may be.
The Company is a holding company, conducting its operations through its
operating subsidiaries. Accordingly, the Company's ability to service the Debt
Securities is dependent, in part, on its ability to obtain funds from the
Company's subsidiaries. The subsidiaries pay fees for management services
rendered by the Company to the subsidiaries and cash dividends. Most of the
subsidiaries of the Company are subject to HMO or insurance regulations and are
subject to supervision by one or more HMO or insurance regulators. Subsidiaries
subject to regulation may be required to satisfy minimum equity, capital,
deposit and/or reserve requirements. These requirements, which limit the ability
of the Company's subsidiaries to transfer funds to the Company, may impact the
amount of funds that may be paid by the subsidiaries to the Company. In
addition, the rights of the Company and the rights of its creditors, including
holders of the Debt Securities, to participate in any distribution of the assets
of a subsidiary upon the liquidation or recapitalization of such subsidiary will
be subject to the prior claims of the subsidiary's creditors, except to the
extent that the Company itself may be a creditor with recognized claims against
the subsidiary. Accordingly, holders of the Debt Securities may be deemed to be
effectively subordinated to such claims. In connection with the FHP Acquisition,
the Company's California health plans provided undertakings to the California
Department of Corporations. As part of these undertakings, the California plans
are required to describe to all future holders of indebtedness that: (i) the
plans would not upstream funds in any manner, if such action would cause the
plans to be out of compliance with their tangible net equity requirements, would
result in insufficient working capital or cash flows necessary to provide for
the retirement of existing or proposed indebtedness of the plans or affect the
plans' ability to provide health care services; (ii) the plans would not
guarantee, cosign, assume or pledge any assets or stock to secure any portion of
the Credit Facility or any future indebtedness of the Company; (iii) the plans
would not lend any money to the Company without an evaluation by independent
financial accountants establishing the value to be equal to the amount shown in
the plan's financial statements; and (iv) any indebtedness of the plans to the
Company may be subordinated to the plans' obligations under California laws and
regulations.
The covenants in the Indenture will not necessarily afford the holders of
the Debt Securities protection in the event of a decline in the Company's credit
quality resulting from highly leveraged or other transactions involving the
Company.
GENERAL
The Indenture provides that separate series of Debt Securities may be
issued under the Indenture from time to time without limitation as to the
aggregate principal amount. The Company may specify a maximum aggregate
principal amount for the Debt Securities of any series. (Section 301). The Debt
Securities are to have such terms and provisions which are not inconsistent with
the Indenture, including as to maturity, principal and interest, as the Company
may determine. Except as provided in Section 1008 and Section 1009, the Debt
Securities will be unsecured obligations of the Company and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company.
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The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: (1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of the particular series of Debt
Securities; (3) the date or dates on which the principal of any of such Debt
Securities will be payable or the method by which such date or dates will be
determined or extended; (4) the rate or rates at which any of such Debt
Securities will bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which any such interest will accrue,
the Interest Payment Dates on which any such interest will be payable and the
Regular Record Date for any such interest payable on any Interest Payment Date,
or the method by which such date or dates shall be determined, and the basis
upon which interest shall be calculated if other than that of a 360-day year of
twelve 30-day months; (5) the place or places where the principal of, and any
premium and interest on any of such Debt Securities will be payable; (6) the
period or periods within which, the price or prices at which and the terms and
conditions upon which any of such Debt Securities may be redeemed, in whole or
in part, at the option of the Company and the manner in which any election by
the Company to redeem such Debt Securities shall be evidenced (if other than by
a Board Resolution); (7) the obligation, if any, of the Company to redeem or
purchase any of such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of the Holder thereof, and the period or periods
within which, the price or prices at which and the terms and conditions on which
any of such Debt Securities will be redeemed or purchased, in whole or in part,
pursuant to any such obligation; (8) the denominations in which any of such Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (9) if the amount of principal of, or any premium or
interest on any of such Debt Securities may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts will be
determined; (10) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any premium
or interest on any of such Debt Securities will be payable (and the manner in
which the equivalent of the principal amount thereof in the currency of the
United States of America is to be determined for any purpose, including for the
purpose of determining the principal amount deemed to be Outstanding at any
time); (11) if the principal of or any premium or interest on any of such Debt
Securities is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than those in which
such Debt Securities are stated to be payable, the currency, currencies or
currency units in which payment of any such amount as to which such election is
made will be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in
which such amount is to be determined); (12) the percentage of the principal
amount at which such Debt Securities will be issued and, if other than the
entire principal amount thereof, the portion of the principal amount of any of
such Debt Securities which will be payable upon declaration of acceleration of
the Maturity thereof or the method by which such portion shall be determined;
(13) if the principal amount payable at the Stated Maturity of any of such Debt
Securities will not be determinable as of any one or more dates prior to the
Stated Maturity, the amount which will be deemed to be such principal amount as
of any such date for any purpose, including the principal amount thereof which
will be due and payable upon any Maturity other than the Stated Maturity or
which will be deemed to be Outstanding as of any such date (or, in any such
case, the manner in which such deemed principal amount is to be determined);
(14) any variation from the application of the provisions of the Indenture
described under "Defeasance and Covenant Defeasance -- Defeasance and Discharge"
or "Defeasance and Covenant Defeasance -- Defeasance of Certain Covenants" or
under both such captions and the manner in which any election of the Company to
defease such Debt Securities shall be evidenced (if other than by a Board
Resolution); (15) whether any of such Debt Securities will be issuable in whole
or in part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Securities in addition to or in lieu of
the legend referred to under "Form, Exchange and Transfer -- Global Securities"
and, if different from those described under such caption, any circumstances
under which any such Global Securities may be exchanged in whole or in part for
Debt Securities registered, and any transfer of such Global Securities in whole
or in part may be registered, in the name of Persons other than the Depositary
for such Global Securities or its nominee; (16) whether any of such Debt
Securities will be subject to certain optional interest rate reset provisions;
(17) whether any of such Debt Securities will be subject to certain optional
extension of maturity provisions; (18) any addition to or change in the Events
of Default applicable to any of such Debt Securities and any change in the right
of the
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Trustee or the Holders of any such Debt Securities to declare the principal
amount of any of such Debt Securities and any change in the right of the Trustee
or the Holders of any of such Debt Securities to declare the principal amount
thereof due and payable; (19) any addition to or change in the covenants in the
Indenture applicable to any of such Debt Securities; and (20) any other terms of
such Debt Securities not inconsistent with the provisions of the Indenture.
(Section 301).
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Special United States
federal income tax considerations (if any) applicable to Debt Securities sold at
an original issue discount may be described in the applicable Prospectus
Supplement. In addition, special United States federal income tax or other
considerations (if any) applicable to any Debt Securities which are denominated
in a currency or currency unit other than United States dollars may be described
in the applicable Prospectus Supplement.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable Prospectus Supplement, only in denominations of $1,000 and integral
multiples thereof. (Section 302).
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series will
be exchangeable for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount. (Section 305).
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed with the form of transfer
endorsed thereon duly executed) at the office of the Security Registrar or at
the office of any transfer agent designated by the Company for such purpose. No
service charge will be made for any registration at transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Such transfer
or exchange will be effected upon the Security Registrar or such transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. The Company has appointed the Trustee as Security
Registrar. Any transfer agent (in addition to the Security Registrar) initially
designated by the Company for any Debt Securities will be named in the
applicable Prospectus Supplement. (Section 305). The Company may from time to
time designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each Place of Payment for the Debt Securities of each series. (Section
1002).
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of, or exchange any Debt Security of that series (or of
that series and specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing or (ii) register the
transfer of, or exchange any Debt Security so selected for redemption, in whole
or in part, except the unredeemed portion of any such Debt Security being
redeemed in part. (Section 305).
GLOBAL SECURITIES
Unless otherwise provided in the Prospectus Supplement, some or all of the
Debt Securities of any series may be represented, in whole or in part, by one or
more Global Securities which will have an aggregate principal amount equal to
that of the Debt Securities represented thereby. Unless otherwise provided in
the Prospectus Supplement, the Global Security representing Debt Securities will
be deposited with, or on behalf of, The Depository Trust Company ("DTC"), or
other successor depository appointed by the Company (DTC or such other
depository is herein referred to as the "Depository") and registered in the name
of the Depository or its nominee and such Global Security will bear a legend
regarding the restrictions on exchange and registration of transfer thereof
referred to below and any such other matters as may be provided for
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pursuant to the Indenture. Unless otherwise provided in the Prospectus
Supplement, Debt Securities will not be issued in definitive form.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depository for
such Global Security or any nominee of such Depository unless (i) the Depository
has notified the Company that it is unwilling or unable to continue as
Depository for such Global Security or has ceased to be qualified to act as such
as required by the Indenture, (ii) there shall have occurred and be continuing
an Event of Default with respect to the Debt Securities represented by such
Global Security or (iii) there shall exist such circumstances, if any, in
addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All Debt Securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depository may direct. (Sections 204 and 305).
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation' within the meaning of the New York Uniform
Commercial Code and a "clearing agency," registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to DTC's book-entry system is
also available to others, such as securities brokers and dealers, banks and
trust companies, that clear securities transactions through or maintain a
custodial relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Upon the issuance by the Company of Debt Securities represented by a Global
Security, purchases of Debt Securities under the DTC System must be made by or
through Direct Participants, which will receive a credit for the Debt Securities
on DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Debt Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Debt Securities, except in the event that use of the book-entry
system for the Debt Securities is discontinued. The laws of some states require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depository for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture. Except
as described above, Beneficial Owners will not be entitled to have Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debt Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC's records
reflect only the identity of the Direct
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Participants to whose accounts such Debt Securities are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers. Conveyance of
notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to any Debt
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer
as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Debt Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Payments of principal of, and interest, if any, on the Debt Securities
represented by the Global Security registered in the name of the Depository or
its nominee will be made by the Company through the Trustee under the Indenture
or a paying agent (the "Paying Agent"), which may also be the Trustee under the
Indenture, to the Depository or its nominee, as the case may be, as the
registered owner of the Global Security. Neither the Company, the Trustee, nor
the Paying Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company has been advised that DTC will credit Direct Participants'
accounts on the payable date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices, as in the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and not of
DTC, the Paying Agent or the Company, subject to any such statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Company or the Paying
Agent, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
Interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of, and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears in
the Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee in New York, New York will
be designated as the Company's sole Paying Agent for payments with respect to
Debt Securities of each series. Any other Paying Agents initially designated by
the Company for the Debt Securities of a particular series will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Company will be required to maintain a Paying Agent in each Place of Payment
for the Debt Securities of a particular series. (Section 1002).
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Any money paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remains
unclaimed at the end of two years after such principal, premium or interest, as
the case may be, has become due and payable may be repaid to the Company at the
Company's request. (Section 1003).
COVENANTS
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with or merge with, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person (a
"Successor Person"), and may not permit any Person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to, the
Company, unless (i) the Company is the continuing and surviving entity or the
Successor Person is a corporation, partnership, trust, or other entity organized
and validly existing under the laws of any domestic jurisdiction and assumes the
Company's obligations on the Debt Securities and under the Indenture and (ii)
immediately after giving effect to the transaction (and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a
result of such transaction as having been incurred at the time of such
transaction), no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing. (Section 801).
LIMITATION ON LIENS
The Company shall not, and shall not permit any Restricted Subsidiary of
the Company, to create or suffer to exist any Lien on property or assets of the
Company or such Subsidiary in connection with incurring Debt without making
effective provision whereby all of the Debt Securities are equally and ratably
secured with such borrowing, subject to the following exceptions: (a) Liens upon
or in the property acquired or existing in such property at the time of
acquisition, or in the case of an entity which becomes a Subsidiary of the
Company, existing with respect to its property at the time it becomes a
Subsidiary; (b) with respect to any series of Debt Securities, Liens existing on
the date of issuance of such series; (c) Liens created by a Restricted
Subsidiary as security for Debt owing to the Company or any Restricted
Subsidiary; (d) Liens otherwise prohibited by this covenant, securing Debt
which, together with the aggregate outstanding principal amount of all other
Debt of the Company and its Restricted Subsidiaries which is secured by Liens
that would otherwise be subject to this covenant and the Attributable Debt of
Sale and Leaseback Transactions effected in accordance with this clause (d) does
not exceed the greater of (A) $50,000,000 or (B) 15% of Consolidated Net
Tangible Assets; (e) Liens resulting from the deposit of funds or evidences of
indebtedness in trust for the purpose of defeasing indebtedness of the Company
or any of its Subsidiaries, (f) Liens securing obligations pursuant to hedging
transactions, including rate swaps, basis swaps, forward rate transactions,
commodity swaps and options, foreign exchange transactions, cap, collar and
floor transactions, currency swap transactions and the like, and (g) any
extension, renewal or refunding of any Liens referred to in the foregoing
clauses; provided, however, that in the case of this clause (g), the principal
amount of Debt secured thereby shall not exceed the principal amount of Debt,
plus any premium or fee payable in connection with any such extension, renewal,
replacement or refunding, so secured at the time of such extension, renewal,
replacement or refunding. (Section 1008).
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and the Company will not
permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction unless: (i) immediately prior to entering into such Sale and
Leaseback Transaction, the Company or such Restricted Subsidiary could create a
Lien on the property that is to be the subject of the Sale and Leaseback
Transaction in an amount equal to the Attributable Debt with respect to the Sale
and Leaseback Transaction without thereby causing an Event of Default, or (ii)
an amount equal to the greater of the net proceeds of such Sale and Leaseback
Transaction and the fair value (as determined by the Board of Directors) of the
property that is to be the subject thereof is used (x) to reduce the Debt of the
Company or any Subsidiary having an original term to maturity of twelve months
or greater or (y) purchase assets for use in the same line of business as that
which the property that is the subject of the Sale and Leaseback Transaction was
used by the Company or the Restricted Subsidiary in
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each case within 180 days after the effective date of the sale of the property
in the Sale and Leaseback Transaction. (Section 1009).
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of, or any premium on any Debt Security of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due, and
continuance of such failure to make payment for 30 days; (c) failure to deposit
any sinking fund payment, when due, in respect of any Debt Security of the
applicable series; (d) failure to perform, or breach of, any other covenant or
warranty of the Company in the Indenture with respect to Debt Securities (other
then a covenant included in the Indenture solely for the benefit of a series
other than the applicable series), continued for 90 days after written notice
has been given to the Company by the Trustee or the Holders of at least 25% in
principal amount of the outstanding Debt Securities of that series, as provided
in the Indenture; (e) a final judgment, decree or order for the payment of money
in excess of $75,000,000 is rendered against the Company or any subsidiary and
remains unsatisfied and in effect for 90 days without a stay of execution; (f) a
default occurs under any instrument or instruments (including the Indenture)
under which there is at the time outstanding, or by which there may be secured
or evidenced, any Debt of the Company or any subsidiary or any guarantee of
payment by the Company or any subsidiary of any obligation of any Person, which
default results in acceleration of, or the nonpayment at maturity (after giving
effect to any applicable grace period) of, such Debt or guarantee in an
aggregate amount exceeding $75,000,000 and such default is not cured or waived,
and such acceleration has not been rescinded or annulled, within 30 days after
receipt by the Company of notice as provided in the Indenture; and (g) certain
events involving bankruptcy, insolvency or reorganization. (Section 501).
If an Event of Default (other than an Event of Default described in clause
(d) above that is applicable to all Outstanding Debt Securities) with respect to
the Debt Securities of any series at the time Outstanding Debt shall occur and
be continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Debt Securities of that series by notice as
provided in the Indenture may declare the principal amount of the Debt
Securities of that series (or, in the case of any Debt Security that is an
Original Issue Discount Security or the principal amount of which is not then
determinable, such portion of the principal amount of such Debt Security, or
such other amount in lieu of such principal amount, as may be specified in the
terms of such Debt Security) to be due and payable immediately. If an Event of
Default described in clause (d) of the preceding paragraph that is applicable to
all Outstanding Debt Securities shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of all the
Debt Securities then outstanding (treated as one class) by notice as provided in
the Indenture may declare the principal amount (or, if any Debt Securities are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms thereof) of all the Debt Securities then Outstanding
to be due and payable immediately. After any such acceleration of a series, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal (or other specified amount) have been cured or waived as
provided in the Indenture. (Section 502). For information as to waiver or
defaults, see "Modification and Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to the Debt Securities of that
series. (Section 512).
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless
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(i) such Holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of that series,
(ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made written request, and such
Holder or Holders have offered reasonable indemnity, to the Trustee to institute
such proceeding and (iii) the Trustee has failed to institute such proceeding,
and has not received from the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507). However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of the
principal of or any premium or interest on such Debt Security on or after the
applicable due date specified in such Debt Security. (Section 508).
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004).
AMENDMENT, MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, (b) reduce
the principal amount of, or any premium or interest on, any Debt Security, (c)
reduce the amount of principal of an Original Issue Discount Security or any
other Debt Security payable upon acceleration of the maturity thereof, (d)
change the place or currency of payment of principal, of or any premium or
interest on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on, or with respect to, any Debt Security, (f) reduce
the percentage in principal amount of Outstanding Debt Securities of any series,
the consent of whose Holders is required for modification or amendment of the
Indenture, (g) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, or (h) make
certain modifications to such provisions with respect to modification and
waiver. (Section 902).
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of any series may waive any past default or compliance with
certain restrictive provisions under the Indenture, except a default in the
payment of principal, premium or interest and certain covenants and provisions
of the Indenture which cannot be amended without the consent of the Holder of
each Outstanding Debt Security of such series affected. (Sections 513 and 1010).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the Indenture
as of any date, (i) the principal amount of Original Issue Discount Security
that will be deemed to be Outstanding will be the amount or the principal
thereof that would be due and payable as of such date upon acceleration of the
maturity thereof to such date, (ii) if, as of such date, the principal amount
payable at the Stated Maturity or a Debt Security is not determinable (for
example, because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount determined
in the manner prescribed for such Debt Security and (iii) the principal amount
of a Debt Security denominated in one or more foreign currencies or currency
units that will be deemed to be Outstanding will be the U.S. dollar equivalent,
determined as of such date in the manner prescribed for such Debt Security, of
the principal amount of such Debt Security (or, in the case of a Debt Security
described in clause (i) or (ii) above, of the amount described in such clause).
Certain Debt Securities, including those for whom payment or redemption money
has been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1402, will not be deemed to be
Outstanding. (Section 101).
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Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series on the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such
shorter period as may be specified by the Company (or the Trustee, if the
Trustee set the record date) and may be shortened or lengthened (but not beyond
180 days) from time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise provided in the applicable Prospectus Supplement, the
provisions of Section 1402, relating to defeasance and discharge of
indebtedness, or Section 1403, relating to defeasance of certain restrictive
covenants in the Indenture, shall apply to the Debt Securities of any series or
to any specified part of a series. (Section 1401).
Defeasance and Discharge. Section 1402 of the Indenture provides that the
Company will be discharged from all of its obligations with respect to such Debt
Securities (except for certain obligations to exchange or register the transfer
of Debt Securities, to replace stolen, lost or mutilated Debt Securities, to
maintain paying agencies and to hold monies for payment in trust) upon the
deposit in trust for the benefit of the Holders of such Debt Securities of money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. Such
defeasance or discharge may occur only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Company
has received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result or such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur. (Sections 1402 and 1404).
Defeasance of Certain Covenants. Section 1403 of the Indenture provides
that, in certain circumstances, the Company may omit to comply with certain
restrictive covenants, including those described under "Certain Covenants," and
any that may be described in the applicable Prospectus Supplement, and that in
those circumstances the occurrence of certain Events of Default, which are
described above (with respect to such restrictive covenants) in clause (d) in
the first paragraph under "Events of Default" and any that may be described in
the applicable Prospectus Supplement, will be deemed not to be or result in an
Event of Default, in each case with respect to such Debt Securities. The
Company, in order to exercise such option, will be required to deposit, in trust
for the benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such Debt
Securities on the respective Stated Maturities in accordance with the terms of
the Indenture and such Debt Securities. The Company will also be required, among
other things, to deliver to the Trustee an Opinion of Counsel to the effect that
Holders of such Debt Securities will not recognize gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit
and defeasance were not to occur. In the event that the Company were to exercise
this option with respect to any Debt Securities and such Debt Securities were
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on such Debt Securities at the time of
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their respective Stated Maturities but might not be sufficient to pay amounts
due on such Debt Securities upon any acceleration resulting from such Event of
Default. In such case, the Company would remain liable for such payments.
(Sections 1403 and 1404).
NOTICES
Notice to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106).
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease under which any
person is liable as lessee, and at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof, discounted from the
respective due dates thereof to such date at a rate per annum equivalent to the
rate inherent in such lease compounded semi-annually, including any termination
penalty in the case of a lease terminable by the lessee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Consolidated Net Tangible Assets" means, with respect to the Company, the
total amount of assets (less applicable valuation allowances) after deducting
(a) all current liabilities (excluding the amount of liabilities which are by
their terms extendable or renewable at the option of the obligor to a date more
than 12 months after the date as of which the amount is being determined) and
(b) all goodwill, tradenames, trademarks, patents, unamortized debt discount and
expense and other like intangible assets, all as set forth on the most recent
balance sheet of the Company and its consolidated Subsidiaries and determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Debt" means indebtedness for money borrowed.
"Lien" means any mortgage, pledge, lien or any other encumbrance.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Restricted Subsidiary" means, at any time, each Subsidiary which has
guaranteed any series of Securities and any Subsidiary having at such time
either (i) gross revenues for the preceding four fiscal quarter periods in
excess of 5% of the consolidated gross revenues of the Company and its
Subsidiaries or (ii) total assets, as of the last day of the preceding fiscal
quarter, in excess of 5% of the consolidated total assets of the Company and its
Subsidiaries, in each case, based upon the Company's most recent annual or
quarterly financial statements.
"Sale and Leaseback Transaction" means any arrangement with any person
pursuant to which the Company or any Subsidiary leases any material property
that has been or is to be sold or transferred by the Company or the Subsidiary
to such person, other than (a) leases for a term, including renewals at the
option of the lessee, of not more than three years, (b) leases between the
Company and a Subsidiary or between Subsidiaries, and (c) leases of material
property executed by the time of, or within 12 months after the latest of, the
acquisition, the completion of construction or improvement, or the commencement
of commercial operation, of such material property.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable."
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TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 309).
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws or the State of New York. (Section 112).
INFORMATION REGARDING THE TRUSTEE
Affiliates of the Trustee, Chase Manhattan Bank and Trust Company, National
Association, have lending and other customary banking relationships with the
Company.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (i) through an underwriter or
underwriters, (ii) through dealers, (iii) through agents, (iv) directly to
purchasers, including affiliates of the Company, or (v) through a combination of
any such methods of sale. The applicable Prospectus Supplement will set forth
the terms of the offerings of any Debt Securities, including the method of
distribution, the name or names of any underwriters, dealers or agents, any
managing underwriter or underwriters, the purchase price of the Debt Securities
and the proceeds to the Company from the sale, any underwriting discounts,
agency fees and other items constituting underwriters' compensation and any
discount or concessions allowed or reallowed to dealers which may be changed
from time to time. The expected time of delivery of the Debt Securities in
respect of which this Prospectus is delivered will be set forth in the
applicable Prospectus Supplement.
If underwriters are used in the sale of the Debt Securities, the
underwriting agreement will provide that the obligations of the underwriters are
subject to certain conditions precedent and that the underwriters with respect
to a sale of Debt Securities will be obligated to purchase all such Debt
Securities if any are purchased. In connection with the sale of Debt Securities,
underwriters may receive compensation from the Company or from purchasers of
Debt Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Debt Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Underwriters, agents or dealers participating in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Debt
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act.
The Debt Securities may be sold in one or more transactions either at a
fixed price or prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company may also offer and sell the Debt Securities in
exchange for one or more of its outstanding issues of debt or convertible debt
securities or in the satisfaction of indebtedness.
Underwriters, agents or dealers who participate in the distribution of Debt
Securities may be entitled, under agreements which may be entered into with the
Company, to indemnification by the Company against certain liabilities,
including liabilities under the Act, or to contribution by the Company to
payments that such underwriters, dealers or agents or any of their controlling
persons may be required to make in respect thereof. Underwriters, agents or
dealers may be customers of, engage in transactions with or perform services for
the Company or subsidiaries of the Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Debt Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the Prospectus
16
<PAGE> 18
Supplement. Such contracts will be subject only to those conditions set forth in
the Prospectus Supplement. The Prospectus Supplement will also set forth the
commissions payable for solicitation of such contracts.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others who may be deemed to be underwriters within the meaning of the Act
with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto. Except as set forth in
the applicable Prospectus Supplement, no director, officer or employee of the
Company will solicit or receive a commission with direct sales by the Company of
the Debt Securities, although such persons may respond to inquiries by potential
purchasers and perform ministerial and clerical work in connection with any such
direct sales.
LEGAL MATTERS
The validity of the issuance of the Debt Securities offered by PacifiCare
hereby will be passed upon for the Company by Cooley Godward LLP, Palo Alto,
California. Certain matters in connection with the issuance of the Debt
Securities will be passed upon for the underwriters, dealers or agents, if any,
by Mayer, Brown & Platt, Los Angeles, California.
EXPERTS
The consolidated financial statements of PacifiCare included in
PacifiCare's Annual Report on Form 10-K for the year ended December 31, 1997,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
17
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 73,750
Rating Agency Fees.......................................... 162,500
Printing and Engraving...................................... 70,000
Legal Fees and Expenses (other than Blue Sky)............... 80,000
Blue Sky Fees and Expenses.................................. 1,000
Accounting Fees and Expenses................................ 40,000
Trustee Fees and Expenses................................... 10,000
Miscellaneous............................................... 50,000
--------
Total............................................. $487,250
========
</TABLE>
All of the above items except the registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's bylaws provide
that the Registrant will indemnify its directors and officers to the maximum
extent consistent with the provisions of the Delaware General Corporation Law.
In addition, the Registrant's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty of care to the Registrant and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant, for
acts or omissions not in good faith or involving intentional misconduct or a
knowing violation of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
The Registrant maintains a policy providing directors' and officers'
liability insurance, which insures directors and officers of the Registrant in
certain circumstances.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
II-1
<PAGE> 20
ITEM 16. EXHIBITS
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement
4.1 Form of Indenture to be dated as of , 1998,
between PacifiCare Health Systems, Inc., and The Chase
Manhattan Bank, as trustee
5.1 Opinion of Cooley Godward LLP
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (appears on signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 of
Chase Manhattan Bank and Trust Company, National
Association, as trustee, under the Trust Indenture Act
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are being made
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any fact or events arising after
the effective date of the registrations 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 and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the
II-2
<PAGE> 21
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Ana, State of California, on this 19th day of
May, 1998.
PACIFICARE HEALTH SYSTEMS, INC.
/s/ ALAN R. HOOPS
--------------------------------------
By: Alan R. Hoops
Title: President and Chief Executive
Officer
PacifiCare Health Systems, Inc.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each of the undersigned whose signature
appears below constitutes and appoints Alan R. Hoops, Wayne B. Lowell and Joseph
S. Konowiecki and each of them (with full power of each of them to act alone),
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and on his behalf, and in his name,
place and stead, in any all capacities to execute and sign any and all
amendments or post-effective amendments to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorneys-in fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in
fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof and the Registrant hereby
confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ TERRY O. HARTSHORN Chairman of the Board May 19, 1998
- ------------------------------------------
Terry O. Hartshorn
/s/ ALAN R. HOOPS President and Chief Executive Officer and May 19, 1998
- ------------------------------------------ Director (Principal Executive Officer)
Alan R. Hoops
/s/ WAYNE B. LOWELL Executive Vice President and Chief May 19, 1998
- ------------------------------------------ Financial Officer (Principal Financial
Wayne B. Lowell Officer)
/s/ MARY C. LANGSDORF Vice President and Corporate Controller May 19, 1998
- ------------------------------------------ (Principal Accounting Officer)
Mary C. Langsdorf
/s/ JACK R. ANDERSON Director May 19, 1998
- ------------------------------------------
Jack R. Anderson
/s/ CRAIG T. BEAM Director May 19, 1998
- ------------------------------------------
Craig T. Beam
</TABLE>
II-4
<PAGE> 23
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ RICHARD M. BURDGE Director May 19, 1998
- ------------------------------------------
Richard M. Burdge
/s/ BRADLEY C. CALL Director May 19, 1998
- ------------------------------------------
Bradley C. Call
/s/ DAVID R. CARPENTER Director May 19, 1998
- ------------------------------------------
David R. Carpenter
/s/ GARY L. LEARY Director May 19, 1998
- ------------------------------------------
Gary L. Leary
/s/ DAVID A. REED Director May 19, 1998
- ------------------------------------------
David A. Reed
/s/ WARREN E. PINCKERT II Director May 19, 1998
- ------------------------------------------
Warren E. Pinckert II
Director May , 1998
- ------------------------------------------
Lloyd E. Ross
/s/ JEAN BIXBY SMITH Director May 19, 1998
- ------------------------------------------
Jean Bixby Smith
</TABLE>
II-5
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.
4.1 Form of Indenture, to be dated as of , 1998,
between PacifiCare Health Systems, Inc. and The Chase
Manhattan Bank, as trustee.
5.1 Opinion of Cooley Godward LLP.
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (appears on signature page).
25.1 Statement of Eligibility and Qualifications on Form T-1 of
Chase Manhattan Bank and Trust Company, National
Association, as trustee under the Trust Indenture Act.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
$
PACIFICARE HEALTH SYSTEMS, INC.
(a Delaware corporation)
% Senior Notes due
UNDERWRITING AGREEMENT
, 1998
BancAmerica Robertson Stephens
as Representatives of the several Underwriters
231 S. LaSalle Street
Chicago, Illinois 60697
Dear Sirs:
PacifiCare Health Systems, Inc., a Delaware corporation (the "Company"),
confirms its agreement with BancAmerica Robertson Stephens and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any Underwriter substituted as hereinafter provided in
Section 10 hereof), for whom BancAmerica Robertson Stephens is acting as
representative (in such capacity, BancAmerica Robertson Stephens shall
hereinafter be referred to as the "Representative"), with respect to the sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of $ aggregate principal amount of the Company's % Senior Notes due
("Securities"). The Securities are to be issued pursuant to an indenture (the
"Indenture") between
<PAGE> 2
the Company, and Chase Manhattan Bank and Trust Company, National Association,
as trustee (the "Trustee").
Prior to the purchase and public offering of the Securities by the several
Underwriters, the Company and the Representative, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and the Representative and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Securities
will be governed by this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of the Pricing Agreement,
this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (as amended to the date of this
Agreement, the "Registration Statement") on Form S-3 (No. 333- ) including a
prospectus relating to the registration of debt of the Company, including the
Securities,(the "Registration Statement") pursuant to the Securities Act of
1933, as amended (the "1933 Act") and has filed with, mailed for filing to, or
shall promptly hereafter file with or transmit to the Commission a final
prospectus supplement specifically relating to the Securities pursuant to Rule
424 of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"). The term "Basic Prospectus" means the prospectus (other than
the prospectus supplement specifically relating to the Securities) included in
the Registration Statement. The term "Prospectus" means the Basic Prospectus
together with the final prospectus supplement specifically relating to the
Securities. The term "preliminary prospectus" means a preliminary prospectus
supplement specifically relating to the Securities, together with the Basic
Prospectus. The term "Material Subsidiaries" means those subsidiaries of the
Company named in Schedule B hereto. All references in this Agreement to
financial statements and schedules and other information which is "contained,"
"included" or "stated" in the Registration Statement, the Basic Prospectus, the
Prospectus or the preliminary prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, the Basic Prospectus, the Prospectus or
the preliminary prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, the Basic
Prospectus, the Prospectus or the preliminary prospectus shall
2
<PAGE> 3
be deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or the rules and regulations
of the Commission under the 1934 Act (the "1934 Act Regulations") which is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
the Pricing Agreement has been executed and delivered and the Statement of
Eligibility of the Trustee on form T-1 has been filed under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
3
<PAGE> 4
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the date
hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement became effective and at
the Representation Date, the Registration Statement complied and, at the
Representation Date, the Prospectus complied or will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, at the
Representation Date and at Closing Time referred to in Section 2 hereof,
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representative expressly for use in the
Registration Statement or Prospectus.
(ii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iii) The financial statements included in the Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries (each such subsidiary being
referred to herein individually as a "Subsidiary" and collectively as the
"Subsidiaries") as at the dates indicated and the results of their
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein;
and the Company's ratios of
4
<PAGE> 5
earnings to fixed charges (actual and, if any, pro forma) included in the
Prospectus have been calculated in compliance with Item 503(d) of
Regulation S-K of the Commission.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business or
(B) there have been no transactions entered into by the Company or any of
its Subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its Subsidiaries
considered as one enterprise.
(v) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware
with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement and the
Pricing Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise.
(vi) Each Material Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
state or other jurisdiction of incorporation. Each Material Subsidiary is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or property
(owned, leased or licensed) or the nature of its business makes such
qualification necessary, except for such jurisdictions where the failure
to qualify would not have a material adverse effect on the assets or
properties, business, results of operations or financial condition of the
Company and its Subsidiaries considered as one enterprise. The Company
does not control, directly or indirectly, any corporation, partnership,
joint venture, association or
5
<PAGE> 6
other business organization other than the Subsidiaries. All of the issued
and outstanding capital stock of each Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations, agreements,
employee benefit plans, redemptions of the Company's Series A Cumulative
Convertible Preferred Stock or the exercise of convertible securities, in
each case as referred to in the Prospectus); and the shares of issued and
outstanding Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable.
(viii) The Company and each of the Material Subsidiaries (a) has the
power and authority and all governmental licenses, authorizations,
consents and approvals to own its assets and carry on its business and (b)
is in compliance with all Requirements of Law, except to the extent that
the failure to have the same or be in such compliance would not have a
material adverse effect on the Company and its Subsidiaries considered as
one enterprise. As used herein, the term "Requirements of Law" means any
law (statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable to
or binding upon the Company or any of its Subsidiaries or any of its or
their property or to which the Company or any of its Subsidiaries or any
of its or their property is subject; and the term "Governmental Authority"
means any nation or government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and
any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
(ix) Neither the Company nor any Subsidiary is in violation of its
certificate or articles of incorporation, charter, by-laws or other
governing instruments or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in
6
<PAGE> 7
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any Subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or assets
of the Company or any Subsidiary is subject except for any violation or
default which, individually or in the aggregate, would not have a material
adverse effect on the Company and its Subsidiaries considered as one
enterprise; and the execution, delivery and performance of this Agreement,
the Pricing Agreement, the Indenture and the Securities and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate action and will not
conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any Subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or assets
of the Company or any Subsidiary is subject, nor will such action result
in any violation of the provisions of the certificate or articles of
incorporation, charter, by-laws or other governing instruments of the
Company or any Subsidiary or any applicable law, administrative regulation
or administrative or court decree, except for any such occurrence which,
individually or in the aggregate, would not have a material adverse effect
on the Company and its Subsidiaries considered as one enterprise;
(x) Neither the Company nor the Material Subsidiaries have any
collective bargaining agreements nor, to the knowledge of the Company, are
any union organizing activities taking place with respect to the Company
or the Material Subsidiaries.
(xi) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company
or any Subsidiary, which is required to be disclosed in the Registration
Statement or the Prospectus (other than as disclosed therein), or which
might materially and adversely affect the consummation of this Agreement;
and there are no contracts or documents of the Company or any Subsidiary
which are required to be filed as exhibits to the Registration Statement
or otherwise included by the
7
<PAGE> 8
1933 Act or by the 1933 Act Regulations which have not been so filed or
included.
(xii) The Company or its Subsidiaries own or are licensed or
otherwise have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises, authorizations and
other rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other
Person. As use herein, the term "Person" means an individual, partnership,
corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, Joint Venture or Governmental
Authority.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering, issuance or sale of the Securities hereunder, except such as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws or the qualification of the Indenture under the 1939 Act.
(xiv) This Agreement has been, and, at the Representation Date, the
Pricing Agreement will have been, duly executed and delivered by the
Company.
(xv) The Indenture has been duly authorized by the Company and, at
the Closing Time, will have been duly qualified under the 1939 Act and
duly executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
(xvi) The Securities have been duly authorized and, at the Closing
Time, will have been duly executed by the Company and, when authenticated
in the manner provided for in the Indenture and delivered against payment
of the Purchase Price therefor specified in the Pricing Agreement, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general
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<PAGE> 9
equitable principles, and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(xvii) The Company has all requisite power and authority to enter
into this Agreement, including the Pricing Agreement, and to carry out the
provisions and conditions thereof.
(xviii) The Securities and the Indenture will conform in all
material respects to the respective statements relating thereto contained
in the Prospectus and will be in substantially the respective forms filed
or incorporated by reference, as the case may be, as exhibits to the
Registration Statement.
(xix) The Securities rank and will rank on a parity with all
indebtedness of the Company outstanding under the Credit Facility (as
referred to in the Prospectus) that is outstanding on the date hereof or
that may be incurred hereafter.
(xx) The documents incorporated or deemed to be incorporated by reference
in the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at
the Closing Time, will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(xxi) The Company and each of its Subsidiaries has good and marketable
title to all properties and assets owned by it, free and clear of any
liens, encumbrances or restrictions and all of the leases and subleases of
the Company and its Subsidiaries and under which the Company or any
Subsidiary holds properties described in the Prospectus, are in full
force, except, in each case, such as (A) are described in the Prospectus
or (B) do not materially impair or interfere with the current use made of
such properties or (C) would not, individually or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries considered as
one enterprise;
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<PAGE> 10
(xxii) The Company and each of its Subsidiaries complies in all
material respects with all Environmental Laws (as defined below) except to
the extent that failure to comply with such Environmental Laws would not
have a material adverse effect on the Company and its Subsidiaries
considered as one enterprise. Except as disclosed in the Prospectus,
neither the Company nor any of its Subsidiaries is the subject of any
pending or, to the knowledge of the Company, threatened federal, state or
local investigation evaluating whether any remedial action by the Company
or any Subsidiary is needed to respond to a release of any Hazardous
Materials (as defined below) into the environment, resulting from the
Company's or any of its Subsidiaries' business operations or ownership or
possession of any of their properties or assets that might be expected to
have a material adverse effect on the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company and
its Subsidiaries considered as one enterprise. As used herein, the term
"Environmental Laws" means any federal, state or local law or regulation
applicable to the Company's or any of its Subsidiaries' business
operations or ownership or possession of any of their properties or assets
relating to environmental matters, and "Hazardous Materials" means those
substances that are regulated by or form the basis of liability under any
Environmental Laws.
(b) Any certificate signed by any officer of the Company and delivered to
the Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Underwriters: Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at the price set
forth in the Pricing Agreement, the aggregate principal amount of Securities set
forth in Schedule A opposite the name of such Underwriter (except as otherwise
provided in the Pricing Agreement), plus any additional principal amount of
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
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The initial public offering price of the Securities shall be a fixed price
to be determined by agreement between the Representative and the Company. The
interest rate on the Securities likewise shall be determined by agreement
between the Company and the Representative. The initial public offering price,
the interest rate and the purchase price, when so determined, shall be set forth
in the Pricing Agreement. In the event that such prices and interest rate have
not been agreed upon and the Pricing Agreement has not been executed and
delivered by the parties thereto by the close of business on the fourth business
day following the date of this Agreement, this Agreement shall terminate
forthwith, without liability of any party to any other party, unless otherwise
agreed to by the Company and the Representative.
(b) Payment of the purchase price for, and delivery of certificates for,
the Securities shall be made at the office of Konowiecki & Rank, 633 West Fifth
Street, Suite 3500, Los Angeles, California, or at such other place as shall be
agreed upon by the Representative and the Company, at 10:00 A.M. on the third
business day (unless postponed in accordance with the provisions of Section 10)
following the execution of the Pricing Agreement, or such other time not later
than five business days after such date as shall be agreed upon by the
Representative and the Company (such time and date of payment and delivery
being herein called "Closing Time"). Payment shall be made to the Company in
same day funds payable to the order of the Company, against delivery to the
Representative for the respective accounts of the Underwriters of the
Securities to be purchased by them. One or more global certificates representing
the Securities shall be delivered to The Depository Trust Company ("DTC").
Interests in the Underwriters' Securities will be represented by book entries on
the records of DTC as the Representative may request not less than two full
business days in advance of the Closing Date. The Company agrees to have the
global certificate(s), if any, available for inspection by the Representative
in New York, New York, not later than 1:00 p.m. Eastern Daylight Time on the
business day prior to the Closing Date.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representative immediately (i) of
the effectiveness of the Registration Statement and any amendment thereto
(including any post-effective amendment), (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement
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<PAGE> 12
or any amendment or supplement to the Prospectus or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to
the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representative with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such Prospectus to which the Representative or
counsel for the Underwriters shall object.
(c) The Company will deliver to the Representative as many signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated
by reference therein) as the Representative may reasonably request and
will also deliver to the Representative a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters.
(d) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for
the purposes contemplated by the 1933 Act or the 1934 Act or the
respective applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the Underwriters or of counsel for the
Company, to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, the Company will forthwith amend
or supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriters) so that, as so amended or supplemented, the
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<PAGE> 13
Prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, and the Company will furnish to
the Underwriters a reasonable number of copies of such amendment or
supplement.
(f) The Company will endeavor, in cooperation with the Underwriters,
to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States as the Representative may designate; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in
which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement.
(g) Not later than the 50th day following the end of the first
fiscal quarter occurring after the first anniversary of the effective date
(as defined in Rule 158 under the 1933 Act), the Company will make
generally available to its security holders an earnings statement in
accordance with Section 11(a) of the 1933 Act and Rule 158 thereunder.
(h) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
(j) During a period of 90 days from the date of the Pricing
Agreement, the Company will not, without the Representative' prior
written consent, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Securities or
securities similar to the Securities, or any securities convertible into
or exchangeable or exercisable for any Securities or any such similar
securities, except for
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<PAGE> 14
Securities sold to the Underwriters pursuant to this Agreement.
SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the reproduction of this Agreement, the Indenture
and the Pricing Agreement, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of a Blue Sky Survey and a Legal Investment Survey, if any, (vi) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each preliminary
prospectus, and of the Prospectus and any amendments or supplements thereto,
(vii) the reproduction and delivery to the Underwriters of copies of a Blue Sky
Survey and any Legal Investment Survey, if any, (viii) the fees and expenses of
the Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (ix) any fees payable in
connection with the rating of the Securities; and (x) the fee of the National
Association of Securities Dealers, Inc.
("NASD"), if any.
If this Agreement is terminated by the Representative in accordance with
the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties of the Company herein contained, to the performance by the Company of
its obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
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<PAGE> 15
(b) At Closing Time the Representative shall have received:
(1) The opinion, dated as of Closing Time, of Cooley Godward
LLP, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Company has all requisite corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the
Indenture and the Securities.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which the ownership of its property or
the conduct of its business requires such qualification and
where any statutory fines or penalties or any corporate
disability imposed for the failure to qualify would materially
and adversely affect the Company and its Subsidiaries
considered as one enterprise.
(iv) Each Material Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the state of its incorporation; has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as
described in the Registration Statement and Prospectus; is
duly qualified as a foreign corporation to transact business
and is in good standing under the laws of each other
jurisdiction in which the ownership of its property and the
conduct of its business requires such qualification and where
any statutory fines or penalties or any corporate disability
imposed for the failure to qualify
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<PAGE> 16
would materially and adversely affect the Company and its
Subsidiaries considered as one enterprise; all of the issued
and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and
non-assessable and is owned of record by the Company, directly
or through Subsidiaries, to such counsel's knowledge, free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(v) This Agreement and the Pricing Agreement have each
been duly authorized, executed and delivered by the Company.
(vi) The Registration Statement is effective under the
1933 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and
to such counsel's knowledge, no proceedings for that purpose
have been initiated or threatened by the Commission.
(vii) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and supporting schedules and other
financial and statistical data included therein or derived
therefrom, as to which no opinion need be rendered) complied
as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(viii) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement other
than those disclosed therein.
(ix) The information in the Prospectus under
"Description of Notes", to the extent that it constitutes
matters of law, summaries of legal matters, documents or legal
proceedings, or legal conclusions, is accurate and fairly
presents, to the extent required by the 1933 Act and the 1933
Act Regulations, the matters referred to therein.
(x) To such counsel's knowledge, there are no contracts,
indentures, mortgages, loan
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<PAGE> 17
agreement, notes, leases or other instruments required to be
filed as exhibits to the Registration Statement other than
those filed or incorporated by reference as exhibits thereto
and the descriptions thereof or references thereto contained
or incorporated in the Prospectus fairly present and summarize
such documents to the extent required by the 1933 Act and the
1933 Act Regulations.
(xi) No authorization, approval, consent or order of any
court or governmental authority or agency is required in
connection with the offering, issuance or sale of the
Securities contemplated herein and in the Prospectus, except
(a) as disclosed in the Registration Statement, or (b) such as
may be required under the 1933 Act or the 1933 Act Regulations
or state securities laws or from the NASD or the qualification
of the Indenture under the 1939 Act.
(xii) The execution, delivery and performance of this
Agreement, the Pricing Agreement, the Indenture, and the
global notes representing the Securities and the consummation
of the transactions contemplated herein and therein and
performance by the Company of its obligations hereunder and
thereunder (other than performance by the Company of its
obligations under the indemnification and contribution
sections of the Agreement, as to which such counsel need
express no opinion) do not violate any provision of the
Company's Certificate of Incorporation or Bylaws or the
charter or Bylaws of any Material Subsidiary, and will not
constitute a material default under those agreements
identified by the Company as being material to the businesses
of itself and its Subsidiaries as set forth on a schedule
attached to such counsel's opinion and do not violate or
contravene (a) any governmental statute, rule or regulation
applicable to the Company (other than state securities laws as
to which such counsel need not express an opinion) or (b) any
order, writ, judgement, injunction, decree, determination or
award which has been entered against the Company and of which
such counsel is aware, in each case the violation or
contravention of which would materially and adversely affect
the
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Company and its Subsidiaries considered as one enterprise.
(xiii) To the best of such counsel's knowledge, there
are no persons with registration or other similar rights to
have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the
1933 Act as a result of the filing of the Registration
Statement.
(xiv) The Indenture and the Securities have been duly
authorized, and the Indenture has been duly executed and
delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Trustee) the Indenture
constitutes and the Securities, when [executed by the Company
and], authenticated by the Trustee in the manner provided in
the Indenture and delivered against payment therefor specified
in the Pricing Agreement, will constitute the valid and
binding agreements of the Company enforceable against the
Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar law relating to or
affecting creditors' rights generally or by general equitable
principles and limitations on the availability of equitable
remedies.
(xv) The Securities are in the form contemplated by the
Indenture.
(xvi) The Indenture has been duly qualified under the
1939 Act.
(xvii) The Securities conform in all material respects
to the description thereof contained in the Prospectus under
the caption "Description of Notes."
(xvii) The annual Report on Form 10-K for the fiscal
year ended December 31, 1997 and the Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 filed by the Company
pursuant to the 1934 Act (other than the
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<PAGE> 19
financial statements and supporting schedules and other
financial and statistical data included therein or derived
therefrom, as to which no opinion need be rendered) and
incorporated or deemed to be incorporated by reference in the
Prospectus complied as to form when so filed with the 1934 Act
and the 1934 Act Regulations.
In giving the opinion required by subsection (b)(1) of this Section, such
counsel shall additionally state that during the course of the preparation of
the Registration Statement such counsel participated in conferences with the
Underwriters, the Underwriters' counsel, and with officers and other
representatives of the Company, other counsel and its independent public
accountants at which the contents of the Registration Statement and Prospectus
were discussed, and while such counsel have not independently verified and are
not passing upon the accuracy, completeness or fairness of the statements made
in the Registration Statement and Prospectus, except as set forth in paragraph
(xvii) above, on the basis of the foregoing, nothing has come to their attention
that would lead them to believe that the Registration Statement (except for
financial statements and schedules, other financial information and statistical
data derived therefrom or included or incorporated by reference therein and that
part of the Registration Statement which constitutes the Trustee's Statement of
Eligibility and Qualification under the 1939 Act (Form T-1), as to which counsel
need not make a statement), at the time it became effective and on the
Representation Date contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (except for financial
statements and schedules, other financial information and statistical data
derived therefrom or included or incorporated by reference therein, as to which
counsel need make no statement), as of its date or at Closing Time, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may state that they have relied on the
opinion of Konowiecki & Rank, as regular corporate counsel to the Company, or on
the opinions of local counsel and, with respect to the opinion rendered pursuant
to Section 5(b)(1)(xiv), such counsel may note that the Indenture and the
Securities designate the laws of the State of New York as the laws governing the
Indenture and the Securities and may state that their opinion is premised upon
the result that would
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<PAGE> 20
obtain if a California court were to apply the internal laws of the State of
California (notwithstanding the designation of the laws of the State of New
York) to the interpretation and enforcement of the Indenture and Securities.
(2) The opinion, dated as of Closing Time, of Mayer, Brown &
Platt, counsel for the Underwriters, with respect to such matters as
the Underwriters shall require.
(c) At Closing Time there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the
20
<PAGE> 21
Representative shall have received a certificate of the chief executive
officer or the chief financial officer of the Company and of the secretary
of the Company, dated as of Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force
and effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement, the
Representative shall have received from Ernst & Young LLP, independent
public accountants, a letter dated the date of such execution, in form and
substance satisfactory to the Representative, to the effect that (i) they
are independent public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations; (ii) it is their opinion that the financial statements and
supporting schedules included in the Registration Statement and the
Prospectus and covered by their opinions therein comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations; (iii) based upon limited procedures set
forth in detail in such letter, nothing has come to their attention which
causes them to believe that (A) the unaudited financial statements and
supporting schedules of the Company and its subsidiaries included in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis consistent
with that of the audited financial statements included in the Registration
Statement, or (B) the unaudited amounts of revenues, net income and net
income per share set forth under "Selected Consolidated Financial
Information" in the Prospectus were not determined on a basis consistent
with that used in determining the corresponding amounts in the audited
financial statements included in the Registration Statement and the
Prospectus; and (iv) in addition to the examination referred to in their
opinions and the limited procedures referred to in clause (iii) above,
they have carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and
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<PAGE> 22
financial information which are included in the Registration Statement and
Prospectus and which are specified by the Representative, and have found
such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of the Company
and its subsidiaries identified in such letter.
(e) At Closing Time the Representative shall have received from
Ernst & Young LLP, independent public accountants, a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than five days
prior to Closing Time.
(f) At Closing Time, the Securities shall be rated at least Baa3 by
Moody's Investors Service Inc. and BBB by Standard & Poor's Corporation,
and the Company shall have delivered to the Representative a letter,
dated the Closing Time, from each such rating agency, or other evidence
satisfactory to the Representative, confirming that the Securities have
such ratings; and, since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Securities or any
other debt or preferred stock of the Company by any nationally recognized
securities rating agency, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the
Company's other securities.
(g) At Closing Time counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and sale
of the Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and counsel for the Underwriters.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Company at any time at or prior to Closing
Time, and such
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<PAGE> 23
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the Prospectus or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by BancAmerica Robertson Stephens), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the
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<PAGE> 24
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, further that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, this indemnity agreement shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased the Notes concerned to the extent that any such
loss claim, damage or liability of such Underwriter results from the fact that a
copy of the Prospectus, excluding documents incorporated by reference therein,
was not sent or given to such person at or prior to the written confirmation of
the sale of such Notes to such person as required by the 1933 Act, if the untrue
statement or omission concerned has been corrected in the Prospectus and
delivery of such Prospectus would have avoided such liability.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representative expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in
24
<PAGE> 25
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more of the Underwriters, as incurred, in
such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits (as described in the preceding
sentence), but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of the Company and the Underwriters shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or the
25
<PAGE> 26
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
consideration referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. The Underwriters'
obligation to contribute are several in proportion to their respective
obligations and not joint. For purposes of this Section 7, any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company will
have the same rights to contribution as the Company, subject in each case to the
provisions hereof. No party will be liable for contribution with respect to any
action or claim settled without its written consent. For purposes of this
Section, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Company
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representative may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
26
<PAGE> 27
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Representative, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
the Common Stock of the Company has been suspended by the Commission, or if
trading generally on either the American Stock Exchange or the New York Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said Exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by either Federal, New
York or California authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement and the Pricing Agreement
(the "Defaulted Securities"), the Representative shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
Securities, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate
27
<PAGE> 28
without liability on the part of any non-defaulting Underwriter or the
Company except as set forth in Section 4.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at BancAmerica Robertson
Stephens, 231 South LaSalle Street, Chicago, Illinois 60697, Attention:
Syndicate Manager, notices to the Company shall be directed to it at 3120 Lake
Center Drive, Santa Ana, California 92704, Attention: Alan R. Hoops, President
and Chief Executive Officer.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters and the Company and
their respective successors. Nothing expressed or mentioned in this Agreement or
the Pricing Agreement is intended or shall be construed to give any person, firm
or corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons, officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or the
Pricing Agreement or any provision herein or therein contained. This Agreement
and the Pricing Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Company and their respective successors, and said controlling persons,
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
28
<PAGE> 29
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time.
29
<PAGE> 30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
PacifiCare Health Systems, Inc.
By
-----------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
BancAmerica Robertson Stephens
By
------------------------------
Name:
Title:
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
Aggregate
Principal Amount
Name of Underwriter of Securities
------------------- ----------------
<S> <C>
BancAmerica Robertson Stephens.................. $
Chase Securities Inc. .......................... $
Citicorp Securities, Inc. ...................... $
SBC Warburg Dillon Read Inc..................... $
-----------
Total........................................... $
===========
</TABLE>
2
<PAGE> 32
$
PacifiCare Health Systems, Inc.
(a Delaware corporation)
% Senior Notes due
PRICING AGREEMENT
, 1998
BancAmerica Robertson Stephens
as Representative of the several Underwriters
named in the within-mentioned Purchase Agreement
231 South LaSalle Street
Chicago, Illinois 60697
Dear Sirs:
Reference is made to the Underwriting Agreement dated , 1998 (the
"Underwriting Agreement") relating to the purchase by the several Underwriters
named in Schedule A thereto, for whom BancAmerica Robertson Stephens is acting
as representative (the "Representative"), of the above % Senior Notes due (the
"Securities") of PacifiCare Health Systems, Inc., a Delaware corporation (the
"Company").
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with each Underwriter as follows:
1. The initial public offering price of the Securities shall be %
of the principal amount thereof, plus accrued interest, if any, from the
date of settlement.
2. The purchase price to be paid by the Underwriters for the
Securities shall be % of the principal amount thereof.
3. The interest rate on the Securities shall be % per annum.
4. The semi-annual interest payment dates shall be and
beginning on 1998.
5. The maturity date shall be .
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a
<PAGE> 33
binding agreement between the Underwriters and the Company in accordance with
its terms.
Very truly yours,
PacifiCare Health Systems, Inc.
By
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
BancAmerica Robertson Stephens
By
-------------------------
Name:
Title:
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
2
<PAGE> 1
EXHIBIT 4.1
================================================================================
PACIFICARE HEALTH SYSTEMS, INC.
Issuer
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
Trustee
---------------
INDENTURE
Dated as of _____, 1998
---------------
================================================================================
<PAGE> 2
- --------------------------------------------------------------------------------
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- --------------- -----------------
<S> <C>
Section 310(a)(1) ........................................... 609
(a)(2) ........................................... 609
(a)(3) ........................................... Not Applicable
(a)(4) ........................................... Not Applicable
(b) ........................................... 608
610
Section 311(a) ........................................... 613
(b) ........................................... 613
Section 312(a) ........................................... 701
702
(b) ........................................... 702
(c) ........................................... 702
Section 313(a) ........................................... 703
(b) ........................................... 703
(c) ........................................... 703
(d) ........................................... 703
Section 314(a) ........................................... 704
(a)(4) ........................................... 101
1004
(b) ........................................... Not Applicable
(c)(1) ........................................... 102
(c)(2) ........................................... 102
(c)(3) ........................................... Not Applicable
(d) ........................................... Not Applicable
(e) ........................................... 102
Section 315(a) ........................................... 601
(b) ........................................... 602
(c) ........................................... 601
(d) ........................................... 601
(e) ........................................... 514
</TABLE>
- ---------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- --------------- -----------------
<S> <C>
Section 316(a) ............................................. 101
(a)(1)(A) ............................................. 502
512
(a)(1)(B) ............................................. 513
(a)(2) ............................................. Not Applicable
(b) ............................................. 508
(c) ............................................. 104
Section 317(a)(1) ............................................. 503
(a)(2) ............................................. 504
(b) ............................................. 1003
Section 318(a) ............................................. 107
</TABLE>
- ---------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION.................................................1
SECTION
101. Definitions...............................................1
"Act"......................................................2
"Attributable Debt"........................................2
"Affiliate"................................................2
"Authenticating Agent".....................................2
"Board of Directors".......................................2
"Board Resolution".........................................2
"Business Day".............................................2
"Commission"...............................................3
"Company"..................................................3
"Company Request" or "Company Order".......................3
"Consolidated Net Tangible Assets".........................3
"Corporate Trust Office"...................................3
"Corporation"..............................................3
"Covenant Defeasance"......................................3
"Debt".....................................................3
"Defaulted Interest".......................................3
"Defeasance"...............................................3
"Depositary"...............................................3
"Event of Default".........................................3
"Exchange Act".............................................3
"Expiration Date"..........................................3
"Global Security"..........................................4
"Holder"...................................................4
"Indenture"................................................4
"Interest".................................................4
"Interest Payment Date"....................................4
"Internal Revenue Code"....................................4
"Investment Company Act"...................................4
"Lien".....................................................4
"Maturity".................................................4
"Notice of Default"........................................4
"Officers' Certificate"....................................4
"Opinion of Counsel".......................................4
"Original Issue Discount Security".........................5
"Outstanding"..............................................5
"Paying Agent".............................................6
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
"Person"...................................................6
"Place of Payment".........................................6
"Predecessor Security".....................................6
"Redemption Date"..........................................6
"Redemption Price".........................................6
"Regular Record Date"......................................6
"Repayment Date"...........................................6
"Responsible Officer"......................................6
"Restricted Subsidiary"....................................7
"Sale and Leaseback Transaction"...........................7
"Securities"...............................................7
"Securities Act"...........................................7
"Security Register" and "Security Registrar"...............7
"Special Record Date"......................................7
"Stated Maturity"..........................................7
"Subsidiary"...............................................7
"Trust Indenture Act"......................................7
"Trustee"..................................................7
"U.S. Government Obligation"...............................8
"Vice President"...........................................8
"Yield to Maturity"........................................8
SECTION 102. Compliance Certificates and Opinions.....................8
SECTION 103. Form of Documents Delivered to Trustee...................9
SECTION 104. Acts of Holders; Record Dates............................9
SECTION 105. Notices, Etc., to Trustee and Company...................11
SECTION 106. Notice to Holders; Waiver...............................12
SECTION 107. Conflict with Trust Indenture Act.......................12
SECTION 108. Effect of Headings and Table of Contents................12
SECTION 109. Successors and Assigns..................................12
SECTION 110. Separability Clause.....................................13
SECTION 111. Benefits of Indenture...................................13
SECTION 112. Governing Law...........................................13
SECTION 113. Legal Holidays..........................................13
ARTICLE TWO
SECURITY FORMS........................................................13
SECTION 201. Forms Generally.........................................13
SECTION 202. Form of Face of Security................................14
SECTION 203. Form of Reverse of Security.............................16
SECTION 204. Form of Legend for Global Securities....................22
SECTION 205. Form of Trustee's Certificate of Authentication.........22
</TABLE>
ii
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE THREE
THE SECURITIES........................................................22
SECTION 301. Amount Unlimited; Issuable in Series....................22
SECTION 302. Denominations...........................................25
SECTION 303. Execution, Authentication, Delivery and Dating..........26
SECTION 304. Temporary Securities....................................27
SECTION 305. Registration, Registration of Transfer and Exchange.....28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities........29
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset...............................30
SECTION 308. Optional Extension of Maturity..........................33
SECTION 309. Persons Deemed Owners...................................33
SECTION 310. Cancellation............................................34
SECTION 311. Computation of Interest.................................34
ARTICLE FOUR
SATISFACTION AND DISCHARGE............................................34
SECTION 401. Satisfaction and Discharge of Indenture.................34
SECTION 402. Application of Trust Money..............................35
ARTICLE FIVE
REMEDIES..............................................................36
SECTION 501. Events of Default.......................................36
SECTION 502. Acceleration of Maturity; Rescission and Annulment......38
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................39
SECTION 504. Trustee May File Proofs of Claim........................40
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities ...........................................40
SECTION 506. Application of Money Collected..........................40
SECTION 507. Limitation on Suits.....................................41
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................42
SECTION 509. Restoration of Rights and Remedies......................42
SECTION 510. Rights and Remedies Cumulative..........................42
SECTION 511. Delay or Omission Not Waiver............................42
SECTION 512. Control by Holders......................................42
SECTION 513. Waiver of Past Defaults.................................43
SECTION 514. Undertaking for Costs...................................43
SECTION 515. Waiver of Usury, Stay or Extension Laws.................44
</TABLE>
iii
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE SIX
THE TRUSTEE...........................................................44
SECTION 601. Certain Duties and Responsibilities.....................44
SECTION 602. Notice of Defaults......................................44
SECTION 603. Certain Rights of Trustee...............................44
SECTION 604. Not Responsible for Recitals or Issuance of Securities..45
SECTION 605. May Hold Securities.....................................45
SECTION 606. Money Held in Trust.....................................46
SECTION 607. Compensation and Reimbursement..........................46
SECTION 608. Conflicting Interests...................................46
SECTION 609. Corporate Trustee Required; Eligibility.................47
SECTION 610. Resignation and Removal; Appointment of Successor.......47
SECTION 611. Acceptance of Appointment by Successor..................48
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business .............................................50
SECTION 613. Preferential Collection of Claims Against Company.......50
SECTION 614. Appointment of Authenticating Agent.....................50
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.....................52
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders ..............................................52
SECTION 702. Preservation of Information; Communications to Holders..52
SECTION 703. Reports by Trustee......................................53
SECTION 704. Reports by Company......................................53
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..................53
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms....53
SECTION 802. Successor Substituted...................................54
ARTICLE NINE
SUPPLEMENTAL INDENTURES...............................................55
SECTION 901. Supplemental Indentures Without Consent of Holders......55
SECTION 902. Supplemental Indentures With Consent of Holders.........57
SECTION 903. Execution of Supplemental Indentures....................58
SECTION 904. Effect of Supplemental Indentures.......................58
SECTION 905. Conformity with Trust Indenture Act.....................58
SECTION 906. Reference in Securities to Supplemental Indentures......58
</TABLE>
iv
<PAGE> 8
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE TEN
COVENANTS.............................................................58
SECTION 1001. Payment of Principal, Premium and Interest.............58
SECTION 1002. Maintenance of Office or Agency........................59
SECTION 1003. Money for Securities Payments to Be Held in Trust......59
SECTION 1004. Statement by Officers as to Default....................60
SECTION 1005. Existence..............................................61
SECTION 1006. Maintenance of Properties..............................61
SECTION 1007. Payment of Taxes and Other Claims......................61
SECTION 1008. Limitation on Liens....................................61
SECTION 1009. Limitation on Sale and Leaseback Transactions..........62
ARTICLE ELEVEN
REDEMPTION OF SECURITIES..............................................63
SECTION 1101. Applicability of Article...............................63
SECTION 1102. Election to Redeem; Notice to Trustee..................63
SECTION 1103. Selection by Trustee of Securities to Be Redeemed......63
SECTION 1104. Notice of Redemption...................................64
SECTION 1105. Deposit of Redemption Price............................65
SECTION 1106. Securities Payable on Redemption Date..................65
SECTION 1107. Securities Redeemed in Part............................65
ARTICLE TWELVE
SINKING FUNDS.........................................................66
SECTION 1201. Applicability of Article...............................66
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..66
SECTION 1203. Redemption of Securities for Sinking Fund..............66
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF THE HOLDERS................................67
SECTION 1301. Applicability of Article...............................67
SECTION 1302. Repayment of Securities................................67
SECTION 1303. Exercise of Option.....................................67
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable..........................................68
SECTION 1305. Securities Repaid in Part..............................68
</TABLE>
v
<PAGE> 9
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE....................................69
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance...........................................69
SECTION 1402. Defeasance and Discharge...............................69
SECTION 1403. Covenant Defeasance....................................69
SECTION 1404. Conditions to Defeasance or Covenant Defeasance........70
SECTION 1405. Acknowledgment of Discharge By Trustee.................72
SECTION 1406. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions..............72
SECTION 1407. Reinstatement..........................................73
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES.....................................73
SECTION 1501. Exemption from Individual Liability....................73
</TABLE>
vi
<PAGE> 10
INDENTURE, dated as of _____________, 1998, between PACIFICARE HEALTH
SYSTEMS, INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
3120 Lake Center Drive, Santa Ana, California 92704, and CHASE MANHATTAN BANK
AND TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly
organized and existing under the laws of the United States of America, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures, notes
or other evidences of indebtedness (herein called the "Securities"), to be
issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION
101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and,
<PAGE> 11
except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation required
or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Attributable Debt" means, as to any particular lease under which any
Person is liable as lessee, and at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof, discounted from the
respective due dates thereof to such date at a rate per annum equivalent to the
rate inherent in such lease compounded semi-annually, including any termination
penalty in the case of a lease terminable by the lessee.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
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"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Net Tangible Assets" means, with respect to the Company, the
total amount of assets (less applicable valuation allowances) after deducting
(a) all current liabilities (excluding the amount of liabilities which are by
their terms extendable or renewable at the option of the obligor to a date more
than 12 months after the date as of which the amount is being determined) and
(b) all goodwill, tradenames, trademarks, patents, unamortized debt discount and
expense and other like intangible assets, all as set forth on the most recent
balance sheet of the Company and its consolidated Subsidiaries and determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Corporate Trust Office" means the office of the Trustee in San Francisco,
California, at which at any particular time its corporate trust business shall
be administered, which office at the date hereof is 101 California Street, Ste.
2725, San Francisco, California 94111, except that with respect to the
presentation of Securities (or coupons, if any, representing an installment of
interest) for payment or for registration of transfer and exchange, such term
shall mean the office or the agency of the Trustee in New York, New York at
which at any particular time its corporate agency business shall be conducted.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1403.
"Debt" means indebtedness for money borrowed.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1402.
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"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"Interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an instalment of interest on such Security.
"Internal Revenue Code" means the Internal Revenue Code of 1986 and any
statute successor thereto, in each case as amended from time to time.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Lien" means any mortgage, pledge, lien or any other encumbrance.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein
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<PAGE> 14
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or any Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
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<PAGE> 15
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
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"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Repayment Date" means, when used with respect to any Security to be
repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee, means the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers to a
particular corporate trust matter hereunder, whom is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means, at any time, each Subsidiary which has
guaranteed any series of Securities and any Subsidiary having at such time
either (i) gross revenues for the preceding four fiscal quarters in excess of 5%
of the consolidated gross revenues of the Company and its Subsidiaries or (ii)
total assets, as of the last day of the preceding fiscal quarter, in excess of
5% of the consolidated total assets of the Company and its Subsidiaries, in each
case, based upon the Company's most recent annual or quarterly financial
statements.
"Sale and Leaseback Transaction" means any arrangement, transaction or
series of transactions with any Person pursuant to which the Company or any
Restricted Subsidiary leases any property, whether real, personal or intangible,
that has been or is to be sold or transferred by the Company or any Restricted
Subsidiary to any such Person or any affiliate of such Person, other than (a)
any such sales and leases between the Company and a Subsidiary or between
Subsidiaries, (b) leases for a term, including renewals at the option of the
lessee, of not more than three years, and (c) leases of property executed by the
time of, or within 12 months after the latest of, the acquisition, the
completion of construction or improvement, or the commencement of commercial
operation of such property.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
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"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified in
such Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1404.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Yield to Maturity" means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he 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, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify,
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of
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<PAGE> 19
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or
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permitted by this Indenture to be given, made or taken by Holders of Securities
of such series, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change
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shall be effective unless notice of the proposed new Expiration Date is given to
the other party hereto in writing, and to each Holder of Securities of the
relevant series in the manner set forth in Section 106, on or prior to the
existing Expiration Date. If an Expiration Date is not designated with respect
to any record date set pursuant to this Section, the party hereto which set such
record date shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid or by overnight delivery
service, to each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail or by overnight delivery
service, neither the failure to mail or send such notice, nor any defect in any
notice so mailed or sent, to any particular Holder shall affect the sufficiency
of such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
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<PAGE> 22
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give notice by mail on
overnight delivery service, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
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SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity.
SECTION 114. Counterparts.
The parties may sign any number of copies of this Indenture, each of which
shall be an original, and all of which together shall be but one instrument. One
signed copy is enough to prove this Indenture.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Neither the Company nor the Trustee shall have any responsibility for any
defect in the CUSIP number that appears on any Security, check, advice of
payment or redemption notice, and any such document may contain a statement to
the effect that CUSIP numbers have been assigned by an independent service for
convenience of reference and that neither the Company nor the Trustee shall be
liable for any inaccuracy in such numbers.
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SECTION 202. Form of Face of Security.
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]
------------------------------
----------------------------------------
No. __________ $__________
PacifiCare Health Systems, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _______________, or registered
assigns, the principal sum of ____________________ Dollars on
____________________ [if the Security is to bear interest prior to Maturity,
insert:, and to pay interest thereon from _______________ or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on __________ and __________ in each year, commencing
__________, at the rate of _____% per annum, until the principal hereof is paid
or made available for payment [if applicable, insert: , provided that any
principal and premium, and any such instalment of interest, which is overdue
shall bear interest at the rate of _____% per annum (to the extent that the
payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand]. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the __________ or
__________ (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert: The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of _____% per annum (to the extent
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<PAGE> 25
that the payment of such interest shall be legally enforceable), from the dates
such amounts are due until they are paid or made available for payment. Interest
on any overdue principal or premium shall be payable on demand. [Any such
interest on overdue principal or premium which is not paid on demand shall bear
interest at the rate of _____% per annum (to the extent that the payment of such
interest on interest shall be legally enforceable), from the date of such demand
until the amount so demanded is paid or made available for payment. Interest on
any overdue interest shall be payable on demand.]]
Payment of the principal of (and premium, if any) and [if applicable,
insert: any such] interest on this Security will be made at the office or agency
of the Company maintained for that purpose in __________, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert: ;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
- ------------ -----------------------------------
By
- ------------ ---------------------------------
Attest:
- -----------------------
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture,
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<PAGE> 26
dated as of __________ (herein called the "Indenture", which term shall have the
meaning assigned to it in such instrument), between the Company and
_______________, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert:, limited in aggregate principal amount
to $__________].
[If applicable, insert: The interest rate (or the spread or spread
multiplier used to calculate such interest rate, if applicable) on this Security
may be reset by the Company on ____________ (each an "Optional Reset Date"). The
Company may exercise such option with respect to this Security by notifying the
Trustee of such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date for this Security. Not later than 40 days prior to each
Optional Reset Date, the Trustee shall transmit, in the manner provided for in
Section 106 of the Indenture, to the Holder of this Security a notice (the
"Reset Notice") indicating whether the Company has elected to reset the interest
rate (or the spread or spread multiplier used to calculate such interest rate,
if applicable), and if so (i) such new interest rate (or such new spread or
spread multiplier, if applicable) and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date or if there is no such next Optional Reset Date, to the Stated
Maturity of this Security (each such period a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during the Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) provided for in the Reset Notice and establish an interest rate (or
a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106 of the Indenture, notice of such higher interest rate (or such
higher spread or spread multiplier, if applicable) to the Holder of this
Security. Such notice shall be irrevocable. All Securities of this series with
respect to which the interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable) is reset on an Optional Reset Date,
and with respect to which the Holders of such Securities have not tendered such
Securities for repayment (or have validly revoked any such tender) pursuant to
the next succeeding paragraph, will bear such higher interest rate (or such
higher spread or spread multiplier, if applicable).
The Holder of this Security will have the option to elect repayment by the
Company of the principal of this Security on each Optional Reset Date at a price
equal to the principal amount hereof plus interest accrued to such Optional
Reset Date. In order to obtain repayment on an Optional Reset Date, the Holder
must follow the procedures set forth in
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<PAGE> 27
Article Thirteen of the Indenture for repayment at the option of Holders except
that the period for delivery or notification to the Trustee shall be at least 25
but not more than 35 days prior to such Optional Reset Date and except that, if
the Holder has tendered this Security for repayment pursuant to the Reset
Notice, the Holder may, by written notice to the Trustee, revoke such tender or
repayment until the close of business on the tenth day before such Optional
Reset Date.
[If applicable, insert: The Stated Maturity of this Security may be
extended at the option of the Company for _______________ (each an "Extension
Period") up to but not beyond ____________ (the "Final Maturity"). The Company
may exercise such option with respect to this Security by notifying the Trustee
of such exercise at least 50 but not more than 60 days prior to the Stated
Maturity of this Security in effect prior to the exercise of such option (the
"Original Stated Maturity"). If the Company exercises such option, the Trustee
shall transmit, in the manner provided for in Section 106 of the Indenture, to
the Holder of this Security not later than 40 days prior to the Original Stated
Maturity a notice (the "Extension Notice") indicating (i) the election of the
Company to extend the Maturity, (ii) the new Stated Maturity, (iii) the interest
rate applicable to the Extension Period and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's transmittal of the
Extension Notice, the Stated Maturity of this Security shall be extended
automatically and, except as modified by the Extension Notice and as described
in the next paragraph, this Security will have the same terms as prior to the
transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days before the Original
Stated Maturity of this Security, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to transmit, in
the manner provided for in Section 106, notice of such higher interest rate to
the Holder of this Security. Such notice shall be irrevocable. All Securities of
this series with respect to which the Stated Maturity is extended will bear such
higher interest rate.
If the Company extends the Maturity of this Security, the Holder will have
the option to elect repayment of this Security by the Company on the Original
Stated Maturity at a price equal to the principal amount hereof, plus interest
accrued to such date. In order to obtain repayment on the Original Stated
Maturity once the Company has extended the Maturity hereof, the Holder hereof
must follow the procedures set forth in Article Thirteen of the Indenture for
repayment at the option of Holders, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to the Original Stated Maturity and except that, if the Holder has tendered this
Security for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth day before the Original Stated Maturity.
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<PAGE> 28
[If applicable, insert: The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert:
(1) on __________ in any year commencing with the year _____ and ending with the
year _____ through operation of the sinking fund for this series at a Redemption
Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert: on or after __________, 19__], as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [if applicable, insert: on or
before __________, _____%, and if redeemed] during the 12-month period beginning
__________ of the years indicated,
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ---- ---------- ---- -----------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption [if applicable, insert: (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert: The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on __________ in any
year commencing with the year _____ and ending with the year _____ through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert: on or after __________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning __________ of the years indicated,
<TABLE>
<CAPTION>
Redemption Price For Redemption
Redemption Price For Redemption Otherwise Than Through Operation
Year Through Operation of the Sinking Fund of the Sinking Fund
- ---- ------------------------------------- --------------------------------
<S> <C> <C>
</TABLE>
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<PAGE> 29
<PAGE> 30
and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert: Notwithstanding the foregoing, the Company may
not, prior to __________, redeem any Securities of this series as contemplated
by [if applicable, insert: Clause (2) of] the preceding paragraph as a part of,
or in anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than _____% per annum.]
[If applicable, insert: The sinking fund for this series provides for the
redemption on __________ in each year beginning with the year _____ and ending
with the year _____ of [if applicable, insert: not less than $__________
("mandatory sinking fund") and not more than] $__________ aggregate principal
amount of Securities of this series. Securities of this series acquired or
redeemed by the Company otherwise than through [if applicable, insert:
mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert: mandatory] sinking fund payments otherwise required to be
made [if applicable, insert: , in the inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert: In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert: The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert: If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert: If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to: insert formula for
20
<PAGE> 31
determining the amount. Upon payment (i) of the amount of principal so declared
due and payable and (ii) of interest on any overdue principal, premium and
interest (in each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the payment
of the principal of and premium and interest, if any, on the Securities of this
series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly
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<PAGE> 32
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $__________ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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<PAGE> 33
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
------------------------------------------
As Trustee
By
----------------------------------------
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107
and except for any Securities which, pursuant to Section 303, are deemed
never to have been authenticated and delivered hereunder);
(3) the date or dates on which the principal of any Securities of
the series is payable, or the method by which such date or dates shall be
determined or extended;
23
<PAGE> 34
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue, or
the method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on any Interest Payment
Date, or the method by which such date or dates shall be determined, and
the basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(5) the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;
(6) the period or periods within which, the price or prices at which
and the term and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the
Company to redeem the Securities shall be evidenced;
(7) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or
periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(9) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be
determined;
(10) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any Securities of the series shall be payable and
the manner of determining the equivalent thereof in the currency of the
United States of America for any purpose, including for purposes of the
definition of "Outstanding" in Section 101;
(11) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company
or the Holder thereof, in one or more currencies or currency units other
than that or those in which such Securities are stated to be payable, the
currency, currencies or currency units in which the principal of or any
premium or interest on such Securities as to which such election is made
shall be payable, the periods within which and the terms and conditions
upon
24
<PAGE> 35
which such election is to be made and the amount so payable (or the manner
in which such amount shall be determined);
(12) the percentage of the principal amount at which such Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount of Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof pursuant
to Section 502 or the method by which such portion shall be determined;
(13) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any
purpose thereunder or hereunder, including the principal amount thereof
which shall be due and payable upon any Maturity other than the Stated
Maturity or which shall be deemed to be Outstanding as of any date prior
to the Stated Maturity (or, in any such case, the manner in which such
amount deemed to be the principal amount shall be determined);
(14) if applicable, that the Securities of the series, in whole or
any specified part, shall not be defeasible or shall be defeasible in a
manner varying from Section 1402 and Section 1403 and, if other than by a
Board Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(15) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204 and
any circumstances in addition to or in lieu of those set forth in Clause
(2) of the last paragraph of Section 305 in which any such Global Security
may be exchanged in whole or in part for Securities registered, and any
transfer of such Global Security in whole or in part may be registered, in
the name or names of Persons other than the Depositary for such Global
Security or a nominee thereof;
(16) if applicable, that the Securities of the series, in whole or
any specified part, shall be subject to the optional interest reset
provisions of Section 307(b);
(17) if applicable, that the Securities of the series, in whole or
any specified part, shall be subject to the optional extension of maturity
provisions of Section 308;
(18) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of the
Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 502;
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<PAGE> 36
(19) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been
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<PAGE> 37
established by or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form
has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
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Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and
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aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary for such
Global Security or a nominee thereof unless (A) such Depositary (i) has
notified the Company that it is unwilling or unable to continue
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as Depositary for such Global Security or (ii) has ceased to be a clearing
agency registered under the Exchange Act, (B) there shall have occurred
and be continuing an Event of Default with respect to such Global Security
or (C) there shall exist such circumstances, if any, in addition to or in
lieu of the foregoing as have been specified for this purpose as
contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906
or 1107 or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Security, unless such Security is registered in the
name of a Person other than the Depositary for such Global Security or a
nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
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Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved; Optional Interest
Reset.
(a) Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the
manner set forth in Section 106, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
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Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
(b) The provisions of this Section 307(b) may be made applicable to any
series of Securities pursuant to Section 301 (with such modifications, additions
or substitutions as may be specified pursuant to such Section 301). The interest
rate (or the spread or spread multiplier used to calculate such interest rate,
if applicable) on any Security of such series may be reset by the Company on the
date or dates specified on the face of such Security (each an "Optional Reset
Date"). The Company may exercise such option with respect to such Security by
notifying the Trustee of such exercise at least 50 but not more than 60 days
prior to an Optional Reset Date for such Security. Not later than 40 days prior
to each Optional Reset Date, the Trustee shall transmit, in the manner provided
for in Section 106, to the Holder of any such Security a notice (the "Reset
Notice") indicating whether the Company has elected to reset the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable), and if so (i) such new interest rate (or such new spread or spread
multiplier, if applicable) and (ii) the provisions, if any, for redemption
during the period from such Optional Reset Date to the next Optional Reset Date
or if there is no such next Optional Reset Date, to the Stated Maturity of such
Security (each such period a "Subsequent Interest Period"), including the date
or dates on which or the period or periods during which and the price or prices
at which such redemption may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) provided for in the Reset Notice and establish an interest rate (or
a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106, notice of such higher
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interest rate (or such higher spread or spread multiplier, if applicable) to the
Holder of such Security. Such notice shall be irrevocable. All Securities with
respect to which the interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable) is reset on an Optional Reset Date,
and with respect to which the Holders of such Securities have not tendered such
Securities for repayment (or have validly revoked any such tender) pursuant to
the next succeeding paragraph, will bear such higher interest rate (or such
higher spread or spread multiplier, if applicable).
The Holder of any such Security will have the option to elect repayment by
the Company of the principal of such Security on each Optional Reset Date at a
price equal to the principal amount thereof plus interest accrued to such
Optional Reset Date. In order to obtain repayment on an Optional Reset Date, the
Holder must follow the procedures set forth in Article Thirteen for repayment at
the option of Holders except that the period for delivery or notification to the
Trustee shall be at least 25 but not more than 35 days prior to such Optional
Reset Date and except that, if the Holder has tendered any Security for
repayment pursuant to the Reset Notice, the Holder may, by written notice to the
Trustee, revoke such tender or repayment until the close of business on the
tenth day before such Optional Reset Date.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Optional Extension of Maturity.
The provisions of this Section 308 may be made applicable to any series of
Securities pursuant to Section 301 (with such modifications, additions or
substitutions as may be specified pursuant to such Section 301). The Stated
Maturity of any Security of such series may be extended at the option of the
Company for the period or periods specified on the face of such Security (each
an "Extension Period") up to but not beyond the date (the "Final Maturity") set
forth on the face of such Security. The Company may exercise such option with
respect to any Security by notifying the Trustee of such exercise at least 50
but not more than 60 days prior to the Stated Maturity of such Security in
effect prior to the exercise of such option (the "Original Stated Maturity"). If
the Company exercises such option, the Trustee shall transmit, in the manner
provided for in Section 106, to the Holder of such Security not later than 40
days prior to the Original Stated Maturity a notice (the "Extension Notice")
indicating (i) the election of the Company to extend the Maturity, (ii) the new
Stated Maturity, (iii) the interest rate applicable to the Extension Period and
(iv) the provisions, if any, for redemption during such Extension Period. Upon
the Trustee's transmittal of the Extension Notice, the Stated Maturity of such
Security shall be extended automatically and, except as modified by the
Extension Notice and as described in the next paragraph, such Security will have
the same terms as prior to the transmittal of such Extension Notice.
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Notwithstanding the foregoing, not later than 20 days before the Original
Stated Maturity of such Security, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to transmit, in
the manner provided for in Section 106, notice of such higher interest rate to
the Holder of such Security. Such notice shall be irrevocable. All Securities
with respect to which the Stated Maturity is extended will bear such higher
interest rate.
If the Company extends the Maturity of any Security, the Holder will have
the option to elect repayment of such Security by the Company on the Original
Stated Maturity at a price equal to the principal amount thereof, plus interest
accrued to such date. In order to obtain repayment on the Original Stated
Maturity once the Company has extended the Maturity thereof, the Holder must
follow the procedures set forth in Article Thirteen for repayment at the option
of Holders, except that the period for delivery or notification to the Trustee
shall be at least 25 but not more than 35 days prior to the Original Stated
Maturity and except that, if the Holder has tendered any Security for repayment
pursuant to an Extension Notice, the Holder may, by written notice to the
Trustee, revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 310. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
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SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for such purpose money in an amount sufficient to pay and
discharge the entire indebtedness on such
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Securities not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date
of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case
may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default
for a period of 30 days; or
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(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of series of Securities other
than that series), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the or
overnight delivery service Holders of at least 25% in principal amount of
the Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company or a Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or such Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or such Subsidiary under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or such Subsidiary
or of any substantial part of its or such Subsidiary's property, or
ordering the winding up or liquidation of its or such Subsidiary's
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the commencement by the Company or a Restricted Subsidiary, as
the case may be, of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it or such Subsidiary to the entry of a
decree or order for relief in respect of the Company or such Subsidiary in
an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it
or such Subsidiary, or the filing by it or such Subsidiary of a petition
or answer or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it or such Subsidiary to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or such Subsidiary or of any
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substantial part of its or such Subsidiary's property, or the making by it
or such Subsidiary of an assignment for the benefit of creditors, or the
admission by it or such Subsidiary in writing of its or such Subsidiary's
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company or such Subsidiary in furtherance of any
such action; or
(7) the rendering against the Company or any Subsidiary of a final
judgment, decree or order for the payment of money in excess of
$75,000,000 and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of 90 consecutive days without a
stay of execution; or
(8) (i) a default occurs under any instrument or instruments
(including this Indenture) under which there is at the time outstanding,
or by which there may be secured or evidenced, any Debt of the Company or
any Subsidiary or any guarantee of payment by the Company or any
Subsidiary of any obligation of any Person, which default results in
acceleration of (whether by declaration or automatically), or the
nonpayment at maturity (after giving effect to any applicable grace
period) of, such Debt or guarantee in an aggregate amount exceeding
$75,000,000, in which case the Company shall immediately give notice to
the Trustee of such acceleration or nonpayment and (ii) there shall have
been a failure to cure such default or to discharge all such defaulted
Debt and guarantees or such default is not otherwise waived, and such
acceleration has not been rescinded or annulled, within 30 days after
receipt by the Company from the Trustee or by the Company and the Trustee
from the Holders of at least 25% in principal amount of the Securities
then Outstanding (excluding, if such defaulted Debt includes any series of
Securities, such series of Securities) of a written notice thereof, by
registered or certified mail, and stating that such notice is a "Notice of
Default" hereunder; or
(9) any other Event of Default provided with respect to Securities
of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(4) or another Event of Default under Section 501(7) which is common
to all Outstanding series of Securities) with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount of all
the Securities of that series (or, if any Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms thereof) to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. If an Event of Default
specified in Section 501(4) or another Event of Default under Section
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501(7) which is common to all Outstanding series of Securities occurs and is
continuing, then in every such case, the Trustee or the Holders of not less than
25% in aggregate principal amount of all the Securities then Outstanding
hereunder (treated as one class), by a notice in writing to the Company (and to
the Trustee if given by Holders) may declare the principal amount (or, if any
Securities are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms thereof) of all the Securities then
Outstanding to be due and payable immediately, and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay all amounts due the Trustee under Section 607 hereof;
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 513; and
(3) such rescission and annulment would not conflict with any
judgment or decree.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization,
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arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding; provided, however, that the Trustee may,
on behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment, first, of the amounts then due and unpaid
for principal of and, second, any premium and interest on, the Securities
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal and any
premium and interest, respectively.
THIRD: To the payment of the remainder, if any, to the Company or
any other Person or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
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(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
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SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series; provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
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(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by
it as Trustee, the court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and such
court may in its discretion assess reasonable costs including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided, that the provisions of this Section 514 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder or group of
Holders holding in the aggregate more than 10 per centum in principal amount of
the Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or interest on any Security, on
or after the respective due dates expressed in such Security. Neither this
Section 514 nor the Trust Indenture Act shall be deemed to authorize any court
to require such an undertaking or such an assessment in any proceeding
instituted by the Company.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
Except as specifically provided herein, the duties and responsibilities of
the Trustee shall be as provided by the Trust Indenture Act.
The Trustee shall, prior to the occurrence of an Event of Default and
after curing of all Events of Default which may have occurred, perform such
duties and only such duties as are specifically set forth in this Indenture and
no implied covenants, duties or obligations shall be read into this Indenture
against the Trustee. The Trustee shall, during the existence of an Event of
Default (which has not been cured), exercise 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 man would exercise or use under the circumstances
in the conduct of his own affairs.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
The Trustee shall not be deemed to have knowledge of any default or Event
of Default hereunder unless and until a Responsible Officer shall have actual
knowledge thereof, or shall have received written notice thereof at its
Corporate Trust Office. In the absence of such actual knowledge or notice, the
Trustee may conclusively assume that no default has occurred and is continuing
under this Indenture. Except as otherwise expressly provided herein, the
Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein
or of any of the documents executed in connection with the Securities, or as to
the existence of a default or Event of Default hereunder.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(8) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty unless so specified
herein.
(9) The Trustee may become the Holder of Securities with the same
rights it would have if it were not Trustee and, to the extent permitted
by law, may act as depositary for and permit any of its officers or
directors to act as a member of, or in any other capacity with respect
to, any committee formed to protect the rights of Holders, whether or not
such committee shall represent the Holders of a majority in principal
amount of the Outstanding Securities
(10) The Trustee shall not be liable for any error of judgment made
by a Responsible Officer, unless the Trustee shall have been negligent in
ascertaining the pertinent facts.
(11) No provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers.
(12) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture; the Trustee shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or
willful misconduct.
(13) Whether or not expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of the
Trustee shall be subject to the provisions of this Article Six and shall
extend to the Authenticating Agent, Securities Registrar, Paying Agents,
and employees and agents of the Trustee.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity,
sufficiency or priority of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or wilful
misconduct; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or wilful
misconduct or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus (or, in the case of a corporation included in a bank holding
company system, the related bank holding company shall have) of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such Person or such
bank holding company shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee with respect to the Securities of any series shall cease to be
eligible in accordance with the provisions of this
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Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one
or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
(4) the Trustee increases fees to the Company and such increases
result in fees for services that are materially higher than commercially
available to the Company from other entities qualifying under Section 609
and at the time of removal no Default or Event of Default exists,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) with respect to items (i), (ii)
and (iii) only, subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of
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competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee may
be appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect
to all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
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.
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In case of the appointment hereunder of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any, of the parties hereto. In case any Securities shall have been
authenticated, but not
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delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus (or, in the case of a corporation
included in a bank holding company system, the related bank holding company
shall have) of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
or such bank holding company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
--------------------------------------,
As Trustee
By ,
------------------------------------
As Authenticating Agent
By ,
------------------------------------
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than June 15 and December 15 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities of each series as of the
preceding June 1 or December 1 as the case may be, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
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A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) the Company shall be the surviving and continuing entity, or in
case the Company shall consolidate with or merge into another Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership, trust or
other entity, shall be organized and validly existing under the laws of
the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and any premium
and interest on all the Securities and the performance or observance of
every covenant and condition of this Indenture on the part of the Company
to be performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any
Subsidiary as a
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result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with; provided,
however, that the delivery of an Officers' Certificate or an Opinion of
Counsel is not required with respect to any consolidation, merger,
conveyance, transfer or lease involving the Company and any wholly-owned
subsidiary of the Company.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included
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solely for the benefit of such series) or to surrender any right or power
herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Default are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are expressly
being included solely for the benefit of such series), provided, however,
that in respect of any such additional Events of Default such supplemental
indenture may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such
default or may limit the right of the Holders of a majority in aggregate
principal amount of that or those series of Securities to which such
additional Events of Default apply to waive such default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that
any such addition, change or elimination (A) shall neither (i) apply to
any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision nor
(ii) modify the rights of the Holder of any such Security with respect to
such provision or (B) shall become effective only when there is no such
Security Outstanding; or
(6) to secure the Securities pursuant to the requirements of Section
1008 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to provide for uncertificated securities in addition to
certificated securities; or
(9) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611; or
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(10) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action pursuant
to this Clause (9) shall not adversely affect the interests of the Holders
of Securities of any series in any material respect; or
(11) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Section 401, 1402 and
1403; provided that any such action shall not adversely affect the
interests of the holders of Securities of such series or any other series
of Securities in any material respect; or
(12) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Eight; or
(13) to comply with the rules or regulations of any securities
exchange on which any of the Securities may be listed; or
(14) to add to, change or eliminate any of the provisions of this
Indenture as shall be necessary or desirable in accordance with any
amendments to the Trust Indenture Act, provided that such action does not
adversely affect the rights or interests of any Holder of Securities.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security or any other Security which would
be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502, or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment
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on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1010, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1010, or the deletion of this proviso, in accordance with the
requirements of Sections 611 and 901(9).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any
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series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate to the extent required by law and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will provide to a Paying Agent a sum sufficient to pay the
principal of or any premium or interest on any Securities of that series, such
sum to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company within 60 days of such date and upon such payment all
liability of the Trustee or any Paying Agent with respect to such funds shall
thereupon cease and the holders shall be entitled to look only to the Company
for payment thereof; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in
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the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
The Company shall have no right, title or interest in or to any moneys
held by the Trustee pursuant to this Section. The Trustee shall not be liable
to the Company or any Holder for interest in funds held by it for the payment
and discharge of the principal, interest, or premium on any of the Securities
to any Holder.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof, after due inquiry, the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. [Reserved]
SECTION 1007. [Reserved]
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SECTION 1008. Limitation on Liens.
The Company will not, and will not permit any Restricted Subsidiary to,
create or suffer to exist any Lien, assignment or transfer upon or of any of its
properties or its assets, whether real, personal or intangible, and now owned or
hereafter acquired, to secure any indebtedness for money borrowed without making
effective provision whereby all of the Securities shall be directly secured
equally and rateably with the indebtedness secured by such Lien, assignment or
transfer; excluding, however, from the operation of the foregoing provision:
(1) Liens (which term for purposes of this Section 1008 shall include
conditional sale agreements or other title retention agreements and leases in
the nature of title retention agreements) upon the property acquired, or Liens
existing in such property at the time of acquisition thereof, or, in the case of
any corporation or other entity which hereafter becomes a Subsidiary, Liens upon
or in its property, existing at the time such corporation or other entity
becomes a Subsidiary, provided, that no such Lien extends or shall extend to or
cover any property of the Company or any Subsidiary, other than the property or
Subsidiary, as the case may be, then being acquired, including fixed
improvements then or thereafter to be erected upon any such property being
acquired;
(2) Liens created by any Restricted Subsidiary as security for Debt owing
to the Company or any other Restricted Subsidiary.
(3) with respect to any series of Securities, Liens existing on the date
of issuance of such series;
(4) Liens otherwise prohibited by this covenant securing Debt which,
together with the aggregate outstanding principal amount of all other Debt of
the Company and its Restricted Subsidiaries which is secured by Liens that would
otherwise be prohibited by this covenant and the Attributable Debt of Sale and
Leaseback Transactions effected in accordance with this clause (4), does not
exceed the greater (A) $50,000,000 and (B) 15% of Consolidated Net Tangible
Assets;
(5) Liens resulting from the deposit of funds or evidences of indebtedness
in trust for the purpose of defeasing indebtedness of the Company or any of its
Subsidiaries;
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(6) Liens securing obligations pursuant to hedging transactions, including
rate swaps, basis swaps, forward rate transactions, commodity swaps and options,
foreign exchange transaction, cap, collar and floor transactions, currency swap
transactions and the like ("Hedging Obligations"); and
(7) any extension, renewal or refunding of any Liens referred to in the
foregoing clauses; provided, however, that in the case of this clause (7), the
principal amount of Debt secured thereby shall not exceed the principal amount
of Debt, plus any premium or fee payable in connection with any such extension,
renewal, replacement or refunding, so secured at the time of such extension,
renewal, replacement or refunding.
SECTION 1009. Limitation on Sale and Leaseback Transactions.
The Company will not, and the Company will not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction, directly or
indirectly, unless (i) immediately prior to entering into such Sale and
Leaseback Transaction, the Company or such Subsidiary could create a Lien on the
property that is to be the subject of the Sale and Leaseback Transaction in an
amount equal to the Attributable Debt with respect to the Sale and Leaseback
Transaction without thereby causing an Event of Default, or (ii) an amount equal
to the greater of the net proceeds of such Sale and Leaseback Transaction or the
fair value (as determined by the Board of Directors) of the property to be the
subject thereof is used (x) to reduce Debt of the Company or any Subsidiary
having an original term to maturity of twelve months or greater or (y) purchase
assets for use in the same line of business as that in which the property that
is the subject of the Sale and Leaseback Transaction was used by the Company or
the Subsidiary, in each case within 180 days after the effective date of the
sale of the property in the Sale and Leaseback Transaction.
SECTION 1010. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Company may, with respect to the Securities of
any series, omit in any particular instance to comply with any term, provision
or condition set forth in any covenant provided pursuant to Section 301(19),
901(2) or 901(7) for the benefit of the Holders of such series or in Sections
1008 or 1009, if the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company of
less than all the Securities of any series (including any such redemption
affecting only a single Security), the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
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The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount
of the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
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SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms
of any Securities is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms of
such Securities is herein referred to as an "optional sinking fund payment". If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such
Securities; provided that the Securities to be so credited have not been
previously so credited. The Securities to be so credited shall be received and
credited for such purpose by the Trustee at the Redemption Price, as specified
in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 45 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name
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of and at the expense of the Company in the manner provided in Section 1104.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF THE HOLDERS
SECTION 1301. Applicability of Article.
Repayment of securities of any series before their Stated Maturity at the
option of Holders thereof shall be made in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.
SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in part at the
option of the Holders thereof will, unless otherwise provided in the terms of
such Securities, be repaid at a price equal to the principal amount thereof,
together with interest and/or premium, if any, thereon accrued to the Repayment
Date specified in or pursuant to the terms of such Securities. The Company
covenants that on or before the Repayment Date it will deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the principal (or, if so provided by the terms of the
Securities of any series, a percentage of the principal) of, the premium, if
any, and (except if the Repayment Date shall be an Interest Payment Date)
accrued interest on, all the Securities or portions thereof, as the case may be,
to be repaid on such date.
SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of the Holders
thereof will contain an "Option to Elect Repayment" form on the reverse of such
Securities. To be repaid at the option of the Holder, any Security so providing
for such repayment, with the "Option to Elect Repayment" form on the reverse of
such Security duly completed by the Holder (or by the Holder's attorney duly
authorized in writing), must be received by the Company at the Place of Payment
therefor specified in the terms of such Security (or at such other place or
places of which the Company shall from time to time notify the Holders of such
Securities) not earlier than 45 days nor later than 30 days prior to the
Repayment Date. If less than the entire principal amount of such Security is to
be repaid in accordance with the terms of such Security, the principal amount of
such Security to be repaid, in increments of the minimum denomination for
Securities of such series, the premium, if any, to be paid,
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<PAGE> 79
and the denomination or denominations of the Security or Securities to be issued
to the Holder for the portion of the principal amount of such Security
surrendered that is not to be repaid, must be specified. The principal amount of
any Security providing for repayment at the option of the Holder thereof may not
be repaid in part if, following such repayment, the unpaid principal amount of
such Security would be less than the minimum authorized denomination of
Securities of the series of which such Security to be repaid is a part. Except
as otherwise may be provided by the terms of any Security providing for
repayment at the option of the Holder thereof and as provided in Sections 307(b)
and 308, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due and
Payable.
If Securities of any series providing for repayment at the option of the
Holders thereof shall have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company shall default in the payment
of such Securities on such Repayment Date) such Securities shall, if the same
were interest-bearing, cease to bear interest. Upon surrender of any such
Security for repayment in accordance with such provisions, the principal amount
of such Security so to be repaid shall be paid by the Company, together with
accrued interest and/or premium, if any, to the Repayment Date; provided,
however, that installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon,
unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If the principal amount of any Security surrendered for repayment shall
not be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Security which is to be repaid in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge and at the expense of the
Company, a new Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.
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ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1402 or
Section 1403 applied to any Securities or any series of Securities, as the case
may be, (unless designated pursuant to Section 301 as not being defeasible
pursuant to such Section 1402 or 1403), in accordance with any applicable
requirements provided pursuant to Section 301 and upon compliance with the
conditions set forth below in this Article. Any such election shall be evidenced
by a Board Resolution or in another manner specified as contemplated by Section
301 for such Securities.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations with
respect to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1404 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1404 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (4) this Article. Subject to compliance with this Article, the
Company may exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1403 applied to such Securities.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be released from its obligations under Section 801(3),
Sections 1006 through 1009, inclusive, and any covenants provided pursuant to
Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such
Securities and (2) the occurrence of any event specified in Sections 501(4)
(with respect to any of Section 801(3), Sections 1006 through 1009, inclusive,
and any such covenants provided pursuant to Section 301(19), 901(2) or 901(7)),
and 501(7) shall be
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deemed not to be or result in an Event of Default, in each case with respect to
such Securities as provided in this Section on and after the date the conditions
set forth in Section 1404 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Securities, the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such specified Section (to the extent so specified in the case of Section
501(4)), whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1402
or Section 1403 to any Securities or any series of Securities, as the case may
be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (C) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any premium
and interest on such Securities on the respective Stated Maturities, in
accordance with the terms of this Indenture and such Securities. As used
herein, "U.S. Government Obligation" means (x) any security which is (i) a
direct obligation of the United States of America for the payment of which
the full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof,
and (y) any depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any U.S.
Government Obligation which is specified in Clause (x) above and held by
such bank for the account of the holder of such depositary receipt, or
with respect to any specific payment of principal of or interest on any
U.S. Government Obligation which is so specified and held, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such
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depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1402 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this
instrument, there has been a change in the applicable Federal income tax
law, in either case (A) or (B) to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Securities will not
recognize gain or loss for Federal income tax purposes as a result of the
deposit, Defeasance and discharge to be effected with respect to such
Securities and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would be the case if such
deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1403 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit and Covenant
Defeasance to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner and
at the same times as would be the case if such deposit and Covenant
Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to such Securities or any
other Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(5) and
(6), at any time on or prior to the 90th day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning
of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
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(8) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be
registered under such Act or exempt from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1405. Acknowledgment of Discharge By Trustee.
Subject to Section 1407 below and after the Company has delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in Section 1404, as the case may be,
relating to the defeasance or satisfaction and discharge of this Indenture have
been complied with, the Trustee upon request of the Company shall acknowledge in
writing the defeasance or the satisfaction and discharge, as the case may be, of
this Indenture and the discharge of the Company's obligations under this
Indenture.
SECTION 1406. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1406, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1404 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1404 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the
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amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
SECTION 1407. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1402 or 1403 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1405 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES
SECTION 1501. Exemption from Individual Liability.
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,
director or employee, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations
of the Company, and that no such personal liability whatever shall attach to, or
is or shall be incurred by, the incorporators, stockholders, officers,
directors, or employees, as such, of the Company or of any 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, 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, director or employee, 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 issue of such Securities.
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This instrument may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PACIFICARE HEALTH SYSTEMS, INC.
By
-----------------------------------
Attest:
- ---------------------
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
By
-----------------------------------
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<PAGE> 86
STATE OF ____________ )
) ss.:
COUNTY OF ___________ )
On the ___ day of ________, 1998, before me personally came
___________________ to me known, who being by me duly sworn, did depose and say
that he is ___________________ of ____________________, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
--------------------------------------
STATE OF ____________ )
) ss.:
COUNTY OF ___________ )
On the ___ day of ______, 1998, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he is ___________ of __________________, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation; and that he signed his name thereto by
like authority.
--------------------------------------
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<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
May 20, 1998
PacifiCare Health Systems, Inc.
3120 Lake Center Drive
Santa Ana, CA 92704
Re: PacifiCare Health Systems, Inc. Registration Statement on form S-3
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by PacifiCare Health Systems, Inc. (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission with respect to up to $250,000,000 of debt
securities (the "Debt Securities") of the Company to be issued pursuant to the
Indenture filed as Exhibit 4.1 to the Registration Statement (the "Indenture")
between the Company and Chase Manhattan Bank and Trust Company, National
Association, as trustee.
In connection with this opinion, we have examined the Indenture, the
Registration Statement and related Prospectus, the Company's Certificate of
Incorporation, the Company's Bylaws, 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 and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, the due execution, delivery and
binding effect of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof, and that there are no extrinsic
agreements or understandings among the parties that would modify or interpret
the terms of the agreements or the respective rights or obligations of the
parties thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware and the
laws of the State of California. We express no opinion as to whether the laws
of any particular jurisdiction other than those identified above are applicable
to the subject matter hereof; accordingly, our opinions in paragraphs 1 and 2
below as to the validity, binding effect and enforceability of the Indenture
and Securities are premised on the result that would obtain if a California
court were to apply the internal laws of the State of California
(notwithstanding the designation of the laws of the State of New York) to the
interpretation and enforcement of the Indenture and Securities.
1.
<PAGE> 2
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that:
1. The Indenture, when duly executed and delivered by the Company
and the Trustee in the form filed as Exhibit 4.1 to the Registration Statement,
will constitute a valid and binding obligation of the Company, subject to
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
2. The issuance of Debt Securities has been duly authorized and when
each series of Debt Securities is duly executed and authenticated by the Trustee
in the manner provided in the Indenture and delivered against payment to the
Company of the purchase price of such series of Debt Securities in accordance
with an authorization of the Company's Board of Directors, each such series of
Debt Securities will have been legally issued and will constitute valid and
binding obligations of the Company, subject to applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting creditors' rights, and subject to general equity principles and to
limitations on availability of equitable relief, including specific performance.
We consent to the reference to our firm under the caption "Legal Matters"
in the Prospectus included in the Registration Statement and to the filing of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ MICHAEL R. JACOBSON
-----------------------------
Michael R. Jacobson
2.
<PAGE> 1
EXHIBIT 12.1
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(TRANSITION
PERIOD)
THREE MONTHS TWELVE THREE
ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------ ------------ ------------ ------------
1998 1997 1997 1996 1996
-------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Pretax income.................. $ 80,286 $79,081 $ 60,124 $128,783 $52,836
-------- ------- -------- -------- -------
Add fixed charges:
Interest expense............. 17,518 9,719 64,536 1,931 350
Interest component of rent
expense.................... 4,475 2,831 14,444 8,043 1,382
-------- ------- -------- -------- -------
Total fixed charges............ 21,993 12,550 78,980 9,974 1,732
-------- ------- -------- -------- -------
$102,279 $91,631 $139,104 $138,757 $54,568
======== ======= ======== ======== =======
Ratio of earnings to fixed
charges...................... 4.7x 7.3x 1.8x 13.9x 31.5x
======== ======= ======== ======== =======
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1996 1995 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Pretax income.................. $122,780 $182,100 $145,468 $108,327
-------- -------- -------- --------
Add fixed charges:
Interest expense............. 2,094 5,549 4,050 2,376
Interest component of rent
expense.................... 8,739 5,490 3,060 2,430
-------- -------- -------- --------
Total fixed charges............ 10,833 11,039 7,110 4,806
-------- -------- -------- --------
$133,613 $193,139 $152,578 $113,133
======== ======== ======== ========
Ratio of earnings to fixed
charges...................... 12.3x 17.5x 21.5x 23.5x
======== ======== ======== ========
</TABLE>
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of PacifiCare Health
Systems, Inc. for the registration of $250,000,000 of Debt Securities and to the
incorporation by reference therein of our report dated February 24, 1998 with
respect to the consolidated financial statements and schedule of PacifiCare
Health Systems, Inc., included in the Annual Report on Form 10-K for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Los Angeles, California
May 18, 1998
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
\
-----------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(B)(2)____
-------------------------
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
95-4655078
(I.R.S. Employer Identification No.)
101 California Street, San Francisco, California
(Address of principal executive offices)
94111
(Zip Code)
------------------
PACIFICARE HEALTH SYSTEMS, INC.
(Exact name of Obligor as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
95-4591529
(I.R.S. Employer Identification No.)
3120 Lake Center Drive
Santa Ana, California
(Address of principal executive offices)
92704
(Zip Code)
--------------------------------
Senior Notes
(Title of Indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
None.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
Exhibit 1. Articles of Association of the Trustee as Now in
Effect (see Exhibit 1 to Form T-1 filed in connection
with Registration Statement No. 333-41329 which is
incorporated by reference).
Exhibit 2. Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection
with Registration Statement No. 333-41329, which is
incorporated by reference).
Exhibit 3. Authorization of the Trustee to Exercise Corporate
Trust Powers (contained in Exhibit 2).
Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No.
333-41329, which is incorporated by reference).
Exhibit 5. Not Applicable
Exhibit 6. The consent of the Trustee required by Section 321
(b) of the Act (see Exhibit 6 to Form T-1 filed in
connection with Registration Statement No. 333-41329,
which is incorporated by reference).
Exhibit 7. A copy of the latest report of condition of the
Trustee, published pursuant to law or the requirements
of its supervising or examining authority.
Exhibit 8. Not Applicable
Exhibit 9. Not Applicable
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Bank and Trust Company, National Association, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of San
Francisco, and State of California, on the 20th day of May, 1998.
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
By /s/ James Nagy
------------------------------
James Nagy
Assistant Vice President
<PAGE> 4
EXHIBIT 7. Report of Condition of the Trustee.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORT OF CONDITION OF Chase Manhattan Bank and Trust Company, N.A.
--------------------------------------------
(Legal Title)
LOCATED AT 1800 Century Park East, Ste. 400 Los Angeles, CA 94111
---------------------------------------------------------------------
(Street) (City) (State) (Zip)
AS OF CLOSE OF BUSINESS ON December 31, 1997
--------------------------------
================================================================================
ASSETS DOLLAR AMOUNTS IN THOUSANDS
<TABLE>
<S> <C> <C>
1. Cash and balances due from
a. Noninterest-bearing balances and currency and coin (1,2) 550
b. Interest bearing balances (3) 0
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A) 0
b. Available-for-sale securities (from Schedule RC-B, column D) 1,053
3. Federal Funds sold (4) and securities purchased agreements to resell 54,210
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) 23
b. LESS: Allowance for loan and lease losses 0
c. LESS: Allocated transfer risk reserve 0
d. Loans and leases, net of unearned income, allowance, and reserve (item
4.a minus 4.b and 4.c) 23
5. Trading assets 0
6. Premises and fixed assets (including capitalized leases) 180
7. Other real estate owned (from Schedule RC-M) 0
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 0
9. Customers liability to this bank on acceptances outstanding 0
10. Intangible assets (from Schedule RC-M) 1,737
11. Other assets (from Schedule RC-F) 2,904
12a. TOTAL ASSETS 60,657
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 12.a and 12.b) 60,657
</TABLE>
(1) includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum of
Schedule RC-M, items 3.a and 3.b
(3) includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a "Loans and leases,
net of unearned income" and in Schedule RC-C, part 1.
LIABILITIES
<TABLE>
13. Deposits:
<S> <C> <C>
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E) 31,177
(1) Noninterest-bearing 6,718
(2) Interest-bearing 24,459
b. In foreign offices, Edge and Agreement subsidiaries, and IBF'
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased (2) and securities sold under agreements to
repurchase 0
15. a. Demand notes issued to the U.S. Treasury 0
b. Trading liabilities 0
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases):
a. With a remaining maturity of one year or less 0
b. With a remaining maturity of more than one year through three years 0
c. With a remaining maturity of more than three years 0
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 0
19. Subordinated notes and Debentures (3) 0
20. Other liabilities (from Schedule RC-G) 4,975
21. Total liabilities (sum of items 13 through 20) 36,152
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 0
24. Common stock-- 600
25. Surplus (exclude all surplus related to preferred stock) 12,590
26. a. Undivided profits and capital reserves 11,315
b. Net unrealized holding gains (losses) on available-for-sale securities 0
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 24,505
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 28.a and 28.b) 24,505
29. Total liabilities, equity capital, and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 21 and 28.c) 60,657
</TABLE>
