<PAGE> 1
- -AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RES-CARE, INC.
(Exact name of registrant as specified in its charter)
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KENTUCKY 61-0875371
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
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10140 LINN STATION ROAD
LOUISVILLE, KENTUCKY 40223
(502) 394-2100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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RONALD G. GEARY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RES-CARE, INC.
10140 LINN STATION ROAD
LOUISVILLE, KENTUCKY 40223
(502) 394-2100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
HENRY D. KAHN, ESQ.
PIPER & MARBURY L.L.P.
36 SOUTH CHARLES STREET
BALTIMORE, MD 21201
(410) 539-2530
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]
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement from the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE(1)
--------------------------- ------------ ---------------- ---------------- ------------
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6% Convertible Subordinated Notes Due 2004 $109,360,000 100% $109,360,000 $33,139.39
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Common Stock, no par value per share (2) -- -- --
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(1) Calculated pursuant to Rule 457(i) under the Securities Act of 1933, as
amended.
(2) Such indeterminate number of shares of Common Stock as may be issuable upon
conversion of the Convertible Subordinated Notes registered hereunder,
including such shares as may be issuable pursuant to antidilution
adjustments. Pursuant to Rule 457(i), no registration fee is required for
these shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
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.
<PAGE> 4
PROSPECTUS SUBJECT TO COMPLETION
January 9, 1998
RES-CARE, INC.
$109,360,000
6% CONVERTIBLE SUBORDINATED NOTES DUE 2004
AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
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This Prospectus relates to the resale from time to time by the holders (the
"Selling Securityholders") of up to $109,360,000 aggregate principal amount of
6% Convertible Subordinated Notes Due 2004 (the "Notes") of Res-Care, Inc., a
Kentucky corporation (the "Company"), and the resale of shares of Common Stock,
no par value per share (the "Common Stock") of the Company issuable upon the
conversion thereof (the "Conversion Shares").
The Notes are convertible at the option of the holder into shares of Common
Stock of the Company following the date of initial issuance thereof and prior to
maturity, unless previously redeemed or repurchased, at a conversion price of
$28.2125 per share (equivalent to a conversion rate of 38.7630 shares per $1,000
principal amount of Notes and representing in the aggregate 3,876,296 shares),
subject to adjustment in certain events. Interest on the Notes is payable
semi-annually on June 1 and December 1 of each year, commencing June 1, 1998.
The Notes are not redeemable by the Company until December 5, 2000.
Thereafter, the Notes will be redeemable, at any time, upon not less than 30 nor
more than 60 days notice at the option of the Company, in whole or in part, at
the redemption prices set forth herein, plus accrued interest. Upon a Repurchase
Event (as defined), each holder of the Notes may require the Company to
repurchase all or a portion of such holder's Notes at 100% of the principal
amount thereof, together with accrued and unpaid interest to the repurchase
date. The Notes are unsecured and subordinated in right of payment in full to
all existing and future Senior Indebtedness (as defined) of the Company. See
"Description of the Notes."
The Notes were originally issued by the Company in a private placement on
November 21, 1997 to the Initial Purchasers (as defined) and were simultaneously
sold by the Initial Purchasers in transactions exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act"), in the United
States to persons reasonably believed to be "qualified institutional buyers" as
defined in Rule 144A under the Securities Act and in offshore transactions to
persons outside of the United States in reliance on Regulation S under the
Securities Act.
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The Selling Securityholders may offer Notes or Conversion Shares from time
to time to purchasers directly or through underwriters, dealers or agents. Such
Notes or Conversion Shares may be sold at market prices prevailing at the time
of sale or at negotiated prices. Each Selling Securityholder will be responsible
for payment of any and all commissions to brokers, which will be negotiated on
an individual basis.
The Notes have been designated for trading on the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") Market. The Common Stock is
quoted on the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "RSCR." On January 8, 1998, the last reported sale
price of the Common Stock as reported on Nasdaq was $28.75 per share. The
Conversion Shares have been approved for quotation on the Nasdaq National
Market. For a description of certain federal income tax consequences to the
holders of the Notes, see "Certain Federal Income Tax Consequences."
The Company will not receive any of the proceeds from the sale of any Notes
or Conversion Shares by the Selling Securityholders. Expenses of preparing and
filing the registration statement to which this Prospectus relates and all
post-effective amendments will be borne by the Company. See "Plan of
Distribution" for a description of the indemnification arrangements between the
Company and the Selling Securityholders.
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SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES AND THE COMMON
STOCK OFFERED HEREBY.
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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.
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The date of this Prospectus is , 1998
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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 and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission, including the
reports and other information incorporated by reference into this Prospectus,
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission or from the Commission's Internet
web site at http://www.sec.gov. The Common Stock of the Company is quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company can be inspected at the offices of The Nasdaq Stock
Market, 1735 K Street, Washington, D.C. 20006.
The Company has agreed that, if at any time while the Notes or the Common
Stock issuable upon conversion of the Notes are restricted securities within the
meaning of the Securities Act or the Company is not subject to the informational
requirements of the Exchange Act, the Company will furnish to holders of such
Notes and Common Stock and to prospective purchasers designated by such holders
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales of
such Notes and Common Stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-20372) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The Supplemental Consolidated Financial Statements and Management's
Discussion and Analysis of Supplemental Financial Condition and Results of
Operations contained in the Registration Statement on Form S-3 (File No:
333-23599) filed April 15, 1997.
3. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997;
4. The Company's Current Reports on Form 8-K and 8-K/A filed March 19,
1997, August 14, 1997, October 14, 1997, November 7, 1997 and January 9, 1998;
5. The Registration Statement on Form 8-A with respect to Res-Care Common
Stock dated June 25, 1992; and
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6. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and prior to the termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Res-Care, Inc., 10140 Linn Station Road, Louisville,
Kentucky 40223, Attention: Pamela M. Spaniac, telephone: (502) 394-2100.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is 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.
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SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Prospectus. This summary is not intended to be
complete and is qualified in its entirety by reference to, and should be read in
conjunction with, the detailed information, including "Risk Factors" and
consolidated financial statements, condensed consolidated financial statements
and pro forma condensed consolidated income statement and notes thereto
appearing elsewhere herein or incorporated by reference in this Prospectus.
Unless the context suggests otherwise, references in this Prospectus to
"Res-Care" or the "Company" include Res-Care, Inc. and its subsidiaries.
THE COMPANY
Res-Care is a leading provider of residential, training, educational and
support services to populations with special needs, including persons with
developmental and other disabilities and at-risk and troubled youths. The
services provided by the Company have historically been provided by state and
local government agencies and not-for-profit organizations. The Company's
programs include an array of services provided in both residential and
non-residential settings for adults and youths with mental retardation or other
developmental disabilities ("MR/DD") and disabilities caused by acquired brain
injury, and at-risk and troubled youths who have severe behavioral disorders,
who are from disadvantaged backgrounds or who have entered the juvenile justice
system. Because most of Res-Care's MR/DD consumers require services over their
entire lives and many states have extensive waiting lists for services, Res-Care
has experienced high occupancy rates at its MR/DD facilities and a stable base
of recurring revenues.
Res-Care's growth strategy is to: (i) pursue acquisitions; (ii) add programs
and expand its existing programs in markets in which it currently operates; and
(iii) expand into additional geographic areas in the United States. The markets
for the Company's services are highly fragmented, and the Company believes that
there are significant opportunities to enhance its market positions through an
active acquisition program in the disabilities and at-risk and troubled youth
sectors that will enable the Company to expand its operations into new
geographic areas, add program offerings and establish new relationships with
governmental entities. The Company believes it has developed a disciplined
approach to acquisitions which focuses on acquiring operations in favorable
reimbursement environments, which are accretive to the Company's earnings per
share and which: (i) expand service offerings; (ii) increase market share in
existing markets; or (iii) help attain critical mass in new markets. The Company
intends to build upon its established relationships with governmental entities
to expand its current programs and obtain contracts for additional programs in
existing markets, and to develop new programs in response to societal trends and
the needs of governmental agencies. The Company also intends to expand its
programs to additional geographic areas which management identifies as having
favorable reimbursement and operating environments.
The Company was incorporated in Kentucky in 1974. Its principal executive
office is located at 10140 Linn Station Road, Louisville, Kentucky 40223, and
its telephone number is (502) 394-2100.
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THE OFFERING
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Securities Offered............. $109,360,000 principal amount of 6% Convertible
Subordinated Notes due 2004 (the "Notes") and the
Conversion Shares. See "Description of Notes" and
"Plan of Distribution."
Interest Payment Dates......... June 1 and December 1 of each year, commencing June
1, 1998.
Maturity Date.................. December 1, 2004
Interest....................... 6% per annum.
Conversion Rights.............. The Notes are convertible, at the option of the
Holder, at any time following the date of initial
issuance thereof and prior to maturity, unless
previously redeemed, into Common Stock at a
conversion price of $28.2125 per share, subject to
adjustments in certain events. See "Description of
Notes -- Conversion Rights."
Optional Redemption............ The Notes are not redeemable by the Company prior to
December 5, 2000. Subject to the foregoing, the Notes
will be redeemable on not less than 30 nor more than
60 days' notice at the option of the Company, in
whole or in part, at any time, at the redemption
prices set forth in "Description of Notes -- Optional
Redemption," in each case together with accrued and
unpaid interest and liquidated damages, if any.
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Repurchase Events.............. Upon the occurrence of any Repurchase Event (as
defined herein) occurring prior to the maturity of
the Notes, each Holder shall have the right, at such
Holder's option, to require the Company to purchase
all or any part of such Holder's Notes at 100% of the
principal amount thereof, subject to adjustments in
certain events, together with accrued and unpaid
interest thereon and liquidated damages, if any, to,
but excluding, the date of the purchase. See
"Description of Notes -- Certain Rights to Require
Repurchase of Notes."
Subordination.................. The Notes are general unsecured obligations of the
Company, subordinated in right of payment to all
existing and future Senior Indebtedness of the
Company. At December 31, 1997, the Company had
outstanding no indebtedness that would have
constituted Senior Indebtedness. The Indenture
governing the Notes does not prohibit or limit the
ability of the Company or its subsidiaries to incur
additional indebtedness, including Senior
Indebtedness. See "Description of Notes --
Subordination."
Use of Proceeds................ The Company will not receive any proceeds from the
sale of the Notes or the Conversion Shares.
Trading........................ Prior to the resale thereof pursuant to this
Prospectus, each of the Notes was eligible for
trading on the PORTAL Market. Notes sold pursuant to
this Prospectus are not expected to remain eligible
for trading on the PORTAL Market. The Conversion
Shares have been authorized for listing on the Nasdaq
National Market upon official notice of issuance.
The Common Stock is quoted on the Nasdaq National
Market under the symbol "RSCR."
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RISK FACTORS
This Prospectus, including statements incorporated by reference, contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors discussed below, as
well as those discussed elsewhere in this Prospectus. In addition to the other
information contained or incorporated by reference in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Notes and the Conversion Shares offered hereby.
SUBSTANTIAL DEPENDENCE ON GOVERNMENTAL REIMBURSEMENT
A substantial portion of the Company's revenues has been and will continue
to be attributable to Medicaid-funded disabilities services programs, with the
majority of the remaining revenues attributable to federal Job Corps contracts.
Governmental agencies have undertaken cost containment measures designed to
limit payments to health care and other service providers, and these efforts are
expected to continue. Various proposals are currently under consideration to
revamp the federally-funded Medicaid programs, including efforts to introduce
managed care and other arrangements in which financial risks associated with
service delivery are retained by the provider rather than by the funding source.
State regulatory agencies which administer Medicaid programs have substantial
discretion with regard to the implementation of Medicaid reimbursement programs
and with regard to the audit and inspection of Medicaid programs. Recent federal
budget legislation repealed a provision of the Medicaid Act known as the "Boren
Amendment," the effect of which is to limit in some respects providers' ability
to challenge state rate setting determinations. Actions taken by state
regulators following the repeal of the Boren Amendment could have a material
adverse effect on the Company's business and results of operations. An adverse
ruling in litigation with the State of Indiana has resulted in a reduction in
rates payable to the Company by the State of Indiana for the 39 months ended
September 30, 1997, although the amount of the reduction had been adequately
reserved by the Company in prior years. The Commonwealth of Kentucky has
challenged in an audit proceeding certain costs associated with a program
managed by the Company in Kentucky, which could lead to retroactive rate
adjustments to the provider of record; the provider of record has filed a
declaratory action against Kentucky in an effort to resolve this matter. Various
other states have initiatives underway to change Medicaid reimbursement
methodologies. No assurance can be given that developments in one or more
jurisdictions will not adversely affect the Company's business, financial
condition or results of operations.
GROWTH STRATEGY; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS AND NEW CONTRACTS
Most of the Company's facilities and programs are operating at or near full
capacity. Moreover, in light of governmental budgetary pressures and competitive
forces, there has been downward pressure on reimbursement rates. Thus, the
Company's ability to expand its revenue base is dependent to a significant
extent on its ability to effect acquisitions and to obtain new contracts. The
Company regularly reviews acquisition opportunities and opportunities for new
contracts and periodically engages in discussions regarding possible
acquisitions and contracts. Although the Company currently has no definitive
agreement with respect to any material acquisition, the Company continually
evaluates opportunities to expand its business through acquisitions of other
companies that provide services to various special needs populations and
frequently enters into discussions and letters of intent which may lead to
acquisitions. There can be no assurance that the Company will be able to
identify
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acquisition or new contract prospects on terms favorable to the Company
or in a timely manner, enter into acceptable agreements or close any such
transactions. There can be no assurance that the Company will be able to achieve
its growth strategy, and any failure to do so could have a material adverse
effect on the Company's business, financial condition, results of operations and
ability to sustain growth. In addition, the Company believes that it will
compete for acquisition candidates and management contracts with a variety of
other prospective bidders, some of which have greater resources than the
Company. Increased competition for such acquisition candidates and management
contracts could have the effect of increasing the costs to the Company of
pursuing this growth strategy, could reduce the number of attractive candidates
to be acquired or could reduce the profitability of management contracts. Future
acquisitions and efforts to obtain management contracts could divert
management's attention from the daily operations of the Company and otherwise
require additional management, operational and financial resources. Moreover,
there can be no assurance that the Company will successfully integrate such new
operations into its business or operate such acquisitions profitably.
Acquisitions may also involve a number of special risks including adverse
short-term effects on the Company's business and results of operations;
dependence on retaining key personnel; amortization of acquired intangible
assets; and risks associated with unanticipated liabilities and contingencies.
The Company may require additional debt or equity financing for future
acquisitions, which may not be available to the Company on terms favorable to
it, if at all. To the extent the Company uses its capital stock for all or a
portion of the consideration to be paid for future acquisitions, dilution may be
experienced by existing shareholders, including persons who are entitled to
become shareholders upon conversion of the Notes. In the event that the
Company's capital stock does not maintain sufficient value or acquisition
candidates are unwilling to accept the Company's capital stock as consideration
for the sale of their businesses, the Company may be required to utilize more of
its cash resources, if available, in order to continue its acquisition program.
If the Company does not have sufficient cash resources or is not able to use its
capital stock as consideration for acquisitions, its growth through acquisitions
could be limited.
UNCERTAIN ABILITY TO EXPAND YOUTH SERVICES OPERATIONS
Although Res-Care has operated Job Corps centers since 1976 and has provided
services for youths with developmental disabilities in its disabilities services
operations since 1978, the Company began intensive efforts to expand its at-risk
and troubled youth services operations in 1996 following the formation of its
Youthtrack, Inc. and Alternative Youth Services, Inc. subsidiaries. The Company
has not yet developed significant experience in operating special needs youth
programs other than Job Corps centers. No assurance can be given that the
Company will be able to generate sufficient revenues or contribution margin to
enable the Company to realize adequate returns on its investment in this sector.
The market for delivery of at-risk and troubled youth services is highly
competitive. Several of the Company's competitors have more experience than does
the Company in developing and implementing these services. Due to the
highly-fragmented nature of the youth services industry, the barriers to entry
remain low, and the Company may experience intensive competition as it seeks to
expand in this area, including competition from companies with substantially
greater resources than Res-Care. Moreover, the privatized management of programs
for at-risk and troubled youths has received varying degrees of acceptance by
state and local governmental authorities, and no assurance can be given that the
level of acceptance will rise or be maintained. There can be no assurance that
the Company will succeed in its goal to significantly increase the revenues and
operating income attributable to its at-risk and troubled youth services
operations.
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DEPENDENCE ON GOVERNMENTAL AGENCIES AND GOVERNMENT CONTRACTS
The Company conducts its business primarily under contracts with federal,
state and local governments and governmental agencies, and virtually all of the
Company's revenues are attributable to such contracts. The Company's cash flow
is subject to the receipt of sufficient funding and timely payment by applicable
governmental entities. If the appropriate governmental agency does not receive
sufficient appropriations to cover its contractual obligations, a contract may
be terminated or the Company's compensation may be deferred or reduced. A number
of federal, state and local governments, including certain of those with which
the Company has contracts, have experienced fiscal difficulties. Any deferral or
reduction in payment could have a material adverse effect on the Company's cash
flow. In addition, the Company is dependent on governmental entities for
referral of a sufficient number of individuals to occupy the Company's
facilities and programs. The failure of the Company to receive a sufficient
number of such referrals may have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's contracts are typically subject to renewal (or in the case of
Job Corps contracts, extension) annually. The renewal and financial terms of
each contract are dependent upon many factors, including the quality and type of
services provided, governmental budget constraints, changes in government or
agency personnel and priorities or philosophies of governments or agencies with
respect to provision of services to various at-risk populations. Government and
agency contracts generally are subject to audits, reviews and investigations.
These audits, reviews and investigations typically involve a review of the
contractor's performance under the contract, its reported costs and its
compliance with applicable laws and regulations. In addition, some contracts are
subject to competitive bidding, and the Company's customers generally may
terminate their contracts with the Company for cause and upon certain other
specified conditions. The loss or renewal on less favorable terms of certain of
the Company's contracts could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company derives revenue from the operation of multiple Job Corps
contracts awarded by the United States Department of Labor (the "DOL").
Performance at each Job Corps center is evaluated by the DOL using certain
objective and subjective criteria, and contracts for Job Corps centers not
meeting DOL expectations may not be extended or awarded during rebid. In 1996,
the Company's contract to operate the Crystal Springs, Mississippi Job Corps
center was not extended for the full term of its final contract year due to
performance issues at that center and in October 1997, the Company was not
successful in retaining the contract to operate the Gulfport, Mississippi Job
Corps Center upon its being rebid. The DOL has recently made efforts to
encourage new participants in the program, including minority-owned businesses,
and several companies with government defense contracting experience have begun
to bid for Job Corps contracts thereby increasing the competition for such
contracts. Although the Company has been able to retain most of its Job Corps
contracts in the past and was awarded a new Job Corps contract in 1996 to
operate the Edison Job Corps Center in Edison, New Jersey and in 1997 to operate
the Blue Ridge Job Corps Center in Marion, Virginia, there can be no assurance
that the DOL will continue to extend the Company's Job Corps contracts or award
the Company additional Job Corps contracts, in the future.
The Company has contracted with providers of record in various states to
manage and operate MR/DD facilities for them. In such cases, the Company is
dependent on the relationship between the state and local
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governments or governmental agencies and the providers of record with which they
contract. Each state and local government or governmental agency may terminate
or declare a breach of contract with providers of record, may be denied federal
matching funds as partial reimbursement for certain program expenses or may
reduce their placement of individuals with, or the use of, such providers of
record for reasons that may be beyond the control of the Company. Such actions
could adversely affect the ability of the providers of record to pay the Company
pursuant to their subcontracts.
GOVERNMENT REGULATION
The Company is subject to extensive federal, state and local regulations
governing licensure, conduct of operations at existing facilities, construction
of new facilities, purchase or lease of existing facilities, addition of new
services, capital expenditures, cost containment and reimbursement for services
rendered. Failure by the Company to meet applicable standards could result in
the loss of a license, the delay or loss of reimbursement or the loss of an
ability to expand services. To date, loss of license has not been a significant
factor in the Company's operations. There can be no assurance that federal,
state or local governments will not impose additional restrictions on the
operations of the Company that might adversely affect its business, financial
condition and results of operations.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's quarterly results of operations may fluctuate significantly as
a result of a variety of factors, including the timing of acquisitions or the
opening of new programs, the timing of rate adjustments and the cumulative
effect of rate adjustments differing from previously estimated amounts. Results
for any particular quarter may not be indicative of future quarterly or annual
results.
OPPOSITION TO PROGRAM LOCATION AND ADVERSE PUBLICITY
The Company's success in obtaining new contracts may depend, in part, upon
its ability to locate facilities that can be leased or acquired on favorable
terms by the Company. Group homes are generally located in residential
communities. Larger facilities for persons with disabilities and at-risk and
troubled youths may be in or near populated areas and, therefore, may generate
legal action or other forms of opposition from residents in areas surrounding a
proposed site. The Company's business also is subject to public scrutiny and,
consequently, could be significantly affected by negative publicity, negative
public reaction or governmental investigations with respect to the Company's
policies or operations or the actions of consumers under its care. The Company's
reputation is very important to the retention and procurement of contracts.
Negative publicity or a governmental investigation with respect to the Company's
policies or operations or the actions of individuals under its care could have a
material adverse effect on the Company's business, financial condition and
results of operations.
POTENTIAL LEGAL LIABILITY
The Company's management of its residential, training, educational and
support programs exposes it to potential third-party claims or litigation by
participants or other persons for wrongful death, personal injury or other
damages resulting from contact with Company facilities, programs, personnel or
participants. In addition, the Company's contracts and the laws of certain
states generally require the Company to maintain adequate
-7-
<PAGE> 15
insurance for its operations and to indemnify the governmental agency against
any damages to which the governmental agency may be subject in connection with
such claims or litigation. The Company has, on occasion, been sued by third
parties and maintains an insurance program that provides coverage for certain
liability risks faced by the Company, including wrongful death, personal injury,
bodily injury or property damage to a third party where the Company is found to
be negligent. There can be no assurance, however, that the Company's insurance
will be adequate to cover potential third-party claims.
DEPENDENCE ON SENIOR MANAGEMENT AND SKILLED PERSONNEL
The success of the Company is highly dependent upon the efforts and
abilities of Ronald G. Geary, its President and Chief Executive Officer and
other members of the Company's senior management team, some of whom have only
recently joined the Company. Although the majority of the Company's senior
executives have many years experience with the Company, the Company has recently
employed a new executive vice president in charge of MR/DD development
activities and a new executive vice president in charge of finance and
administration. The Company has entered into separate employment agreements with
the President and four other senior executive officers containing customary
noncompetition, nondisclosure, and nonsolicitation covenants. The loss of the
services of one or more of the senior executives could have a material adverse
effect upon the Company's business, financial condition and results of
operations.
AVAILABILITY OF QUALIFIED PERSONNEL
The Company competes with many other providers of long-term care with
respect to attracting and retaining qualified and skilled personnel. A possible
shortage of professional personnel or direct service staff or other outside
pressures, including collective bargaining efforts, may require the Company to
enhance its wage and benefits package in order to compete in the hiring and
retention of such personnel. The Company will also be dependent upon the
available labor pool of semi-skilled and unskilled employees in each of the
markets in which it operates. The Company's labor costs are expected to
increase, and there can be no assurance that the Company can match an increase
in such costs by corresponding increases in reimbursement rates for services
rendered by the Company. Any significant failure to control its labor costs or
to receive increased reimbursement for such costs through rate increases would
have a material adverse effect on the Company's business, financial condition
and results of operations.
SUBORDINATION
The Notes are general unsecured obligations, subordinated in right of
payment in full to all existing and future Senior Indebtedness of the Company.
Under the Indenture (as defined herein), the Notes are subordinated to the
Company's Senior Indebtedness (principally bank debt). As a result of such
subordination, in the event of any insolvency, liquidation or reorganization of
the Company or upon acceleration of the Notes due to an Event of Default (as
defined in the Indenture), the assets of the Company will be available to pay
obligations on the Notes and any other subordinated indebtedness of the Company
only after all Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on any or all of the Notes and
any other subordinated indebtedness of the Company then outstanding. The
Indenture does not prohibit or limit the incurrence of indebtedness, including
Senior Indebtedness, by the Company. The incurrence of such indebtedness could
adversely affect the Company's ability to pay its obligations under the Notes.
As of
-8-
<PAGE> 16
December 31, 1997, the Company had outstanding no indebtedness that would have
constituted Senior Indebtedness.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
Prior to the date hereof, there has been no established trading market for
the Notes. The Notes have been designated for trading on the PORTAL Market;
however, Notes sold pursuant to this Prospectus are not expected to remain
eligible for trading on the PORTAL Market. The Company does not intend to apply
for listing of the Notes on any securities exchange or for quotation through the
Nasdaq National Market. There can be no assurance that an active trading market
for the Notes will develop or, if one does develop, that it will be maintained.
If an active trading market for the Notes fails to develop or be sustained, the
trading price of such Notes could be adversely affected and holders of the Notes
may experience difficulty in reselling the Notes or may be unable to sell them
at all. If a public trading market develops for the Notes, future trading prices
of the Notes will depend upon many factors, including, among other things,
prevailing interest rates and the market price of the shares of Common Stock.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity and trading markets independent of
the financial performance of, and prospects for, the Company.
LIMITATION ON REPURCHASE OF NOTES UPON REPURCHASE EVENT
Upon the occurrence of a Repurchase Event (as defined herein) each Holder of
Notes may require the Company to repurchase all or a portion of such Holder's
Notes. If a Repurchase Event were to occur, there could be no assurance that the
Company would have sufficient financial resources or would be able to arrange
financing to pay the repurchase price for all Notes tendered by Holders thereof.
The Company's ability to repurchase the Notes in such event may be limited by
law, the Indenture and the terms of other agreements relating to borrowings that
constitute Senior Indebtedness, as such indebtedness or agreements may be
entered into, replaced, supplemented or amended from time to time. The Company
may be required to refinance Senior Indebtedness in order to make any such
payment. If the Company is prohibited from repurchasing the Notes, such failure
would constitute an Event of Default under the Indenture, which may, in turn,
constitute a further default under certain of the Company's existing agreements
relating to borrowings and the terms of other indebtedness that the Company may
enter into from time to time. In such circumstances, the subordination
provisions in the Indenture would prohibit payments to the Holders of the Notes.
Furthermore, the Company may not have the financial ability to repurchase the
Notes in the event that maturity of Senior Indebtedness is accelerated as a
result of a default under the applicable loan or similar agreement. See
"Description of Notes -- Certain Rights to Require Repurchase of Notes."
COMPETITION
The provision of disabilities and youth services is subject to a number of
competitive factors, including quality of services provided, cost-effectiveness,
reporting and regulatory expertise, reputation in the community and the location
and appearance of facilities and programs. In addition to certain not-for-profit
organizations, including organizations affiliated with advocacy and sponsoring
groups, certain proprietary competitors operate in multiple jurisdictions and
may be well capitalized. The Company faces significant competition from
not-for-profit organizations and proprietary competitors in the states in which
it now operates and expects to face
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<PAGE> 17
similar competition in any state that it may enter in the future. Many of the
Company's competitors have greater resources than the Company. Such competition
may adversely affect the Company's ability to obtain new contracts and complete
acquisitions on favorable terms.
ENVIRONMENTAL AND EMPLOYEE SAFETY LAWS
The Company must comply with various federal and state laws and regulations
that govern the handling and disposal of medical and infectious waste in the
operation of its businesses. Failure to comply with these laws or regulations
could subject the Company to fines, criminal penalties and other enforcement
actions. The Company has developed and implemented policies with respect to the
handling and disposal of medical and infectious waste and believes it is in
compliance with such laws and regulations. Federal regulations promulgated by
the Occupational Safety and Health Administration impose additional requirements
on the Company with regard to protecting employees from exposure to bloodborne
pathogens. The Company believes that it has complied, and will continue to be
able to comply, with these regulations. However, there can be no assurance that
the regulations will not adversely affect the Company's business, financial
condition and results of operations.
VOLATILITY OF MARKET PRICE
In the future, there may be significant volatility in the market price of
the Common Stock. The Company believes that the current market price of the
Common Stock reflects expectations that the Company will be able to continue to
operate its programs profitably and to acquire or develop additional and new
programs at a significant rate and operate them profitably. If the Company is
unable to operate its programs profitably or develop new programs at a pace that
reflects the expectations of the market, investors could sell shares of Common
Stock at or after the time that it becomes apparent that such expectations may
not be realized, resulting in a decrease in the market price of the Common
Stock. In addition to the operating results of the Company, changes in earnings
estimates by analysts, changes in general conditions in the economy or the
financial markets or other developments affecting the Company or comparable
companies within the privatization services industries could cause the market
price of the Common Stock to fluctuate substantially. In recent years, the stock
market has experienced extreme price and volume fluctuations. This volatility
has had a significant effect on the market prices of securities issued by many
companies for reasons unrelated to their operating performance.
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Charter and Bylaws contain certain anti-takeover provisions
and the Company may add other such provisions in the future. The Company's Board
of Directors has the authority to issue preferred stock and to determine the
price, rights, conversion ratios, preferences and privileges of that stock
without further vote or action by the holders of the Common Stock. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights, including economic rights, of the holders of any shares of
preferred stock. Any such issuance may discourage third parties from attempting
to acquire control of the Company. Furthermore, the Company is subject to the
anti-takeover provisions of the Kentucky Business Corporation Act prohibiting
the Company from engaging in a "business combination" with an "interested
stockholder" for a period of five years after the date of the transaction in
which the person first becomes an "interested stockholder," unless the business
combination is approved in a prescribed manner. The application of this
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<PAGE> 18
statute and certain other provisions of the Company's Amended and Restated
Articles of Incorporation also could have the effect of discouraging, delaying
or preventing a change of control of the Company not approved by the Board of
Directors, which could adversely affect the market price of the Company's Common
Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sales of the Notes or the
Conversion Shares by the Selling Securityholders.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for each of the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of
Earnings to
Fixed Charges...... 5.39 7.29 7.07 6.73 6.08 6.80 6.89
</TABLE>
The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings. Earnings is defined as pretax income from continuing operations
adjusted by adding fixed charges and excluding interest capitalized during the
period. Fixed charges consist of interest and financing charges, the estimated
interest component of rent expense and preferred stock dividends.
SELLING SECURITYHOLDERS
The Notes were originally issued by the Company in a private placement on
November 21, 1997 to NationsBanc Montgomery Securities, Inc., J.C. Bradford &
Co., L.L.C. and Equitable Securities Corporation (the "Initial Purchasers") and
were simultaneously sold by the Initial Purchasers, in transactions exempt from
the registration requirements of the Securities Act, to persons reasonably
believed by such Initial Purchasers to be "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) and in offshore transactions to
persons outside of the United States in reliance on Regulation S under the
Securities Act. The Selling Securityholders may from time to time offer and sell
pursuant to this Prospectus any or all of the Notes and Conversion Shares. The
term "Selling Securityholder" includes the holders listed below and the
beneficial owners of the Notes and their transferees, pledgees, donees or other
successors.
The following table sets forth information as with respect to the Selling
Securityholders and the respective principal amount of Notes beneficially owned
by each Selling Securityholder that may be offered pursuant to this Prospectus.
Such information has been obtained from the Selling Securityholders.
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<PAGE> 19
<TABLE>
<CAPTION>
PERCENTAGE NUMBER OF PERCENTAGE
PRINCIPAL OF TOTAL CONVERSION PERCENTAGE OF TOTAL
AMOUNT OUT- SHARES THAT OF COMMON VOTING POWER
OF NOTES STANDING MAY BE STOCK OUT- AFTER CON-
NAME OWNED NOTES SOLD(1) STANDING(2) VERSION(3)
---- --------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
</TABLE>
[Selling Securityholder Information will be completed prior to
effectiveness of the Registration Statement via amendment]
-----------------
* Less than 1%.
(1) Assumes conversion of the full amount of Notes held by such holder at
the initial conversion price of $28.2125 per share; such conversion price is
subject to adjustment as described under "Description of the Notes--
Conversion." Accordingly, the number of shares of Common Stock issuable upon
conversion of the Notes may increase or decrease from time to time. Under the
terms of the Indenture, fractional shares will not be issued upon conversion of
the Notes; cash will be paid in lieu of fractional shares, if any.
(2) Computed in accordance with Rule 13d-3(d)(1) promulgated under the
Exchange Act and based upon 12,365,682 shares of Common Stock outstanding as of
December 31, 1997, treating as outstanding the number of Conversion Shares shown
as being issuable upon the assumed conversion by the named holder of the full
amount of such holder's Notes but not assuming the conversion of the Notes of
any other holder. Includes Common Stock, if any, beneficially owned by the
holder other than the Conversion Shares.
(3) The percentage of total voting power after conversion represents the
percentage of the voting power each stockholder will have after the conversion
based upon 12,365,682 shares of Common Stock outstanding as of December 31, 1997
treating as outstanding the number of Conversion Shares as being issuable upon
the assumed conversion by the named holder of the full amount of such holder's
Notes but not assuming the conversion of the Notes of any other holder. Includes
Common Stock, if any, beneficially owned by the holder other than the Conversion
Shares.
None of the Selling Securityholders has, or within the past three years has
had, any position, office or other material relationship with the Company or any
of its predecessors or affiliates. Because the Selling Securityholders may,
pursuant to this Prospectus, offer all or some portion of the Notes or the
Conversion Shares, no estimate can be given as to the amount of the Notes or the
Conversion Shares that will be held by the Selling Securityholders upon
termination of any such sales. In addition, the Selling Securityholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of their Notes, in transactions exempt from the registration
requirements of the Securities Act, since the date on which they provided the
information
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<PAGE> 20
regarding their Notes. Information regarding changes with respect to the Selling
Securityholders will be set forth in supplements to this Prospectus if and when
necessary. See "Plan of Distribution."
DESCRIPTION OF NOTES
The Notes were issued under an indenture dated as of November 21, 1997 (the
"Indenture") between the Company and PNC Bank, Kentucky, Inc., as trustee (the
"Trustee"). The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of the Indenture and the
Registration Rights Agreement including the definition therein of certain terms.
Wherever particular sections or defined terms of the Indenture are referred to,
such sections or defined terms are incorporated herein by reference. Copies of
the form of Indenture are available from the Company or the Initial Purchasers
upon request.
GENERAL
The Notes represent general unsecured subordinated obligations of the
Company, are convertible into Common Stock of the Company as described under
"Conversion Rights" and will mature on December 1, 2004 ("Maturity"). The Notes
will bear interest at the rate of 6% per annum from the date of initial issuance
of Notes pursuant to the Indenture, or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semi-annually on
June 1 and December 1 of each year, commencing June 1, 1998 to the Person in
whose name the Notes (or any predecessor Notes) are registered (individually, a
"Holder" and collectively, the "Holders") at the close of business on the
preceding May 15 or November 15, as the case may be (whether or not a Business
Day). Interest on the Notes will be paid on the basis of a 360-day year
consisting of twelve 30-day months.
Principal of, and premium, if any, interest and liquidated damages, if any,
on the Notes will be payable (i) in respect of Notes held of record by DTC or
its nominee, in same day funds on or prior to the respective payment dates and
(ii) in respect of Notes held of record by Holders other than DTC or its
nominee, in same day funds, at the office of the Trustee in New York, New York,
and the Notes may be surrendered for transfer, exchange or conversion at the
office of the Trustee in New York, New York. In addition, with respect to Notes
held of record by holders other than DTC or its nominee, payment of interest may
be made at the option of the Company by check mailed to the address of the
persons entitled thereto as it appears in the Register for the Notes on the
Regular Record Date for such interest.
The Notes were issued only in registered form, without coupons and in
denominations of $1,000 or any integral multiple thereof. No service charge will
be made for any transfer or exchange of the Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge and
any other expenses (including the fees and expenses of the Trustee) payable in
connection therewith. The Company is not required (i) to issue or register the
transfer of or exchange of any Notes during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption and
ending at the close of business on the day of such mailing, (ii) to register the
transfer of or exchange of any Note selected for redemption in whole or in part,
except the unredeemed portion of Notes being redeemed in part or (iii) to
register the transfer or exchange of any Notes surrendered for conversion or
repurchase upon the occurrence of a Repurchase Event.
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<PAGE> 21
All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of, and premium, if any, interest and liquidated damages,
if any, on any Note which remain unclaimed for two years after such principal,
premium, interest or liquidated damages, if any, become due and payable may be
repaid to the Company. Thereafter, the Holder of such Note may, as an unsecured
general creditor, look only to the Company for payment thereof.
The Indenture does not contain any provisions that would afford protection
to Holders of the Notes against a sudden and dramatic decline in the credit
quality of the Company resulting from any takeover, recapitalization or similar
restructuring, except as described below under "Certain Rights to Require
Repurchase of Notes."
CONVERSION RIGHTS
The Notes are convertible, at the option of the Holder, into Common Stock
following the date of initial issuance and prior to redemption or final
maturity, initially at the conversion price of $28.2125 per share. The right to
convert Notes which have been called for redemption will terminate at the close
of business on the second business day preceding the Redemption Date, unless the
Company defaults on a redemption payment. See "Optional Redemption" below.
The conversion price will be subject to adjustments upon the occurrence of
any of the following events: (i) the subdivision, combination or
reclassification of outstanding shares of Common Stock; (ii) the payment of a
dividend or distribution on Common Stock exclusively in shares of Common Stock
or the payment of a dividend or distribution on any class of capital stock of
the Company in shares of Common Stock; (iii) the issuance of rights or warrants
to all holders of Common Stock entitling them to acquire shares of Common Stock
(or securities convertible into Common Stock) at a price per share less than the
Current Market Price; (iv) the distribution to all holders of Common Stock of
shares of capital stock (other than Common Stock), evidences of indebtedness,
cash or assets (including securities, but excluding dividends or distributions
in connection with the liquidation, dissolution or winding up of the Company or
paid exclusively in cash and dividends, distributions, rights and warrants
referred to above); (v) the distribution to all or substantially all holders of
Common Stock of rights or warrants to subscribe for its securities (other than
those referred to in (iii) above); (vi) a distribution consisting exclusively of
cash (excluding any cash distributions referred to in (iv) above) to all holders
of Common Stock in an aggregate amount that, together with (A) all other cash
distributions (excluding any cash distributions referred to in (iv) above) made
within the 12 months preceding the date fixed for determining the stockholders
entitled to such distribution in respect of which no adjustment has previously
been made and (B) any cash and the fair market value of other consideration
payable in respect of any tender offer by the Company or a subsidiary of the
Company for the Common Stock consummated within the 12 months preceding such
date of determination, exceeds the greater of (A) 10% of the Company's market
capitalization (being the product of the Current Market Price times the number
of shares of Common Stock then outstanding) on such date of determination
entitled to such distribution or (B) the Company's retained earnings on the date
of determination entitled to such distribution; (vii) the consummation of a
tender offer made by the Company or any subsidiary of the Company for all or any
portion of the Common Stock which involves an aggregate consideration that,
together with (X) any cash and the fair market value of other consideration
payable in respect of any tender offer by the Company or a subsidiary of the
Company for the Common Stock consummated within the 12 months preceding the
consummation of such tender offer in respect
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<PAGE> 22
of which no adjustment has been previously made and (Y) the aggregate amount of
all cash distributions (excluding any cash distributions referred to in (iv)
above) to all holders of the Common Stock within the 12 months preceding the
consummation of such tender offer in respect of which no adjustment has been
previously made, exceeds the greater of (A) 10% of the product of the Current
Market Price immediately prior to the date of consummation of such tender offer
times the number of shares of Common Stock outstanding at the date of
consummation of such tender offer or (B) the Company's retained earnings on the
date of consummation of the tender offer; and (viii) payment in respect of a
tender offer or exchange offer by a person other than the Company or any
subsidiary of the Company in which, as of the closing date of the offer, the
Board of Directors is not recommending rejection of the offer. The adjustment
referred to in clause (viii) will only be made if the tender offer or exchange
is for an amount which increases the offeror's ownership of Common Stock to more
than 25% of the total shares of Common Stock outstanding, and if the cash and
value of any other consideration included in such payment per share of Common
Stock exceeds the current market price per share of Common Stock on the business
day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. The adjustment referred to in clause
(viii) will generally not be made, however, if, as of the closing of the offer,
the offering documents with respect to such offer disclose a plan or an
intention to cause the Company to engage in a consolidation or merger of the
Company or a sale of all or substantially all of the Company's assets. No
adjustment of the conversion price will be required to be made until cumulative
adjustments amount to at least one percent of the conversion price, as last
adjusted. Any adjustments that would not otherwise be sufficient to require a
change to be made pursuant to the immediately preceding sentence shall be
carried forward and taken into account in any subsequent adjustment.
In addition to the foregoing adjustments, the Company will be permitted to
reduce the conversion price as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Common Stock or, if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
In the case of any consolidation or merger of the Company with any other
corporation (other than one in which no change is made in the Common Stock), or
any sale or transfer of all or substantially all of the assets of the Company,
the Holder of any Note then outstanding will, with certain exceptions, have the
right thereafter to convert such Note only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such Note might have been converted immediately prior to such consolidation,
merger, sale or transfer; and adjustments will be provided for events subsequent
thereto that are as nearly equivalent as practical to the conversion price
adjustments described above.
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the then
Closing Price at the close of business on the day of conversion (or, if such day
is not a Trading Day, on the Trading Day immediately preceding such day). If any
Notes are surrendered for conversion during the period from the opening of
business on any Regular Record Date through and including the next succeeding
Interest Payment Date (except any such Notes called for redemption), such Notes
when surrendered for conversion must instead be accompanied by payment of an
amount equal to the interest thereon which the registered Holder on such Regular
Record Date is to receive; provided however that the Notes or portions thereof
which have been called for redemption and the conversion rights of which
terminate during such period must be accompanied by payment of an amount equal
to the interest which would
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<PAGE> 23
have accrued on the principal amount of the Notes being surrendered for
conversion for the period from the conversion date to such Interest Payment
Date. Except as described in the preceding sentence, no interest will be payable
by the Company on converted Notes with respect to any Interest Payment Date
subsequent to the date of conversion. No other payment or adjustments for
interest or dividends is to be made upon conversion.
SUBORDINATION
The payment of the principal of, and premium, if any, interest and
liquidated damages, if any, on the Notes is subordinated, to the extent set
forth in the Indenture, in right of payment to the prior payment in full of all
Senior Indebtedness. If there is a payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of all
Senior Indebtedness will be entitled to receive payment in full of all amounts
due or to become due thereon or provision for such payment in money or money's
worth before the Holders of the Notes will be entitled to receive any payment in
respect of the principal of, or premium, if any, interest or liquidated damages,
if any, on the Notes. In the event of the acceleration of the Maturity of the
Notes, the holders of all Senior Indebtedness then outstanding will first be
entitled to receive payment in full in cash of all amounts due thereon or
provision for such payment in money or money's worth before the Holders of the
Notes will be entitled to receive any payment for the principal of, or premium,
if any, interest or liquidated damages, if any, on the Notes. The Company also
may not make any payment (whether by redemption, purchase, retirement,
defeasance or otherwise) to the Holders upon or in respect of the Notes if (i) a
default in the payment of the principal of, or premium, if any, or interest on
any Designated Senior Indebtedness (a "Payment Default") occurs or (ii) any
other default occurs and is continuing with respect to any Designated Senior
Indebtedness which permits holders of Designated Senior Indebtedness as to which
that default relates to accelerate its maturity (a "Nonpayment Default") and the
Trustee receives notice of that default (a "Payment Blockage Notice") from the
Company or other person permitted to give such notice under the Indenture. The
payments on or in respect of the Notes shall be resumed (i) in the case of a
Payment Default respecting Designated Senior Indebtedness, on the date on which
that default is cured or waived and (ii) in the case of a Nonpayment Default
respecting Designated Senior Indebtedness, the earliest of (a) the date on which
that Nonpayment Default is cured or waived, (b) the date the applicable Payment
Blockage Notice is retracted by written notice to the Trustee from a
representative of the holders of the Designated Senior Indebtedness which have
given that Payment Blockage Notice or (c) 179 days after the date on which the
applicable Payment Blockage Notice is received by the Trustee, unless any
Payment Default has occurred and is continuing or an Event of Default of the
type referred to in clause (g) of the first sentence under "--Events of Default"
has occurred. No Nonpayment Default which existed or was continuing on the date
of any Payment Blockage Notice may be made the basis for giving a second Payment
Blockage Notice and only one such Payment Blockage Notice with respect to a
Nonpayment Default may be given in any 365-day period.
"Senior Indebtedness" is defined in the Indenture as (a) all indebtedness of
the Company for money borrowed under the Company's credit facilities and any
predecessor or successor credit facilities thereto, whether outstanding on the
date of execution of the Indenture (such as the Company's Revolving Credit
Facility, any increase in the maximum principal amount thereof and any
predecessor or successor facilities thereto) or thereafter created, incurred or
assumed, (b) indebtedness of the Company for money borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, incurred or
assumed, except any such other indebtedness that by the terms of the instrument
or instruments by which such indebtedness was created or
-16-
<PAGE> 24
incurred expressly provides that it (i) is junior in right of payment to the
Notes or (ii) ranks pari passu in right of payment with the Notes, and (c) any
amendments, renewals, extensions, modifications, refinancings and refundings of
any of the foregoing. The term "indebtedness for money borrowed" when used with
respect to the Company is defined to mean (i) any obligation of or any
obligation guaranteed by, the Company for the repayment of borrowed money
(including without limitation fees, penalties and other obligations in respect
thereof), whether or not evidenced by bonds, notes or other written instruments,
(ii) any deferred payment obligation of, or any such obligation guaranteed by,
the Company for the payment of the purchase price of property or assets
evidenced by a note or similar instrument and (iii) any obligation of, or any
such obligation guaranteed by, the Company for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of the
Company, under generally accepted accounting principles. As used in the
Indenture, "Designated Senior Indebtedness" means principal, interest, premiums,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any indebtedness (a) under any debt facility
with banks or other lenders which provides for revolving credit loans, term
loans, receivables financing (including through the sale of receivables) or
letters of credit to the Company or any of its subsidiaries and (b) any other
Senior Indebtedness the principal amount of which is $5.0 million or more and
that has been designated by the Company as "Designated Senior Indebtedness."
The Indenture does not limit or prohibit the incurrence of indebtedness,
including Senior Indebtedness, by the Company or its subsidiaries. As of
December 31, 1997, the Company had outstanding no indebtedness which constitutes
Senior Indebtedness. The Company expects to incur Senior Indebtedness from time
to time in the future.
INFORMATION CONCERNING THE TRUSTEE
PNC Bank, Kentucky, Inc. is both the Trustee under the Indenture for the
Notes and the lead bank under the Company's Revolving Credit Facility. The
Indenture does not preclude the Trustee from enforcing its rights as a creditor,
including its rights as a holder of Senior Indebtedness. In the event of a
conflict of interest arising between the Holders of the Notes and the holders of
Senior Indebtedness, PNC Bank, Kentucky, Inc. will resign as Trustee and a
successor trustee will be appointed.
OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or from time
to time in part, at any time on or after December 5, 2000, upon not less than 30
nor more than 60 days' notice mailed to each Holder of Notes to be redeemed at
its address appearing in the Security Register and prior to Maturity at the
following Redemption Prices (expressed as percentages of the principal amount)
plus accrued interest to the Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the period beginning December 1 (December 5, if in the
year 2000), in the year indicated and ending on the succeeding November 30, the
redemption price shall be:
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<PAGE> 25
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2000 103.43%
2001 102.57%
2002 101.71%
2003 100.86%
2004 100.00%
</TABLE>
in each case together with accrued and unpaid interest and liquidated damages,
if any, up to but not including the date of redemption. No sinking fund is
provided for the Notes.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will 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 will not permit any Person to consolidate with or
merge into the Company unless: (a) the Person formed by such consolidation or
into which the Company is merged or the Person or corporation which acquires the
properties and assets of the Company substantially as an entirety is a
corporation, partnership or trust organized and validly existing under the laws
of the United States or any state thereof or the District of Columbia and
expressly assumes payment of the principal of and premium, if any, and interest
on the Notes and performance and observance of each obligation of the Company
under the Indenture; (b) after consummating such consolidation, merger, transfer
or lease, no Default or Event of Default will occur and be continuing, (c) such
consolidation, merger, conveyance, transfer or lease does not adversely affect
the validity or enforceability of the Notes and (d) the Company or Successor
Person has delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer or
lease complies with the provisions of the Indenture.
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES
In the event of any Repurchase Event occurring after the date of issuance of
the Notes and on or prior to Maturity, each Holder of Notes will have the right,
at the Holder's option, to require the Company to repurchase all or any part of
the Holder's Notes on the date (the "Repurchase Date") that is 30 days after the
date the Company gives notice of the Repurchase Event as described below at a
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest and liquidated damages, if any, to the
Repurchase Date. On or prior to the Repurchase Date, the Company shall deposit
with the Trustee or a Paying Agent an amount of money in same day funds
sufficient to pay the Repurchase Price of the Notes which are to be repaid on or
promptly following the Repurchase Date.
Failure by the Company to provide timely notice of a Repurchase Event, as
provided for below, or to repurchase the Notes when required under the preceding
paragraph will result in an Event of Default under the Indenture whether or not
such repurchase is permitted by the subordination provisions of the Indenture.
On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of Notes a notice of the occurrence
of such Repurchase Event and identifying the Repurchase Event, the Repurchase
Date, the date by which the repurchase right must be exercised, the Repurchase
Price for Notes
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<PAGE> 26
(which shall equal 100% of the principal amount thereof, together with accrued
and unpaid interest and liquidated damages, if any,) and the procedures which
the Holder must follow to exercise this right. To exercise the repurchase right,
the Holder of a Note must deliver, on or before the close of business on the
Repurchase Date, written notice to the Company (or an agent designated by the
Company for such purpose) and to the Trustee of the Holder's exercise of such
right, together with the certificates evidencing the Notes with respect to which
the right is being exercised, duly endorsed for transfer.
A "Repurchase Event" shall have occurred upon the occurrence of a Change in
Control (as defined below) or a Termination of Trading (as defined below).
A "Change in Control" shall occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case, other than a consolidation or merger
of the Company in which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
total voting power of all classes of capital stock entitled to vote generally in
the election of directors of the continuing or surviving corporation immediately
after such consolidation or merger in substantially the same relative proportion
as their ownership of Common Stock immediately before such transaction; (iii)
any person, or any persons acting together which would constitute a "group" for
purposes of Section 13(d) of the Exchange Act, together with any affiliates
thereof, shall beneficially own (as defined in Rule 13d-3 under the Exchange
Act) at least 50% of the total voting power of all classes of capital stock of
the Company entitled to vote generally in the election of directors of the
Company; (iv) at any time during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of 66 2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (v) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution.
A "Termination of Trading" shall occur if the Common Stock (or other common
stock into which the Notes are then convertible) is neither listed for trading
on a U.S. national securities exchange nor approved for trading on an
established automated over-the-counter trading market in the United States.
If a Repurchase Event were to occur, there can be no assurance that the
Company would have sufficient funds to repurchase the Notes tendered by the
Holders thereof. The Company's Senior Indebtedness may provide that a change in
control of the Company would constitute an event of default thereunder, the
occurrence of which would cause any repurchase of the Notes, absent a waiver, to
be blocked by the subordination provisions of the Notes. In addition, even if
such event of default did not occur or was waived, the right to require the
Company to repurchase Notes as a result of the occurrence of a Repurchase Event
could create an event of default under Senior Indebtedness of the Company, as a
result of which any repurchase could, absent a waiver, be blocked by the
subordination provisions of the Notes. See "-- Subordination." The Company's
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<PAGE> 27
ability to pay cash to the Holders of Notes upon a Repurchase Event may be
limited by certain financial covenants contained in the Company's Senior
Indebtedness. Failure by the Company to repurchase the Notes when required will
result in an Event of Default with respect to the Notes whether or not such
repurchase is permitted by the subordination provisions thereof.
In the event a Repurchase Event occurs and the Holders exercise their rights
to require the Company to repurchase Notes, the Company intends to comply with
applicable tender offer rules under the Exchange Act, including Rules 13e-4 and
14e-1, as then in effect, with respect to any such purchase.
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders. In addition, the foregoing provisions
may discourage open market purchases of the Common Stock or a non-negotiated
tender or exchange offer for such stock and, accordingly, may limit a
stockholder's ability to realize a premium over the market price of the Common
Stock in connection with any such transaction.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Notes: (a) default in the payment of the principal of, or the premium, if any,
on any Note when due (even if such payment is prohibited by the subordination
provisions of the Indenture); (b) default in the payment of any interest and
liquidated damages, if any, on any Note when due, which default continues for 30
days (even if such payment is prohibited by the subordination provisions of the
Indenture); (c) failure to provide timely notice of a Repurchase Event as
required by the Indenture; (d) default in the payment of the Repurchase Price in
respect of any Note on the Repurchase Date therefor (even if such payment is
prohibited by the subordination provisions of the Indenture); (e) default in the
performance, or breach, of any other covenant or warranty of the Company in the
Indenture which continues for 60 days after written notice as provided in the
Indenture; (f) default under one or more bonds, notes or other evidences of
indebtedness for money borrowed by the Company or any subsidiary of the Company
or under one or more mortgages, indentures or instruments under which there may
be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any subsidiary of the Company, whether such
indebtedness now exists or shall hereafter be created, which default
individually or in the aggregate shall constitute a failure to pay the principal
of indebtedness in excess of $10,000,000 when due and payable after the
expiration of any applicable grace period with respect thereto or shall have
resulted in indebtedness in excess of $10,000,000 becoming or being declared due
and payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 30 days after there shall
have been given to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes (as defined in the Indenture) a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled; and (g) certain events of bankruptcy,
insolvency or reorganization of the Company or any subsidiary of the Company.
If an Event of Default with respect to the Notes (other than as specified in
clause (g) in the immediately preceding paragraph) shall occur and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes may declare the principal of, and
premium, if any, on all such Notes
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<PAGE> 28
to be due and payable immediately, but if the Company cures all Events of
Default and has paid or deposited with the Trustee a sum sufficient to pay all
interest on, premium, if any, and principal of Notes then due and certain other
conditions are met, such declaration may be canceled and past defaults may be
waived by the holders of a majority in principal amount of Outstanding Notes. If
an Event of Default shall occur as a result of an event of bankruptcy,
insolvency or reorganization of the Company or any subsidiary of the Company,
the aggregate principal of, premium, if any, any accrued and unpaid interest and
liquidated damages, if any, on the Notes shall automatically become due and
payable. The Company is required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. The Indenture provides that
the Trustee may withhold notice to the Holders of the Notes of any continuing
default (except in the payment of the principal of, or premium, if any, or
interest on any Notes) if the Trustee considers it in the interest of Holders of
the Notes to do so.
MODIFICATION, AMENDMENTS AND WAIVERS
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 Outstanding Notes; provided, however, that no such modification or
amendment may without consent of the Holder of each Outstanding Note affected
thereby (i) change the maturity of the principal of, or any installment of
interest on, any Note; (ii) reduce the principal amount of, or the premium or
interest on, any Note; (iii) change the place of payment where, or currency in
which, any Note or any premium or interest thereof is payable; (iv) impair the
right of a Holder to institute suit for the enforcement of any payment on or
with respect to any Note; (v) change the currency in which the Notes are
payable; (vi) adversely affect the right to convert the Notes; (vii) adversely
affect the right to cause the Company to repurchase the Notes; (viii) modify the
subordination provisions in a manner adverse to the Holders of the Notes; or
(ix) reduce the above stated percentage of aggregate principal amount of
Outstanding Notes necessary for waiver or compliance with certain provisions of
the Indenture or for waiver of certain defaults.
The Holders of a majority in aggregate principal amount of Outstanding Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. The Holders of a majority in aggregate principal amount of
Outstanding Notes may waive any past default or right under the Indenture,
except (i) a default in payment of principal, premium or interest, (ii) the
right of a Holder to redeem or convert the Note, or (iii) with respect to any
covenant or provision of the Indenture that requires the consent of the Holder
of each Outstanding Note affected.
SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Indenture, other than
its obligation to pay the principal of and interest on the Notes and certain
other obligations (including its obligation to deliver shares of Common Stock
upon conversion of the Notes), while Notes remain Outstanding if (a) all
Outstanding Notes have become due and payable or will become due and payable at
their scheduled maturity within one year, or (b) all Outstanding Notes are
scheduled for redemption within one year or are delivered to the Trustee for
conversion in accordance with the Indenture, and in either case the Company has
irrevocably deposited with the Trustee an amount sufficient to pay and discharge
all Outstanding Notes on the date of their scheduled maturity or the scheduled
date of redemption.
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<PAGE> 29
FORM, DENOMINATION AND REGISTRATION
The Notes were issued in fully registered form, without coupons, in
denominations of $1,000 in principal amount and integral multiples thereof.
Global Notes; Book-Entry Form. Notes offered in reliance on Rule 144A are
evidenced by one or more global Notes (hereinafter referred to as the "144A
Global Notes") and Notes offered in reliance on Regulation S are evidenced by
one or more global Notes (hereinafter referred to as the "Regulation S Global
Notes," and, together with the 144A Global Notes, the "Global Notes"). The
Global Notes were deposited with, or on behalf of, the Depository Trust Company,
New York, New York ("DTC") and registered in the name of Cede & Co. ("Cede") as
DTC's nominee. Beneficial interests in the Regulation S Global Notes may only be
held through the Euroclear System ("Euroclear") operated by Morgan Guaranty
Trust Company of New York, Brussels office or Cedel, S.A. ("Cedel"). Except as
set forth below, the Global Notes may be transferred, in whole or in part, only
to another nominee of DTC or to a successor of DTC or its nominee. The 144A
Global Notes will be (i) reduced in principal amount to reflect the subsequent
transfer by owners of beneficial interest in the 144A Global Notes to a
Regulation S Purchaser (as defined herein) and (ii) increased in principal
amount to reflect the subsequent transfer from a Regulation S Purchaser. The
Regulation S Global Notes will be (i) reduced in principal amount to reflect the
subsequent transfer by owners of beneficial interest in the Regulation S Global
Notes to a QIB (as defined herein) and (ii) increased in principal amount to
reflect the subsequent transfer from a QIB.
QIBs may hold their interests in the 144A Global Notes directly through DTC
if such Holders are participants in DTC, or indirectly through organizations
which are participants in DTC (the "Participants"). Transfers between
Participants will be effected in the ordinary way in accordance with DTC rules
and will be settled in same day funds. Holders of beneficial interest in the
Regulation S Global Notes (a "Regulation S Holder") may hold their interest in
the Regulation S Global Notes directly through Cedel or Euroclear, or indirectly
through organizations that are participants in Cedel or Euroclear. Cedel and
Euroclear will hold interests in the Regulation S Global Notes on behalf of
their participants through their respective depositaries at DTC. Transfers
between participants in Euroclear and Cedel will be effected in the ordinary way
in accordance with their respective rules and operating procedures. The laws of
some states require that certain persons take physical delivery of securities in
definitive form. Consequently, the ability to transfer beneficial interests in
the Global Notes to such persons may be limited.
The Holders of Notes who are not Participants may beneficially own interests
in the Global Notes held by DTC only through Participants or certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC, is
the registered owner of the Global Notes, Cede for all purposes will be
considered the sole holder of the Global Notes.
Payment of interest on and the redemption price (upon redemption at the
option of the Company or at the option of the Holder upon a Repurchase Event) of
the Global Notes will be made to Cede, the nominee for DTC, as the registered
owner of the Global Notes, by wire transfer of immediately available funds.
Neither the Company, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records
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<PAGE> 30
relating to or payments made on account of beneficial ownership interests in the
Global Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
With respect to any payment of interest on and the redemption price (upon
redemption at the option of the Company or at the option of the Holder upon a
Repurchase Event) of the Global Notes, DTC's practice is to credit Participants'
accounts on the payment date therefor with payments in amounts proportionate to
their respective beneficial interests in the Notes represented by the Global
Notes as shown on the records of DTC, unless DTC has reason to believe that it
will not receive payment on such payment date. Payments by Participants to
owners of beneficial interests in Notes represented by the Global Notes held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Notes represented by the Global Notes to pledge
such interest to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, 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 Securities Exchange Act of 1934, as amended.
DTC holds securities for its Participants. DTC also facilitates the clearance
and settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic book-entry changes to
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations such as the Initial Purchasers. Certain of such Participants (or
their representatives), together with other entities, own DTC. Indirect access
to the DTC system is available to others such as banks, brokers dealers and
trust companies that clear through, or maintain a custodial relationship with, a
Participant, either directly or indirectly. The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global Note among Participants
of DTC, Euroclear and Cedel, they are under no obligation to perform or continue
to perform such procedures, and such procedures may be discontinued at any time.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the Company
will cause the Notes to be issued in definitive form in exchange for the Global
Notes.
Certificated Notes. Notes sold to investors that are neither QIBs nor
Regulation S Purchasers will be issued in definitive registered form and may not
be evidenced by Global Notes. QIBs and Regulation S Holders may
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<PAGE> 31
request that their Notes be issued in definitive registered form. In addition,
certificated Notes may be issued in exchange for Notes represented by the Global
Notes if no successor depositary is appointed by the Company as set forth above
under the paragraph entitled "Global Notes; Book-Entry Form."
Restrictions on Transfer; Legends. The Notes, and the Common Stock into
which they may be converted, will be subject to certain transfer restrictions as
described below under the caption "Transfer Restrictions," and certificates
evidencing the Notes will bear a legend to such effect.
PAYMENTS OF PRINCIPAL AND INTEREST
The Indenture requires that payments in respect of the Notes (including
principal, premium, if any, interest and liquidated damages, if any) held of
record by DTC (including Notes evidenced by the Global Notes) be made in same
day funds. Payments in respect of the Notes held of record by holders other than
DTC may, at the option of the Company, be made by check and mailed to such
holders of record as shown on the register for the Notes.
GOVERNING LAW
The Indenture and, except as may otherwise be required by mandatory
provisions of law, Notes are governed by and construed in accordance with the
laws of the State of New York, without giving effect to such state's conflicts
of laws principles.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED SHARES
The authorized capital stock of the Company consists of 40,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock issuable in series.
COMMON STOCK
As of December 31, 1997, there were 12,365,682 shares of Common Stock
outstanding. All outstanding shares are validly issued, fully paid and
nonassessable.
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Holders of shares of Common Stock
are entitled to receive dividends and other distributions when, as and if
declared from time to time by the Board of Directors out of funds legally
available therefor subject to any preferential rights of, and sinking fund or
redemption or purchase rights with respect to, outstanding shares of Preferred
Stock, if any. In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares of Common Stock
would be entitled to share ratably in all assets remaining after payment of
liabilities subject to prior distribution rights of any shares of Preferred
Stock then outstanding. Holders of the shares of Common Stock have no preemptive
or conversion rights and the
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<PAGE> 32
shares of Common Stock are not subject to further calls or assessment by the
Company. There are no redemption or sinking fund provisions applicable to the
shares of Common Stock.
In connection with the election of directors, each holder of shares of
Common Stock is entitled to cumulative voting; that is, the holder is entitled
to vote the number of shares the holder owns multiplied by the number of members
of the Board of Directors to be elected by such class (currently six), and the
holder may cast the whole number of votes for one candidate, or distribute such
votes among two or more candidates.
PREFERRED STOCK
None of the shares of Preferred Stock are presently outstanding. The Board
of Directors has the authority, without any further vote or action by the
shareholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares, designations of such series, dividend rates, relative
rights (including voting rights), preferences and limitations of such series to
the full extent now or hereafter permitted by Kentucky law.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that may
be issued in the future. It is not possible to state the actual effect of the
authorization and issuance of series of shares of Preferred Stock upon the
rights of holders of shares of Common Stock unless and until the Board of
Directors determines the attributes of the series and the specific rights of its
holders. Such effects might include, however, (i) restrictions on dividends on
shares of Common Stock if dividends on shares of Preferred Stock have not been
paid; (ii) dilution of the voting power of shares of Common Stock to the extent
that the shares of Preferred Stock have voting rights, or to the extent that any
series of shares of Preferred Stock is convertible into shares of Common Stock;
(iii) dilution of the equity interest of holders of shares of Common Stock
unless the shares of Preferred Stock are subsequently redeemed by the Company;
and (iv) limitation on the right of holders of shares of Common Stock to share
in the Company's assets upon liquidation until satisfaction of any liquidation
preference granted to holders of shares of Preferred Stock. Issuance of a new
series of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present intention to issue any shares of Preferred
Stock.
CERTAIN PROVISIONS RELATING TO CHANGE IN CONTROL
The Company's Amended and Restated Articles of Incorporation and Bylaws
contain various provisions that may have the effect, either alone or in
combination with each other, of making more difficult or discouraging a business
combination or an attempt to obtain control of the Company that is not approved
by the Board of Directors. These provisions include (i) the right of the Board
of Directors to issue unissued and unreserved shares of Common Stock without
shareholder approval, (ii) the right of the Board of Directors to issue shares
of Preferred Stock in one or more series and to designate the number of shares
of each such series and the relative rights and preferences of such series,
including voting rights, terms of redemption, redemption prices and conversion
rights, without further shareholder approval, (iii) a Board of Directors whose
terms are staggered at such time as there are nine or more directors of the
Company, (iv) provisions prohibiting the removal of directors other than for
cause, applicable only when the Company has nine or more directors, and (v) the
right of the Board of Directors to consider the interests of various
constituencies, including employees, customers,
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<PAGE> 33
suppliers and creditors of the Company, as well as the communities in which the
Company is located, in addition to the interests of the Company and its
shareholders, in discharging their duties and determining what is in the
Company's best interests.
Section 271B.12-210 of the Kentucky Business Corporation Act (the "Act")
generally prevents a corporation from entering into certain business
combinations with an interested shareholder (defined as any person or entity
that is the beneficial owner of at least 10% of a corporation's voting stock) or
its affiliates for a period of five years after the date of the transaction in
which the person became an interested shareholder, unless (i) the transaction is
approved by a majority of the independent members of the Board of Directors of
the corporation prior to such business combination, or (ii) the business
combination is approved by a vote of 80% of the outstanding voting stock and by
a vote of two-thirds of the outstanding voting stock not owned by the interested
shareholder.
The Act further provides that the prior approval of a business combination
by the independent members of the board of directors or the shareholders is not
required if the business combination meets certain minimum price and procedural
requirements. Generally, the consideration to be received in the business
combination must not be less than the highest of (i) the highest per share price
paid by the interested shareholder in acquiring its stock ownership in the
corporation (A) during the five years prior to the announcement of the business
combination ("Announcement Date") and (B) in the transaction in which it became
an interested shareholder ("Determination Date"), whichever is greater; (ii) the
market value per share of the stock on the Announcement Date or the
Determination Date, whichever is greater; and (iii) the price per share equal to
the market value per share of the stock multiplied by the fraction of (X) the
highest per share price paid by the interested shareholder during the five years
prior to the Announcement Date over (Y) the market value per share of the stock
on the first day of such five year period prior to the Announcement Date. In the
event these and other minimum price criteria and procedural requirements are met
with respect to a particular business combination, the requirements of Kentucky
law apply and, accordingly, only a majority vote of the outstanding voting stock
is required, or, for certain transactions, no shareholder vote is necessary. The
Act provides that a corporation may elect not to be governed by Section
271B.12-210. The Company currently does not intend to make such an election in
order to avail itself of the rights afforded by Section 271B.12-210.
The Company's Bylaws contain provisions requiring advance notice to the
Company of (i) nominations of persons to the Board of Directors who are not
nominated by the Company and (ii) proposals to be brought before the Company's
annual meeting of shareholders (other than proposals made by the Company).
Without compliance with these provisions, any such nominations or shareholder
proposals may be disregarded by the Company.
INDEMNIFICATION
The Company's Amended and Restated Articles of Incorporation eliminate the
personal liability of its directors to the Company and its shareholders for
monetary damages for breach of their duties as directors, except for liability
(i) for any transaction in which the director's personal financial interest is
in conflict with the financial interests of the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or are known to the directors to be a violation of law, (iii) for a
vote for or assent to unlawful payment of a dividend or unlawful purchase,
redemption or other acquisition of Common Stock or
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Preferred Stock of the Company, or (iv) for any transaction from which the
director derived an improper personal benefit. This provision does not eliminate
the duty of care, and, in appropriate circumstances, equitable remedies such as
an injunction or other forms of non-monetary relief would remain available under
Kentucky 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 Company's Bylaws also provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by the Act. The Company
believes that indemnification under its Bylaws covers at least negligence and
gross negligence by such directors and officers, and requires the Company to
advance litigation expenses in the case of actions, including shareholder
derivative actions, against an undertaking by the officer or director to repay
such advances if it is ultimately determined that the officer or director is not
entitled to indemnification. The Company believes that these provisions are
essential to attracting and retaining qualified persons as directors and
officers.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Company's shares of Common Stock is
Mid-America Bank of Louisville and Trust Company, Louisville, Kentucky.
INCLUSION IN THE NASDAQ NATIONAL MARKET
The Common Stock is quoted on the Nasdaq National Market under the symbol
"RSCR."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax considerations relevant to Holders of the Notes and the Conversion Shares as
of the date hereof. This discussion is based on existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, judicial decisions now in effect and administrative
rulings, all of which are subject to change or alternative construction,
possibly with retroactive effect. This summary does not discuss other federal
taxes (such as federal estate and gift taxes) that may be important to Holders
of the Notes or any state, local or foreign tax considerations, nor does it
purport to address all federal income tax consequences applicable to all
categories of investors, some of which may be subject to special rules in light
of their personal circumstances, such as life insurance companies, tax-exempt
organizations, dealers in securities or currency, banks or other financial
institutions, investors whose functional currency is not the U.S. dollar, or
investors that hold the Notes as part of a hedge, straddle or conversion
transaction. In addition, this summary deals only with Notes and Common Stock
into which the Notes are convertible which are held as "capital assets" within
the meaning of Section 1221 of the Code and that are purchased by investors upon
initial issuance at the initial offering price. The Company will not seek a
ruling from the Internal Revenue Service (the "IRS") with regard to the United
States federal income tax treatment relating to an investment in the Notes (or
the Common Stock into which the Notes are convertible) and, therefore, there can
be no assurance that the IRS will agree with the conclusions set forth below.
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<PAGE> 35
For purposes of this summary, the term "U.S. Holder" means a beneficial
owner of a Note or Common Stock that is (i) a citizen or resident of the United
States, (ii) except to the extent otherwise provided in Treasury regulations
with respect to a partnership, a corporation or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (iii) an estate the income of which is subject to United States federal
income taxation regardless of its source, and (iv) a trust if (a) a U.S. court
is able to exercise primary supervision over the trust's administration and (b)
one or more U.S. fiduciaries have the authority to control all of the trust's
substantial decisions. The term "Non-U.S. Holder" shall mean the beneficial
owner of a Note or Common Stock other than a U.S. Holder.
PERSONS CONSIDERING THE PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL TAX LAWS, AS WELL
AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR
PARTICIPATION IN THE OFFERING, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING
CONVERSION OF THE NOTES, AND THE EFFECT THAT THEIR PARTICULAR SITUATIONS MAY
HAVE ON SUCH TAX CONSIDERATIONS. THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL
ASPECTS OF FEDERAL, STATE, LOCAL OR FOREIGN TAXATION THAT MAY BE RELEVANT TO AN
INVESTOR'S DECISION TO PURCHASE THE NOTES.
TAXATION OF U.S. HOLDERS
Adjustments to Conversion Price. The Indenture provides that the conversion
price will be adjusted upon the occurrence of certain circumstances. Section 305
of the Code treats as a distribution taxable as a dividend (to the extent of the
Company's current or accumulated earnings and profits) certain actual or
constructive distributions of stock with respect to stock and convertible
securities. Applicable Treasury regulations treat holders of convertible
debentures as having received such a constructive distribution where the
conversion price is adjusted to reflect certain distributions with respect to
the stock into which such debentures are convertible. Thus, under certain
circumstances, an adjustment in the conversion price of the Common Stock may be
taxable to the U.S. Holders as a dividend distribution. In such a case, U.S.
Holders may recognize income as a result of an event pursuant to which they
receive no cash or property that could be used to pay the related income tax.
Generally, a holder's tax basis in a Note will be increased by the amount of any
such constructive dividend. Holders of the Notes are advised to consult their
tax advisors with respect to the potential of taxable constructive dividend
distributions upon such conversion price modifications.
Payments of Interest. The payment of stated interest on the Notes will be
taxable to a U.S. Holder as ordinary interest income at the time it accrues or
is received in accordance with the holder's usual method of accounting for
federal income tax purposes.
Conversion of a Note into Common Stock. In general, a U.S. Holder will not
recognize gain or loss on conversion of a Note solely into Common Stock of the
Company pursuant to the terms of the conversion right of the Notes, except with
respect to cash received in lieu of a fractional share. The holding period of
the Common Stock received by the U.S. Holder upon conversion of a Note generally
will include the period during which the Note was held prior to the conversion.
The U.S. Holder's aggregate tax basis in the Common Stock received upon
conversion of a Note generally will equal the U.S. Holder's aggregate tax basis
in the Note
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exchanged (reduced by the portion allocable to cash received in lieu of a
fractional share). A U.S. Holder generally will recognize capital gain or loss
in connection with any cash received in lieu of a fractional share in an amount
equal to the difference between the amount of cash received and the U.S.
Holder's tax basis in the fractional share. U.S. Holders should consult their
own tax advisors regarding the tax consequences of converting the Notes into
Common Stock, in particular in the case of the conversion of a Note into Common
Stock after a record date for the payment of interest but prior to the next
succeeding interest payment date.
Disposition of Notes or Common Stock. A U.S. Holder of a Note (or the Common
Stock into which it was converted) generally will recognize capital gain or loss
upon the sale, exchange, retirement or other disposition of the Note (or the
Common Stock) measured by the difference between (i) the amount realized (except
to the extent the amount is attributable to accrued interest income, which will
generally be taxable as ordinary income) and (ii) the U.S. Holder's tax basis in
the Note (or the Common Stock). The gain or loss on such disposition will be
taken into account in determining the amount of the U.S. Holder's net capital
gain which is taxed at a rate of 20% if the Note (or the Common Stock) has been
held for more than 18 months at the time of such disposition or mid-term gain or
loss (net mid-term gains being taxed at a rate of 28%) if the Note (or Common
Stock) has been held for more than one year but not more than 18 months at the
time of such disposition.
Market Discount. The resale of Notes may be affected by the "market
discount" provisions of the Code. For this purpose, the market discount on a
Note will generally be equal to the amount, if any, by which the stated
redemption price at maturity of the Note immediately after its acquisition
exceeds the holder's tax basis in the Note. Subject to a de minimis exception,
these provisions generally require a holder of a Note acquired at a market
discount to treat as ordinary income any gain recognized on the disposition of
such Note to the extent of the "accrued market discount" on such Note at the
time of disposition. In general, market discount on a Note will be treated as
accruing on a straight-line basis over the term of such Note, or, at the
election of the holder, under a constant yield method. A holder of a Note
acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to purchase
or carry the Note until the Note is disposed of in a taxable transaction, unless
the holder elects to include accrued market discount in income currently.
Distributions with Respect to Common Stock. In general, distributions made
by the Company with respect to Common Stock will constitute dividends for
federal income tax purposes and will be taxable to a holder as ordinary income
to the extent of the Company's undistributed current or accumulated earnings and
profits (as determined for federal income tax purposes). Distributions in excess
of the Company's current or accumulated earnings and profits will be treated
first as a nontaxable return of capital reducing the U.S. Holder's tax basis in
the Common Stock, thus increasing the amount of any gain (or reducing the amount
of any loss) which might be realized by such holder upon the sale, exchange or
redemption of such Common Stock. Any such distributions in excess of the U.S.
Holder's tax basis in the Common Stock will be treated as capital gain to the
U.S. Holder (provided the Common Stock is held as a capital asset), and will be
either more-than-18-month, mid-term or short-term capital gain depending upon
the holder's federal income tax holding period for the Common Stock.
Subject to certain limitations, to the extent that distributions made by the
Company are treated as dividends, a U.S. Holder of Common Stock that is taxed as
a domestic corporation and that meets the applicable holding period and taxable
income requirements of the Code may be entitled to a deduction under Section 243
of the Code equal in amount to 70% of the dividends paid out of such earnings
and profits (the "Dividends Received
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Deduction"). With respect to Common Stock considered to be "portfolio stock" as
defined in Section 246A of the Code, the Dividends Received Deduction will be
reduced to the extent that the Common Stock constitutes "debt financed portfolio
stock." In addition, under certain circumstances, the receipt of a dividend on
the Common Stock determined to be an "extraordinary dividend" may cause the
holder's tax basis in the Common Stock to be reduced by the untaxed portion of
the dividend and could result in gain recognition pursuant to Section 1059 of
the Code.
TAXATION OF NON-U.S. HOLDERS
Payments of Interest. The payment of stated interest on a Note by the
Company or any paying agent to a Non-U.S. Holder will qualify for the "portfolio
interest exemption" and, therefore, will not be subject to United States federal
income tax or withholding tax, provided that such interest income is not taxable
as effectively connected with a United States trade or business of the Non-U.S.
Holder and provided that the Non-U.S. Holder (i) does not actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company entitled to vote, (ii) is not a controlled foreign
corporation related to the Company actually or constructively through stock
ownership, (iii) is not a bank receiving interest on a loan entered into in the
ordinary course of business, and (iv) either (a) provides a Form W-8 (or
suitable substitute form) signed under penalties of perjury that includes its
name and address and certifies as to its non-United States status in compliance
with applicable law and regulations, or (b) deposits the Note with a securities
clearing organization, bank or financial institution that holds customers'
securities in the ordinary course of its trade or business and which holds the
Note and provides a statement to the Company or its agent under penalties of
perjury in which it certifies that such a Form W-8 (or a suitable substitute)
has been received by it from the Non-U.S. Holder or qualifying intermediary and
furnishes the Company or its agent with a copy thereof. For purposes of
determining whether a Non-U.S. Holder constructively owns more than 10% of the
Company's combined voting power, the Non-U.S. Holder will be treated as owning
the number of shares of Common Stock that he would acquire if he converted all
of his Notes.
Recently finalized Treasury regulations (the "Regulations") provide
alternative methods for satisfying the certification requirement described in
clause (iv) above. These Regulations also generally will require, in the case of
Notes held by a foreign partnership, that (a) the certification described in
clause (iv) above be provided by the partners rather than by the foreign
partnership, and (b) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule will apply in
the case of tiered partnerships. These Regulations generally will be effective
January 1, 1999. Non-U.S. Holders of the Notes are advised to consult their tax
advisors with respect to their qualification for the portfolio interest
exemption and the steps necessary to comply with such exemption.
Except to the extent otherwise provided under an applicable tax treaty, a
Non-U.S. Holder generally will be taxed in the same manner as a U.S. Holder with
respect to interest on a Note if such interest income is effectively connected
with a United States trade or business of the Non-U.S. Holder. Effectively
connected interest received by a corporate Non-U.S. Holder may also, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate (or, if applicable, a lower treaty rate). A Non-U.S. Holder may be required
to satisfy certain certification requirements in order to claim a reduction of
or exemption from
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withholding under the foregoing rules. Non U.S. Holders should consult
applicable income tax treaties, which may provide different rules.
Interest income of a Non-U.S. Holder that is not effectively connected with
a United States trade or business and that does not qualify for the portfolio
interest exemption described above generally will be subject to a withholding
tax at a 30% rate (or, if applicable, a lower treaty rate).
Conversion of a Note into Common Stock. In general, no United States federal
income tax or withholding tax will be imposed upon the conversion of a Note into
Common Stock by a Non-U.S. Holder except, with respect to the receipt of cash in
lieu of fractional shares by Non-U.S. Holders upon conversion of a Note, where
any one of the four exceptions described below under " -- Disposition of Notes
or Common Stock" is applicable. In addition, under certain circumstances, the
extent to which the fair market value of the Common Stock received upon
conversion is attributable to accrued interest will be treated as ordinary
interest income taxable as described above under " --Payments of Interest."
Disposition of Notes or Common Stock. A Non-U.S. Holder of the Note (or the
Common Stock into which it was converted) generally will not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale, exchange, retirement or other disposition of the Note (including the
receipt of cash in lieu of fractional shares upon conversion of the Note to
Common Stock), unless (i) the gain is effectively connected with a United States
trade or business of the Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder
who is an individual, such holder is present in the United States for a period
or periods aggregating 183 days or more during the taxable year of the
disposition, and either such holder has a "tax home" in the United States or the
disposition is attributable to an office or other fixed place of business
maintained by such holder in the United States, (iii) the Non-U.S. Holder is
subject to tax pursuant to the provisions of the Code applicable to certain
United States expatriates, or (iv) the Company is a United States real property
holding corporation. The Company does not believe that it is, or is likely to
become, a United States real property holding corporation.
Distributions with Respect to Common Stock. To the extent distributions made
by the Company are treated as dividends (as described above under "Taxation of
U.S. Holders -- Distributions with Respect to Common Stock"), a Non-U.S. Holder
will be subject to United States federal withholding tax at a 30% rate (or lower
rate provided under an applicable income tax treaty) on dividends paid (or
deemed paid, as described above under "Taxation of U.S. Holders -- Adjustment to
Conversion Price") on Common Stock, unless the dividends are taxable as
effectively connected with the conduct of a trade or business in the United
States and the Non-U.S. Holder delivers IRS Form 4224 to the payor. Except to
the extent otherwise provided under an applicable tax treaty, a Non-U.S. Holder
generally will be taxed in the same manner as a U.S. Holder on dividends paid
(or deemed paid) that are effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Holder. If such Non-U.S. Holder is
a foreign corporation, it may also be subject to a United States branch profits
tax on such effectively connected income at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty.
Under current Treasury Regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country (unless
the payor has knowledge to the contrary) for purposes of the withholding rules
discussed below and, under the current interpretation of Treasury Regulations,
for purposes of determining the applicability of a tax treaty rate. Under the
Regulations effective January 1, 1999, however, a
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<PAGE> 39
Non-U.S. Holder of Common Stock who wishes to claim the benefit of an applicable
treaty rate would be required to satisfy applicable certification requirements.
In addition, under these Regulations, in the case of Common Stock held by a
foreign partnership, the certification requirement generally would be applied to
the partners of the partnership and the partnership would be required to provide
certain information, including a United States taxpayer identification number.
These Regulations also will provide look-through rules for tiered partnerships.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Under current United States federal income tax law, U.S.
Holders of Notes or Common Stock will be subject to information reporting and,
under certain circumstances, may be subject to "backup withholding" at the rate
of 31% in respect to payments of principal, interest and dividends made to, and
the proceeds of disposition of Notes or Common Stock by, certain noncorporate
U.S. Holders. Generally, the backup withholding rules will apply only if the
U.S. Holder (i) fails to furnish its taxpayer identification number ("TIN") to
the payor, (ii) furnishes such payor with an incorrect TIN, (iii) is notified by
the IRS that it has failed to report properly interest, dividends or other
"reportable payments" as defined by the Code, or (iv) under certain
circumstances, fails to provide such payor or the U.S. Holder's securities
broker with a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that the U.S. Holder is not subject to backup
withholding. Backup withholding will not apply with respect to payments made to
certain U.S. Holders of the Notes, including payments to certain exempt
recipients (such as corporations and exempt organizations). The amount of backup
withholding from a payment to a holder will be allowed as a credit against the
holder's federal income tax liability and may entitle such holder to a refund
provided the required information is furnished to the IRS.
Non-U.S. Holders. The Company must report annually to the IRS and to each
Non-U.S. Holder any interest or dividend that is subject to withholding, or that
is exempt from U.S. withholding tax (pursuant to a tax treaty or the exceptions
described above).
Backup withholding at a rate of 31% and information reporting generally may
apply to payments of principal and interest if the payee fails to certify under
penalties of perjury that it is not a U.S. person, provided the payor does not
have actual knowledge that the holder is a United States person. Dividends paid
to Non-U.S. Holders that are subject to the 30% withholding tax described above
or that are subject to treaty reduction generally will be exempt from United
States backup withholding tax.
Payment of the proceeds of the sale or other disposition of Notes or Common
Stock to or through a United States office of a broker, U.S. or foreign, will be
subject to information reporting and possible backup withholding at a rate of
31% unless the owner certifies its non-United States status under penalties of
perjury or otherwise establishes an exemption (provided the broker does not have
actual knowledge that the holder is a U.S. Person or that the conditions of any
other exemption are not, in fact, satisfied). Payment of the proceeds on the
sale of Notes or Common Stock to or through a foreign office of a foreign broker
that is not a "U.S. related person" generally will not be subject to information
reporting or backup withholding tax. For this purpose, a "U.S. related person"
is (i) a "controlled foreign corporation" for United States federal income tax
purposes or (ii) a foreign person 50% or more of whose gross income from all
sources for a specified period is derived from
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<PAGE> 40
activities that are effectively connected with the conduct of a United States
trade or business. In the case of the payment of proceeds from the disposition
of Notes to or through a foreign office of a broker that is either a United
States person or a related person, information reporting is required on the
payment unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no actual knowledge to the contrary.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's United States federal income tax, provided that the required
information is furnished to the IRS.
The backup withholding and information reporting rules would also be changed
by the Regulations. These regulations will provide that proceeds from the
disposition of Common Stock after December 31, 1998 will be exempt from backup
withholding and information reporting only if the Non-U.S. Holder complies with
certain certification requirements or otherwise establishes an exemption.
Holders of Notes should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
THE FOREGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, PROSPECTIVE HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE COMMON STOCK
INTO WHICH THE NOTES ARE CONVERTIBLE (INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS).
PLAN OF DISTRIBUTION
Pursuant to a Registration Rights Agreement dated as of November 21, 1997
(the "Registration Rights Agreement") between the Company and the initial
purchasers named therein entered into in connection with the offering of the
Notes, the Registration Statement of which this Prospectus forms a part was
filed with the Commission covering the resale of the Notes and the Conversion
Shares. The Company has agreed to use all reasonable efforts to keep the
Registration Statement effective for a period ending two years from the date of
effective date thereof (or such earlier date when the holders of the Securities
are able to sell all such Notes and the Conversion Shares immediately without
restriction as described in the Registration Rights Agreement). The Company will
be permitted to suspend the use of this Prospectus (which is a part of the
Registration Statement) in connection with sale of the Notes and the Conversion
Shares by holders during certain periods of time under certain circumstances
relating to pending corporate developments and public filings with the
Commission and similar events. The specific provisions relating to the
registration rights described above are contained in the Registration Rights
Agreement, and the foregoing summary is qualified in its entirety by reference
to the provisions of such agreement.
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The Company will not receive any of the proceeds from the offering of Notes
and the Conversion Shares by the Selling Securityholders. Sales of the Notes and
the Conversion Shares may be effected by or for the account of the Selling
Securityholders from time to time in transactions (which may include block
transactions in the case of the Conversion Shares) on any exchange or market on
which such securities are listed or quoted, as applicable, in negotiated
transactions, through a combination of such methods of sale, or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices, or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the Notes or
Conversion Shares directly to purchasers, through broker-dealers acting as
agents for the Selling Securityholders, or to broker-dealers who may purchase
Notes or Conversion Shares as principals and thereafter sell the Notes or
Conversion Shares from time to time in transactions (which may include block
transactions in the case of the Conversion Shares) on any exchange or market on
which such securities are listed or quoted, as applicable, in negotiated
transactions, through a combination of such methods of sale, or otherwise. In
effecting sales, broker-dealers engaged by Selling Securityholders may arrange
for other broker-dealers to participate. Such broker-dealers, if any, may
receive compensation in the form of discounts, concessions or commissions from
the Selling Securityholders and/or the purchasers of the Notes or Conversion
Shares for whom such broker-dealers may act as agents or to whom they may sell
as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). The Selling Securityholders and
any broker-dealers, agents or underwriters that participate with the Selling
Securityholders in the distribution of the Notes or Conversion Shares may be
deemed to be "underwriters" within the meaning of the Securities Act. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the Notes or Conversion Shares offered
hereby and purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
Pursuant to the Registration Rights Agreement, the Company has agreed to pay
all expenses incident to the offer and sale of the Notes and Conversion Shares
offered by the Selling Securityholders hereby, except that the Selling
Securityholders will pay all underwriting discounts and selling commissions, if
any. The Company and the Selling Securityholders are obligated to indemnify each
other against certain liabilities arising under the Securities Act.
The outstanding Common Stock is quoted on the Nasdaq National Market and the
Conversion Shares have been approved for listing on the Nasdaq National Market
subject to official notice of issuance. The Initial Purchasers have advised the
Company that they are making and currently intend to continue making a market in
the Notes. They are not obligated to do so, however, and any such market making
may be discontinued at any time without notice, in the sole discretion of the
Initial Purchasers. The Company does not intend to apply for listing of the
Notes on any securities exchange or for quotation through the Nasdaq National
Market. Accordingly, no assurance can be given as to the development of
liquidity of any trading market that may develop for the Notes. See "Risk
Factors -- Absence of Public Market for Notes."
To comply with the securities laws of certain states, if applicable, the
Notes and Conversion Shares offered hereby will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Notes and Conversion Shares may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualification requirement is available
and is complied with.
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Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Notes or the Conversion Shares may be limited
in its ability to engage in market activities with respect to such Note or
Conversion Shares. In addition and without limiting the foregoing, each Selling
Securityholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, which provisions may limit the timing of
purchase and sales of any of the Notes and Conversion Shares by the Selling
Securityholders. The foregoing may affect the marketability of the Notes and the
Conversion Shares.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby have been passed upon for the Company by Piper & Marbury L.L.P.,
Baltimore, Maryland and Reed Weitkamp Schell Cox & Vice, Louisville, Kentucky.
EXPERTS
The supplemental consolidated financial statements and schedule of
Res-Care, Inc. and its subsidiaries as of December 31, 1995 and 1996, and for
each of the years in the three-year period ended December 31, 1996, have been
incorporated by reference herein from the Company's Registration Statement on
Form S-3 (File No. 333-23599) filed April 15, 1997 in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements and schedule of Res-Care, Inc.
and its subsidiaries as of December 31, 1995 and 1996, and for each of the years
in the three-year period ended December 31, 1996, have been incorporated by
reference herein from the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
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========================================
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations not contained or
incorporated by reference in this Prospectus in connection with the offer
contained herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or the Selling Securityholders. This Prospectus does not constitute
an offer to sell, or the solicitation of an offer to buy the
securities offered hereby by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in
the affairs of the Company or that the information herein is correct as of
any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
----
Summary............................................1
The Company........................................1
Risk Factors.......................................4
Use of Proceeds...................................11
Ratio of Earnings to Fixed Charges................11
Selling Securityholders...........................11
Description of Notes..............................13
Description of Capital Stock......................24
Certain Federal Income Tax Considerations.........27
Plan of Distribution..............................33
Legal Matters.....................................35
Experts...........................................35
=======================================
=======================================
$109,360,000
RES-CARE, INC.
6% CONVERTIBLE
SUBORDINATED
NOTES
DUE 2004
AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
--------------
PROSPECTUS
--------------
___________, 1998
=======================================
<PAGE> 44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by the Company in
connection with the offering of the Notes and the Conversion Shares being
registered, other than discounts and commissions. The Selling Securityholders
will not share any portion of these expenses. All amounts are estimated except
the SEC Registration Fee and the Nasdaq Listing Application Fee.
Registration Fee............................ $33,139.39
Nasdaq Listing Application Fee.............. 17,500.00
Printing Expenses........................... 5,000.00
Legal Fees and Expenses..................... 20,000.00
Accounting Fees and Expenses................ 15,000.00
Miscellaneous............................... 2,197.61
----------
Total........................................ $92,837.00
==========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 271B.8-510 of the Kentucky Business Corporation Act (the "Act")
permits the indemnification by a corporation of any director who is made party
to a threatened, pending or completed action, suit or proceeding because he is
or was a director of such corporation. To be eligible for indemnification, such
person must have conducted himself in good faith and reasonably believed that
his conduct, if undertaken in his official capacity with the corporation, was in
the corporation's best interests, and, if not in his official capacity, was at
least not opposed to the corporation's best interests. In the case of a criminal
proceeding, the director must also not have reasonable cause to believe his
conduct was unlawful. A director may not be indemnified under the
above-referenced section in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or
in connection with any other proceeding charging improper personal benefit to
him, whether or not involving action in official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him. Indemnification permitted under Section 271B.8-510 of the Act in connection
with a proceeding by or in the right of the corporation shall be limited to
II-1
<PAGE> 45
reasonable expenses incurred in connection with the proceeding. Section
271B.8-560 of the Act provides that a Kentucky corporation may indemnify its
officers, employees and agents to the same extent as directors. Mandatory
indemnification against reasonable expenses incurred in connection with a
proceeding is provided for by the Act, unless otherwise limited by the
corporation's articles of incorporation, where a director or officer has been
wholly successful on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director or officer of the
corporation. A court of competent jurisdiction may also order indemnification if
the director is fairly and reasonably entitled thereto in view of all relevant
circumstances, whether or not he met the applicable standard of conduct or was
adjudged liable to the corporation, but if he was adjudged liable, his
indemnification shall be limited to reasonable expenses incurred.
The Act provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise. Additionally, the Act provides that a corporation may purchase and
maintain insurance on behalf of directors, officers, employees or agents of the
corporation against liability asserted against or incurred by such party in
their respective capacity with the corporation.
Article X of the Company's Amended and Restated Articles of
Incorporation and Article X of the Company's Bylaws provide for indemnification
of its directors, officers, employees and other agents to the maximum extent
permitted by law.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference:
<TABLE>
<S> <C>
2.1 Agreement by and among Res-Care, Inc., RSCR California, Inc., Res-Care Illinois, Inc.,
Res-Care Kansas, Inc., and RSCR Texas, Inc. and Beverly Health and Rehabilitation
Services, Inc., Beverly Enterprises-California, Inc., Beverly Enterprises-Illinois, Inc.,
Beverly Enterprises-Kansas, Inc. and Beverly Enterprises-Texas, Inc. dated April 5, 1995
(excluding Exhibits and Schedules). Exhibit 2-1 to the Company's Report on Form 8-K
dated May 1, 1995 filed on May 12, 1995 is hereby incorporated by reference.
2.2 Stock Purchase Agreement by and among Housecall Medical Resources Inc. and Res-Care,
Inc., Blair S. Gordon and J. Paul Gordon dated as of May 31, 1995 (excluding
Exhibits and Schedules). Exhibit 2-1 to the Company's Report on Form 8-K dated May
31, 1995 filed on June 15, 1995 is hereby incorporated by reference.
2.3 Stock Purchase Agreement by and among the Company and Richard Greer, Robert Greer
and Alicia Greer Austin dated July 31, 1997. Exhibit 2-1 to the Company's Report on
Form 8-K dated July 31, 1997 filed on August 14, 1997 is hereby incorporated by
reference.
3.1 Articles of Amendment to Amended and Restated Articles of Incorporation of the
Company. Exhibit 3.1 to the Company's Registration Statement on Form S-3 (Reg. No.
333-32513) is hereby incorporated by reference.
</TABLE>
II-2
<PAGE> 46
<TABLE>
<S> <C>
3.2 Amended and Restated Articles of Incorporation of the Company. Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-48749 is hereby
incorporated by reference.
3.3 Bylaws of the Company. Exhibit 3.2 to the Company's Registration Statement on Form
S-1 (Reg. No. 33-48749) is hereby incorporated by reference.
4.1 Specimen Common Stock Certificate. Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-48749) is hereby incorporated by reference.
4.2 Article VI of the Amended and Restated Articles of Incorporation of the Company
included in Exhibit 3.1.
4.3 Indenture, dated as of November 21, 1997, between the Company and PNC Bank,
Kentucky, Inc. (filed herewith)
4.4 Registration Rights Agreement, dated as of November 21, 1997, by and among the
Company, NationsBanc Montgomery Securities, Inc., J.C. Bradford & Co., L.L.C. and
Equitable Securities Corporation (filed herewith).
5.1 Opinion of Reed Weitkamp Schell Cox & Vice (filed herewith).
5.2 Opinion of Piper & Marbury L.L.P. (filed herewith).
10.1 1991 Incentive Stock Option Plan of the Company (adopted April 24, 1991, amended and
restated as of February 23, 1995). Exhibit 4 to the Company's Registration Statement on
Form S-8 (Reg. No. 33-80331) is hereby incorporated by reference.
10.2 Amended and Restated Employment Agreement, dated April 27, 1992, between the
Company and E. Halsey Sandford. Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-48749) is hereby incorporated by reference.
10.3 1991 Compensation/Evaluation Bonus Plan. Exhibit 10.15 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-48749) is hereby incorporated by
reference.
10.4 1993 Nonemployee Directors Stock Ownership Incentive Plan of the Company (adopted
October 28, 1993). Exhibit 4.1 to the Company's Registration Statement on Form S-8
(Reg. No. 33-76612) is hereby incorporated by reference.
10.5 Amended and Restated Loan Agreement dated as of April 26, 1995 by and among
Res-Care, Inc., and PNC Bank, Kentucky, Inc. and National City Bank, Kentucky. Exhibit
10.7 to the Company's Annual Report on Form 10-K for the year ending December 31,
1995 is hereby incorporated by reference.
</TABLE>
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<PAGE> 47
<TABLE>
<S> <C>
10.6 1994 Employee Stock Purchase Plan effective July 1, 1995. Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-85964) is hereby
incorporated by reference.
10.7 Employment Agreement dated October 26, 1995 between the Company and Ronald G.
Geary. Exhibit 10-1 to the Company's Report on Form 10-Q for the quarter ending
September 30, 1995 is hereby incorporated by reference.
10.8 Res-Care, Inc. 401(K) Restoration Plan effective December 1, 1995. Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ending December 31, 1995 is
hereby incorporated by reference.
10.9 Second Amendment to Loan Instruments dated as of February 16, 1996 by and among
Res-Care, Inc., and PNC Bank, Kentucky, Inc. National City Bank, Kentucky and
SunTrust Bank, Nashville, N.A. Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ending December 31, 1995 is hereby incorporated by reference.
10.10 Second Amended and Restated Employment Agreement dated March 17, 1996 between
the Company and E. Halsey Sandford. Exhibit 10.13 to the Company's Annual Report on
Form 10-K for the year ending December 31, 1995 is hereby incorporated by reference.
10.11 Amended and Restated Employment Agreement dated as of October 26, 1995 and
amended November 5, 1996 between the Company and Ronald G. Geary. Exhibit 10.11
to the Company's Annual Report on Form 10-K for the year ending December 31, 1996 is
hereby incorporated by reference.
10.12 Loan Agreement dated as of December 23, 1996 by and among Res-Care, Inc. and all of
its subsidiaries and PNC Bank, Kentucky, Inc., National City Bank of Kentucky,
SunTrust Bank, Nashville, N.A., and Bank One, Kentucky, NA. Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the year ending December 31, 1996 is
hereby incorporated by reference.
10.13 Employment Agreement dated January 1, 1997 between the Company and Jeffrey M.
Cross. Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year ending December 31, 1996 is hereby incorporated by reference.
10.14 Employment Agreement dated April 13, 1997 between the Company and Paul G. Dunn.
Exhibit 10.2 to the Company's Report on Form 10-Q for the quarter ending March 31,
1997 is hereby incorporated by reference.
10.15 Amendment to the Employment Agreement between the Company and Jeffrey M. Cross
dated August 4, 1997. Exhibit 10.3 to the Company's Report on Form 10-Q for the
quarter ending June 30, 1997 is hereby incorporated by reference.
</TABLE>
II-4
<PAGE> 48
<TABLE>
<S> <C>
10.16 Amendment to the Employment Agreement between the Company and Paul G. Dunn
dated August 4, 1997. Exhibit 10.4 to the Company's Report on Form 10-Q
for the quarter ending June 30, 1997 is hereby incorporated by reference.
10.17 Employment Agreement between the Company and Pamela M. Spaniac dated July 10,
1997. Exhibit 10.5 to the Company's Report on Form 10-Q for the
quarter ending June 30, 1997 is hereby incorporated by reference.
10.18 First Amendment to Loan Instruments by and between PNC Bank, Kentucky, Inc.;
National City Bank of Kentucky; SunTrust Bank, Nashville, N.A.; Bank One, Kentucky,
NA; Wachovia Bank, NA; and Res-Care, Inc. and Subsidiaries dated June 17, 1997.
Exhibit 10.6 to the Company's Report on Form 10-Q for the quarter ending June 30, 1997
is hereby incorporated by reference.
10.19 Second Amendment to Loan Instruments by and between PNC Bank, Kentucky, Inc.;
National City Bank of Kentucky; SunTrust Bank, Nashville, N.A.; Bank One, Kentucky,
NA; Wachovia Bank, NA; and Res-Care, Inc. and Subsidiaries dated November 20, 1997
(filed herewith).
12.1 Computation of Ratio of Earnings to Fixed Charges (filed herewith).
23.1 Consent of KPMG Peat Marwick LLP (filed herewith).
23.2 Consent of Reed Weitkamp Schell Cox & Vice (included in opinion filed as Exhibit 5.1).
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility of Trustee under the Trust Indenture Act of 1939 on Form T-1
(filed herewith).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
II-5
<PAGE> 49
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in the 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 Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, 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.
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 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the 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 Securities Act
of 1933 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 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-6
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Louisville, Commonwealth of Kentucky on January 9,
1998.
RES-CARE, INC.
By: /s/ Ronald G. Geary
------------------------------
Ronald G. Geary, President
and Chief Executive Officer
SIGNATURE PAGE AND POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Ronald G. Geary and E. Halsey Sandford
(with full power to each of them to act alone) as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in his
name, place and stead in any and all capacities to sign any or all amendments or
post-effective amendments to this Registration Statement, including
post-effective amendments filed pursuant to Rule 462(b) of the Securities Act of
1933, as amended, and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
to sign any and all applications, registration statements, notices or other
document necessary or advisable to comply with the applicable state securities
laws, and to file the same, together with all other documents in connection
therewith, with the appropriate state securities authorities, granting unto said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, thereby 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.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
II-7
<PAGE> 51
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ James R. Fornear Chairman of the Board of Directors January 9, 1998
- -------------------------------
James R. Fornear
/s/ Ronald G. Geary Chief Executive Officer, January 9, 1998
- ------------------------------- President and Director
Ronald G. Geary
/s/ E. Halsey Sandford Senior Executive and Director January 9, 1998
- -------------------------------
E. Halsey Sandford
/s/ Spiro B. Mitsos Secretary, Treasurer and Director January 9, 1998
- -------------------------------
Spiro B. Mitsos
/s/ Pamela M. Spaniac Executive Vice President of Finance and January 9, 1998
- ------------------------------- and Administration and Chief Financial Officer
Pamela M. Spaniac
/s/ Seymour L. Bryson Director January 9, 1998
- -------------------------------
Seymour L. Bryson
/s/ W. Bruce Lunsford Director January 9, 1998
- -------------------------------
W. Bruce Lunsford
</TABLE>
II-8
<PAGE> 52
<TABLE>
<CAPTION>
Sequentially
Exhibit Number Description of Exhibit Numbered Page
- -------------- ---------------------- -------------
<S> <C> <C>
4.3 Indenture, dated as of November 21, 1997, between the Company
and PNC Bank, Kentucky, Inc.
4.4 Registration Rights Agreement, dated as of November 21, 1997,
by and among the Company, NationsBanc Montgomery Securities,
Inc., J.C. Bradford & Co., L.L.C. and Equitable Securities
Corporation
5.1 Opinion of Reed Weitkamp Schell Cox & Vice
5.2 Opinion of Piper & Marbury L.L.P. (filed herewith).
10.19 Second Amendment to Loan Instruments by and between PNC Bank,
Kentucky, Inc.; National City Bank of Kentucky; SunTrust Bank,
Nashville, N.A.; Bank One, Kentucky, NA; Wachovia Bank, NA; and
Res-Care, Inc. and Subsidiaries dated November 20, 1997.
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Reed Weitkamp Schell Cox & Vice (included in opinion
filed as Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility of Trustee under the Trust Indenture
Act of 1939 on Form T-1
</TABLE>
<PAGE> 1
EXHIBIT 4.3
Conformed Copy
RES-CARE, INC.
and
PNC BANK, KENTUCKY, INC.,
as Trustee
INDENTURE
Dated as of November 21, 1997
$115,000,000
6% Convertible Subordinated Notes due 2004
<PAGE> 2
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<S> <C> <C>
Section 310 (a)(1) ................................ 609
(a)(2 ................................ 609
(a)(3) ................................ Not Applicable
(a)(4) ................................ Not Applicable
(a)(5) ................................ 609
(a) ................................ 608
Section 311 (a) ................................ 613
(b) ................................ 613
Section 312 (a) ................................ 701
................................ 702(a)
(b) ................................ 702(b)
(c) ................................ 702(c)
Section 313 (a) ................................ 703(a)
(b) ................................ 703(a)
(c) ................................ 703(a)
(d) ................................ 703(b)
Section 314 (a) ................................ 704
(a)(4) ................................ 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
Section 316 (a)(1)(A) ................................ 502
................................ 512
(a)(1)(B) ................................ 513
(a)(2) ................................ Not Applicable
(b) ................................ 508
(c) ................................ 104(c)
</TABLE>
*Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 317 (a)(1) ................................ 503
(a)(2) ................................ 504
(b) ................................ 1003
Section 318 (a) ................................ 107
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties.............................................................................................................. 1
Recitals of the Company.............................................................................................. 1
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions...................................................................... 2
Act ............................................................................................... 2
Affiliate ......................................................................................... 2
Authenticating Agent............................................................................... 2
Beneficial Owner................................................................................... 2
Board of Directors................................................................................. 2
Board Resolution................................................................................... 3
Business Day....................................................................................... 3
Cedel.............................................................................................. 3
Change in Control.................................................................................. 3
Closing Date....................................................................................... 3
Commission......................................................................................... 3
Common Stock....................................................................................... 3
Company............................................................................................ 3
Company Request.................................................................................... 3
Company Order...................................................................................... 3
Corporate Trust Office............................................................................. 3
Corporation........................................................................................ 4
Current Market Price............................................................................... 4
DTC................................................................................................ 4
Defaulted Interest................................................................................. 4
"Definitive Security" or "Definitive Securities"................................................... 4
Depositary......................................................................................... 4
Designated Senior Indebtedness..................................................................... 4
Euroclear.......................................................................................... 4
Event of Default................................................................................... 4
Exchange Act....................................................................................... 4
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
iii
<PAGE> 5
<TABLE>
<S> <C>
"Global Security" or "Global Securities............................................................ 4
Holder............................................................................................. 4
Indenture.......................................................................................... 5
Initial Purchasers................................................................................. 5
Interest Payment Date.............................................................................. 5
Maturity........................................................................................... 5
Officers' Certificate.............................................................................. 5
144A Global Security............................................................................... 5
Opinion of Counsel................................................................................. 5
Outstanding........................................................................................ 5
Paying Agent....................................................................................... 6
Person............................................................................................. 6
Predecessor Security............................................................................... 6
Purchase Agreement................................................................................. 6
Record Date........................................................................................ 6
Redemption Date.................................................................................... 6
Redemption Price................................................................................... 6
Registration Rights Agreement...................................................................... 6
Regular Record Date................................................................................ 6
Regulation S....................................................................................... 7
Regulation S Global Security....................................................................... 7
Repurchase Date.................................................................................... 7
Repurchase Event................................................................................... 7
Repurchase Price................................................................................... 7
Resale Restriction Termination Date................................................................ 7
Responsible Officer................................................................................ 7
Securities Custodian............................................................................... 7
"Security Register" and "Security Registrar"....................................................... 7
Senior Indebtedness................................................................................ 7
Shelf Registration Statement....................................................................... 8
Special Record Date................................................................................ 8
Stated Maturity.................................................................................... 8
Subsidiary......................................................................................... 8
Termination of Trading............................................................................. 8
Transfer Restricted Securities..................................................................... 8
Trust Indenture Act................................................................................ 8
Trustee............................................................................................ 8
Vice President..................................................................................... 8
SECTION 102. Compliance Certificates and Opinions............................................. 8
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 103. Form of Documents Delivered to Trustee........................................... 9
SECTION 104. Acts of Holders; Record Dates.................................................... 10
SECTION 105. Notices, Etc., to Trustee and Company............................................ 11
SECTION 106. Notice to Holders; Waiver........................................................ 11
SECTION 107. Conflict with Trust Indenture Act................................................ 12
SECTION 108. Effect of Headings and Table of Contents......................................... 12
SECTION 109. Successors and Assigns........................................................... 12
SECTION 110. Separability Clause.............................................................. 12
SECTION 111. Benefits of Indenture............................................................ 12
SECTION 112. Governing Law.................................................................... 12
SECTION 113. Legal Holidays................................................................... 12
SECTION 114. No Security Interest Created..................................................... 13
SECTION 115. Limitation on Individual Liability............................................... 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.................................................................. 13
SECTION 202. Form of Face of Security......................................................... 15
SECTION 204. Form of Trustee's Certificate of Authentication.................................. 31
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.................................................................. 32
SECTION 302. Denominations.................................................................... 33
SECTION 303. Execution, Authentication, Delivery and Dating................................... 33
SECTION 304. Temporary Securities............................................................. 34
SECTION 305. Registration, Registration of Transfer and Exchange.............................. 34
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities................................. 42
SECTION 307. Payment of Interest; Interest Rights Preserved................................... 43
SECTION 308. Persons Deemed Owners............................................................ 45
SECTION 309. Cancellation..................................................................... 45
SECTION 310. Computation of Interest.......................................................... 45
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
v
<PAGE> 7
<TABLE>
<S> <C> <C>
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.......................................... 45
SECTION 402. Application of Trust Money....................................................... 46
ARTICLE FIVE
Remedies
SECTION 501. Events of Default................................................................ 47
SECTION 502. Acceleration of Maturity; Rescission and Annulment............................... 49
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.................. 50
SECTION 504. Trustee May File Proofs of Claim................................................. 51
SECTION 505. Trustee May Enforce Claims Without Possession of Securities...................... 52
SECTION 506. Application of Money Collected................................................... 52
SECTION 507. Limitation on Suits.............................................................. 53
SECTION 509. Restoration of Rights and Remedies............................................... 53
SECTION 510. Rights and Remedies Cumulative................................................... 53
SECTION 511. Delay or Omission Not Waiver..................................................... 54
SECTION 512. Control by Holders............................................................... 54
SECTION 513. Waiver of Past Defaults.......................................................... 54
SECTION 514. Undertaking for Costs............................................................ 55
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.............................................. 55
SECTION 602. Notice of Defaults............................................................... 56
SECTION 603. Certain Rights of Trustee........................................................ 56
SECTION 605. May Hold Securities.............................................................. 57
SECTION 606. Money Held in Trust.............................................................. 58
SECTION 607. Compensation and Reimbursement................................................... 58
SECTION 608. Disqualification; Conflicting Interests.......................................... 59
SECTION 609. Corporate Trustee Required; Eligibility.......................................... 59
SECTION 610. Resignation and Removal; Appointment of Successor................................ 59
SECTION 611. Acceptance of Appointment by Successor........................................... 61
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
vi
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 612. Merger, Conversion, Consolidation or Succession to Business...................... 61
SECTION 613. Preferential Collection of Claims Against Company................................ 61
SECTION 614. Appointment of Authenticating Agent.............................................. 61
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders........................ 64
SECTION 702. Preservation of Information; Communication to Holders............................ 64
SECTION 703. Reports by Trustee............................................................... 64
SECTION 704. Reports by Company............................................................... 65
SECTION 705. Rule 144A Information Requirement................................................ 65
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms............................. 65
SECTION 802. Successor Substituted............................................................ 66
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders............................... 66
SECTION 902. Supplemental Indentures with Consent of Holders.................................. 67
SECTION 903. Execution of Supplemental Indentures............................................. 68
SECTION 904. Effect of Supplemental Indentures................................................ 68
SECTION 905. Conformity with Trust Indenture Act.............................................. 68
SECTION 906. Reference in Securities to Supplemental Indentures............................... 68
SECTION 907. Notice of Supplemental Indenture................................................. 68
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
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<TABLE>
<S> <C> <C>
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest....................................... 68
SECTION 1002. Maintenance of Office or Agency.................................................. 69
SECTION 1003. Money for Security Payments to Be Held in Trust.................................. 69
SECTION 1004. Statement by Officers as to Default.............................................. 70
SECTION 1005. Existence........................................................................ 70
SECTION 1006. Waiver of Certain Covenants...................................................... 71
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.............................................................. 71
SECTION 1102. Applicability of Article......................................................... 71
SECTION 1103. Election to Redeem; Notice to Trustee............................................ 71
SECTION 1104. Selection by Trustee of Securities to be Redeemed................................ 71
SECTION 1105. Notice of Redemption............................................................. 72
SECTION 1106. Deposit of Redemption Price...................................................... 73
SECTION 1107. Securities Payable on Redemption Date............................................ 73
SECTION 1108. Securities Redeemed in Part...................................................... 74
SECTION 1109. Conversion Arrangement on Call for Redemption.................................... 74
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinated to Senior Indebtedness................................... 75
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc................................... 75
SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of Securities............. 76
SECTION 1204. Payment When Designated Senior Indebtedness in Default........................... 76
SECTION 1205. Payment Permitted If No Default.................................................. 78
SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness.......................... 78
SECTION 1207. Provisions Solely to Define Relative Rights...................................... 78
SECTION 1208. Trustee to Effectuate Subordination.............................................. 79
SECTION 1209. No Waiver of Subordination Provisions............................................ 79
SECTION 1210. Notice to Trustee................................................................ 79
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
viii
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<TABLE>
<S> <C> <C>
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent................... 80
SECTION 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness......................... 80
SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights................................................. 80
SECTION 1214. Article Applicable to Paying Agents.............................................. 81
SECTION 1215. Certain Conversions Deemed Payment............................................... 81
SECTION 1216. No Suspension of Remedies........................................................ 81
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Privilege and Conversion Price........................................ 82
SECTION 1302. Exercise of Conversion Privilege................................................. 82
SECTION 1303. Fractions of Shares.............................................................. 83
SECTION 1304. Adjustment of Conversion Price................................................... 83
SECTION 1305. Notice of Adjustments of Conversion Price........................................ 90
SECTION 1306. Notice of Certain Corporate Action............................................... 91
SECTION 1307. Company to Reserve Common Stock.................................................. 92
SECTION 1308. Taxes on Conversions............................................................. 92
SECTION 1309. Covenant as to Common Stock...................................................... 92
SECTION 1310. Cancellation of Converted Securities............................................. 92
SECTION 1311. Provisions of Consolidation, Merger or Sale of Assets............................ 92
SECTION 1312. Trustee's Disclaimer............................................................. 93
ARTICLE FOURTEEN
Right to Require Repurchase
SECTION 1401. Right to Require Repurchase...................................................... 94
SECTION 1402. Notice; Method of Exercising Repurchase Right.................................... 94
SECTION 1403. Deposit of Repurchase Price...................................................... 95
SECTION 1404. Securities Not Repurchased on Repurchase Date.................................... 95
SECTION 1405. Securities Repurchased in Part................................................... 95
SECTION 1406. Certain Definitions.............................................................. 96
</TABLE>
*Note: This table of contents shall not, for any purposes, be deemed to be a
part of the Indenture.
ix
<PAGE> 11
INDENTURE, dated as of November 21, 1997 between Res-Care, Inc., a
corporation duly organized and existing under the laws of the Commonwealth of
Kentucky (herein called the "Company"), having its principal executive offices
at 10140 Linn Station Road, Louisville, Kentucky 40223 and PNC Bank, Kentucky,
Inc., as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 6%
Convertible Subordinated Notes due 2004 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
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<PAGE> 12
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required and permitted
hereunder shall mean such accounting principles as are generally accepted and
adopted by the Company at the date of this Indenture; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used in Articles Twelve, Thirteen and Fourteen are
defined in such Articles.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
The term "Beneficial Owner" is determined in accordance with Rule
13d-3, promulgated by the Commission under the Exchange Act.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
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<PAGE> 13
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York or
the city in which the Corporate Trust Office is located are authorized or
obligated to close by law or executive order.
"Cedel" means Cedel Bank societe anonyme.
"Change in Control" has the meaning specified in Section 1406.
"Closing Date" means November 21, 1997.
"Commission" means the Securities and Exchange Commission as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company. However, subject to the
provisions of Section 1311, shares issuable on conversion of Securities shall
include only shares of the class designated as Common Stock of the Company at
the date of this Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall principally be
administered, which office is, at the date as of which this
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<PAGE> 14
Indenture is dated, located at 500 West Jefferson Street, Louisville, Kentucky
40202, Attention: Corporate Trust Administration. The Trustee also maintains an
office at Drop Agent Office at The Depository Trust Company, 55 Water Street,
1st Floor, New York, New York 10041, which it is authorized to receive notices
hereunder.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Current Market Price" has the meaning specified in Section 1304.
"DTC" has the meaning specified in Section 305.
"Defaulted Interest" has the meaning specified in Section 307.
"Definitive Security" or "Definitive Securities" means a Security or
Securities that are in the form of the Security set forth in Sections 202 and
203 hereof, containing the legend specified for a Definitive Security and not
including the additional language referred to in footnote 1 or the additional
schedule referred to in footnote 2.
"Depositary" has the meaning specified in Section 305.
"Designated Senior Indebtedness" means the principal of, premium if
any, and interest, fees, indemnification amounts, reimbursements, damages and
other liabilities payable under the documentation governing indebtedness (a)
under any debt facility with banks or other lenders which provides for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables) or letters of credit to the Company or any of its subsidiaries, and
(b) any other Senior Indebtedness the principal amount of which is $5.0 million
or more and that has been designated by the Company as "Designated Senior
Indebtedness."
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" or "Global Securities" means a Security or Securities
in the form of the Security set forth in Sections 202, 203 and 204 hereof
containing the legend specified for a Global Security, the additional language
referred to in footnote 1 and the additional schedule referred to in footnote 2.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
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<PAGE> 15
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means NationsBanc Montgomery Securities, Inc.,
J.C. Bradford & Co. and Equitable Securities Corporation.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity thereof or by declaration of
acceleration, redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the 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.
"144A Global Security" has the meaning specified in Section 201.
"Opinion of Counsel" means a written opinion of counsel who shall be
reasonably acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount have been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities; provided, that if such
Securities, or portions thereof, are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee
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<PAGE> 16
proof satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; provided,
however, that in determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities as to which the Trustee has actual knowledge
of such ownership 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 and premium, if any, interest or liquidated damages, if any, on any
Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means that certain Purchase Agreement dated
November 18, 1997 between the Company and the Initial Purchasers.
"Record Date" means either a Regular Record Date or a Special Record
Date, as applicable.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture on the applicable Redemption Date.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated November 21, 1997 between the Company and the Initial
Purchasers.
"Regular Record Date," for the interest payable on any Interest Payment
Date means May 15 or November 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
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<PAGE> 17
"Regulation S" means Regulation S under the Securities Act of 1933, as
amended.
"Regulation S Global Security" has the meaning specified in Section
201.
"Repurchase Date" has the meaning specified in Section 1401.
"Repurchase Event" has the meaning specified in Section 1406.
"Repurchase Price" has the meaning specified in Section 1401.
"Resale Restriction Termination Date" means, with respect to any
Security, the date which is two years after the later of (i) the original issue
date of such Security and (ii) the last date on which the Company or any
Affiliate of the Company was the owner of such Security (or any Predecessor
Security).
"Responsible Officer" means, when used with respect to the Trustee, an
officer of the Trustee assigned and duly authorized by the Trustee to administer
its corporate trust matters.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (a) all indebtedness of the Company for money borrowed under the
Company's credit facilities and any predecessor or successor credit facilities
thereto, whether outstanding on the date of execution of the Indenture (such as
the Company's bank credit agreement, any increase in the maximum principal
amount thereof and any predecessor or successor facilities thereto) or
thereafter created, incurred or assumed, (b) all indebtedness of the Company for
money borrowed, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred or assumed, except any such other indebtedness that
by the terms of the instrument or instruments by which such indebtedness was
created or incurred expressly provides that it (i) is junior in right of payment
to the Notes or (ii) ranks pari passu in right of payment with the Notes, and
(c) any amendments, renewals, extensions, modifications, refinancings and
refundings of the foregoing. For the purposes of this definition, "indebtedness
for money borrowed" when used with respect to the Company means (i) any
obligation of, or any obligation guaranteed by, the Company for the repayment of
borrowed money (including without limitation fees, penalties or other
obligations in respect thereof), whether or not evidenced by bonds, debentures,
notes or other written instruments, (ii) any deferred payment obligation of, or
any such obligation guaranteed by, the Company for the payment of the purchase
price of property or assets evidenced by a note or similar instrument, and (iii)
any obligation of, or any such obligation guaranteed by, the Company for the
payment of rent or other amounts under a lease of property or assets which
obligation is required to be classified and accounted for as a
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<PAGE> 18
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles.
"Shelf Registration Statement" means the Registration Statement with
respect to the Notes and the Common Stock the Issuer is required to file
pursuant to the Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
instalment of interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such instalment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Termination of Trading" has the meaning specified in Section 1406.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 305 hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President," when used with respect to the Company means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. 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
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<PAGE> 19
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual or firm signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual
or such firm, he has or they have made such examination or investigation as is
necessary to enable him or them to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any Person may certify to
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certification or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate of public officials or upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
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.
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<PAGE> 20
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
Notwithstanding the foregoing, the Company shall not set a record date for, and
the provisions of this paragraph shall not apply with respect to, any Act by the
Holders pursuant to Section 501, 502 or 512.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer therefor or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
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<PAGE> 21
(f) Without limiting the foregoing, a Holder entitled hereunder to give
or take any action hereunder with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any Act of Holders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Holders and the Company by the Trustee; or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company, addressed to it
at the address of its principal executive offices specified in the first
paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two Business Days
after being deposited in the mail, registered or certified with postage prepaid,
if mailed; when answered back if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by nationally recognized overnight air courier guaranteeing next day
delivery.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if made, given, mailed or otherwise furnished or filed in writing to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. All
such notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; two Business Days after being
deposited in the mail, registered or certified with postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by nationally
recognized overnight air courier guaranteeing next day delivery.
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<PAGE> 22
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act or another provision that would be required or deemed
under such Act to be a part of and govern this Indenture if this Indenture were
subject thereto, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company and the
Trustee shall bind each of their respective successors and assigns, whether so
expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the Holders of Securities and, with respect to Article Twelve, the
holders of Senior Indebtedness, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and, except as may otherwise be required by mandatory
provisions of law, the Securities shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to the
principles of conflicts of laws thereof.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest,
liquidated damages, if any, or principal and premium if any, or conversion of
the Securities need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, or on such
last day for conversion; provided, that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, to the next succeeding Business Day.
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<PAGE> 23
SECTION 114. NO SECURITY INTEREST CREATED.
Nothing in this Indenture or in the Securities, express or implied,
shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted and in
effect in any jurisdiction where property of the Company or its Subsidiaries is
or may be located.
SECTION 115. LIMITATION ON INDIVIDUAL LIABILITY.
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or any successor 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, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or any successor Person, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any Security or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, shareholder, officer or director, as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any
Security or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Security.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities and the Trustee's certificate of authentication shall be
in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any organizational document, any applicable law or with
the rules of any securities exchange on which the Securities are listed or as
may, consistently herewith, be determined by the Company officers executing such
Securities, as evidenced by their execution of the Securities.
The Securities issued in definitive form shall be substantially in the
form set forth in Section 202 hereof.
Unless issued in definitive form, Securities issued and sold in
reliance on Rule 144A shall be issued in the form of one or more global
securities (the "144A Global Security"), the face of which
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<PAGE> 24
shall be substantially in the form set forth in Section 202 hereof and the
reverse of which shall be substantially in the form set forth in Section 203
hereof, which 144A Global Security shall be deposited on behalf of the holders
of the Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the nominee of the Depositary, duly
executed by the Company and authenticated as provided for herein.
Securities offered and sold outside the United States in reliance on
Regulation S shall be issued in the form of one or more global securities (the
"Regulation S Global Security"), the face of which shall be substantially in the
form set forth in Section 202 hereof and the reverse of which shall be
substantially in the form set forth in Section 203 hereof, which Regulation S
Global Security shall be deposited on behalf of the holders of the Securities
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of a nominee of the Depositary, duly executed by the
Company and authenticated as provided herein, for credit to the accounts of the
respective depositaries for Euroclear and Cedel (or such other accounts as they
may direct). Prior to or on the 40th day after the later of the commencement of
the offering of the Securities and the Closing Date (the "Restricted Period"),
beneficial interests in the Regulation S Global Security may only be held
through Morgan Guaranty Trust Company of New York, Brussels office, as operator
of Euroclear or Cedel or another agent member of the Euroclear System and Cedel
acting for and on behalf of them, unless delivery is made though the 144A Global
Security in accordance with the certification requirements hereof. During the
Restricted Period, interests in the Regulation S Global Security may be
exchanged for interests in the 144A Global Security or for Definitive Securities
only in accordance with the certification requirements described in Section 305
below.
Each Global Security shall represent such of the outstanding Securities
as shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee or the Securities Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof.
The Definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
on which the Securities may be listed, all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
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<PAGE> 25
SECTION 202. FORM OF FACE OF SECURITY.
LEGENDS FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS SECURITY, THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
UNLESS THE SHARES OF COMMON STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
A HOLDER OF THIS SECURITY WILL BE ABLE TO EXERCISE THE CONVERSION RIGHT ONLY IF
THE HOLDER CERTIFIES THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" OR AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACQUISITION HEREOF, AGREES THAT IT
WILL NOT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY, OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED
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<PAGE> 26
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO PNC BANK, KENTUCKY, INC., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR SUCCESSOR TRUSTEE, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); AND AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED
HEREBY, OR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF, WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO PNC BANK, KENTUCKY, INC., AS TRUSTEE (OR
A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO PNC BANK, KENTUCKY, INC., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY, OR THE SHARES OF
COMMON STOCK ISSUED UPON CONVERSION THEREOF, AFTER THE EXPIRATION OF TWO YEARS
FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
LEGENDS FOR DEFINITIVE SECURITY:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS SECURITY, THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS
16
<PAGE> 27
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE
ABLE TO EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACQUISITION HEREOF, AGREES THAT IT
WILL NOT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY, OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO PNC BANK, KENTUCKY, INC., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR SUCCESSOR
TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY, OR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO PNC BANK,
KENTUCKY, INC., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO PNC
BANK, KENTUCKY, INC., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE
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<PAGE> 28
NOTE EVIDENCED HEREBY, OR THE SHARES OF COMMON STOCK ISSUED UPON CONVERSION
THEREOF, AFTER THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE
NOTE EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
18
<PAGE> 29
RES-CARE, INC.
6% Convertible Subordinated Notes due 2004
CUSIP No. ________ No. ___________
Res-Care, Inc., a corporation duly organized and existing under the
laws of the Commonwealth of Kentucky (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 its
registered assigns, the principal sum of ________________ Dollars [OR SUCH
GREATER OR LESSER AMOUNT AS INDICATED ON THE SCHEDULE OF EXCHANGES OF SECURITIES
ON THE REVERSE HEREOF](1) on December 1, 2004 upon surrender hereof to the
Paying Agent, and to pay interest thereon from the date of original issuance of
Securities pursuant to the Indenture or from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on June 1 and December 1 in each year, commencing June 1, 1998 at
the rate of 6% per annum, until the principal hereof is paid or made available
for payment and promises to pay any liquidated damages which may be payable
pursuant to Section 4 of the Registration Rights Agreement on the Interest
Payment Dates. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the May 15 or November 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Notice of a Special Record Date shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date. Payment of
the principal of and premium, if any, interest and liquidated damages, if any,
on this Security will be made (i) in respect of Securities held of record by the
Depositary or its nominee in same day funds on or prior to the respective
payment dates and (ii) in respect of Securities held of record by Holders other
than the Depositary or its nominee in same day funds at the office or agency of
the Company maintained for that purpose pursuant to Section 1002 of the
Indenture, in each case in such coin or currency of the United States of America
as of the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest
in respect of Securities held of record by Holders other
- --------------------
(1) This phrase should be included only if the Security is issued in global
form.
19
<PAGE> 30
than the Depositary or its nominee 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: RES-CARE, INC.
-----------------------------
By:
-------------------------------
Title:
-------------------------
Attest:
- -----------------------------------
20
<PAGE> 31
SECTION 203. FORM OF REVERSE OF GLOBAL SECURITIES AND DEFINITIVE
SECURITIES.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 6% Convertible Subordinated Notes due 2004 (herein
called the "Securities"), limited in aggregate principal amount to $115,000,000
(including Securities issuable pursuant to the Initial Purchasers'
over-allotment option, as provided for in the Purchase Agreement dated November
18, 1997 between the Company and the Initial Purchasers), issued and to be
issued under an Indenture, dated as of November 21, 1997 (herein called the
"Indenture"), between the Company and PNC Bank, Kentucky, Inc., as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time following
the date of original issuance of Securities pursuant to the Indenture and on or
before the close of business on December 1, 2004, or in case this Security or a
portion hereof is called for redemption, then in respect of this Security or
such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
second business day preceding the Redemption Date, to convert this Security (or
any portion of the principal amount hereof which is $1,000 or an integral
multiple thereof), at the principal amount hereof, or of such portion, into
fully paid and non-assessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of Common Stock at a conversion price equal to
$28.2125 principal amount for each share of Common Stock (or at the current
adjusted conversion price if an adjustment has been made as provided in the
Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency maintained for that
purpose pursuant to Section 1002 of the Indenture, accompanied by written notice
to the Company in the form provided in this Security (or such other notice as is
acceptable to the Company) that the Holder hereof elects to convert this
Security, or if less than the entire principal amount hereof is to be converted,
the portion hereof to be converted, and, in case such surrender shall be made
during the period from the opening of business on any Regular Record Date next
preceding any Interest Payment Date to the close of business on such Interest
Payment Date (unless this Security or the portion thereof being converted has
been called for redemption), also accompanied by payment in funds acceptable to
the Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of this Security then being converted. Subject to
the aforesaid requirement for payment and, in the case of a conversion after the
Regular Record Date next preceding any Interest Payment Date and on or before
such Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture), no
payment or adjustment is to be made upon conversion on account of any interest
accrued hereon or on account of any dividends on the Common Stock issued upon
conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but instead of any fractional share the Company shall
pay a cash adjustment as provided
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<PAGE> 32
in the Indenture. The conversion price is subject to adjustment as provided in
the Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the sale or
transfer of all or substantially all of the assets of the Company, the Indenture
shall be amended, without the consent of any Holders of Securities, so that this
Security, if then outstanding, will be convertible thereafter, during the period
this Security shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon the consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock
into which this Security might have been converted immediately prior to such
consolidation, merger, sale or transfer (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares).
The Securities are subject to redemption upon not less than 30 and not
more than 60 days' notice by mail, at any time on or after December 5, 2000 and
prior to Maturity, as a whole or in part, at the election of the Company, at the
Redemption Prices set forth below (expressed as percentages of the principal
amount), plus accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the period beginning December 1 (December 5, if in
the year 2000) in the year indicated, and ending on the succeeding November 30,
the redemption price shall be:
<TABLE>
<CAPTION>
Redemption Year Redemption Price
--------------- ----------------
<S> <C>
2000 103.43%
2001 102.57%
2002 101.71%
2003 100.86%
2004 100.00%
</TABLE>
in each case together with accrued and unpaid interest and liquidated damages,
if any, up to but not including the date of redemption.
In certain circumstances involving the occurrence of a Repurchase Event
(as defined in the Indenture), the Holder hereof shall have the right to require
the Company to repurchase all or any part of this Security at 100% of the
principal amount hereof, together with accrued and unpaid interest and
liquidated damages, if any, to the Repurchase Date, but interest installments
whose Stated Maturity is on or prior to such Repurchase Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
22
<PAGE> 33
In the event of redemption or conversion of this Security in part only,
a new Security or Securities for the unredeemed or unconverted portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
The indebtedness evidenced by this Security is, in all respects,
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness of the Company, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding, and, under certain limited circumstances, by the Company and the
Trustee without the consent of the Holders. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and to waive certain past defaults and Events of
Default under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any,
interest and liquidated damages, if any, on this Security at the times, place
and rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium, interest and liquidated damages, if any, on this Security are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
23
<PAGE> 34
The Securities are issuable only in fully registered form without
coupons in minimum denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange except as provided in the Indenture, and the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, except as provided in this Security, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Company will
furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.
24
<PAGE> 35
[FORM OF CONVERSION NOTICE]
TO RES-CARE, INC.
The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which is
$1,000 or a multiple thereof) designated below, into shares of Common Stock of
Res-Care, Inc. in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for a fractional share and any
Security representing any unconverted principal amount hereof, be issued and
delivered to the registered Holder hereof unless a different name has been
provided below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the close of business on the
related Interest Payment Date, this Notice is accompanied by payment in funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date on the principal of this Security to be converted (unless
this Security has been called for redemption). If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated:
------------------------------ -----------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to S.E.C. Rule
17Ad-15, if shares of Common Stock are to be delivered, or Securities to be
issued, other than to and in the name of the registered Holder.
- ------------------------------------
Signature Guarantee
25
<PAGE> 36
Fill in for registration of shares of Common Stock if they are to be delivered,
or Securities if they are to be issued, other than to and in the name of the
registered Holder:
- ---------------------------------------------
(Name)
- ---------------------------------------------
(Street Address)
- ---------------------------------------------
(City, State and zip code)
(Please print name and address)
Register: _____ Common Stock
_____ Securities
(Check appropriate line(s)).
Principal amount to be converted (if less than all): $__________,000
--------------------------------------------
Social Security or other Taxpayer
Identification Number of owner
[ASSIGNMENT FORM]
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
26
<PAGE> 37
Date: Your signature:
------------------ ----------------------------------
(Sign exactly as your name appears on the face of
this Security)
Signature Guarantee:
The signature to this assignment should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to S.E.C. Rule 17Ad-15.
27
<PAGE> 38
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 6% Convertible Subordinated Notes due 2004
This Certificate relates to $_________ principal amount of Securities
held in **____________ book-entry or **____________ definitive form by _________
(the "Transferor").
The Transferor**:
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in a Global Security held by the Depositary a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to deliver in exchange for its
Security or Securities a beneficial interest in a Global Security held by the
Depositary in a principal amount equal to the aggregate principal amount of such
Security or Securities; or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
[ ] In connection with such request and in respect of each such security, the
Transferor does hereby certify to the Company and the Trustee that Transferor is
familiar with the Indenture relating to the above captioned Notes and, as
provided in Section 305 of such Indenture, the transfer of this Security does
not require registration under the Securities Act (as defined below) because**:
[ ] Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 305(b)(ii)(A) or Section 305(f)(i)(A) of
the Indenture).
[ ] Such Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A or pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i),
Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of the
Indenture). An opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 305(b)(ii)(B),
- ----------------------
**Check applicable box.
28
<PAGE> 39
Section 305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii)
or Section 305(h)(iii) of the Indenture).
[ ] Such Security is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B)
or Section 305(k)(ii) of the Indenture). If such Security is being transferred
in accordance with Rule 144 under the Securities Act, an opinion of counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),
Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
[ ] Such Security is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act, other than
Rule 144A, 144 or Regulation S under the Securities Act. An opinion of counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are irrevocably
authorized to produce this certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
--------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------------
Date:
--------------------------
29
<PAGE> 40
[OPTION OF HOLDER TO ELECT PURCHASE]
If you wish to have this Security purchased by the Company pursuant to
Section 1401 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security (which is $1,000 or an
integral multiple thereof) purchased by the Company pursuant to Section 1401 of
the Indenture, state the amount you wish to have purchased:
$
----------------------------
Date: Your Signature(s):
------------------------ --------------------------
Tax Identification No.:
---------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
------------------------------------------------------------
The signature to this option of holder to elect purchase should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program) pursuant to S.E.C. Rule 17Ad-15.
30
<PAGE> 41
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES**]
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount of Signature of
Date of Exchange in Principal Amount in Principal Amount this Global Security authorized signatory
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
PNC BANK, KENTUCKY, INC.,
as Trustee
By
------------------------------------------
Authorized Signatory
- -----------
** This Schedule should be included only if the Security is issued in global
form.
31
<PAGE> 42
ARTICLE THREE
THE SECURITIES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $100,000,000 (including
$115,000,000 aggregate principal amount of Securities that may be sold to the
Initial Purchasers by the Company upon exercise of the over-allotment option
granted pursuant to the Purchase Agreement), except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 304, 305, 306, 906, 1108, 1302 or 1405.
The Securities shall be known and designated as the "6% Convertible
Subordinated Notes due 2004" of the Company. Their Stated Maturity shall be
December 1, 2004 and they shall bear interest at the rate of 6% per annum, from
the date of original issuance of Securities pursuant to this Indenture or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable semi-annually on June 1 and December 1
commencing June 1, 1998, until the principal thereof is paid or made available
for payment.
The principal of and premium and liquidated damages, if any, and
interest on the Securities shall be payable (i) in respect of Securities held of
record by the Depositary or its nominee in same day funds on or prior to the
respective payment dates and (ii) in respect of Securities held of record by
Holders other than the Depositary or its nominee in same day funds at the office
or agency of the Company maintained for such purpose pursuant to Section 1002;
provided, however, that at the option of the Company payment of interest to
Holders of record other than the Depositary may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
The Securities shall be subject to the transfer restrictions set forth
in Section 305.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve.
The Securities shall be convertible as provided in Article Thirteen.
The Securities shall be subject to repurchase at the option of the
Holder as provided in Article Fourteen.
Neither the Company nor the Trustee shall have any responsibility for
any defect in the CUSIP number that appears on any Security, check, advance of
payment or redemption notice, and
32
<PAGE> 43
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.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in fully registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President or one of its
Vice Presidents, under its corporate seal or a facsimile thereof reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall either at one time or from time to time pursuant
to such instructions as may be described therein authenticate and deliver such
Securities as in this Indenture provided and not otherwise. Such Company Order
shall specify the amount of Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated, and shall certify that
all conditions precedent to the issuance of such Securities contained in this
Indenture have been complied with. The aggregate principal amount of Securities
Outstanding at any time may not exceed the amount set forth above except as
provided in Section 306.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of the Indenture. The Trustee may appoint an Authenticating Agent
pursuant to the terms of Section 614.
33
<PAGE> 44
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the Definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities. Every such temporary Security shall be executed by
the Company and shall be authenticated and delivered by the Trustee upon the
same conditions and in substantially the same manner, and with the same effect,
as the Definitive Security or Securities in lieu of which it is issued.
Not including Global Securities, if temporary Securities are issued,
the Company will cause Definitive Securities to be prepared without unreasonable
delay. After the preparation of Definitive Securities, the temporary Securities
shall be exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of a like principal amount of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as Definitive Securities.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Security
Registrar shall be in written form or in any form capable of being converted
into written form within a reasonably prompt period of time. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided. At all reasonable times the
Security Register shall be open for inspection by the Company.
The Company initially appoints The Depository Trust Company ("DTC") to
act as depositary (the "Depositary") with respect to the Global Security(ies).
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Security(ies).
(b) With respect to the transfer and exchange of Definitive Securities,
when Definitive Securities are presented to the Security Registrar with the
request (x) to register the transfer of the Definitive Securities or (y) to
exchange such Definitive Securities for an equal principal amount of
34
<PAGE> 45
Definitive Securities of other authorized denominations, the Security Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Security Registrar duly
executed by the Holder thereof or by its attorney, duly authorized in writing;
and
(ii) shall, in the case of Transfer Restricted Securities that
are Definitive Securities, be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Security Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to that effect
(in substantially the form of Exhibit A hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in reliance on Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit A hereto) and, in the case of a transfer in
accordance with Rule 144A, Rule 144 or Regulation S under the Securities Act, an
Opinion of Counsel reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect (in substantially the form
of Exhibit A hereto) and an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with the Securities
Act.
(c) The following restrictions apply to any transfer of a
Definitive Security for a beneficial interest in a 144A Global Security. A
Definitive Security may not be exchanged for a beneficial interest in a 144A
Global Security except until and upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form of Exhibit A hereto, that
such Definitive Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in accordance with
Rule 144A and an Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities Act; and
35
<PAGE> 46
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an endorsement on the 144A Global
Security to reflect an increase in the aggregate principal amount of the
Securities represented by the 144A Global Security, then the Trustee shall
cancel such Definitive Security and cause, or direct the Securities Custodian to
cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of Securities represented by the 144A Global Security to be increased
accordingly. If no 144A Global Securities are then outstanding, the Company
shall execute and, upon receipt of an authentication order in the form of a
Company Order in accordance with Section 303, the Trustee shall authenticate a
new 144A Global Security in the appropriate principal amount.
(d) The following restrictions apply to any transfer of a Definitive
Security for a beneficial interest in a Regulation S Global Security. A
Definitive Security may not be exchanged for a beneficial interest in a
Regulation S Global Security except until and upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in the form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form of Exhibit A hereto, that
such Definitive Security is being transferred in accordance with Regulation S
and an Opinion of Counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an endorsement on the Regulation S
Global Security to reflect an increase in the aggregate principal amount of the
Securities represented by the Regulation S Global Security, then the Trustee
shall cancel such Definitive Security and cause, or direct the Securities
Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the aggregate
principal amount of Securities represented by the Regulation S Global Security
to be increased accordingly. If no Regulation S Global Securities are then
outstanding, the Company shall execute and, upon receipt of an authentication
order in the form of a Company Order in accordance with Section 303, the Trustee
shall authenticate a new Regulation S Global Security in the appropriate
principal amount.
(e) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
(f) With respect to the transfer of a beneficial interest in a 144A
Global Security or a Regulation S Global Security for a Definitive Security:
36
<PAGE> 47
(i) Any person having a beneficial interest in a 144A
Global Security or a Regulation S Global Security may upon request exchange such
beneficial interest for a Definitive Security. Upon receipt by the Trustee of
written instructions or such other form of instructions as is customary for the
Depositary or its nominee on behalf of any person having a beneficial interest
in a 144A Global Security or a Regulation S Global Security constituting a
Transfer Restricted Security only, and receipt by the Trustee of the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred
to the person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the form of
Exhibit A hereto); or
(B) if such beneficial interest is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit A hereto) and, in the case of a
transfer in accordance with Rule 144A, Rule 144 or Regulation S under the
Securities Act, an Opinion of Counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance with the Securities Act; or
(C) if such beneficial interest is being transferred
in reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferee or transferor
(in substantially the form of Exhibit A hereto) and an Opinion of Counsel from
the transferee or transferor reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, then the Trustee or
the Securities Custodian, at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of the
Global Security to be reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the form of a Company
Order in accordance with Section 303, the Trustee will authenticate and deliver
to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a 144A Global Security or a Regulation S Global Security pursuant to
this Section 305 shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(g) With respect to the transfer of a beneficial interest in a
Regulation S Global Security for a beneficial interest in a 144A Global
Security, any person having a beneficial interest in a Regulation S Global
Security may upon request exchange such beneficial interest for an interest in a
144A Global Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depositary or its
nominee on behalf of any person having a
37
<PAGE> 48
beneficial interest in a Regulation S Global Security constituting a Transfer
Restricted Security only, and receipt by the Trustee of the following additional
information and documents (all of which may be submitted by facsimile):
(i) instructions given in accordance with the procedures of
Euroclear or Cedel, the Depositary and the Securities Custodian, as the case may
be, from or on behalf of a beneficial owner of an interest in the Regulations S
Global Security directing the Trustee, as transfer agent, to credit or cause to
be credited a beneficial interest in the 144A Global Security in an amount equal
to the beneficial interest in the Regulation S Global Security to be exchanged
or transferred,
(ii) a written order given in accordance with the procedures
of Euroclear or Cedel, the Depositary and the Securities Custodian, as the case
may be, containing information regarding the account with the Depositary to be
credited with such increase and the name of such account, and
(iii) a certification from the transferor (in substantially
the form of Exhibit A hereto) to the effect that such beneficial interest is
being transferred to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the Securities Act
and an Opinion of Counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, then the Trustee,
as transfer agent, shall promptly deliver appropriate instructions to the
Depositary, its nominee, or the custodian for the Depositary, as the case may
be, to reduce or reflect on its records a reduction of the Regulation S Global
Security by the aggregate principal amount of the beneficial interest in such
Regulation S Global Security to be exchanged or transferred, and the Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary, its nominee, or the custodian for the Depositary, as the case may
be, concurrently with such reduction, increase or reflect on its records an
increase of the principal amount of the 144A Global Security by the aggregate
principal amount of the beneficial interest in the Regulation S Global Security
to be so exchanged or transferred, and to credit or cause to be credited to the
account of the person specified in such instructions a beneficial interest in
the 144A Global Security equal to the reduction in the principal amount of the
Regulation S Global Security.
(h) With respect to the transfer of a beneficial interest in a
144A Global Security for a beneficial interest in a Regulation S Global
Security, any person having a beneficial interest in a 144A Global Security may
upon request exchange such beneficial interest for an interest in a Regulation S
Global Security. Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depositary or its nominee on
behalf of any person having a beneficial interest in a 144A Global Security
constituting a Transfer Restricted Security only, and receipt by the Trustee of
the following additional information and documents (all of which may be
submitted by facsimile):
(i) instructions given in accordance with the procedures
of the Depositary and the Securities Custodian, as the case may be, from or on
behalf of a holder of a beneficial interest in the 144A Global Security,
directing the Trustee, as transfer agent, to credit or cause to be credited a
38
<PAGE> 49
beneficial interest in the Regulation S Global Security in an amount equal to
the beneficial interest in the 144A Global Security to be exchanged or
transferred,
(ii) a written order given in accordance with the procedures
of the Depositary and the Securities Custodian, as the case may be, containing
information regarding the Euroclear or Cedel account to be credited with such
increase and the name of such account, and
(iii) a certification from the transferor (in substantially
the form of Exhibit A hereto) to the effect that such beneficial interest is
being transferred in accordance with Regulation S and an Opinion of Counsel
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, then the Trustee, as transfer agent, shall
promptly deliver appropriate instructions to the Depositary, its nominee, or the
custodian for the Depositary, as the case may be, to reduce or reflect on its
records a reduction of the 144A Global Security by the aggregate principal
amount of the beneficial interest in such 144A Global Security to be so
exchanged or transferred from the relevant participant, and the Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary, its nominee, or the custodian for the Depositary, as the case may
be, concurrently with such reduction, to increase or reflect on its records an
increase of the principal amount of such Regulation S Global Security by the
aggregate principal amount of the beneficial interest in such 144A Global
Security to be so exchanged or transferred, and to credit or cause to be
credited to the account of the person specified in such instructions (who shall
be Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear or Cedel or another agent member of Euroclear or Cedel, or both, as
the case may be, acting for and on behalf of them) a beneficial interest in such
Regulation S Global Security equal to the reduction in the principal amount of
such 144A Global Security.
(i) Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in subsection (j) of this Section 305), a Global
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(j) The following relates to the authentication of Definitive
Securities in absence of the Depositary. If at any time: (i) the Depositary for
the Securities notifies the Company that the Depositary is unwilling or unable
to continue as Depositary for the Global Securities and a successor Depositary
for the Global Securities is not appointed by the Company within 90 days after
delivery of such notice; or (ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture, then the Company will execute, and the Trustee,
upon receipt of a Company Order in accordance with Section 303 requesting the
authentication and delivery of Definitive Securities, will authenticate and
deliver Definitive Securities in an aggregate principal amount equal to the
principal amount of the Global Securities, in exchange for such Global
Securities.
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(k) (i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS SECURITY, THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
UNLESS THE SHARES OF COMMON STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
A HOLDER OF THIS SECURITY WILL BE ABLE TO EXERCISE THE CONVERSION RIGHT ONLY IF
THE HOLDER CERTIFIES THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" OR AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACQUISITION HEREOF, AGREES THAT IT
WILL NOT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY, OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO PNC BANK, KENTUCKY, INC., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR SUCCESSOR
TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY, OR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE,
THE HOLDER
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MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO PNC BANK, KENTUCKY, INC.,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO PNC BANK, KENTUCKY, INC., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY, OR THE SHARES OF
COMMON STOCK ISSUED UPON CONVERSION THEREOF, AFTER THE EXPIRATION OF TWO YEARS
FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act (including the Shelf
Registration Statement) or on or after the Resale Restriction Termination Date:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Security Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security; provided, however, that with
respect to a transfer made in reliance upon Rule 144 or an effective
registration statement, the Holders thereof shall certify in writing to the
Security Registrar that such request is being made pursuant to Rule 144 or an
effective registration statement (such Certification to be substantially in the
form of Exhibit A hereto) and, in the case of a transfer made in reliance upon
Rule 144, shall be accompanied by an Opinion of Counsel reasonably acceptable to
the Company to the effect that such transfer is in compliance with the
Securities Act; and
(B) any such Transfer Restricted Security represented
by a Global Security shall not be subject to the provisions set forth in (i)
above (such sales or transfers being subject only to the provisions of Section
305(e) hereof); provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented by a Global
Security for a Definitive Security that does not bear a legend, which request is
made in reliance upon Rule 144 or an effective registration statement, the
Holder thereof shall certify in writing to the Security Registrar that such
request is being made pursuant to Rule 144 or an effective registration
statement (such certification to be substantially in the form of Exhibit A
hereto) and, in the case of a transfer made in reliance upon Rule 144, shall be
accompanied by an Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities Act.
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(l) At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
canceled, such Global Security shall be returned to or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(m) All Definitive Securities and Global Securities issued upon any
registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
(n) To the extent requested by the Trustee, all Securities the
transfer, exchange and/or registration of which is effectuated pursuant to this
Section 305 shall be accompanied by an Officers' Certificate of the Company,
certifying that such transfer, exchange and/or registration is authorized by the
Company and permitted hereunder.
To permit registrations of transfer and exchanges, the Company shall
execute and the Trustee shall authenticate Definitive Securities and Global
Securities at the Security Registrar's request.
No service charge to a Holder shall be made for any registration of
transfer or exchange of Securities except as provided in Section 306. The
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906, 1108 or 1302 not involving any transfer.
The Company or the Security Registrar shall not be required (i) to
issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities selected for redemption under Section 1104
and ending at the close of business on the day of such mailing, (ii) to register
the transfer of or exchange any Definitive Security or beneficial interest in
any Global Security so selected for redemption in whole or in part, except the
unredeemed portion of any Definitive Security being redeemed in part or (iii) to
register the transfer of or exchange of any Definitive Security or beneficial
interest in any Global Security surrendered for conversion pursuant to Article
Thirteen or repurchase pursuant to Article Fourteen.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
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In every case the applicant for a substituted Security shall furnish to
the Company, to the Trustee, and, if applicable, to such authenticating agent
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding. The Trustee may charge the Company for the
Trustee's expenses in replacing such Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable or is about to be converted into
Common Stock, the Company in its discretion may, instead of issuing a new
Security, pay such Security or convert or authorize the conversion of the same
if the applicant for such payment or conversion shall furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent such security or
indemnity as set forth above.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
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.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest. Payment
of interest will be made (i) in respect of Securities held by the Depositary or
its nominee, in same day funds on or prior to the respective Interest Payment
Dates and (ii) in respect of Securities held of record by Holders other than the
Depositary or its nominee, in same day funds at the office of the Trustee in New
York, New York or at such other office or agency of the Company as it shall
maintain for that purpose pursuant to Section 1002, provided, however, that, at
the option of the Company, interest on any Security held of record by Holders
other than the Depositary or its
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nominee may be paid by mailing checks to the addresses of the Holders thereof as
such addresses appear in the Securities Register.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the 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 mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Securities may be listed or
designated for listing, and upon such notice as may be required by such exchange
or authorized quotation system, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security. In the
case of any Security which is converted after any Regular Record Date and on or
prior to the business day next preceding next succeeding Interest Payment Date
(other than any
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Security whose Maturity is prior to such Interest Payment Date), interest whose
Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date provided,
however, that Securities so surrendered for conversion shall (except in the case
of Securities or portions thereof called for redemption which is addressed in
Article 11 and in Section 1302 below) be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount being surrendered for conversion.
Except as otherwise expressly provided above in this subsection (2), in Article
11 and in Section 1302, in the case of any Security which is converted, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer, exchange or conversion shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section , except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be destroyed by the Trustee, unless
otherwise directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as expressly provided for in this Article Four), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when (1) either (A) all Securities
theretofore authenticated and delivered (other than (i) Securities which have
been
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destroyed, lost or stolen and which have been replaced or paid as provided in
Section 306 and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section
1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, or
(iv) are delivered to the Trustee for Conversion in
accordance with Article Thirteen, and the Company, in the case of (i), (ii),
(iii) or (iv) above, has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose an amount in cash sufficient
(without consideration of any investment of such cash) to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation for principal and premium, if any, and interest to the date of
such deposit (in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be; provided that the
Trustee shall have been irrevocably instructed to apply such amount to said
payments with respect to the Securities; (2) the Company has paid or caused to
be paid all other sums payable hereunder by the Company; and (3) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the following
rights or obligations under the Securities and this Indenture shall survive
until otherwise terminated or discharged hereunder: (a) Article Thirteen,
Article Fourteen and the Company's obligations under Sections 304, 305, 306,
1002 and 1003, in each case with respect to any Securities described in
subclause (B) of Clause (1) of this Section , (b) this Article Four, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder,
including the obligations of the Company to the Trustee under Section 607, and
the obligations of the Trustee to any Authenticating Agent under Section 614 and
(d) if money shall have been deposited with the Trustee pursuant to subclause
(B) of Clause (1) of this Section , the rights of Holders of any Securities
described in subclause (B) of Clause (1) of this Section to receive, solely from
the trust fund described in such subclause (B), payments in respect of the
principal of, and premium (if any) and interest on, such Securities when such
payment are due.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003 and
Section 506, 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
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acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal and premium, if any, and interest for whose
payment such money has been deposited with the Trustee. All moneys deposited
with the Trustee pursuant to Section 401 (and held by it or any Paying Agent)
for the payment of Securities subsequently converted shall be returned to the
Company upon Company Request.
SECTION 403. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article Four by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Four until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust with
respect to the Securities; provided, however, that if the Company makes any
payment of principal of, or any premium or interest on, any Security following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of the Securities to receive such payment from the money
so held in trust.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body);
(1) default in the payment of the principal of, or premium, if
any, on any Security at its Maturity, whether or not such payment is prohibited
by the provisions of Article Twelve; or
(2) default in the payment of any interest and liquidated
damages, if any, upon any Security when it becomes due and payable, whether or
not such payment is prohibited by the provisions of Article Twelve, and
continuance of such default for a period of 30 days; or
(3) failure to provide timely notice of a Repurchase Event as
required in accordance with the provisions of Article Fourteen; or
(4) default in the payment of the Repurchase Price in respect
of any Security on the Repurchase Date therefor in accordance with the
provisions of Article Fourteen, whether or not such payment is prohibited by the
provisions of Article Twelve; or
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(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(6) default under one or more bonds, debentures, notes or
other evidences of indebtedness for money borrowed by the Company or any
Subsidiary or under one or more mortgages, indentures or instruments under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any Subsidiary, whether such
indebtedness now exists or shall hereafter be created, which default
individually or in the aggregate shall constitute a failure to pay the principal
of indebtedness in excess of $10,000,000 when due and payable after the
expiration of any applicable grace period with respect thereto or shall have
resulted in indebtedness in excess of $10,000,000 becoming or being declared due
and payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 30 days after there shall
have been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities a written notice specifying such default
and requiring the Company to cause such indebtedness to be discharged or cause
such acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any Subsidiary
in an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company or any Subsidiary as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any Subsidiary
under any applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(8) the commencement by the Company or any Subsidiary of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the Company or any
Subsidiary in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or State law, or the consent by it to the
filing of such petition or
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to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any
Subsidiary or of any substantial part of its property, or the making by it of a
general assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company or any Subsidiary in furtherance of
any such action.
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 501, a record date shall automatically and without any other action by
any Person be set for the purpose of determining the Holders of Outstanding
Securities entitled to join in such Notice of Default, which record date shall
be the close of business on the day the Trustee receives such Notice of Default.
The Holders of Outstanding Securities on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
Notice of Default, whether or not such Holders remain Holders after such record
date: provided, that unless such Notice of Default shall have become effective
by virtue of the Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such Notice of
Default shall automatically and without any action by any Person be canceled and
of no further force or effect.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than as specified in subparagraph (7) or
(8) of Section 501) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of, and premium if any, on all
the Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal plus any interest accrued on the securities to the date of
declaration shall become immediately due and payable. If an Event of Default
specified in subparagraph (7) or (8) of Section 501 occurs and is continuing,
then the principal of, premium, if any, and accrued and unpaid interest, if any,
and liquidated damages, if any, on all of the Securities shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of Securities.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
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(B) the principal of and premium, if any, on any
Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities, and
(D) all sums paid or advanced by the Trustee and each
predecessor Trustee, their respective agents and counsel hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee and
each predecessor Trustee, their respective agents and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of, premium, if any, and interest on the Securities that has become
due solely by such declaration of acceleration, have been cured or waived as
provided in Section 513. No such rescission and waiver shall affect any
subsequent default or impair any right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any
rescission and annulment of any such declaration, pursuant to this Section 502,
a record date shall automatically and without any other action by any Person be
set for the purpose of determining the Holders of Outstanding Securities
entitled to join in such declaration, or rescission and annulment, as the case
may be, which record date shall be the close of business on the day the Trustee
receives such declaration, or rescission and annulment, as the case may be. The
Holders of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to join in such declaration,
or rescission and annulment, as the case may be, whether or not such Holders
remain Holders after such record date; provided, that unless such declaration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of Holders of the requisite principal amount of Outstanding Securities on
such record date (or their duly appointed agents) having joined therein on or
prior to the 90th day after such record date, such declaration, or rescission
and annulment, as the case may be, shall automatically and without any action by
any Person be canceled and of no further force or effect.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of or premium, if
any, on any Security at the Maturity thereof, the Company will, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal of, and
premium, if any, and interest, and, to the extent that payment of such interest
shall
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be legally enforceable, interest, on any overdue principal and premium, if any,
and on any overdue interest, at the rate borne by the Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee, their
respective agents and counsel, and any other amounts due the Trustee or any
predecessor Trustee under Section 607.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and may
prosecute any such proceeding to judgment or final decree, and may enforce the
same against the Company (or any other obligor upon the Securities) and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company (or any other obligor upon the Securities),
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have the claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it and
each predecessor Trustee for the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and their
respective agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and may be a member of the
Creditors' Committee.
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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 and each predecessor Trustee and their
respective agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium, if
any, or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To payment of all amounts due the Trustee under Section 607;
SECOND: Subject to Article Twelve, to the holders of Senior
Indebtedness;
THIRD: To the payment of the amounts then due and unpaid for principal
of and premium, if any, and interest on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and premium, if any, and interest, respectively;
and
FOURTH: The balance, if any, to the Company or any other Person or
Persons determined to be entitled thereto upon provision of an Officer's
Certificate or other evidence reasonably satisfactory to the Trustee by the
Company or such other person verifying such entitlement.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
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(3) such Holder or Holders have offered to the Trustee
reasonable indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities; it being understood and
intended that no one or more holders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders, or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
INTEREST AND LIQUIDATED DAMAGES AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, premium, and liquidated
damages, if any, and (subject to Section 307) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date or, in the case of a repurchase pursuant to
Article Fourteen, on the Repurchase Date) and to convert such Security in
accordance with Article Thirteen and to institute suit for the enforcement of
any such payment and right to convert, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or 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.
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SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the Trustee in
good faith shall determine that the action so directed would involve the Trustee
in personal liability or would be unduly prejudicial to Holders not joining in
such direction.
Upon receipt by the Trustee of any such direction, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities entitled to join in such
direction, which record date shall be the close of business on the day the
Trustee receives such direction. The Holders of Outstanding Securities on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to join in such direction, whether or not such Holders remain Holders
after such record date; provided, that unless such direction shall have become
effective by virtue of Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such direction shall
automatically and without any action by any Person be canceled and of no further
force or effect.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except:
(1) a default in the payment of the principal of or premium,
if any, or interest on any Security,
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(2) the right of a Holder to redeem or convert the Security,
or
(3) a default with respect to a covenant or provision hereof
which under Article Nine cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company, in any suit instituted
by the Trustee, a suit by a Holder pursuant to Section 508, or a suit by a
Holder or Holders of more than 10% in principal amount of the outstanding
Securities.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
this Indenture and the Trust Indenture Act for securities issued pursuant to
indentures qualified thereunder. Except as otherwise provided herein,
notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability or risk in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity satisfactory to it
against such risk or liability is not reasonably assured to it. Whether or not
therein expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section. The Trustee shall not be
liable (x) for any error of judgment made in good faith by a Responsible Officer
or Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts or (y) with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the holders of not less than a majority in aggregate principal
amount of the Securities at the time Outstanding relating to the time, method
and place of conducting any proceeding or any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture. Prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred: (i) the
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duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture and in the Trust Indenture Act, and the Trustee
shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture and in the Trust Indenture Act, and
no implied covenants or obligations shall be read in to this Indenture against
the Trustee; and (ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions therein, upon any statements, certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture and believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties; but in the case of any such
statements, certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform on their
face to the requirements of this Indenture. If a default or an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder of
which it has actual knowledge 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(5), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively 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;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely conclusively upon an Officers' Certificate;
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(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) before the Trustee acts or refrains from acting with respect to any
matter contemplated by this Indenture, it may require an Officers' Certificate
or an Opinion of Counsel, which shall conform to the provisions of Section 102,
and the Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith and without gross negligence in reliance on
such certificate or opinion;
(g) the Trustee shall not be required to give any bond or surety in
respect of the performance of its power and duties hereunder;
(h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(i) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company, and the Trustee and any Authenticating Agent assume no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee and any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may
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otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. The
Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (including its services
as Security Registrar or Paying Agent, if so appointed by the Company) as may be
mutually agreed upon in writing by the Company and the Trustee (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances reasonably incurred or made by
or on behalf of it in connection with the performance of its duties under any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel and all other persons not
regularly in its employ) except to the extent any such expense, disbursement or
advance may be attributable to its negligence, willful misconduct, recklessness
or bad faith; and
(3) to indemnify the Trustee and each predecessor Trustee
(each an "indemnitee") for, and to hold it harmless against, any loss, liability
or expense incurred without negligence, willful misconduct or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder (including its
services as Security Registrar or Paying Agent, if so appointed by the Company),
including enforcement of this Section 607 and including the costs and expenses
of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Company shall defend any claim or threatened claim asserted
against an indemnitee for which it may seek indemnity, and the indemnitee shall
cooperate in the defense unless, in the reasonable opinion of the indemnitee's
counsel, the indemnitee has an interest adverse to the Issuer or a potential
conflict of interest exists between the indemnitee and the Company, in which
case the indemnitee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company shall
only be responsible for the reasonable fees and expenses of one law firm (in
addition to local counsel) in any one action or separate substantially similar
actions in the same jurisdiction arising out of the same general allegations or
circumstances, such law firm to be designated by the indemnitee.
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As security for the performance of the obligations of the Company under
this Section 607, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities, and the
Securities are hereby subordinated to such prior lien. The obligations of the
Company under this Section to compensate and indemnify the Trustee and any
predecessor Trustee and to pay or reimburse the Trustee and any predecessor
Trustee for expenses, disbursements and advances, and any other amounts due the
Trustee or any predecessor Trustee under Section 607, shall constitute an
additional obligation hereunder and shall survive the satisfaction and discharge
of this Indenture.
When the Trustee or any predecessor Trustee incurs expenses or renders
services in connection with the performance of its obligations hereunder
(including its services as Security Registrar or Paying Agent, if so appointed
by the Company) after an Event of Default specified in Section 501(7) or (8)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any applicable bankruptcy,
insolvency or other similar federal or state law to the extent provided in
Section 503(b)(5) of Title 11 of the United States Code, as now or hereafter in
effect.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a Person
that (i) is eligible pursuant to the Trust Indenture Act to act as such, (ii)
has (or, in the case of a corporation included in a bank holding company system,
whose related bank holding company has) a combined capital and surplus of at
least $50,000,000 and (iii) has an office where it provides corporate trust
services, or at which it is authorized to receive notices hereunder, in the
Borough of Manhattan, The City of New York, or a designated agent. If such
Person publishes reports of conditions at least annually, pursuant to law or to
the requirements of a Federal or state supervising or examining authority, then
for the purposes of this Section , the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee required
by Section 611 shall not have been
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delivered to the resigning Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of
a majority in principal amount of the Outstanding Securities delivered to the
Trustee and to the Company.
(d) If at any time:
(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 the last six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Security for at least the last six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
such successor Trustee shall comply with the applicable requirements of Section
611. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611 become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 106. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
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SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents acceptable to
and at the expense of the Company which shall be authorized to act on behalf of
the Trustee to authenticate Securities issued upon original issue and upon
exchange, registration of transfer, partial conversion or partial redemption or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
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deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Person organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such Person shall be otherwise eligible under this Section ,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail notice of such
appointment by first-class mail, postage prepaid, to all Holders as their names
and addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment under this Section shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible to act as such under the
provisions of this Section.
Any Authenticating Agent by the acceptance of its appointment shall be
deemed to have represented to the Trustee that it is eligible for appointment as
Authenticating Agent under this Section and to have agreed with the Trustee
that: it will perform and carry out the duties of an Authenticating Agent as
herein set forth, including among other things the duties to authenticate
Securities when presented to it in connection with the original issuance and
with exchanges, registrations of transfer or redemptions or conversions thereof
or pursuant to Section 306; it will keep and maintain, and furnish to the
Trustee from time to time as requested by the Trustee, appropriate records of
all transactions carried out by it as Authenticating Agent and will furnish the
Trustee such other information and reports as the Trustee may reasonably
require; and it will notify
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the Trustee promptly if it shall cease to be eligible to act as Authenticating
Agent in accordance with the provisions of this Section . Any Authenticating
Agent by the acceptance of its appointment shall be deemed to have agreed with
the Trustee to indemnify the Trustee against any loss, liability or expense
incurred by the Trustee and to defend any claim asserted against the Trustee by
reason of any acts or failures to act of such Authenticating Agent, but such
Authenticating Agent shall have no liability for any action taken by it in
accordance with the specific written direction of the Trustee.
The Trustee shall not be liable for any act or any failure of the
Authenticating Agent to perform any duty either required herein or authorized
herein to be performed by such person in accordance with this Indenture.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
PNC BANK, KENTUCKY, INC.,
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 (a)
semi-annually, not more than 15 days after each Regular Record Date, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders as of such Regular Record Date, and (b) at such other times as the
Trustee may request in writing, within 30 days after the receipt by the Company
of any such request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished.
Notwithstanding the foregoing, so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act or otherwise in accordance with this Indenture.
SECTION 703. REPORTS BY TRUSTEE.
(a) Not later than 60 days following each December 1, the Trustee shall
transmit to Holders such reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange or automated
quotation system upon which the Securities are listed or traded, with the
Commission and with the Company. The Company will notify the
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Trustee when the Securities are listed or traded on any stock exchange or
automated quotation system.
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.
SECTION 705. RULE 144A INFORMATION REQUIREMENT.
The Company will furnish to the Holders or beneficial holders of the
Securities and prospective purchasers of the Securities designated by the
Holders of the Securities, upon their request, information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act until the earlier
of (i) the date on which the Securities and the underlying Common Stock are
registered under the Securities Act or (ii) the Resale Restriction Termination
Date.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, all or substantially all of the properties and assets
of the Company shall be a corporation, partnership or trust, shall be organized
and validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of and premium, if
any, and interest on all the Securities and the performance or observance of
every covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Section 1311;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
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(3) such consolidation, merger, conveyance, transfer or lease
does not adversely affect the validity or enforceability of the Securities; and
(4) the Company or the successor Person has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a transfer by lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution and the provisions hereunder, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cause this Indenture to be qualified under the Trust
Indenture Act; or
(2) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(3) to add to the covenants of the Company for the benefit of
the Holders or an additional Event of Default, or to surrender any right or
power conferred herein or in the Securities upon the Company; or
(4) to secure the Securities; or
(5) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1311; or
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(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or
(7) to cure any ambiguity, to correct or supplement any
provision herein or in the Securities which may be defective or inconsistent
with any other provision herein or in the Securities, or to make any other
provisions with respect to matters or questions arising under this Indenture
which shall not be inconsistent with the provisions of this Indenture; provided,
that such action pursuant to this Clause (7) shall not adversely affect the
interests of the Holders in any material respect and the Trustee may rely upon
an opinion of counsel to that effect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or adversely affect the right to convert any Security as provided in
Article Thirteen (except as permitted by Section 901(5)), or modify the
provisions of Article Fourteen, or the provisions of this Indenture with respect
to the subordination of the Securities, in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513
or Section 1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this Clause shall not be deemed to require the consent
of any Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section and Section 1006, or the deletion of this
proviso, in accordance with the requirements of Section 901(6).
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It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which adversely affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and (at
the specific direction of the Company) authenticated and delivered by the
Trustee in exchange for Outstanding Securities upon surrender of such
Outstanding Securities.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURE.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to Section 902, the Company shall transmit to
the Holders a notice setting forth the substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay the principal of and premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
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SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in New York, New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, where Securities may be
surrendered for exchange or conversion and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in New
York, New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of and premium, if any, or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and premium, if
any, or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to 11:00 a.m. (New York City time) on each due date of the principal
of, and premium, if any, or interest on any Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal and any premium
and interest so becoming due, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee or the
Company to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act and this Indenture applicable to it as a Paying Agent and hold all
sums held by it for the payment of principal of, or any premium or interest on,
the Securities in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or
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otherwise disposed of as herein provided; (ii) give the Trustee written notice
of any default by the Company (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities; and (iii) at any time during
the continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent for payment in respect of the Securities, and account
for any funds disbursed.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
The Trustee shall not be liable for any act or failure to act of any
Paying Agent (other than the Trustee acting in such capacity) to perform any
duty either required herein or authorized herein to be performed by such person
in accordance with this Indenture.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and
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statutory) and franchises and the existence, rights (charter and statutory) and
franchises of each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 1006. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1005, if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. RIGHT OF REDEMPTION.
The Securities may be redeemed at the election of the Company, in whole
or from time to time in part, at any time on or after December 5, 2000, at the
Redemption Prices specified in the form of Security hereinbefore set forth,
together with accrued and unpaid interest and liquidated damages, if any, up to
but not including the Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company as permitted by
any provision of this Indenture shall be made in accordance with such provision
and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all the Securities, the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter period shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed. In case of any redemption at the election of the
Company of all of the Securities, the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter period shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot.
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If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection. In any case
where more than one Security is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Security.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to the Trustee and to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption of any Securities, the
principal amounts) of the particular Securities to be redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that (unless the Company
shall default in payment of the Redemption Price) interest thereon will cease to
accrue on and after said date,
(e) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate (which right shall extend at least
until two business days prior to the Redemption Date) and the place or places
where such Securities may be surrendered for conversion,
(f) the place or places where such Securities are to be surrendered for
payment of the Redemption Price, and
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(g) that, unless the Company defaults in making the redemption payment,
the only remaining right of the Holders shall be to receive payment of the
Redemption Price upon presentation and surrender of the Securities.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request received
by the Trustee at least 30 days prior to the Redemption Date, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
At or prior to 9:00 a.m. (New York City time) on any Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in same day funds sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date other than any Securities or portions thereof
called for redemption on that date which have been delivered by the Company to
the Trustee for cancellation or converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 307) be paid to the Company upon Company Request or,
if then held by the Company, shall be discharged from such trust.
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
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SECTION 1108. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company maintained for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
SECTION 1109. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers to purchase such Securities
by paying to the Trustee in trust for the Holders, on or before the date fixed
for redemption, an amount not less than the applicable Redemption Price,
together with interest accrued to (but excluding) that date fixed for
redemption, of such Securities which have not been surrendered for conversion.
Notwithstanding anything to the contrary contained in this Article Eleven, the
obligation of the Company to pay the Redemption Price of such Securities,
together with interest accrued to (but excluding) the date fixed for redemption,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into (a copy of which
shall be filed with the Trustee prior to the date fixed for redemption), any
Securities not duly surrendered for conversion by the Holders thereof may, at
the option of the Company, be deemed, to the fullest extent permitted by law,
acquired by such purchasers from such Holders and surrendered by such purchasers
for conversions, all as of immediately prior to the close of business on the
date fixed for redemption (and the right to convert any such Securities shall be
extended through such time), subject to payment of the above amount as
aforesaid. At the written direction of the Company, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Securities. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Securities shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and hold it harmless against, any loss, liability or expense
arising out of or in connection with any such arrangement for the purchase and
conversion of any Securities between the Company and such purchasers to which
the Trustee has not consented in writing, including the costs and expenses,
including reasonable legal fees, incurred by the Trustee in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations under
this Indenture.
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ARTICLE TWELVE
SUBORDINATION OF SECURITIES
SECTION 1201. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, at all times and in all
respects, the indebtedness represented by the Securities and the payment of the
principal of and premium, if any, interest and liquidated damages, if any, on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
SECTION 1202. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding, relative to the Company or to its creditors, as such, or to a
substantial part of its assets, or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any general
assignment for the benefits of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness; or provision shall be
made for such payment in money or money's worth, before the Holders of the
Securities are entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities, on account of principal of
or premium, if any, or interest on the Securities, and to that end the holders
of Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or character, whether
in cash, property or securities, including any such payment or distribution
which may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the Securities,
which may be payable or deliverable in respect of the Securities in any such
case, proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full or payment thereof
provided for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or such Holder, as the case
may be, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
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For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a dissolution, winding up, liquidation, reorganization, general
assignment for the benefit of creditors or marshalling of assets and liabilities
of the Company for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article Eight.
SECTION 1203. PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Indebtedness, or provision shall be made for such payment in money or
money's worth, before the Holders of the Securities are entitled to receive any
payment (including any payment which may be payable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities) by the Company on account of the principal of or premium, if any, or
interest on the Securities or on account of the purchase or other acquisition of
Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or such Holder, as the
case may be, then and in such event such payment shall be paid over the
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
SECTION 1204. PAYMENT WHEN DESIGNATED SENIOR INDEBTEDNESS IN DEFAULT.
No payment shall be made with respect to the principal of, or premium,
if any, interest or liquidated damages, if any, on any Security (including, but
not limited to, the redemption price or the Repurchase Price with respect to the
Security to be called for redemption in accordance with Article 11 or submitted
for repurchase in accordance with Article 16, as the case may be, as provided in
this
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Agreement), except payments and distributions made by the Trustee as permitted
by Section 1210, if:
(a) a default in the payment of principal, premium, interest, rent or
other obligations due on any Designated Senior Indebtedness occurs and is
continuing (or, in the case of Senior Indebtedness occurs and is continuing (or,
in the case of Designated Senior Indebtedness for which there is a period of
grace, in the event of such a default that continues beyond the period of grace,
if any, specified in the instrument or lease evidencing such Designated Senior
Indebtedness), unless and until such default shall have been cured or waived or
shall have ceased to exist (a "Payment Default"); or
(b) a default, other than a Payment Default, on any Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity (a "Non Payment
Default") and the Trustee receives a notice of default (a "Payment Blockage
Notice") from a person who may give it pursuant to Section 1210 hereof.
If the Trustee receives any Payment Blockage Notice pursuant to clause
(b) above, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section unless and until (1) at least 365 days shall have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice, and (2) all
scheduled payments of principal, premium, interest and liquidated damages, if
any, on the Notes that have come due have been paid in full in cash. No
nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:
(x) the date upon which the default is cured or waived;
(y) in the case of a default referred to in clause (b) above,
the date the applicable Payment Blockage Notice is
retracted by written notice to the Trustee from a
representative of the holders of the Designated Senior
Indebtedness which have given the Payment Blockage Notice;
or
(z) in the case of a default referred to in clause (b) above,
179 days pass after notice is received by the Trustee if
the maturity of such Designated Senior Indebtedness has
not been accelerated, unless this Article 12 otherwise
prohibits the payment or distribution at the time of such
payment or distribution.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section , and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or such
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Holder, as the case may be, then and in such event such payment shall be paid
over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
SECTION 1205. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, general assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section 1202 or under the
conditions described in Section 1203 or 1204, from making payments at any time
of principal of and premium, interest or liquidated damages, if any, on the
Securities, or (b) the application by the Trustee of any money deposited with it
hereunder to the payment of or on account of the principal of and premium, if
any, or interest on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article.
SECTION 1206. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all amounts due on or in respect of
Senior Indebtedness, the Holders of the Securities shall be subrogated to the
extent of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article (equally and ratably
with the holders of all indebtedness of the Company which by its express terms
is subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and Interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would otherwise be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among
the Company, its creditors other than holders of Senior Indebtedness and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
SECTION 1207. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the
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relative rights against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior Indebtedness; or (c)
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Indebtedness
to receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 1208. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1209. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 1210. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
the notice provided for in this Section
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at least four Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of and premium, if any, or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within four Business Days
prior to such date.
Subject to the provisions of Section 601, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 1211. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1212. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Article against the Trustee.
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SECTION 1213. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1214. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1213 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1215. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article
Thirteen shall not be deemed to constitute a payment or distribution on account
of the principal of or premium or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of such Security. For the purposes of this Section, the term "junior
securities" means (a) shares of any class of capital stock of the Company and
(b) securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article Thirteen.
SECTION 1216. NO SUSPENSION OF REMEDIES.
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of the Securities to take any action to accelerate the maturity
of the Securities pursuant to the provisions described under Article Five and as
set forth in this Indenture or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article of the
holders, from time to time, of Senior Indebtedness to receive the cash, property
or securities receivable upon the exercise of such rights or remedies.
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ARTICLE THIRTEEN
CONVERSION OF SECURITIES
SECTION 1301. CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof which equals $1,000 or any integral multiple thereof may be
converted at any time after the date of original issuance and prior to
redemption or final maturity of Securities under this Indenture at the principal
amount thereof, or of such portion thereof, into fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100 of a share) of
Common Stock, at the conversion price, determined as hereinafter provided, in
effect at the time of conversion. Such conversion right shall expire at the
close of business on December 1, 2004. In case a Security or portion thereof is
called for redemption, such conversion right in respect of the Security or
portion so called shall expire at the close of business on the second business
day next preceding the applicable Redemption Date, unless the Company defaults
in making the payment due upon redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $28.2125
per share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f), (g) and (i) of
Section 1304.
SECTION 1302. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Security shall surrender such Security, duly endorsed or assigned to the Company
or in blank, at any office or agency of the Company maintained pursuant to
Section 1002, accompanied by written notice to the Company in the form provided
in the Security (or such other notice as is acceptable to the Company) at such
office or agency that the Holder elects to convert such Security or, if less
than the entire principal amount thereof is to be converted, the portion thereof
to be converted.
Securities surrendered for conversion during the period after any
Regular Record Date next preceding any Interest Payment Date to the close of
business on the business day next preceding such Interest Payment Date shall
(unless such Security or portion thereof being converted shall have been called
for redemption during the period from the close of business on such Regular
Record Date to the close of business on the second business day next succeeding
the following Interest Payment Date, as described in the succeeding sentence) be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount being
surrendered for conversion; provided, however, that no such payment need be made
if there shall exist at the time of conversion a default in the payment of
interest on the Security. If such Security or portion thereof being converted
shall have been called for redemption during the period from the close of
business on the Regular Record Date to the close of business on
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the second business day next succeeding the following Interest Payment Date,
then such Security or portion thereof shall be accompanied by payment in funds
acceptable to the Company of an amount equal to the difference between (i) the
interest on the principal amount of such Security or portion thereof payable on
such Interest Payment Date and (ii) the amount of accrued interest on the
principal amount of such Security or portion thereof to but not including the
date of Conversion Date. Except as provided above in this Section 1302 and
subject to the fourth paragraph of Section 307, no payment or adjustment shall
be made upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes of the record holder or holders of such Common Stock as and
after such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1303.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
SECTION 1303. FRACTIONS OF SHARES.
No fractional share of Common Stock shall be issued upon conversion of
Securities. If more than one Security shall be surrendered for conversion at one
time by the same Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Securities (or specified portions thereof) so surrendered. Instead
of any fractional share of Common Stock which would otherwise be issuable upon
conversion of any Security or Securities (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Closing Price (as hereinafter defined) at the
close of business on the day of conversion (or, if such day is not a Trading Day
(as hereafter defined), on the Trading Day immediately preceding such day).
SECTION 1304. ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend or distribution includes Common Stock, the conversion
price in effect at the opening of business on the day following the date fixed
for the determination of shareholders entitled to receive such dividend or other
distribution shall be
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reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purpose of this paragraph (a), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(b) Subject to paragraph (h) of this Section, in case the Company shall
pay or make a dividend or other distribution on the Common Stock consisting
exclusively of, or shall otherwise issue to all holders of the Common Stock,
rights or warrants entitling the holders thereof to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market Price
(determined as provided in paragraph (i) of this Section) on the date fixed for
the determination of shareholders entitled to receive such rights or warrants,
the conversion price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by multiplying such
conversion price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current Market Price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (b), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company shall
not issue any rights or warrants in respect of shares of Common Stock held in
the treasury of the Company. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the conversion price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which subdivision or combination becomes
effective.
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(d) Subject to the last sentence of this paragraph (d) and to paragraph
(h) of this Section, in case the Company shall, by dividend or otherwise,
distribute to all holders of the Common Stock evidences of its indebtedness,
shares of any class of its capital stock, cash or other assets (including
securities, but excluding any rights or warrants referred to in paragraph (b) of
this Section, excluding any dividend or distribution paid exclusively in cash
and excluding any dividend or distribution referred to in paragraph (a) of this
Section), the conversion price shall be reduced by multiplying the conversion
price in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as provided in
paragraph (i) of this Section) on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) on such date of the portion of the
evidences of indebtedness, shares of capital stock, cash and other assets to be
distributed applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to become effective immediately prior
to the opening of business on the day following such date. If the Board of
Directors determines the fair market value of any distribution for purposes of
this paragraph (d) by reference to the actual or when-issued trading market for
any securities comprising part or all of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to paragraph (i) of this Section, to the extent
possible. For purposes of this paragraph (d), any dividend or distribution that
includes shares of Common Stock, rights or warrants to subscribe for or purchase
shares of Common Stock or securities convertible into or exchangeable for shares
of Common Stock shall be deemed to be (x) a dividend or distribution of the
evidences of indebtedness, cash, assets or shares of capital stock other than
such shares of Common Stock, such rights or warrants or such convertible or
exchangeable securities (making any conversion price reduction required by this
paragraph (d)) immediately followed by (y) in the case of such shares of Common
Stock or such rights or warrants, a dividend or distribution thereof (making any
further conversion price reduction required by paragraph (a) and (b) of this
Section, except any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of paragraph (a) of this
Section), or (z) in the case of such convertible or exchangeable securities, a
dividend or distribution of the number of shares of Common Stock as would then
be issuable upon the conversion or exchange thereof, whether or not the
conversion or exchange of such securities is subject to any conditions (making
any further conversion price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Stock cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) of this
Section or in connection with a transaction to which Section 1311 applies) in an
aggregate amount that, together with (A) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in cash within
the 12 months preceding the date fixed for the determination of shareholders
entitled to such distribution and in respect of which no conversion price
adjustment pursuant to this paragraph (e) has been made
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previously and (B) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of such date of determination of
consideration payable in respect of any tender offer by the Company or a
Subsidiary for all or any portion of the Common Stock consummated within the 12
months preceding such date of determination and in respect of which no
conversion price adjustment pursuant to paragraph (f) of this Section has been
made previously, exceeds the greater of (I) 10.0% of the product of the Current
Market Price (determined as provided in paragraph (i) of this Section) on such
date of determination times the number of shares of Common Stock outstanding on
such date or (II) the Company's retained earnings on the date fixed for
determining the stockholders entitled to such distribution the conversion price
shall be reduced by multiplying the conversion price in effect immediately prior
to the close of business on such date of determination by a fraction of which
the numerator shall be the Current Market Price (determined as provided in
paragraph (i) of this Section) on such date less the amount of cash to be
distributed at such time applicable to one share of Common Stock and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day after such
date.
(f) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of the last time that tenders may be
made pursuant to such tender offer (as it shall have been amended) (the
"Expiration Time") that, together with (A) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) as of the Expiration
Time of the other consideration paid in respect of any other tender offer by the
Company or a Subsidiary for all or any portion of the Common Stock consummated
within the 12 months preceding the Expiration Time and in respect of which no
conversion price adjustment pursuant to this paragraph (f) has been made
previously and (B) the aggregate amount of any distributions to all holders of
the Common Stock made exclusively in cash within the 12 months preceding the
Expiration Time and in respect of which no conversion price adjustment pursuant
to paragraph (e) of this Section has been made previously, exceeds the greater
of (I) 10.0% of the product of the Current Market Price (determined as provided
in paragraph (i) of this Section) immediately prior to the Expiration Time times
the number of shares of Common Stock outstanding (including any tendered shares)
at the Expiration Time or (II) the Company's retained earnings as of the
Expiration Time, the conversion price shall be reduced by multiplying the
conversion price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be (x) the product of the Current Market
Price (determined as provided in paragraph (i) of this Section) immediately
prior to the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered shares at the Expiration Time minus (y) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to shareholders upon consummation of such tender offer and the
denominator shall be the product of (A) such Current Market Price times (B) such
number of outstanding shares at the Expiration Time minus the number of shares
accepted for payment in such tender offer (the "Purchased Shares"), such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time; provided,
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that if the number of Purchased Shares or the aggregate consideration payable
therefor have not been finally determined by such opening of business, the
adjustment required by this paragraph (f) shall, pending such final
determination, be made based upon the preliminarily announced results of such
tender offer, and, after such final determination shall have been made, the
adjustment required by this paragraph (f) shall be made based upon the number of
Purchased Shares and the aggregate consideration payable therefor as so finally
determined.
(g) In case a tender offer or exchange offer made by a Person other
than the Company or any Subsidiary, which offer is not recommended for rejection
by the Company's Board of Directors, shall be consummated with respect to such
number of shares of Common Stock which, as of the closing date of such tender
offer or exchange offer, as amended, increases the acquiring Person's ownership
of Common Stock to more than 25% of the total shares of Common Stock outstanding
and if the cash and fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution) of
any other consideration included in such payment per share of Common Stock
exceeds the current market price per share of Common Stock on the Business Day
next succeeding the last date on which tenders or exchanges may be made pursuant
to such tender offer or exchange offer, the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the closing of
such offer by a fraction of which the numerator shall be (x) the product of the
current market price (determined as described above in this paragraph (g)) times
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares at the closing) minus (y) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders upon the
consummation of such offer and the denominator shall be the product of (A) the
current market price (as determined above) times (B) such number of outstanding
shares at the closing minus the number of shares accepted for payment in such
tender offer or exchange offer, such reduction to become effective immediately
prior to the opening of business on the day following the closing; provided,
that if the number of shares tendered or exchanged or the aggregate
consideration payable therefor has not been finally determined by such opening
of business, the adjustment required by this paragraph shall, pending such final
determination, be made based upon the preliminarily announced results of such
tender or exchange offer, and, after such final determination shall have been
made, the adjustment required by this paragraph shall be made based upon the
number of shares tendered or exchanged and the aggregate consideration payable
therefor as so finally determined. The adjustment referred to in the paragraph
will generally not be made, however, if, as of the closing of such tender offer
or exchange offer, the offering documents with respect to such offer disclose a
plan or an intention to cause the Company to engage in a consolidation or merger
of the Company, or a sale of all or substantially all of the Company's assets.
(h) The reclassification of Common Stock into securities which include
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 1311 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to such distribution" within the meaning of paragraph (d) of this Section), and
(ii) a subdivision or combination, as the
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case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (c) of this Section).
Rights or warrants issued by the Company to all holders of the Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock (either initially or under certain circumstances), which rights or
warrants (i) are deemed to be transferred with such shares of Common Stock, (ii)
are not exercisable and (iii) are also issued in respect of future issuances of
Common Stock, in each case in clauses (i) through (iii) until the occurrence of
a specified event or events ("Trigger Event"), shall for purposes of this
Section 1304 not be deemed issued or distributed until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is required) to the
Conversion Price shall be made under this Section 1304. If any such rights or
warrants, including any such existing rights or warrants distributed prior to
the date of this Indenture are subject to subsequent events, upon the occurrence
of each of which such rights or warrants shall become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the
occurrence of each such event shall be deemed to be such date of issuance and
record date with respect to new rights or warrants (and a termination or
expiration of the existing rights or warrants without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event with respect thereto, that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 1304 was made, (1) in the
case of any such rights or warrant which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants which shall have expired or been terminated
without exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
Notwithstanding any other provision of this Section 1304 to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including, without limitation, any rights distributed pursuant to
any stockholder rights plan) shall be deemed not to have been distributed for
purposes of this Section 1304 if the Company makes proper provision so that each
holder of Securities who converts a Security (or any portion thereof) after the
date fixed for determination of stockholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversions, the amount and kind
of such distributions that such holder would have been entitled to receive if
such
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holder had, immediately prior to such determination date, converted such
Security into Common Stock.
(i) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Stock (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 10 consecutive Trading Days
immediately prior to the date in question; provided, however, that (i) if the
"ex" date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (a), (b), (c), (d), (e) or (f) above occurs during such 10 consecutive
Trading Days, the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a result
of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f)
above occurs on or after the "ex" date for the issuance or distribution
requiring such computation and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the fraction
by which the conversion price is so required to be adjusted as a result of such
other event, and (iii) if the "ex" date for the issuance or distribution
requiring such computation is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (ii) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value on
the date in question (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (d) or
(e) of this Section, whose determination shall be conclusive and described in a
Board Resolution) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any computation
under paragraph (f) of this Section, the Current Market Price on any date shall
be deemed to be the average of the daily Closing Prices for such day and the
next two succeeding Trading Days; provided, however, that if the "ex" date for
any event (other than the tender offer requiring such computation) that requires
an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d),
(e) or (f) above occurs on or after the Commencement Date and prior to the
Expiration Time for the tender offer requiring such computation, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
conversion price is so required to be adjusted as a result of such other event.
The closing price for any Trading Day (the "Closing Price") shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange, on
the Nasdaq Stock Market's National Market or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or quoted on such
National Market, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member
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firm selected from time to time by the Company for that purpose. For purposes of
this paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally not
traded on the applicable securities exchange or in the applicable securities
market and the term "`ex' date," (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Prices
were obtained without the right to receive such issuance or distribution, (ii)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any tender
offer means the first date on which the Common Stock trades regular way on such
exchange or in such market after the Expiration Time.
(j) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (a), (b), (c), (d), (e), (f) and (g) of
this Section, as it considers to be advisable (as evidenced by a Board
Resolution) in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the recipients or, if
that is not possible, to diminish any income taxes that are otherwise payable
because of such event.
(k) No adjustment in the conversion price shall be required unless such
adjustment (plus any other adjustments not previously made by reason of this
paragraph (k)) would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (k) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(l) Notwithstanding any other provision of this Section 1304, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company hereby
covenants not to take any action to increase the par value per share of the
Common Stock.
SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 1304 and shall prepare an Officers' Certificate signed
by the Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed (with a copy to the Trustee) at each
office or agency maintained for the purpose of conversion of Securities pursuant
to Section 1002; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be prepared, and as
soon as practicable after it is prepared,
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such notice shall be mailed by the Company to all Holders at their last
addresses as they shall appear in the Security Register.
SECTION 1306. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require a conversion price
adjustment pursuant to paragraph (e) of Section 1304; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights (excluding shares of capital
stock or option for capital stock issued pursuant to a benefit plan for
employees, officers or directors of the Company); or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock), or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
(e) the Company or any Subsidiary shall commence a tender offer for all
or a portion of the outstanding shares of Common Stock (or shall amend any such
tender offer to change the maximum number of shares being sought or the amount
or type of consideration being offered therefor); or
(f) the Company shall receive notice of a tender offer or exchange
offer with respect to 25% or more of its outstanding Common Stock;
then the Company shall cause to be filed (with a copy to the Trustee) at each
office or agency maintained pursuant to Section 1002, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 21 days (or 11 days in any case specified in clause
(a), (b), (e), or (f) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or granting
of rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record who will be entitled to such dividend,
distribution, rights or warrants are to be determined, (y) the date on which
such reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities,
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cash or other property deliverable upon such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or winding up,
or (z) the date on which such tender offer or exchange offer commenced, the date
on which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof or exchange offer (or
the material terms of any amendment thereto). Neither the failure to give any
such notice nor any defect therein shall affect the legality or validity of any
action described in clauses (a) through (e) of this Section 1306.
SECTION 1307. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Stock or out of the
shares of Common Stock held in treasury, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding Securities. Shares of Common
Stock issuable upon conversion of outstanding Securities shall be issued out of
the Common Stock held in Treasury to the extent available.
SECTION 1308. TAXES ON CONVERSIONS.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
SECTION 1309. COVENANT AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1308, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
SECTION 1310. CANCELLATION OF CONVERTED SECURITIES.
All Securities delivered for conversion shall be delivered to the
Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
SECTION 1311. PROVISIONS OF CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or any sale or
transfer of all or substantially all of the assets of the Company, the Person
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 1301, to convert such Security only
into the kind and amount of securities, cash
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and other property, if any, receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock into which such
Security might have been converted immediately prior to such consolidation,
merger, sale or transfer, assuming such holder of Common Stock (i) is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be (a "Constituent Person"), or an Affiliate of a Constituent Person
and (ii) failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer is not the same for each share of Common Stock held immediately
prior to such consolidation, merger, sale or transfer by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("nonelecting share"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, sales or transfers.
SECTION 1312. TRUSTEE'S DISCLAIMER.
The Trustee and any other conversion agent shall not at any time be
under any duty or responsibility to any holder of Securities to determine
whether any facts exist that may require any adjustment of the conversion price
or notice thereof, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same and
shall be protected in relying upon the Officers' Certificate with respect
thereto which the Company is required to file with the Trustee pursuant to
Section 1305. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, that may at any time
be issued or delivered upon the conversion of any Security; and the Trustee and
any other conversion agent make no representations with respect thereto or any
actions or omission by the Company in such regard. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any debenture for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article Thirteen.
The Trustee shall not be under any responsibility to determine or
verify the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 1311, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 1311.
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<PAGE> 104
ARTICLE FOURTEEN
RIGHT TO REQUIRE REPURCHASE
SECTION 1401. RIGHT TO REQUIRE REPURCHASE.
In the event that there shall occur a Repurchase Event (as defined in
Section 1406), then each Holder shall have the right, at such Holder's option,
to require the Company to purchase, and upon the exercise of such right, the
Company shall, subject to the provisions of Section 1203, purchase, all or any
part of such Holder's Securities on the date (the "Repurchase Date") that is 30
days after the date the Company gives notice of the Repurchase Event as
contemplated in Section 1402(a) at a price (the "Repurchase Price") equal to
100% of the principal amount thereof, together with accrued and unpaid interest,
but excluding, to the Repurchase Date.
SECTION 1402. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(a) On or before the 15th day after the occurrence of a Repurchase
Event, the Company, or at the written request of the Company received by the
Trustee at least 40 days prior to the Repurchase Date, the Trustee (in the name
and at the expense of the Company), in its capacity as tender agent (for which
services it shall be reasonably compensated), shall give notice of the
occurrence of the Repurchase Event and of the repurchase right set forth herein
arising as a result thereof by first-class mail, postage prepaid, to the Trustee
and to each Holder of the Securities at such Holder's address appearing in the
Security Register. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the event constituting the Repurchase Event and the date
thereof,
(2) the Repurchase Date,
(3) the date by which the repurchase right must be exercised,
(4) the Repurchase Price, and
(5) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Repurchase
Event.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (a) above) and to the Trustee on or before the close of business
on the Repurchase Date (i) written notice of the Holder's exercise
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<PAGE> 105
of such right, which notice shall set forth the name of the Holder, the
principal amount of the Security or Securities (or portion of a Security) to be
repurchased, and a statement that an election to exercise the repurchased right
is being made thereby, and (ii) the Security or Securities with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date falls
between any Regular Record Date and the next succeeding Interest Payment Date,
Securities to be repurchased must be accompanied by payment from the Holder of
an amount equal to the interest thereon which the registered Holder thereof is
to receive on such Interest Payment Date.
In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall on the Repurchase Date pay or cause to be
paid in cash to the Holder thereof the Repurchase Price of the Security or
Securities as to which the repurchase right had been exercised. In the event
that a repurchase right is exercised with respect to less than the entire
principal amount of a surrendered Security, the Company shall execute and
deliver to the Trustee and the Trustee shall authenticate for issuance in the
name of the Holder a new Security or Securities, containing identical terms and
conditions, in the aggregate principal amount of the unrepurchased portion of
such surrendered security.
SECTION 1403. DEPOSIT OF REPURCHASE PRICE.
On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds sufficient to pay the Repurchase Price of the Securities
which are to be repaid on the Repurchase Date.
SECTION 1404. SECURITIES NOT REPURCHASED ON REPURCHASE DATE.
If any Security surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate per annum borne
by such Security.
SECTION 1405. SECURITIES REPURCHASED IN PART.
Any Security which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
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, containing identical terms and conditions,
of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
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<PAGE> 106
SECTION 1406. CERTAIN DEFINITIONS.
For purposes of this Article:
(a) A "Repurchase Event" shall have occurred upon the occurrence of a
Change in Control or Termination of Trading after the date of this Indenture and
on or prior to December 1, 2004.
(b) A "Change in Control" shall occur when :
(i) all or substantially all of the Company's assets are
sold as an entirety to any person or related group of persons (other than a
Permitted Holder);
(ii) there shall be consummated any consolidation or merger
of the Company (A) in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly owned subsidiary
of the Company in which all shares of Common Stock outstanding immediately prior
to the effectiveness thereof are changed into or exchanged for the same
consideration) or (B) pursuant to which the Common Stock would be converted into
cash, securities or other property, in each case, other than a consolidation or
merger of the Company in which the holders of the Common Stock immediately prior
to the consolidation or merger have, directly or indirectly, at least a majority
of the total voting power of all classes of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such consolidation or merger in substantially the
same proportion as their ownership of Common Stock immediately before such
transaction;
(iii) any person, or any persons acting together which would
constitute a "group" for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof, shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act) at least 50% of the total voting
power of all classes of capital stock of the Company entitled to vote generally
in the election of directors of the Company; or
(iv) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
or
(v) the Company is liquidated or dissolved or adopts a plan
of liquidation or dissolution.
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<PAGE> 107
(c) A "Termination of Trading" shall occur if the Common Stock (or
other common stock into which the Securities are then convertible) is neither
listed for trading on a U.S. national securities exchange nor approved for
trading on an established automated over-the-counter trading market in the
United States.
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 108
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.
RES-CARE, INC.
By: /s/ Ronald G. Geary
-----------------------------------------
Name: Ronald G. Geary
---------------------------------------
Title: President & Chief Executive Officer
--------------------------------------
Attest:
Name: /s/ Mary D. Wiley
------------------------------
Title: Assistant Secretary
-----------------------------
PNC BANK, KENTUCKY, INC.,
as Trustee
By: /s/ David G. Metcalf
-----------------------------------------
Name: David G. Metcalf
---------------------------------------
Title: Vice President
--------------------------------------
Attest:
Name: /s/ W. Michael Hanks
------------------------------
Title: Vice President
-----------------------------
98
<PAGE> 109
Commonwealth of Kentucky )
) ss.
County of Jefferson )
On the 20th day of November, 1997, before me personally came Ronald G.
Geary, to me known, who, being by me duly sworn, did depose and say that he is
an officer of Res-Care, Inc., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.
[Notary Seal] /s/ Mary D. Wiley
----------------------------
Commonwealth of Kentucky )
) ss.
County of Jefferson )
On the 21st day of November, 1997, before me personally came David
Metcalf, to me known, who, being by me duly sworn, did depose and say that he is
an officer of PNC Bank, Kentucky Inc., a banking corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by authority of the Board of Directors of said corporation; and that
he signed his name thereto by like authority.
[Notary Seal] /s/ W. Michael Hanks
----------------------------
99
<PAGE> 110
EXHIBIT A
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF SECURITIES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 6% Convertible Subordinated Notes due 2004
This Certificate relates to $_________ principal amount of Securities
held in **____________ book-entry or **____________ definitive form by _________
(the "Transferor").
The Transferor**:
[ ] has requested the Trustee by written order to deliver in exchange
for its beneficial interest in a Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to deliver in exchange
for its Security or Securities a beneficial interest in a Global Security held
by the Depositary in a principal amount equal to the aggregate principal amount
of such Security or Securities; or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such security,
the Transferor does hereby certify to the Company and the Trustee that
Transferor is familiar with the Indenture relating to the above captioned Notes
and, as provided in Section 305 of such Indenture, the transfer of this Security
does not require registration under the Securities Act (as defined below)
because**:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 305(b)(ii)(A) or Section
305(f)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule
- --------------------
**Check applicable box.
A-1
<PAGE> 111
144A or pursuant to an exemption from registration in accordance with Regulation
S under the Securities Act (in satisfaction of Section 305(b)(ii)(B), Section
305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or
Section 305(h)(iii) of the Indenture). An opinion of counsel to the effect that
such transfer does not require registration under the Securities Act accompanies
this Certificate (in satisfaction of Section 305(b)(ii)(B), Section 305(c)(i),
Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or Section
305(h)(iii) of the Indenture).
[ ] Such Security is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 305(b)(ii)(B), Section
305(f)(i)(B) or Section 305(k)(ii) of the Indenture). If such Security is being
transferred in accordance with Rule 144 under the Securities Act, an opinion of
counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(B), Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Regulation S under the Securities Act. An opinion
of counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are irrevocably
authorized to produce this certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
- --------------------------------------------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
Date:
A-2
<PAGE> 1
EXHIBIT 4.4
Conformed Copy
REGISTRATION RIGHTS AGREEMENT
Dated as of November 21, 1997
relating to
$100,000,000 in Aggregate Principal Amount
of 6 % Convertible Subordinated
Notes due 2004
by and between
Res-Care, Inc.
and
NationsBanc Montgomery Securities, Inc.
J.C. Bradford & Co., L.L.C.
and
Equitable Securities Corporation
as Initial Purchasers
<PAGE> 2
This Registration Rights Agreement (the "Agreement") is made and
entered into as of November 21, 1997, by and between Res-Care, Inc., a Kentucky
corporation (the "Company"), and NationsBanc Montgomery Securities, Inc., J.C.
Bradford & Co., L.L.C. and Equitable Securities Corporation (the "Initial
Purchasers"), who will purchase $100,000,000 in aggregate principal amount of 6%
Convertible Subordinated Notes due 2004 (the "Notes") of the Company (excluding
up to an additional $15,000,000 aggregate principal amount that may be purchased
by the Initial Purchasers pursuant to their over-allotment option) pursuant to
the Purchase Agreement dated November 18, 1997 (the "Purchase Agreement"),
between the Company and the Initial Purchasers. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in the Purchase Agreement. All defined terms used but not
defined herein shall have the meanings ascribed to them in the Indenture (as
defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
CLOSING DATE: The date on which all the Notes are first sold by the
Company to the Initial Purchasers pursuant to the Purchase Agreement.
COMMISSION: The Securities and Exchange Commission.
COMMON STOCK: The Common Stock, no par value per share, of the
Company.
DAMAGES PAYMENT DATE: With respect to the Notes or the Common Stock,
as applicable, each Interest Payment Date as defined in the Indenture.
EFFECTIVENESS TARGET DATE: As defined in Section 4.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Notes to (i) certain "qualified institutional buyers" (as
such term is defined in Rule 144A under the Act), (ii) to certain persons in
offshore transactions in reliance on Regulation S under the Act and (iii) to a
limited number of "accredited investors" as defined in Rule 501(a)(1), (2), (3)
or (7).
HOLDER: As defined in Section 2(b) hereof.
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<PAGE> 3
INDENTURE: The Indenture, to be dated as of November 21, 1997, among
the Company and PNC Bank, Kentucky, Inc., as trustee (the "Trustee"), pursuant
to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture.
NASD: National Association of Securities Dealers, Inc.
OFFERING MEMORANDUM: The Offering Memorandum, dated November 18, 1997,
and all amendments and supplements thereto, relating to the Notes and prepared
by the Company pursuant to the Purchase Agreement.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PRELIMINARY PROSPECTUS: As defined in Section 3(g).
PROSPECTUS: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material which may be incorporated by
reference into such prospectus.
PROSPECTUS SUPPLEMENT: As defined in Section 5(b).
RECORD HOLDER: (i) With respect to any Damages Payment Date relating
to the Notes, each Person who is registered on the books of the Registrar as
the holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur and (ii) with respect to
any Damages Payment Date relating to the Common Stock, each Person who is a
holder of record of such Common Stock 15 days prior to the Damages Payment
Date.
REGISTRATION EXPENSES: As defined in Section 6(a).
SHELF REGISTRATION STATEMENT: As defined in Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note and share of Common Stock of
the Company issuable upon conversion of a Note, until each such Note or share
(i) has been effectively registered under the Securities Act and disposed of in
accordance with the effective Shelf Registration Statement covering it, (ii) is
distributed to the public pursuant to Rule 144, (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act or otherwise, or
-3-
<PAGE> 4
(iv) with respect to a Note, has been redeemed or repurchased by the Company as
provided in the Indenture.
UNDERWRITER: Any underwriter, placement agent, selling broker, dealer
manager, qualified independent underwriter or similar securities industry
professional.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm
commitment or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) FILING OF REGISTRATION STATEMENT. The Company shall use its best
efforts to file or cause to be filed with the Commission on or prior to 60 days
after the Closing Date, a shelf registration statement pursuant to Rule 415 (as
may then be amended) under the Act (the "Shelf Registration Statement") on Form
S-1 or Form S-3, if the use of such form is then available and as determined by
the Company, to cover resales of Transfer Restricted Securities by the Holders
thereof who shall have timely provided the information required pursuant to
Section 3(g) hereof. The Company shall use its reasonable best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission on
or prior to 120 days after the Closing Date. The Company shall use its
reasonable best efforts to keep such Shelf Registration Statement continuously
effective, supplemented and amended to the extent necessary to ensure that it
is available for resales of Transfer Restricted Securities for a period ending
two years from the effective date thereof or such shorter period that will
terminate when each of the Transfer Restricted Securities covered by the Shelf
Registration Statement shall cease to be a Transfer Restricted Security (as
further described in Section 5 below); provided that the Company shall not be
obligated to keep the Shelf Registration Statement effective as to any period
with respect to which the Company has received a written opinion, which has
been furnished to and is reasonably acceptable to the Initial Purchasers, from
the Company's counsel, Piper & Marbury L.L.P., or other counsel designated by
the Company and reasonably acceptable to the Initial Purchasers ("Company
Counsel"), to the effect that the Transfer Restricted Securities can be freely
offered and sold in the public markets without the continued effectiveness of
the Shelf Registration Statement. The Company further agrees to use its
reasonable best efforts to prevent the happening of any event that would cause
the Shelf
-4-
<PAGE> 5
Registration Statement to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or to be not effective and usable
for resale of the Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) to be not effective and
usable for resale of Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable, the
Company upon knowledge of such an event, shall as promptly as practicable file
an amendment to the Shelf Registration Statement, in the case of clause (i),
correcting any such misstatement or omission, and in the case of either clause
(i) or (ii), use its best efforts to cause such amendment to be declared
effective and such Shelf Registration Statement to become usable as soon as
practicable thereafter.
Notwithstanding anything to the contrary in this Section 3, subject to
compliance with Sections 4 and 5(b), if applicable, the Company may prohibit
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement at any time if (A) (i) it is in possession of material
non-public information, (ii) the Board of Directors of the Company determines
based on advice of counsel (which counsel shall be experienced in securities
laws matters) that such prohibition is necessary in order to avoid a
requirement to disclose such material non-public information and (iii) the
Board of Directors of the Company determines in good faith that disclosure of
such material non-public information would not be in the best interests of the
Company and its stockholders or (B) the Company has made a public announcement
relating to an acquisition or business combination transaction including the
Company and/or one or more of its subsidiaries (i) that is material to the
Company and its subsidiaries taken as a whole and (ii) the Board of Directors
of the Company determines in good faith that offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement prior to the
consummation of such transaction (or such earlier date as the Board of
Directors shall determine) is not in the best interests of the Company and its
stockholders or (C) (i) the Company has received any request by the Commission
or any other federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information, (ii) the Commission or any other federal or state governmental
authority has issued any stop order suspending the effectiveness of a
Registration Statement or the initiation or threatening of any proceedings for
that purpose, (iii) the Company has received any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Transfer Restricted Securities for sale in any jurisdiction or the
initiation or threatening of any proceedings for such purpose, (iv) upon the
existence of any fact or happening of any event which makes any statement of a
material fact in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
or which would require the making of any changes in the Registration Statement
or Prospectus in order that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
-5-
<PAGE> 6
statements therein, in the light of the circumstances under which they were
made, not misleading, and (v) the Company has determined that a post-effective
amendment to a Registration Statement would be appropriate (the period during
which any such prohibition of offers and sales of Transfer Restricted
Securities pursuant to the Shelf Registration Statement is in effect pursuant
to clause (A), (B) or (C) of this subparagraph (a) is referred to herein as a
"Suspension Period"). A Suspension Period shall commence on and include the
date on which the Company provides written notice to Holders of Transfer
Restricted Securities covered by the Shelf Registration Statement that offers
and sales of Transfer Restricted Securities cannot be made thereunder in
accordance with this Section 3 and shall end three business days after the
earlier to occur of (x) the date on which such material information is
disclosed to the public or ceases to be material or the Company is able to so
comply with its disclosure obligations and Commission requirements or (y) 45
days after written notice is provided by the Company to the Holders of such
Suspension Period. Each notice shall state to the extent, if any, as is
practicable, an estimate of the expected duration of the Suspension Period.
(b) RESTRICTION ON SECURITIES INCLUDED IN REGISTRATION STATEMENT. None
of the Company nor any of its security holders (other than the Holders of
Transfer Restricted Securities in such capacity) shall have the right to
include any of the Company's securities in the Shelf Registration Statement.
(c) UNDERWRITTEN OFFERING. If the Holders of a majority of the
outstanding Transfer Restricted Securities so elect (with holders of Common
Stock constituting Transfer Restricted Securities being deemed to be Holders of
the aggregate principal amount of Notes converted into such Common Stock for
purposes of such calculation), an offering of Transfer Restricted Securities
pursuant to the Shelf Registration Statement may be effected in the form of an
Underwritten Offering. Such election shall be evidenced by a written notice
(the "Underwriting Notice") delivered to the Company. The Holders of the
Transfer Restricted Securities to be registered shall pay all underwriting
discounts and commissions of such Underwriters, and the Company shall be
obligated to pay all expenses described in Section 6 below.
(d) SELECTION OF UNDERWRITERS. If any of the Transfer Restricted
Securities covered by the Shelf Registration Statement are to be sold in an
Underwritten Offering, the Underwriter(s) that will administer the offering
will be selected by the Holders of a majority of the outstanding Transfer
Restricted Securities (with holders of Common Stock constituting Transfer
Restricted Securities being deemed to be Holders of the aggregate principal
amount of Notes converted into such Common Stock for purposes of such
calculation); provided, however, that such Underwriter(s) shall be reasonably
satisfactory to the Company.
(e) LOCK-UP BY HOLDER. Each Holder of Transfer Restricted Securities
agrees, upon the request of the Underwriter(s) in any Underwritten Offering,
not to effect any sale or distribution of securities of the Company of the same
class as the securities included in such Shelf Registration Statement, for a
period of up to 90 days beginning on the date any such Underwritten Offering
made pursuant to such Shelf Registration Statement commences, to the extent
timely notified in writing by such Underwriter(s).
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<PAGE> 7
(f) COMPANY LOCK-UP. The Company agrees not to effect any public or
private offer, sale or distribution of securities of the same quality and
nature as any of the Transfer Restricted Securities to be registered in an
Underwritten Offering during the 90-day period (the "Lock-up Period") beginning
on the date any such Underwritten Offering made pursuant to the Shelf
Registration Statement commences, to the extent timely notified in writing by
the Underwriter(s) (except as part of such registration, if permitted, pursuant
to registrations on Forms S-4 or S-8 or any successor form to such Forms),
unless the Underwriter(s) shall consent in writing to a shorter period of time
or shall waive this provision; provided, however, that any such agreement shall
permit (A) the issuance by the Company of any shares of Common Stock issued to
employees of the Company or to any other eligible person pursuant to any
employee stock option plan, stock ownership plan, stock bonus plan or stock
compensation plan of the Company in effect on the date of such Underwritten
Offering, (B) the issuance by the Company of Common Stock upon the conversion
of securities, or the exercise of options or warrants, outstanding at the date
of such Underwritten Offering and (C) the issuance by the Company of any such
securities in connection with an acquisition transaction if the transferee or
transferees of such securities agree during the Lock-up Period not to publicly
offer or sell such securities without the prior written consent of such
Underwriter(s). Notwithstanding the foregoing, the Company shall be entitled to
suspend its lock-up obligations under this Section 3(f) for a period not to
exceed 180 days after the delivery of the Underwriting Notice in order to
complete an issuance and sale of securities in an underwritten offering,
private offering, acquisition or otherwise provided that it notifies the sender
of the Underwriting Notice within five business days of its receipt of such
notice.
(g) SELLING HOLDER INFORMATION. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless such Holder (a
"Selling Holder" or collectively, the "Selling Holders") furnishes to the
Company in writing, within 10 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus (a "Preliminary Prospectus") included therein. All information
provided to the Company by any Holder shall be accurate and complete in all
material respects. No Holder of Transfer Restricted Securities shall be
entitled to Liquidated Damages pursuant to Section 4 hereof unless such Holder
shall have timely provided all such reasonably requested information. After the
first such request for information by the Company, it shall be the sole
responsibility of each Holder to notify the Company of any change of address or
change of ownership of the Transfer Restricted Securities of such Holder.
SECTION 4. LIQUIDATED DAMAGES
If (i) the Shelf Registration Statement is not filed with the
Commission on or prior to 60 days after the Closing Date, (ii) the Shelf
Registration Statement has not been declared effective by the Commission within
120 days after the Closing Date (the "Effectiveness Target Date"), or (iii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or useable for
resale for a period of time (including any Suspension Period) which shall
exceed 60 days in the aggregate in any of the one-year periods ending on the
first or second anniversaries of the Closing
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<PAGE> 8
Date or which shall exceed 30 days in any calendar quarter within any of such
one-year periods (each such event referred to in clauses (i) through (iii), a
"Registration Default"), the Company will pay liquidated damages to each Holder
of Transfer Restricted Securities who has complied with such Holder's
obligations under this Agreement. The amount of liquidated damages payable
during any period during which a Registration Default shall have occurred and
be continuing is that amount which is equal to one-quarter of one percent (25
basis points) per annum per $1,000 principal amount of Notes or $2.50 per annum
per 35.4453 shares of Common Stock (subject to adjustment in the event of stock
splits, stock recombinations, stock dividends and the like) constituting
Transfer Restricted Securities for each subsequent 90-day period until the
applicable registration statement is filed and the applicable registration
statement is declared effective, or the Shelf Registration Statement again
becomes effective or usable, as the case may be, up to a maximum amount of
liquidated damages of one and one-quarter of one percent (125 basis points) per
annum per $1,000 principal amount of Notes or $12.50 per annum per 35.4453
shares (subject to adjustment as set forth above) of Common Stock constituting
Transfer Restricted Securities. The Company shall notify the Trustee and the
Initial Purchasers within one business day after each and every date on which a
Registration Default occurs. All accrued liquidated damages shall be paid to
Record Holders by wire transfer of immediately available funds or by federal
funds check by the Company on each Damages Payment Date. Following the cure of
all Registration Defaults, liquidated damages will cease to accrue with respect
to such Registration Default. Notwithstanding the foregoing, the parties hereto
agree that a Registration Default shall not be deemed to have occurred to the
extent that (i) the direct, proximate cause of said Registration Default was
the act or failure to act of one or more Holders, the Initial Purchasers or the
Underwriters and (ii) such act or failure to act is inconsistent with the
Holders', Initial Purchasers' or Underwriters' rights or obligations under this
Agreement.
All of the Company's payment obligations set forth in the preceding
paragraph which are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
The parties hereto agree that the liquidated damages provided in this
Section 4 constitute a reasonable estimate of the damages that will be incurred
by Holders of Transfer Restricted Securities by reason of the failure of the
Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company will
use its best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution or disposition thereof, and pursuant thereto
the Company will as expeditiously as possible after the Closing Date:
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<PAGE> 9
(a) FILING OF REGISTRATION STATEMENT. On or prior to the date 60 days
after the Closing Date, prepare and file with the Commission a Shelf
Registration Statement relating to the registration on Form S-1 or Form S-3, if
the use of such form is then available and as determined by the Company, for
the sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof and shall include all financial
statements required to be included or incorporated by reference therein. The
Company shall take such action as may be reasonably necessary so that (i) the
Shelf Registration Statement and any amendment thereto and any Prospectus
forming a part thereof and any supplement or amendment thereto complies in all
material respects with the Act and the rules and regulations thereunder, (ii)
the Shelf Registration and any amendment thereto (in either case, other than
with respect to written information furnished to the Company by or on behalf of
any Holder specifically for inclusion therein) does 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 any statement therein not misleading and
(iii) the Prospectus and any supplement thereto (in either case, other than
with respect to such information from Holders), does 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 light of the circumstances under which
they were made, not misleading.
The Company agrees to cooperate and assist in any filings required to
be made with the NASD and use its reasonable best efforts to cause such Shelf
Registration Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the Selling Holders to
consummate the disposition of such Transfer Restricted Securities; provided,
however, that before filing a Shelf Registration Statement or any Prospectus,
or any amendments or supplements thereto, the Company will furnish to the
Initial Purchasers, each Selling Holder who may have requested the same in
writing and the Underwriter(s), if any, copies of all such documents proposed
to be filed (except that the Company shall not be required to furnish any
exhibits to such documents, including those incorporated by reference, unless
so requested by an Initial Purchaser, Selling Holder or Underwriter in
writing), and the Company will not file any Shelf Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which (i) the
Initial Purchasers or the Underwriter(s), if any, shall reasonably object or
(ii) if there are no Underwriters, the Initial Purchasers or the Holders of a
majority of the outstanding Transfer Restricted Securities shall reasonably
object (with holders of Common Stock constituting Transfer Restricted
Securities being deemed to be Holders of the aggregate principal amount of
Notes converted into such Common Stock for purposes of such calculation), in
each such case within five business days after the receipt thereof. An Initial
Purchaser, Holder or Underwriter, if any, shall be deemed to have reasonably
objected to such filing if the Shelf Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
which misstatement or omission is specifically identified to the Company in
writing within such five business days.
(b) AMENDMENTS AND SUPPLEMENTS. The Company agrees to prepare and file
with the Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf Registration
Statement effective for the applicable period set forth in Section 3(a) hereof;
cause the Prospectus to be supplemented by any required supplement thereto (a
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<PAGE> 10
"Prospectus Supplement"), and as so supplemented to be filed pursuant to Rule
424 under the Act, and to comply with the applicable provisions of Rules 424
and 430A under the Act in a timely manner; and comply with the provisions of
the Act with respect to the disposition of all securities covered by such Shelf
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Shelf Registration Statement, Prospectus or Prospectus Supplement.
(c) FILINGS OF AMENDMENTS OR SUPPLEMENTS IN CONNECTION WITH
UNDERWRITTEN OFFERINGS. The Company agrees, if requested in writing by the
Selling Holders of Transfer Restricted Securities, or if the Transfer
Restricted Securities are being sold in an Underwritten Offering, the
Underwriter(s) of such Underwritten Offering, promptly incorporate in the
Prospectus, any Prospectus Supplement or post-effective amendment to the Shelf
Registration Statement such information as the Underwriters and/or the Selling
Holders of Transfer Restricted Securities agree should be included therein
relating to the plan of distribution of the Transfer Restricted Securities,
including, without limitation, information with respect to the principal amount
of Notes and/or the number of shares of Common Stock being sold to such
Underwriter(s), the purchase price being paid therefor and any other terms with
respect to the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus, Prospectus
Supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be incorporated in such Prospectus, Prospectus
Supplement or post-effective amendment.
(d) COMMUNICATION WITH SECURITIES EXCHANGE COMMISSION; NOTICE OF
REQUIREMENT TO AMEND OR Supplement. The Company agrees to advise the Initial
Purchasers, the Underwriter(s), if any, and Selling Holders promptly and, if
requested by such Persons, to confirm such advice in writing, (i) when the
Prospectus or any Prospectus Supplement or post-effective amendment to the
Shelf Registration Statement has been filed, and, with respect to the Shelf
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (ii) of any request by the Commission for amendments to
the Shelf Registration Statement or amendments or supplements to the Prospectus
or for additional information relating thereto, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (iv) if at any time the
representations and warranties of the Company contemplated by paragraph (m)(i)
below cease to be true and correct, and (v) of the existence of any fact and
the happening of any event that makes any statement of a material fact made in
the Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Shelf Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
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<PAGE> 11
(e) COPIES OF DOCUMENTS INCORPORATED BY REFERENCE IN REGISTRATION
STATEMENT. The Company agrees promptly following the filing of any document
that is to be incorporated by reference into the Shelf Registration Statement
or the Prospectus subsequent to the initial filing of the Shelf Registration
Statement, provide copies of such document (excluding exhibits, unless
specifically requested by an Initial Purchaser or a Selling Holder in writing)
to the Initial Purchasers and each Selling Holder who may have requested the
same in writing.
(f) COPIES OF REGISTRATION STATEMENT AND AMENDMENTS. The Company
agrees to furnish to each Initial Purchaser, each Selling Holder and each of
the Underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference therein
and all exhibits (excluding exhibits to documents incorporated by reference
therein unless requested by such Initial Purchaser, Selling Holder or
Underwriter).
(g) COPIES OF PRELIMINARY PROSPECTUS AND PROSPECTUS. The Company
agrees to deliver to each Initial Purchaser, each Selling Holder and each of
the Underwriter(s), if any, without charge, as many copies of any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto as such
Persons may reasonably request; the Company consents to the use of any
Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto by each of the Selling Holders and each of the Underwriter(s), if any,
in connection with the public offering and the sale of the Transfer Restricted
Securities covered by any Preliminary Prospectus and the Prospectus or any
amendments or supplements thereto; provided that such use of the Preliminary
Prospectus or Prospectus, and such offering and sale, conform to the Plan of
Distribution set forth in the Prospectus and comply with all applicable laws.
(h) BLUE SKY. The Company agrees, prior to any public offering of
Transfer Restricted Securities, to cooperate with the Selling Holders, the
Underwriter(s), if any, and their respective counsel in connection with the
registration and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the Selling Holders or
Underwriter(s) may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdiction of the Transfer
Restricted Securities covered by the Shelf Registration Statement; provided,
however, that the Company shall not be required (i) to register or qualify as a
foreign corporation where it is not now so qualified or (ii) to take any action
that would subject it to the service of process in suits, other than as to
matters and transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject.
(i) CERTIFICATES. The Company agrees to cooperate with the Selling
Holders and the Underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to be
sold and not bearing any restrictive legends; and enable such Transfer
Restricted Securities to be in such denominations and registered in such names
as the Selling Holders or the Underwriter(s), if any, may request at least two
business days prior to any sale of Transfer Restricted Securities.
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<PAGE> 12
(j) OTHER GOVERNMENT AGENCIES. The Company agrees to use its best
efforts to cause the Transfer Restricted Securities covered by the Shelf
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the Underwriter(s), if any, to consummate the disposition
of such Transfer Restricted Securities, subject to the proviso contained in
clause (h) above.
(k) POST-EFFECTIVE AMENDMENTS OR SUPPLEMENTS TO UPDATE. The Company
agrees to, if any fact or event contemplated by clause (d)(ii) through (v)
above shall exist or have occurred, prepare a post-effective amendment or
supplement to the Shelf Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading.
(l) CUSIP. The Company agrees to provide a CUSIP number for all
Transfer Restricted Securities not later than the effective date of the Shelf
Registration Statement and provide the Trustee under the Indenture and/or the
transfer agent for the Common Stock with certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company.
(m) UNDERTAKINGS IN CONNECTION WITH UNDERWRITTEN OFFERINGS. The
Company agrees to, in connection with an Underwritten Registration, enter into
such agreements (including an underwriting agreement) and take all such other
actions in connection therewith as may reasonably be required in order to
expedite or facilitate the disposition of the Transfer Restricted Securities
pursuant to the Shelf Registration Agreement (including without limitation,
providing in a supplement or post-effective amendment, such information
relating to the plan of distribution as is necessary, information concerning
the purchase price being paid and such other information with respect to the
offering as may be reasonably requested), and (i) make such representations and
warranties to the Selling Holders and the Underwriter(s), in form, substance
and scope as they may reasonably request and as are customarily made by issuers
to Underwriters in Underwritten Offerings and covering matters, including, but
not limited to, those set forth in the Purchase Agreement; (ii) obtain opinions
of counsel for the Company and updates thereof in customary form and covering
matters reasonably requested by the Underwriter(s) of the type customarily
covered in legal opinions to Underwriters in connection with Underwritten
Offerings addressed to each Selling Holder and the Underwriter requesting the
same and covering the matters as may be reasonably requested by such Selling
Holders and Underwriters; (iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed
to the Selling Holders of Transfer Restricted Securities and the Underwriters
requesting the same, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters to Underwriters in
connection with Underwritten Offerings; (iv) set forth in full or incorporate
by reference in the underwriting agreement the indemnification provisions and
procedures of Section 7 hereof with respect to all parties to be indemnified
pursuant to said Section; and (v) deliver such documents and certificates as
may be reasonably requested by the Selling Holders of the Transfer Restricted
Securities being sold or the Underwriter(s) of such Underwritten Offering to
evidence compliance with clause (i) above and with any customary conditions
contained in the underwriting
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<PAGE> 13
agreement entered into by the Company pursuant to this clause (m). The above
shall be done at or prior to each closing under such underwriting agreement, as
and to the extent required thereunder.
(n) DUE DILIGENCE. The Company agrees to make available at reasonable
times and in a reasonable manner to a representative of the Holders of the
Transfer Restricted Securities, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement and any attorney or
accountant retained by such Selling Holders or any of the Underwriters,
representatives of the Company for discussion of customary due diligence
matters, and furnish such documents and financial and other information as may
be reasonably requested by such persons in connection with such due diligence;
provided, however, that such representatives, attorneys or accountants shall
agree to keep confidential (which agreement shall be confirmed in writing in
advance to the Company if the Company shall so request) all information,
records or documents made available to such persons which are not otherwise
available to the general public unless disclosure of such records, information
or documents is required by court or administrative order (of which the Company
shall have been given prior notice and an opportunity to defend) after the
exhaustion of all appeals therefrom, and to use such information obtained
pursuant to this provision only in connection with the transaction for which
such information was obtained, and not for any other purpose.
(o) COMPLIANCE WITH RULES AND REGULATIONS. The Company agrees to
otherwise use its reasonable best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its security
holders, as soon as practicable, in a regular filing on Form 10-Q or Form 10-K,
a consolidated earnings statement, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act, for the twelve-month period
(i) commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to Underwriters in a firm commitment or best efforts
Underwritten Offering or (ii) if not sold to Underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Shelf Registration Statement.
(p) INDENTURE. The Company agrees to the extent required by the TIA to
cause the Indenture to be qualified under the TIA, and, in connection
therewith, cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best efforts to
cause the Trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner.
(q) LISTING, ETC. The Company agrees to cause all Transfer Restricted
Securities covered by the Shelf Registration Statement to be listed on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed if requested by the Holders of a majority of the
outstanding Transfer Restricted Securities (with holders of Common Stock
constituting Transfer Restricted Securities being deemed to be Holders of the
aggregate principal amount of Notes converted into such Common Stock for
purposes of such calculation) or the Underwriters, if any; cause the Notes
covered by the Shelf Registration Statement to be rated with the appropriate
rating agencies, if so
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<PAGE> 14
requested by the Holders of a majority in aggregate principal amount of such
Notes then outstanding or the Underwriters.
(r) NASD. The Company agrees to cooperate and assist in any filings
required to be made with the NASD and in the performance of any due diligence
investigation by any Underwriter (including any "qualified independent
Underwriter" that is required to be retained in accordance with the rules and
regulations of the NASD).
(s) AGREEMENTS OF HOLDERS. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading or necessary to cause such Shelf Registration Statement not to omit
a material fact with respect to such Holder necessary in order to make the
statements therein not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence
of any fact of the kind described in Section 5(d)(v) hereof (an "Amendment
Notice"), such Holder will forthwith discontinue disposition of Transfer
Restricted Securities until such Holder's receipt of (i) copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or
until counsel for the Company shall have determined that such disclosure is not
required due to subsequent events, (ii) notice in writing from the Company that
the use of the Prospectus may be resumed, and (iii) copies of any additional or
supplemental filings with respect to the Prospectus. If so directed by the
Company, each Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities current at the time
of receipt of such notice. In the event Company shall give any such notice, the
time period regarding the effectiveness of the Shelf Registration Statement set
forth in Section 3(a) hereof shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5(d)(v) hereof to and including the date when each Selling Holder
covered by such Shelf Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 5(k) hereof or
shall have received the Advice and any additional or supplemental filings with
respect to the Prospectus.
SECTION 6. REGISTRATION EXPENSES
(a) EXPENSES OF COMPANY. All expenses incident to the Company's
performance of or compliance with this Agreement (the "Registration Expenses")
will be borne by the Company, regardless of whether a Shelf Registration
Statement becomes effective, including without limitation:
(i) all registration and filing fees and expenses (including
filings made with the NASD);
(ii) fees and expenses of compliance with federal securities
or state blue sky laws;
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<PAGE> 15
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer Restricted
Securities in a form eligible for deposit with Depository Trust Company and of
printing the Prospectus and any Preliminary Prospectus), messenger and delivery
services and telephone;
(iv) fees and disbursements of counsel for the Company and
for the Holders of the Transfer Restricted Securities (subject to the
provisions of Section 6(b) hereof);
(v) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any special audit
and "cold comfort" letters required by or incidental to the preparation and
filing of a Shelf Registration Statement and Prospectus and the disposition of
Transfer Restricted Securities); and
(vi) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in accordance with
Section 5(r) hereof.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Company. The Company shall not be responsible for commissions,
fees and discounts of brokers, dealers and agents. The Holders of Transfer
Restricted Securities shall bear the expense of any broker's commission or
Underwriter's discount or commission.
(b) COUNSEL TO HOLDERS. In connection with the Shelf Registration
Statement, the Company will reimburse the Holders of Transfer Restricted
Securities being registered pursuant to such Shelf Registration Statement for
the reasonable fees and disbursements of not more than one counsel chosen by
the Holders of a majority of the outstanding Transfer Restricted Securities
(with holders of Common Stock constituting Transfer Restricted Securities being
deemed to be Holders of the aggregate principal amount of Notes converted into
such Common Stock for purposes of such calculation) which fees and
disbursements shall not exceed $15,000 in the aggregate.
Notwithstanding the provisions of this Section 6(b), each Holder of
Transfer Restricted Securities shall pay all Registration Expenses to the
extent required by applicable law, and if the Shelf Registration Statement is
to be effected in the form of an Underwritten Offering, the discounts and
commissions of the Underwriters.
SECTION 7. INDEMNIFICATION
(a) COMPANY INDEMNIFICATION. The Company agrees to indemnify and
hold harmless (i) each of the Initial Purchasers, (ii) each Holder, (iii) each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) any of the Initial Purchasers or any
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<PAGE> 16
Holder (any of the persons referred to in this clause (iii) being hereinafter
referred to as a "controlling person") and (iv) the respective officers,
directors, partners, employees, representatives and agents of any of the
Initial Purchasers or any Holder or any controlling person (any person referred
to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to as a
"Non-Company Indemnitee"), to the fullest extent lawful, from and against any
and all losses, claims, damages, liabilities, reasonable expenses and judgments
arising out of or based on any untrue statement or alleged untrue statement of
a material fact contained in the Shelf Registration Statement, Prospectus or
Preliminary Prospectus (or any amendments or supplements thereto), including
any document incorporated by reference therein, or arising out of or based on
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except, with respect to any Non-Company Indemnitee, insofar as such losses,
claims, damages, liabilities, expenses or judgments (1) are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Non-Company Indemnitee
expressly for use therein (which shall include written information provided by
such Non-Company Indemnitee pursuant to Section 3(g) herein expressly for use
therein), or (2) with respect to any Preliminary Prospectus, result from the
fact that such Non-Company Indemnitee sold Transfer Restricted Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final Prospectus, as amended or
supplemented, if the Company shall have previously furnished copies thereof to
such Non-Company Indemnitee in accordance with this Agreement and the final
Prospectus, as amended or supplemented, would have corrected such untrue
statement or omission. The indemnification in this subsection (a) shall be in
addition to any liability which the Company may have at common law or
otherwise.
The Company also agrees to indemnify or contribute to losses of, as
provided in Section 7(d), any underwriters of Transfer Restricted Securities
registered under the Shelf Registration Statement, their officers and directors
and each Person, if any, who controls any such underwriter (within the meaning
of the Act) on substantially the same basis as that of the indemnification of
the Holders provided in this Section 7(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement, as
provided in Section 5(m) hereof.
(b) INDEMNIFICATION PROCEDURES. In case any action shall be brought
against any Non-Company Indemnitee, based upon the Shelf Registration
Statement, Prospectus, or Preliminary Prospectus (or any amendments or
supplements thereto), and with respect to which indemnity may be sought against
the Company, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses; provided, however,
that the omission so to notify the Company shall not relieve the Company from
any liability that it may have to any Non-Company Indemnitee (except to the
extent that the Company is materially prejudiced or otherwise forfeits
substantive rights or defenses by reason of such failure). Such Non-Company
Indemnitee shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of counsel
shall be paid by such Non-Company Indemnitee, unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any
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<PAGE> 17
impleaded parties) include both such Non-Company Indemnitee and the Company and
it would be inappropriate for the same counsel to represent such Non-Company
Indemnitee and the Company (in which case the Company shall not have the right
to assume the defense of such action on behalf of such Non-Company Indemnitee,
it being understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the Non-Company
Indemnitees, which firm shall be designated in writing by the Non-Company
Indemnitees and shall be subject to the Company's approval, not to be
unreasonably withheld, and whose fees and expenses reasonably incurred shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company, which consent shall not be unreasonably withheld or delayed, and if
settled with the written consent of the Company, the Company agrees to
indemnify and hold harmless any Non-Company Indemnitee from and against any
amounts payable pursuant to such written consent in connection with such
settlement. The Company shall not, without the prior written consent of such
Non-Company Indemnitee, effect any settlement of any pending or threatened
proceeding in respect of which such Non-Company Indemnitee is or could have
been a party and indemnity could have been sought hereunder by such Non-Company
Indemnitee, unless such settlement includes an unconditional release of such
Non-Company Indemnitee from all liability on claims that are the subject matter
of such proceeding.
(c) INDEMNIFICATION BY HOLDER. Each Holder of Transfer Restricted
Securities agrees to indemnify and hold harmless (i) the Company, (ii) each of
the Initial Purchasers, (iii) each other Holder, (iv) any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, any of the Initial Purchasers and each other Holder and (v) the
respective officers, directors, partners, employees, representatives and agents
of each of the parties referred to in clauses (i), (ii), (iii) and (iv), to the
same extent as the foregoing indemnity from the Company to each of the
Non-Company Indemnitees, but only with respect to claims and actions based on
information relating to such Holder that was furnished in writing by such
Holder expressly for use in the Shelf Registration Statement or Prospectus (or
any amendment or supplement thereto) (including without limitation the
information provided in writing by a Holder pursuant to Section 3(g) expressly
for use therein). In no event shall the liability of any Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(d) CONTRIBUTION. If the indemnification provided for in this Section
7 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to herein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments in such proportion as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and
the indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, shall be determined by reference to, among other things,
whether
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<PAGE> 18
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the indemnifying party, on the one hand, or the indemnified party, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The indemnity and
contribution obligations of each indemnifying party set forth herein shall be
in addition to any liability or obligation such indemnifying party may
otherwise have to any Indemnified Party, including under this Agreement.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The losses, claims, damages, liabilities or judgments of an
indemnified party referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim prior to the indemnifying
party's assumption of the defense thereof or subsequent thereto to the extent
permitted by the second sentence of Section 7(b) hereof. Notwithstanding the
provisions of this Section 7, none of the Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total amount of net process received by such Holder with respect to the sale of
Transfer Restricted Securities exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 7(d) are several in proportion to the respective principal
amount of Notes held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A AND RULE 144
(a) RULE 144A. The Company hereby agrees with each Holder, for so long
as any of the Notes or shares of Common Stock that are Transfer Restricted
Securities remain outstanding and during any such period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, to make available to
any Initial Purchaser or any beneficial owner of the Notes or shares of such
Common Stock in connection with any sale thereof and any prospective purchaser
of such Notes or Common Stock from such Initial Purchaser or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
(b) RULE 144. The Company shall use commercially reasonable efforts to
file the reports required to be filed by it under the Act and the Exchange Act
in a timely manner and covenants that it will take such further action as any
Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time, to enable such Holder to sell securities
without registration under the Act within the limitation of the exemptions
provided by Rule 144.
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<PAGE> 19
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of
such underwriting arrangements and (c) furnishes the Company in writing
information in accordance with Section 3(g) and agrees to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and any person controlling the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act to the extent contemplated by
Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering in accordance with Section 3(c) herein.
In any such Underwritten Offering, the Underwriter(s) that will administer the
offering will be selected by the Holders of the Transfer Restricted Securities
included in such offering in the manner specified in Section 3(c); provided,
however, that such Underwriters must be reasonably satisfactory to the Company.
SECTION 11. MISCELLANEOUS
(a) REMEDIES. Each party agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of Transfer
Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Transfer Restricted
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's securities under any
other agreements in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of a majority of the outstanding Transfer Restricted Securities (with holders
of Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Notes converted into such Common
Stock for purposes of such calculation). Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof that relates
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<PAGE> 20
exclusively to the rights of Holders of Transfer Restricted Securities whose
securities are being sold pursuant to such Shelf Registration Statement and
that does not directly or indirectly affect the rights of other Holders of
Transfer Restricted Securities shall be valid only with the written consent of
Holders of at least 66-2/3% of the Transfer Restricted Securities being sold,
in each case calculated in accordance with the provisions of Section 3(c).
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted Securities, at the
address set forth on the records of the Registrar under the Indenture, with a
copy to the Registrar; and
(ii) if to the Company or an Initial Purchaser, initially at its
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder of Transfer Restricted Securities unless and to the
extent such successor or assign acquired Transfer Restricted Securities from
such Holder; and provided further that nothing herein shall be deemed to permit
any assignment, transfer or any disposition of Transfer Restricted Securities
in violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Transfer Restricted Securities, in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be
held subject to all of the terms of this Agreement and by taking and holding
such Transfer Restricted Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits
hereof.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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<PAGE> 21
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES THEREOF.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement together with all documents and
agreements referred to herein is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the securities
sold pursuant to the Purchase Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[Remainder of page intentionally left blank]
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<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
RES-CARE, INC.
By: /s/ Ronald G. Geary
-------------------------------------
Name:
Title:
NATIONSBANC MONTGOMERY SECURITIES, INC.
J.C. BRADFORD & CO., L.L.C.
EQUITABLE SECURITIES CORPORATION
BY: NATIONSBANC MONTGOMERY SECURITIES, INC.
By:/s/ Lisa Yeager
-----------------------------------------
Name: Lisa Yeager
Title: MANAGING DIRECTOR
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<PAGE> 1
EXHIBIT 5.1
[REED WEITKAMP SCHELL COX & VICE LETTERHEAD]
January 9, 1998
Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
Ladies and Gentlemen:
We have acted as counsel to Res-Care, Inc., a Kentucky corporation (the
"Company"), in connection with the registration by the Company on Form S-3,
Registration Statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), filed with the Securities and
Exchange Commission (the "Commission") on January 9, 1998. The Registration
Statement covers $109,360,000 in principal amount of the Company's 6%
Convertible Subordinated Notes due 2004 (the "Notes") and shares (the "Shares")
of the Company's common stock, no par value per share, issuable upon conversion
of the Notes, each to be sold by certain selling holders of the Notes.
In this capacity, we have examined the Company's Amended and Restated
Articles of Incorporation and Bylaws, the Registration Statement, the
proceedings of the Board of Directors of the Company relating to the issuance of
the Notes and the Shares and such other documents, instruments and matters of
law as we have deemed necessary to the rendering of this opinion.
Based on the foregoing, we are of the opinion and advise you that the
Shares described in the Registration Statement have been duly authorized and
when issued, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus included in the Registration Statement. In giving
this consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the General Rules
and Regulations of the Commission.
We express no opinion as to the laws of any jurisdiction other than the
laws of the Commonwealth of Kentucky and the federal laws of the United States.
Our opinion is rendered as of the date hereof and we assume no obligation to
advise you of changes that may hereafter be brought to our attention. Except as
provided in the immediately preceding paragraph, this opinion is intended solely
for your benefit and may not be relied upon, referred to or otherwise used by
any person without our express written consent.
Sincerely,
/s/ Reed Weitkamp Schell Cox & Vice
<PAGE> 1
Exhibit 5.2
[Piper & Marbury LLP Letterhead]
January 9, 1998
Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Res-Care, Inc., a Kentucky corporation (the
"Company"), in connection with a Registration Statement on Form S-3 filed by
the Company under the Securities Act of 1933, as amended, (the "Registration
Statement") and the resale pursuant to the Registration Statement from time to
time of up to $109,360,000 in principal amount of the Company's 6% Convertible
Subordinated Notes due 2004 (the "Notes") issued pursuant to an Indenture dated
as of November 15, 1997 between the Company and PNC Bank Kentucky, Inc. (the
"Indenture") and issued in a private placement transaction to certain qualified
institutional investors and offshore purchasers.
In that capacity, we have reviewed the charter and by-laws of the
Company, the Registration Statement, the Indenture, the corporate action taken
by the Company that provides for the issuance of the Notes and such other
materials and matters as we have deemed necessary for the issuance of this
opinion.
Based upon the foregoing, we are of the opinion and advise you that the
Notes are in the form contemplated by the Indenture, have been duly authorized
by the Company for issuance and sale pursuant to the Indenture and, assuming
they have been executed by the Company and authenticated by the Trustee in the
manner provided in the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and delivered against payment of the
purchase price therefor, 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 similar laws relating to or affecting enforcement
of the rights and remedies of creditors or by general principles of equity and
will be entitled to the benefits of the Indenture.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the heading "Legal Matters" in
the prospectus which is a part of the Registration Statement. In rendering this
opinion, we have relied as to matters of Kentucky law on the opinion of Reed
Weitkamp Schell Cox & Vice.
Very truly yours,
/s/ Piper & Marbury LLP
<PAGE> 1
EXHIBIT 10.19
SECOND AMENDMENT TO LOAN INSTRUMENTS
This Second Amendment to Loan Instruments (the "Second Amendment"), is
made and entered into as of the 20th day of November, 1997, by and among (i)
(a) PNC BANK, KENTUCKY, INC., a Kentucky banking corporation with principal
office and place of business in Louisville, Kentucky ("PNC"), (b) NATIONAL CITY
BANK OF KENTUCKY, a national banking association with principal office and
place of business in Louisville, Kentucky ("National City"), (c) SUNTRUST BANK,
NASHVILLE, N.A., a national banking association with principal office and place
of business in Nashville, Tennessee ("SunTrust"), (d) BANK ONE, KENTUCKY, NA, a
national banking association with principal office and place of business in
Louisville, Kentucky ("Bank One"), and (e) WACHOVIA BANK, N.A., a national
banking association with principal office and place of business in Atlanta,
Georgia ("Wachovia") (PNC, National City, SunTrust, Bank One and Wachovia are
hereinafter collectively referred to as the "Banks", and each is hereinafter
individually referred to as a "Bank"); (ii) PNC BANK, KENTUCKY, INC., in its
capacity as the administrative bank hereunder (in such capacity the
"Administrative Bank"); and (iii) RES-CARE, INC., a Kentucky corporation with
principal office and place of business in Louisville, Kentucky ("Res-Care") and
each of the Consolidated Subsidiaries of Res-Care identified on Schedule 1
hereto (Res-Care and each Consolidated Subsidiary, a "Borrower," and all of the
foregoing collectively, the "Borrowers").
PRELIMINARY STATEMENT
A. The Existing Borrowers (defined herein) obtained from PNC, National
City, SunTrust and Bank One certain credit accommodations pursuant to a Loan
Agreement dated as of December 23, 1996 (the "Old Loan Agreement") including
the following: (i) a revolving line of credit in the principal amount of Sixty
Five Million Dollars ($65,000,000) (the "Original Revolving Credit Facility"),
(ii) a commitment to issue letters of credit for the account of the Borrowers
in an aggregate outstanding amount of up to Ten Million Dollars ($10,000,000)
and (iii) a swing revolving line of credit in the principal amount of Seven
Million Five Hundred Thousand Dollars ($7,500,000) (the "Original Swing Line
Credit Facility").
B. The Borrowers, the Administrative Bank and the Banks amended the
Old Loan Agreement pursuant to a First Amendment to Loan Instruments dated as
of June 23, 1997 (the "First Amendment to Loan Instruments"), providing for,
among other things, the increase of the principal amount of the Original
Revolving Credit Facility to One Hundred Million Dollars ($100,000,000), (ii)
the increase of the principal amount of the Original Swing Line Credit Facility
to Twelve Million Five Hundred Thousand Dollars ($12,500,000), (iii) the
amendment of certain financial covenants and (iv) the addition of the New
Borrowers as parties to the Loan Instruments. The Old Loan Agreement, as
amended by the First Amendment to Loan Instruments, is referred to as the "Loan
Agreement." Each capitalized term used herein, unless otherwise expressly
defined herein, shall have the meaning set forth in the Loan Agreement.
C. The Borrowers wish to amend the Loan Agreement and the Loan
Instruments to allow the Borrowers to incur certain subordinated indebtedness
under Section 8.2 of the Loan
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<PAGE> 2
Agreement and to make certain other amendments. The Banks are agreeable to such
amendments, upon satisfaction of the terms and conditions set forth herein.
Now, therefore, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Loan Agreement and for
other good and valuable consideration, the mutuality, receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
I. AMENDMENTS TO LOAN AGREEMENT
A. SECTION 1 - DEFINITIONS AND CROSS REFERENCE. The following
definitions and provisions of Section 1 of the Loan Agreement are hereby
amended and restated and/or added as follows:
1.32 "Contingent Obligations" means, with respect to the
Borrowers, any direct or indirect liability, contingent or otherwise
(excluding all transactions which, on a consolidated basis under GAAP,
should be eliminated) of the Borrowers, (i) with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of
another if the primary purpose or intent thereof by the Borrowers is
to provide assurance to the obligee of such obligation of another that
such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holder
of such obligation will be protected (in whole or in part) against
loss in respect thereof, or (ii) under any letter of credit issued for
the account of the Borrowers or for which the Borrowers are otherwise
liable for reimbursement thereof, or (iii) under interest rate swap
agreements, interest rate collar agreements or other similar
arrangements providing interest rate protection. Contingent
Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting
with recourse or sale with recourse by the Borrowers of the obligation
of another, and (b) any liability of the Borrowers for the obligations
of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase, or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), (2) to maintain the
solvency of any balance sheet item, level of income or financial
condition of another, or (3) to make take-or-pay or similar payments
if required regardless of non-performance by any other party or
parties to an agreement, in the case of any agreement described under
subclauses (1), (2) or (3) of this sentence the primary purpose or
intent thereof is as described in clause (i) of the preceding
sentence. The amount of any Contingent Obligation, as at any time of
determination, shall be equal to the amount of the obligation so
guaranteed or otherwise supported at such time of determination which
amount shall be deemed to be the amount of such obligation guaranteed,
as reasonably estimated by the Borrowers, if such amount cannot be
specifically determined at the time of determination. A schedule of
the Contingent Obligations of Res-Care as of the Second Amendment
Closing Date is attached to the Second Amendment as Schedule 1.32.
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1.121 "Existing Borrowers" means any and all Borrowers party
to the Loan Agreement as of June 23, 1997, but does not currently
include the entities listed on Schedule 1.122 attached to the Second
Amendment.
1.122 "New Borrowers" means certain Subsidiaries created or
acquired since June 23, 1997, specifically identified as Res-Care
Aviation, Inc., Communications Network Consultants, Inc., and The
Academy for Individual Excellence, Inc., and Res-Care Other Options,
Inc., but does not currently include the entities listed on Schedule
1.122 attached to the Second Amendment.
1.123 "Convertible Subordinated Notes" means the Convertible
Subordinated Notes of Res-Care in the principal amount not exceeding
$115,000,000, which meet all of the criteria set forth in Section 8.2
hereof.
1.124 "Second Amendment" means the Second Amendment to Loan
Instruments made and entered into as of November 20, 1997, by and
among the Banks, the Administrative Bank and the Borrowers.
1.125 "Second Amendment Closing Date" means the date on which
the Second Amendment to Loan Instruments has been executed and
delivered by the parties thereto, November 20, 1997.
B. SECTION 8 - NEGATIVE COVENANTS.
(1) Section 8.1 Merger and Other Extraordinary Events. Section 8.1 is
hereby amended by deleting the word "Banks" in the second line thereof and
substituting therefor "Majority Banks (as defined in Section 15.11 hereof)".
(2) Section 8.2 of the Loan Agreement is hereby amended and restated
as follows:
"8.2 Indebtedness, etc. The Borrowers will not, without the
prior written consent of the Majority Banks, directly or indirectly,
create, incur, assume, guarantee, agree to purchase or repurchase or
provide funds in respect of, or otherwise become liable with respect
to any Indebtedness other than:
(i) The Revolving Credit Facility;
(ii) The Swing Line Credit Facility;
(iii) The Equipment Leases in the aggregate amount not
exceeding Two Million Five Hundred Thousand Dollars ($2,500,000);
(iv) The Beverly Note;
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<PAGE> 4
(v) Current liabilities of the Borrowers (other than for
borrowed money) incurred in the ordinary course of their businesses
and in accordance with customary trade practices;
(vi) (A) Promissory notes or other evidence of indebtedness
issued by one or more of the Borrowers as all or part of the Business
Combination Consideration in connection with a Permitted Business
Combination, or (B) purchase money indebtedness incurred or assumed by
the Borrowers in connection with acquisition of tangible and
intangible personal and real property acquired other than in
connection with a Permitted Business Combination, to the extent that
such tangible and intangible personal and real property are to be used
by the Borrowers in businesses permitted under Section 8.5 hereof;
provided that the aggregate amount of indebtedness described in (B) of
this Section 8.2(vi) shall not exceed Five Million Dollars
($5,000,000); and provided further that the aggregate amount of
indebtedness described in (A) and (B) of this Section 8.2(vi) shall
not exceed Fifteen Million Dollars ($15,000,000);
(vii) The advances, loans and guarantees permitted under
Section 8.12 hereof; and
(viii) Convertible Subordinated Notes that meet all of the
following criteria:
(a) The principal amount of such Convertible
Subordinated Notes may not exceed $115,000,000; and
(b) Neither the Convertible Subordinated Notes nor
the Indenture may be amended in any manner that could
reasonably be expected to be adverse to the interests of the
Banks without prior written consent of the Administrative
Bank."
(3) Section 8.4 Mortgages, Liens, Encumbrances, Security
Interests, Etc. Section 8.4 is hereby amended by deleting the word "Banks" in
the second line thereof and substituting therefor "Majority Banks (as defined in
Section 15.11 hereof)".
(4) Section 8.5 Nature of Businesses. Section 8.5 is hereby
amended by deleting the word "Banks" in the second line thereof and substituting
therefor "Majority Banks (as defined in Section 15.11 hereof)".
(5) Section 8.9 Ratio of Indebtedness to Cash Flow from
Operations. A new sentence is added at the end of Section 8.9 as follows:
"For purposes of determining the ratio of Indebtedness to
Cash Flow from Operations under this Section 8.9, the
Borrowers, if they so elect, may reduce Indebtedness by an
amount equal to the difference (if positive) between (i) the
Borrowers' cash and (ii) $10,000,000."
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(6) Section 8.11 Permitted Business Combinations. Section 8.11 is
hereby amended deleting the word "Banks" in the second line thereof and
substituting therefor "Majority Banks (as defined in Section 15.11 hereof)".
Section 8.11 is further amended by amending and restating clause (iv) thereof
as follows:
"(iv) the Business Combination Consideration associated with
the proposed Business Combination plus the aggregate Business
Combination Consideration associated with Permitted Business
Combinations that have been completed in 1997 does not exceed One
Hundred Million Dollars ($100,000,000);"
(7) Section 8.12 Loans, Advances and Guaranties by Borrowers.
Section 8.12 is hereby amended by deleting the word "Banks" in the second line
thereof and substituting therefor "Majority Banks (as defined in Section 15.11
hereof)".
(8) Section 8.14 A new Section 8.14 is added to the Loan Agreement
as follows:
"Section 8.14 Redemption of Convertible Subordinated Notes.
Without prior written consent of the Majority Banks, the Convertible
Subordinated Notes may not be redeemed unless (i) Res-Care has entered
into a standby underwriting agreement with a nationally-recognized
underwriter acceptable to Administrative Bank, which underwriting
agreement provides for the issuance of additional common or preferred
shares or indebtedness subordinated to the Obligations in an amount
sufficient to redeem the Convertible Subordinated Notes or (ii)
Res-Care's common stock has traded at a price at least equal to or
exceeding 140% of the then applicable conversion price for the
Convertible Subordinated Notes for at least 20 consecutive trading
days ending within five days prior to the notice of redemption."
C. SCHEDULE 1 - LIST OF BORROWERS OTHER THAN RES-CARE. Schedule 1 is
hereby amended and replaced in its entirety by Schedule 1 attached to this
Second Amendment.
D. SCHEDULE 1.122 - LIST OF CERTAIN ENTITIES WHICH CURRENTLY ARE NOT
INCLUDED IN DEFINITION OF BORROWERS OR NEW BORROWERS. Schedule 1.122 is hereby
amended and replaced in its entirety by Schedule 1.122 attached hereto.
E. SCHEDULE 6.7 - INDEBTEDNESS. Schedule 6.7 is hereby amended and
restated in its entirety by Schedule 6.7 attached hereto.
F. SCHEDULE 6.13 - CONSOLIDATED SUBSIDIARIES OF RES-CARE, INC..
Schedule 6.13 is hereby amended and restated in its entirety by Schedule 6.13
attached hereto.
G. RATIFICATION. The Loan Agreement, as amended by this Second
Amendment, remains in full force and effect and the Borrower reaffirms and
ratifies its obligations under the Loan Agreement, as amended by this
Second Amendment.
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<PAGE> 6
II. AMENDMENT OF STOCK PLEDGE AGREEMENT
A. EXHIBIT A TO STOCK PLEDGE AGREEMENT. Exhibit A to the Stock
Pledge Agreement is amended and restated in its entirety by Exhibit A to this
Second Amendment.
B. DELIVERY OF STOCK CERTIFICATES TO ADMINISTRATIVE BANK.
Res-Care covenants to deliver or to cause to be delivered the pledged share
certificates identified in Section II of Exhibit A to the Stock Pledge
Agreement, as amended, to the Administrative Bank on the Second Amendment
Closing Date.
C. RATIFICATION. The Stock Pledge Agreement, as amended by this
Second Amendment, remains in full force and effect and Res-Care reaffirms and
ratifies its obligations under the Stock Pledge Agreement, as amended by this
Second Amendment.
III. AMENDMENT AND RATIFICATION OF SECURITY AGREEMENTS
Each of the Security Agreements remains in full force and effect and
each Borrower reaffirms and ratifies its obligations under the Security
Agreement to which it is a party. Each Borrower agrees that the Security
Agreement to which it is a party shall continue to secure all indebtedness of
the Borrower to the Banks evidenced by the Revolving Credit Notes, the Swing
Line Note, the Applications and Agreements for Letters of Credit and the Loan
Agreement, all as they may be amended by this Second Amendment. Additionally,
each of the New Borrowers, as of the date of the Second Amendment, shall have
executed and delivered to the Administrative Bank a Security Agreement and
UCC-1 financing statements in favor of the Banks, in form and substance
satisfactory to the Banks.
IV. CLOSING CONDITIONS
The establishment of the Revolving Credit Facility by the Banks in
favor of the Borrowers, the obtaining of the Revolving Credit Loans and/or
Letters of Credit by the Borrowers thereunder, the making of the Swing Line
Loans by PNC to the Borrowers, all as amended by this Second Amendment, are
subject to the satisfaction of all the following conditions (in addition to the
conditions set forth in the Loan Agreement):
A. CONDITIONS TO CLOSING OF THE SECOND AMENDMENT. The obligation
of the Banks to make the Revolving Credit Loans to the Borrowers and to make the
Swing Line Loans to the Borrowers are subject to the condition that, in addition
to the satisfaction of the conditions precedent specified in Section 5.1 of the
Loan Agreement, and with respect to the Swing Line Loan, the conditions
precedent specified in Section 3.1D of the Loan Agreement, as of the Second
Amendment Closing Date, the Banks shall have received the following from the
Borrowers, dated the Second Amendment Closing Date or such other date as shall
be acceptable to the Banks:
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<PAGE> 7
(1) This Second Amendment, duly executed and delivered by the each
of the Borrowers.
(2) Stock certificates evidencing all of the issued and outstanding
shares of the common stock of all New Borrowers as identified below, and
executed blank stock powers appended thereto:
Res-Care Aviation, Inc.*
Communications Network Consultants, Inc.*
The Academy for Individual Excellence, Inc.
Res-Care Other Options, Inc.
*Already delivered to Administrative Bank.
(3) Security Agreements, executed and delivered by all Subsidiaries
acquired or created by all New Borrowers, as identified below:
Res-Care Aviation, Inc.*
Communications Network Consultants, Inc.*
The Academy for Individual Excellence, Inc.
Res-Care Other Options, Inc.
*Already delivered to Administrative Bank.
(4) UCC-1 financing statements appropriate for filing in
filing offices designated by the Administrative Bank, executed and delivered by
all New Borrowers acquired or created by the Borrowers since June 23, 1997, as
identified below:
Res-Care Aviation, Inc.
Communications Network Consultants, Inc.
The Academy for Individual Excellence, Inc.
Res-Care Other Options, Inc.
(5) The Indenture.
(6) A Certificate of the Secretary or Assistant Secretary of
Res-Care certifying as to the authenticity, completeness and accuracy of, and
attaching copies of any amendments to the Articles of Incorporation or Bylaws
since June 23, 1997, and Resolutions of the Board of Directors of Res-Care
authorizing such Borrower's execution, delivery and performance of the Second
Amendment and any other Loan Instruments to which such Borrower is a party, and
certifying the names and true signatures of the officers of such Borrower
authorized to execute and deliver the Loan Instruments to which the Borrower is
a party, on behalf of such Borrower.
-7-
<PAGE> 8
(7) A Certificate of the Secretary or Assistant Secretary of
each New Borrower certifying as to the authenticity, completeness and accuracy
of, and attaching copies of their respective Certificates of Incorporation and
Bylaws, together with any amendments thereto, and Resolutions of the Board of
Directors of each New Borrower authorizing such New Borrower's execution,
delivery and performance of the Second Amendment and any other Loan Instruments
to which such New Borrower is a party, and certifying the names and true
signatures of the officers of such New Borrower authorized to execute and
deliver the Loan Instruments to which the New Borrower is a party, on behalf of
such New Borrower.
(8) An opinion from counsel to the Borrowers, in form and
substance satisfactory to the Banks, giving substantially the same opinions as
were given in connection with the execution and delivery of the Loan Agreement
dated as of June 23, 1997, but to be given with respect to the execution and
delivery of this Second Amendment.
(9) Such other documents as the Administrative Bank may
reasonably request.
V. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF BORROWER AND CONSOLIDATED
SUBSIDIARIES. To induce the Banks to enter into this Second Amendment, the
Borrowers represent and warrant to the Banks as follows:
(1) Each Borrower has full power, authority, and capacity to
enter into this Second Amendment, and this Second Amendment constitutes the
legal, valid and binding obligations of each Borrower, enforceable against each
in accordance with its terms.
(2) No Event of Default under the Loan Agreement or any of
the other Loan Instruments has occurred which continues unwaived by the Banks,
and no event which with the passage of time, the giving of notice or both would
constitute an Event of Default, exists as of the date hereof.
(3) The person executing this Second Amendment on behalf of
each Borrower is duly authorized to do so. Each such person has been duly
authorized pursuant to resolutions of the Borrowers approved by the directors
of the Borrowers to execute and deliver minor amendments to the Loan
Instruments of the sort set forth in this Second Amendment without the
necessity of further action by the respective boards of directors.
(4) The representations and warranties made by each Borrower
in all of the Loan Instruments are hereby remade and restated as of the date
hereof.
(5) There are no material actions, suits, legal, equitable,
arbitration or administrative proceedings pending or threatened against any
Borrower, the adverse determination of which could have a material adverse
effect on the Loan Instruments, the business operations or financial condition
of the Borrowers or the ability of the Borrowers to fulfill their obligations
under the Loan Instruments.
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<PAGE> 9
IN WITNESS WHEREOF, the Borrowers, the Banks and the Administrative
Bank have each caused this Second Amendment to be duly executed as of the date
and year first hereinabove written.
PNC BANK, KENTUCKY, INC.
("PNC")
/s/ Ben Willingham
-------------------------------------------
By: Ben Willingham, Vice President
NATIONAL CITY BANK OF KENTUCKY
("National City")
/s/ Deroy Scott
-------------------------------------------
By: Deroy Scott, Vice President
SUNTRUST BANK, NASHVILLE, N.A.
("SunTrust")
/s/ Karen Cole Ahern
-------------------------------------------
By: Karen Cole Ahern, Group Vice President
BANK ONE, KENTUCKY, NA
("Bank One")
/s/ Todd D. Munson
-------------------------------------------
Todd D. Munson, Senior Vice President
WACHOVIA BANK, N.A.
("Wachovia")
/s/ Stephen A. Racine
-------------------------------------------
By: Stephen A. Racine, Banking Officer
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<PAGE> 10
PNC BANK, KENTUCKY, INC.
(the "Administrative Bank")
/s/ Ben Willingham
-------------------------------------------
By: Ben Willingham, Vice President
RES-CARE, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President and
Chief Executive Officer
COMMUNITY ALTERNATIVES INDIANA,
INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
COMMUNITY ALTERNATIVES NEBRASKA,
INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
COMMUNITY ADVANTAGE, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
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<PAGE> 11
TEXAS HOME MANAGEMENT, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
CAPITAL TX INVESTMENTS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
THM HOMES, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR TEXAS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE NEW MEXICO, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE OHIO, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
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<PAGE> 12
COMMUNITY ALTERNATIVES OF
TEXAS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
CATX PROPERTIES, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE CALIFORNIA, INC., d/b/a
RCCA Services
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE FLORIDA, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR CALIFORNIA, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
-12-
<PAGE> 13
RSCR KANSAS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR ILLINOIS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR OKLAHOMA, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR TENNESSEE, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR TRAINING TECHNOLOGIES, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
YOUTHTRACK, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
-13-
<PAGE> 14
RES-CARE PREMIER, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR PREMIER, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE NEW JERSEY, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
COMMUNITY ALTERNATIVES
KENTUCKY, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
ALTERNATIVE YOUTH SERVICES, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
-14-
<PAGE> 15
COMMUNITY ALTERNATIVES
VIRGINIA, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RSCR WEST VIRGINIA, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
COMMUNITY ALTERNATIVES
MISSOURI, INC. f/k/a RAIMENT, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE AVIATION, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
COMMUNICATIONS NETWORK
CONSULTANTS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
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<PAGE> 16
THE ACADEMY FOR INDIVIDUAL
EXCELLENCE, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
RES-CARE OTHER OPTIONS, INC.
(a "Borrower")
/s/ Ronald G. Geary
-------------------------------------------
By: Ronald G. Geary, President
-16-
<PAGE> 17
SCHEDULE 1
LIST OF BORROWERS OTHER THAN RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal
office and place of business of Louisville, Kentucky ("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCF").
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<PAGE> 18
14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RSCRC").
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCP").
22. RSCR PREMIER, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RSCRP").
23. RES-CARE NEW JERSEY, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCNJ").
24. COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
25. ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AYS")
26. COMMUNITY ALTERNATIVES VIRGINIA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAV").
27. RSCR WEST VIRGINIA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RSCRWV").
28. COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a
Missouri corporation with principal office and place of business in Louisville,
Kentucky ("R").
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<PAGE> 19
29. RES-CARE AVIATION, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("RCA").
30. COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island
corporation with principal office and place of business in Louisville, Kentucky
("CNC").
31. THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation
with principal office and place of business in Louisville, Kentucky ("AIE").
32. RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("ROO").
-3-
<PAGE> 20
SCHEDULE 1.32
CONTINGENT OBLIGATIONS OF RES-CARE, INC.
-4-
<PAGE> 21
SCHEDULE 1.122 TO FIRST AMENDMENT
Certain Entities which Currently are not Included in
Definition of "Existing Borrowers" or "New Borrowers"
Premier Rehabilitation Centers Limited Partnership
Biscayne Bay Transitional Living Center Limited Partnership
Premier Rehabilitation Center of Missouri Limited Partnership
PRC of Chicago Limited Partnership
PRC of New York Limited Partnership
Community Alternatives Illinois, Inc.
Premier Rehabilitation Centers of Missouri, Inc.
Premier Rehabilitation Centers of Florida, Inc.
PRC of New York, Inc.
PRC of Chicago, Inc.
Alternative Choices, Inc.
Refraining from including those entities within the definition of "New
Borrowers", "Existing Borrowers" or "Borrowers" does not prevent the Banks from
later exercising any rights under the Loan Instruments to require them to become
Borrowers.
-5-
<PAGE> 22
SCHEDULE 6.7
INDEBTEDNESS
-6-
<PAGE> 23
SCHEDULE 6.13
CONSOLIDATED SUBSIDIARIES OF RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC. State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Fort Wayne, Indiana;
Angola, Indiana; Sullivan, Indiana; Greencastle, Indiana. Qualified to
do business in: Indiana Any name, other than name of Corporation, used
for conducting business in the last five (5) years:
2. COMMUNITY ALTERNATIVES NEBRASKA, INC. State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Lincoln, Nebraska
Qualified to do business in: Nebraska Any name, other than name of
Corporation, used for conducting business in the last five (5) years:
3. COMMUNITY ADVANTAGE, INC. State of incorporation: Delaware Location of
principal office and records: 10140 Linn Station Road Louisville,
Kentucky Qualified/not qualified to do business in Kentucky: Not
qualified Locations of operations: Longmont, Brighton, Grieley
Colorado. Qualified to do business in: Colorado Any name, other than
name of Corporation, used for conducting business in the last five (5)
years:
4. TEXAS HOME MANAGEMENT, INC. State of incorporation: Delaware Location
of principal office and records: 10140 Linn Station Road Louisville,
Kentucky Qualified/not qualified to do business in Kentucky: Not
qualified Locations of operations: various in Texas (59 group homes)
Qualified to do business in: Texas Any name, other than name of
Corporation, used for conducting business in the last five (5) years:
-7-
<PAGE> 24
5. CAPITAL TX INVESTMENTS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations -
Bexar, Tarrant, Angelina, Travis, Caldwell, Harris, Nacogdoches,
Anderson, Parker, Gonzalez, Plano Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
6. THM HOMES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations:
Lubbock, Bexar, Williamson, Taylor, Tarrant, Anderson Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
7. RSCR TEXAS, INC., F/K/A THM PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Canton, Austin, San Antonio, Dallas-Ft. Worth,
TX Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
8. RES-CARE NEW MEXICO, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Albuquerque, Rosewell, Clovis, Santa Fe,
New Mexico Qualified to do business in: New Mexico
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
9. RES-CARE OHIO INC.
State of incorporation: Delaware
-8-
<PAGE> 25
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Fairfield, Williamsburg, Hamilton, Middletown,
Cincinnati area, Xenia, Menton, Lake County, Ohio
Qualified to do business in: Ohio
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
10. COMMUNITY ALTERNATIVES OF TEXAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Wichita Co., Tarrant Co., Texas
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
11. CATX PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations -
Wichita and Tarrant Counties Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting
business in the last five (5) years:
12. RES-CARE CALIFORNIA, INC. D/B/A RCCA SERVICES
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Stanislaus, San Mateo, Sutter, Nevada, Placer,
Santa Clara County, CA Qualified to do business in: California
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
13. RES-CARE FLORIDA, INC.
State of incorporation: Delaware
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<PAGE> 26
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: none Qualified to do business in: Florida
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
14. RSCR CALIFORNIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Los Angeles and Orange Counties
Qualified to do business in: California Any name, other than name of
Corporation, used for conducting business in the last five (5)
years:
15. RES-CARE KANSAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Sherman, Neosho, Stafford & Cowley, Kansas
Qualified to do business in: Kansas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
16. RES-CARE ILLINOIS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jackson and Vermilion Counties, Illinois
Qualified to do business in: Illinois
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
17. RES-CARE OKLAHOMA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Tulsa, Oklahoma City,
-10-
<PAGE> 27
Qualified to do business in: Oklahoma
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
18. RES-CARE TENNESSEE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Nashville, TN
Qualified to do business in: Tennessee
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
19. RES-CARE TRAINING TECHNOLOGIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Location of registered agent in Kentucky: Louisville
Locations of operations: Louisville
Qualified to do business in: Kentucky only
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
20. YOUTHTRACK, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Littleton, Colorado
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Arapahoe, Denver, Mesa, El Paso, Jefferson
Counties, Colorado Qualified to do business in: Colorado, Kentucky and
Puerto Rico
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
21. RES-CARE PREMIER, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None
Qualified to do business in: Massachusetts
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
-11-
<PAGE> 28
22. RSCR PREMIER, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
23. RES-CARE NEW JERSEY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None yet
Qualified to do business in: New Jersey
Any name, other than name of Corporation, used for conducting
business in the last five (5) years:
24. COMMUNITY ALTERNATIVES KENTUCKY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: None yet
Qualified to do business in: No other states
Any name, other than name of Corporation, used for conducting
business in the last five (5) years:
25. ALTERNATIVE YOUTH SERVICES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: None yet
Qualified to do business in: Georgia, Ohio and Tennessee
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
26. COMMUNITY ALTERNATIVES VIRGINIA, INC.
State of incorporation: Delaware
-12-
<PAGE> 29
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None yet
Qualified to do business in: Virginia
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
27. RSCR WEST VIRGINIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: West Virginia
Qualified to do business in: West Virginia
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
28. COMMUNITY ALTERNATIVES MISSOURI, INC. F/K/A RAIMENT, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Missouri
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: Raiment, Inc.
29. RES-CARE AVIATION, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: Kentucky
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
30. COMMUNICATIONS NETWORK CONSULTANTS, INC.
State of incorporation: Rhode Island
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: North Carolina
-13-
<PAGE> 30
Qualified to do business in: North Carolina
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
31. THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Kentucky
Qualified to do business in: No other state
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
32. RES-CARE OTHER OPTIONS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Pennsylvania, North Carolina, Oregon
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
-14-
<PAGE> 31
CONSOLIDATED SUBSIDIARIES THAT ARE NOT BORROWERS
1. Premier Rehabilitation Centers Limited Partnership
2. Biscayne Bay Transitional Living Center Limited Partnership
3. Premier Rehabilitation Center of Missouri Limited Partnership
4. PRC of Chicago Limited Partnership
5. PRC of New York Limited Partnership
6. Community Alternatives Illinois, Inc.
7. Premier Rehabilitation Centers of Missouri, Inc.
8. Premier Rehabilitation Centers of Florida, Inc.
9. PRC of New York, Inc.
10. PRC of Chicago, Inc.
11. Alternative Choices, Inc.
-15-
<PAGE> 32
EXHIBIT A
Exhibit A
to Stock Pledge Agreement
between Res-Care, Inc.
and
PNC Bank, Kentucky, Inc.,
as Administrative Bank
I. PLEDGED SHARES ALREADY DELIVERED TO ADMINISTRATIVE BANK
<TABLE>
<CAPTION>
Number
Certificate of
Consolidated Subsidiary Number Shares Owned By
----------------------- ------ ------ --------
<S> <C> <C> <C>
Community Alternatives Indiana, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Nebraska, Inc. 1 1,000 Res-Care, Inc.
Community Advantage, Inc. 1 1,000 Res-Care, Inc.
Texas Home Management, Inc. 1 1,000 Res-Care, Inc.
Capital TX Investments, Inc. 1 1,000 Res-Care, Inc.
THM Homes, Inc. 1 1,000 Res-Care, Inc.
Res-Care New Mexico, Inc. 1 1,000 Res-Care, Inc.
Res-Care Ohio, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives of Texas, Inc. 1 1,000 Res-Care, Inc.
CATX Properties, Inc. 1 1,000 Res-Care, Inc.
Res-Care California, Inc. 1 1,000 Res-Care, Inc.
Res-Care Florida, Inc. 1 1,000 Res-Care, Inc.
RSCR California, Inc. 1 1,000 Res-Care, Inc.
Res-Care Kansas, Inc. 1 1,000 Res-Care, Inc.
Res-Care Illinois, Inc. 1 1,000 Res-Care, Inc.
RSCR Texas, Inc. 1 1,000 Res-Care, Inc.
Res-Care Oklahoma, Inc. 1 1,000 Res-Care, Inc.
Res-Care Tennessee, Inc. 1 1,000 Res-Care, Inc.
Res-Care Training Technologies, Inc. 1 1,000 Res-Care, Inc.
Youthtrack, Inc. 1 800 Res-Care, Inc.
Res-Care Premier, Inc. 1 1,000 Res-Care, Inc.
RSCR Premier, Inc. 1 1,000 Res-Care, Inc.
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
Res-Care New Jersey, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Kentucky, Inc. 1 1,000 Res-Care, Inc.
Alternative Youth Services, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Virginia, Inc. 1 1,000 Res-Care, Inc.
RSCR West Virginia, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Missouri, Inc.
f/k/a Raiment, Inc. 1 500 Res-Care, Inc.
Res-Care Aviation, Inc. 1 1,000 Res-Care, Inc.
Communication Network Consultants, Inc. 1 100 Res-Care, Inc.
II. PLEDGED SHARES DELIVERED TO ADMINISTRATIVE BANK AT SECOND AMENDMENT CLOSING
DATE
The Academy for Individual Excellence, Inc. 1 1,000 Res-Care, Inc.
Res-Care Other Options, Inc. 1 1,000 Res-Care, Inc.
</TABLE>
C-2
<PAGE> 1
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is computed as follows (dollars in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS $4,725 $7,870 $8,987 $12,010 $14,961 $10,479 $15,328
FIXED CHARGES:
INTEREST EXPENSE 225 131 164 630 1,351 956 1,391
IMPUTED INTEREST AND DEPRECIATION
ON RENT EXPENSE 850 1,120 1,316 1,466 1,591 850 1,211
------ ------ ------- ------- ----- ------- -------
TOTAL FIXED CHARGES 1,075 1,251 1,480 2,096 2,942 1,806 2,602
------ ------ ------- ------- ------- ------- -------
EARNINGS ADJUSTED FOR FIXED CHARGES $5,800 $9,121 $10,467 $14,106 $17,903 $12,285 $17,930
====== ====== ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 5.39 7.29 7.07 6.73 6.08 6.80 6.89
==== ==== ==== ==== ==== ==== ====
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of Res-Care, Inc. of our report dated February 28, 1997,
with respect to the supplemental consolidated balance sheets of Res-Care, Inc.
and subsidiaries as of December 31, 1995 and 1996 and the related supplemental
consolidated statements of income, shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1996, and the related
schedule, which report appears in the Registration Statement on Form S-3 filed
April 15, 1997.
/s/ KPMG PEAT MARWICK LLP
January 9, 1998
<PAGE> 2
EXHIBIT 23.1
Page 2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of Res-Care, Inc. of our report dated February 26, 1997,
with respect to the consolidated balance sheets of Res-Care, Inc. and
subsidiaries as of December 31, 1995 and 1996 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1996, and the related schedule,
which report appears in the Form 10-K for the year ended December 31, 1996.
/s/ KPMG PEAT MARWICK LLP
January 9, 1998
<PAGE> 1
EXHIBIT 25.1
Securities Act of 1933 File No.
---------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
------------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305 (b)(2) [ ]
------------------------
PNC Bank, Kentucky, Inc.
------------------------
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Commonwealth of Kentucky 61-0191580
- --------------------------------------- ----------------------------------
(State of Incorporation If Not a (I.R.S. Employer Identification No.)
National Bank)
500 W. Jefferson Street
Louisville, Kentucky 40202
- --------------------------------------- ----------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
------------------------
Martha A. Ziskind
Vice President
PNC Bank, Kentucky, Inc.
500 W. Jefferson Street
Louisville, Kentucky 40202
(502) 581-3231
(Name, address, and telephone number of agent for service)
------------------------
RES-CARE, INC.
--------------
(Exact Name of Obligor as Specified in its Charter)
KENTUCKY 61-0875371
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
10140 Linn Station Road, Louisville, Kentucky 40223
- ----------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
6% CONVERTIBLE SUBORDINATED NOTES DUE 2004
------------------------------------------
(Title of the Indenture Securities)
<PAGE> 2
1. General information. Furnish the following information as Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of St. Louis
411 Locust Street, P.O. Box 442
St. Louis, Mo 63266
Department of Financial Institutions
Commonwealth of Kentucky
477 Versailles Road
Frankfort, Ky 40601
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor. If the obligor is an affiliate of the
Trustee, describe each such affiliation.
Not applicable.
3. Voting Securities of the trustee. Furnish the following information
as to each class of voting securities of the trustee.
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Col. A Col. B
---------------- ------------------
(Title of Class) Amount Outstanding
---------------- ------------------
<S> <C>
PNC Bank, Kentucky, Inc.
Common Stock, par value $30 per share 2,000,000 shares
PNC Bank Corp.
Common Stock, par value $5 per share 322,038,350 shares
</TABLE>
4. Trusteeships under other indentures. If the trustee is a trustee
under another indenture under which any other securities, or certificates of
interest or participation in any other securities, of the obligor are
outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
Not applicable.
<PAGE> 3
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310(b)(1) of the Act
arises as a result of the trusteeship under any such other indenture, including
a statement as to how the indenture securities will rank as compared with the
securities issued under other such other indenture.
Not applicable.
5. Interlocking directorates and similar relationships with the obligor
or underwriters. If the trustee or any of the directors or executive officers
of the trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor, identify
each such person having any such connection and state the nature of each such
connection.
Not applicable.
6. Voting securities of the trustee owned by the obligor or its
officials. Furnish the following information as to the voting securities of
the trustee owned beneficially by the obligor and each director, partner and
executive officer of the obligor:
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Column C
------------- -------------- ------------ ------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
7. Voting securities of the trustee owned by underwriter or their
officials. Furnish the following information as to the voting securities of
the trustee owned beneficially by each underwriter for the obligor and each
director, partner, executive officer of each such underwriter:
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Column C
------------- -------------- ------------ ------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
<PAGE> 4
8. Securities of the obligor owned or held by the trustee. Furnish the
following information as to securities of the obligor owned beneficially or
held as collateral security for obligations in default by the trustee.
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Amount Owned
Beneficially
Whether the or Held as
Securities are Collateral Percent of
Voting or Security for Class Represented
Nonvoting Obligations in by Amount Given
Title of Class Securities Default in Column C
-------------- ----------- -------------- ------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
9. Securities of the underwriters owned or held by the trustee. If the
trustee owns beneficially of holds as collateral security for obligations in
default any securities of an underwriter for the obligor, furnish the following
information as to each class of securities of such underwriter any of which are
so owned or held by the trustee:
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ -----------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
<PAGE> 5
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor. If the trustee owns
beneficially or holds collateral security for obligations in default voting
securities of a person who, to the knowledge of the trustee (1) owns 10% or
more of the voting securities of the obligor or (2) is an affiliate, other than
a subsidiary, of the obligor, furnish the following information as to the
voting securities of such person:
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ ----------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor. If the
trustee owns beneficially or holds as collateral security for obligations in
default any securities of a person who, to the knowledge of the trustee, owns
50 percent or more of the voting securities of the obligor, furnish the
following information as to each class of securities of such person any of
which are so owned or held by the trustee:
As of December 11, 1997
-----------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ ---------------
<S> <C> <C> <C>
Not applicable.
</TABLE>
<PAGE> 6
12. Indebtedness of the obligor to the trustee. Except as noted in the
instructions, if the obligor is indebted to the trustee, furnish the following
information:
As of December 11, 1997
<TABLE>
<CAPTION>
Column A Column B Column C
Nature of Amount
Indebtedness Outstanding Due Date
-------------- --------------- --------
<S> <C> <C>
Revolving Credit $30,000,000 commitment
Facility with $0 outstanding Dec. 2001
Lease $320,000 Dec. 2002
</TABLE>
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is the trustee for more
than one outstanding series of securities under the indenture, state whether
there has been a default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such default.
Not applicable.
14. Affiliation with the Underwriters. If any underwriter is an affiliate
of the trustee, describe each such affiliation.
Not applicable.
15. Foreign Trustee. Identify the order or rule pursuant to which the
foreign trustee is authorized to act as sole trustee under indentures
qualified or to be qualified under the Act.
Not applicable.
16. List of Exhibits. List below all exhibits filed as part of this
statement of eligibility.
1. A copy of the Articles of Incorporation of the Trustee now in
effect is hereby incorporated by reference to Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 22-23572, dated as of February 24, 1993.
<PAGE> 7
2. Certificate of authority of the Trustee to commence business,
contained in the Articles of Incorporation is hereby
incorporated by reference to Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 22-23572, dated
as of February 24, 1993.
3. Authorization of the Trustee to exercise corporate trust
powers, contained in the Articles of Incorporation is hereby
incorporated by reference to Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 22-23572, dated
as of February 24, 1993.
4. A copy of the existing By-Laws of the trustee is hereby
incorporated by reference to Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 22-23572, dated
as of February 24, 1993.
5. Copy of each indenture referred to in Item 4, if the obligor
is in default. Not applicable.
6. The consent of United States institutional trustees required
by Section 321(b) of the Act.
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 is hereby incorporated by
reference to its Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 and Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997 which were previously
filed with the Commission.
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, PNC Bank, Kentucky, Inc., a corporation organized and existing under
the laws of the Commonwealth of Kentucky, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Louisville and Commonwealth of Kentucky on the
11th day of December, 1997.
PNC BANK, KENTUCKY, INC.
By: /s/ David G. Metcalf
-----------------------
David G. Metcalf
Vice President
<PAGE> 9
EXHIBIT 6
THE CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(B) OF THE ACT
PNC Bank, Kentucky, Inc., the Trustee executing the statement of
eligibility and qualification to which this Exhibit is attached does hereby
consent that reports of examinations of the undersigned by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefore in accordance with
the provisions of Section 321(b) of the Trust Indenture Act of 1939.
PNC BANK, KENTUCKY, INC.
BY: /s/ David G. Metcalf
-----------------------
David G. Metcalf
Vice President
December 11, 1997
-----------------
Date
