<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)
OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
RITE AID CORPORATION
(NAME OF ISSUER)
------------------------
RITE AID CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
------------------------
ZERO COUPON CONVERTIBLE SUBORDINATED NOTES DUE 2006
(TITLE OF CLASS OF SECURITIES)
------------------------
767754 AE 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
FRANKLIN C. BROWN
EXECUTIVE VICE PRESIDENT AND CHIEF LEGAL COUNSEL
RITE AID CORPORATION
30 HUNTER LANE
CAMP HILL, PA 17011
TELEPHONE: (717) 761-2633
Copy to:
NANCY A. LIEBERMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
JUNE 25, 1996
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$205,866,771 $41,173.35
</TABLE>
* The transaction valuation upon which the filing fee was based was calculated
as follows: The purchase price of the Zero Coupon Convertible Subordinated
Notes due 2006 (the 'Notes'), as described herein, is $514.86 per $1,000
principal amount outstanding at stated maturity. As of June 25, 1996, there
were $399,850,000 in aggregate principal amount at maturity outstanding,
resulting in an aggregate purchase price, assuming all Notes are tendered, of
$205,866,771. The filing fee was calculated as follows: One-fiftieth of 1% of
$205,866,771 equals $41,173.35.
/ / Check box if any part of the fee is offset as provided Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the
form or schedule and the date of its filing.
<TABLE>
<S> <C> <C>
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: NOT APPLICABLE
FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
</TABLE>
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer is Rite Aid Corporation, a Delaware Corporation (the
'Company'). The Company's principal executive offices are located at 30 Hunter
Lane, Camp Hill, PA 17011.
(b) As of June 25, 1996, there were $399,850,000 in aggregate principal
amount at stated maturity of the Zero Coupon Convertible Subordinated Notes due
2006 (the 'Notes') of the Company outstanding. The Notes are convertible at any
time, on or prior to maturity, at the option of the holder of a Note (each, a
'Holder'), into 15.993 shares of the Company's common stock, par value $1.00 per
share (the 'Company Common Stock,' subject to adjustment for dilutive events
such as stock dividends or stock splits). Information concerning the tender
offer set forth under 'THE OFFER--Principal Terms of the Offer' of the Offer to
Purchase is incorporated herein by reference. As to any officer, director or
affiliate of the Company who is the Holder of any Notes and who elects to
require the Company to purchase any or all of such Holder's Notes on the
Purchase Date, the Company will do so as described above, pursuant to the terms
of the Indenture (as defined in the Offer to Purchase).
(c) The Notes and the Company Common Stock are traded on the New York Stock
Exchange (the 'NYSE'). The high and low sales prices of the Notes, as reported
by the NYSE, for each full quarterly period during the previous two years is set
forth under 'PRICE RANGE OF NOTES AND COMPANY COMMON STOCK' of the Offer to
Purchase and is incorporated herein by reference.
(d) This Schedule 13E-4 is being filed by the issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth under 'THE OFFER--Principal Terms of
the Offer' of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth under 'THE OFFER--Purpose of the Offer' of the
Offer to Purchase is incorporated herein by reference. Any Notes that are
purchased by the Company will be retired.
There presently are no plans which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Company, or the disposition of the securities of the Company;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Company including, but not limited to, any plans or proposals to change the
number or the term of directors (except as disclosed in the Company's proxy
statement for the 1996 Annual Meeting of Stockholders scheduled to be held
on June 26, 1996), to fill any existing vacancy on the board or to change
any material term of the employment contract of any executive officer;
(e) Any material change in the present dividend rate or policy, or
indebtedness or capitalization of the company;
(f) Any other material change in the Company's corporate structure or
business;
(g) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(h) Causing a class of equity security of the Company to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
(i) A class of equity security of the Company becoming eligible for
termination of registration pursuant to Section 12 (g) (4) of the
Securities Exchange Act of 1934 (the 'Act'); or
(j) The suspension of the issuer's obligation to file reports pursuant
to Section 15 (d) of the Act.
2
<PAGE>
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
During the past 40 business days, there have been no transactions in the
Notes effected by the Company or, to the best knowledge of the Company, by any
of its directors or executive officers.
ITEM 5. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Except for Article III of the Indenture herewith filed, there are no
contracts, arrangements, understandings, or relationships relating directly or
indirectly to the tender offer (whether or not legally enforceable) between the
Company (or, to the knowledge of the Company, any director or executive officer
of the Company) and any person with respect to any securities of the Company,
including, without limitation, any contract, arrangement, understanding, or
relationship concerning the transfer or the voting of any of such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties or loans,
guaranties against loss, or the giving or withholding of proxies, consents or
authorizations.
The information set forth under 'DESCRIPTION OF THE NOTES' of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
There are no persons employed, retained or to be compensated by the Company
to make solicitations or recommendations in connection with the tender offer.
ITEM 7. FINANCIAL INFORMATION.
The information set forth under 'PRICE RANGE OF NOTES AND COMPANY COMMON
STOCK,' 'CERTAIN FEDERAL INCOME TAX CONSIDERATIONS' and 'HISTORICAL FINANCIAL
INFORMATION OF THE COMPANY' of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. ADDITIONAL INFORMATION.
(a)-(e) The information set forth in the Offer to Purchase and Purchase
Notice and Letter of Transmittal, copies of which are filed herewith as Exhibits
(a)(1) and (a)(2), respectively, is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated June 25, 1996.
(a)(2) Purchase Notice and Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(b) None.
(c) Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as
Trustee, relating to $460,000,000 in principal amount of Zero Coupon Convertible Subordinated Notes
due 2006.
(d) None.
(e) None.
(f) None.
</TABLE>
3
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: June 25, 1996 RITE AID CORPORATION
By: /s/ ELLIOT S. GERSON
--------------------------------
Name: Elliot S. Gerson
Title: Senior Vice President and
Assistant Chief Legal
Counsel
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ -------------------------------------------------------------------------------------------- -----------
<S> <C> <C>
(a)(1) -- Offer to Purchase, dated June 25, 1996.
(a)(2) -- Purchase Notice and Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
other nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(c) -- Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings
Bank, as Trustee, relating to $460,000,000 in principal amount of Zero Coupon
Convertible Subordinated Notes due 2006.
</TABLE>
<PAGE>
Offer to Purchase for Cash
by
RITE AID CORPORATION
Any and All of Its
Zero Coupon Convertible Subordinated Notes due 2006
At a Purchase Price of $514.86
For Each $1,000 Principal Amount at Stated Maturity of Notes
THIS COMPANY NOTICE AND OFFER TO PURCHASE FOR CASH (THE 'OFFER TO
PURCHASE') ANY AND ALL ZERO COUPON CONVERTIBLE SUBORDINATED NOTES DUE 2006 OF
RITE AID CORPORATION (THE 'NOTES') WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 24, 1996 (THE 'PURCHASE DATE'). A HOLDER'S WRITTEN
NOTICE REQUESTING PURCHASE OF ANY OR ALL OF HIS NOTES (A 'PURCHASE NOTICE') MAY
BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE CLOSE OF BUSINESS ON THE PURCHASE
DATE.
RITE AID CORPORATION (THE 'COMPANY') HEREBY OFFERS, UPON THE TERMS AND
SUBJECT TO THE CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE AND IN THE
ACCOMPANYING PURCHASE NOTICE (WHICH TOGETHER CONSTITUTE THE 'OFFER' ), AND AS
REQUIRED BY THE PROVISIONS OF THE INDENTURE, DATED AS OF JULY 15, 1991,
GOVERNING THE NOTES, TO PURCHASE FOR CASH ANY AND ALL NOTES, AT THE OPTION OF
THE HOLDER, ON THE PURCHASE DATE FOR A PURCHASE PRICE OF $514.86 FOR EACH $1,000
PRINCIPAL AMOUNT AT STATED MATURITY OF NOTES (THE 'PURCHASE PRICE') (WHICH
AMOUNT EQUALS THE ISSUE PRICE OF $369.43 PLUS ACCRUED ORIGINAL ISSUE DISCOUNT TO
THE PURCHASE DATE).
AS OF THE CLOSE OF BUSINESS ON MONDAY, JUNE 24, 1996, THE MARKET PRICE PER
$1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES ON THE NEW YORK STOCK
EXCHANGE (THE 'NYSE') WAS $510.00. IF THE THEN CURRENT MARKET PRICE OF THE NOTES
IS GREATER THAN $514.86 ON THE PURCHASE DATE, JULY 24, 1996, ANY HOLDER OF NOTES
WHOSE NOTES ARE PURCHASED IN THE OFFER WILL RECEIVE LESS THAN THE THEN CURRENT
MARKET PRICE OF THE NOTES. HOLDERS OF THE NOTES ARE URGED TO OBTAIN A CURRENT
MARKET PRICE QUOTATION PRIOR TO DELIVERY OF A PURCHASE NOTICE AND PRIOR TO THE
PURCHASE DATE.
NEITHER THE BOARD OF DIRECTORS NOR THE MANAGEMENT OF THE COMPANY MAKE ANY
RECOMMENDATION AS TO WHETHER ANY HOLDER OF NOTES SHOULD TENDER HIS NOTES
PURSUANT TO THE OFFER. EACH HOLDER MUST MAKE HIS OWN DECISION AS TO WHETHER TO
TENDER FOR PURCHASE ANY OR ALL OF HIS NOTES. EACH HOLDER OF NOTES IS URGED TO
CONTACT HIS OWN INVESTMENT ADVISOR.
THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK,
PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A
CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY
OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF THE NOTES ON THE
NYSE ON JUNE 24, 1996 AND $32.19 PER SHARE BASED ON THE PURCHASE PRICE. ON JUNE
24, 1996, THE LAST REPORTED SALE PRICE OF THE COMPANY COMMON STOCK ON THE NYSE
COMPOSITE TAPE WAS $29.00 PER SHARE. NOTES TENDERED AND NOT WITHDRAWN WILL CEASE
TO BE CONVERTIBLE ON THE PURCHASE DATE.
IMPORTANT
Any Holder desiring to deliver Notes for purchase must deliver a Purchase
Notice to Harris Trust and Savings Bank (the 'Paying Agent') at any time from
the opening of business on June 25, 1996, the date that is twenty (20) business
days preceding the Purchase Date, until the close of business on the Purchase
Date. Any Purchase Notice may be withdrawn by the Holder by a written notice of
withdrawal delivered to the Paying Agent prior to the close of business on the
Purchase Date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the Notes as to which the withdrawal
notice relates and the principal amount at maturity, if any, which remains
subject to the Purchase Notice. Payment of the Purchase Price for a Note for
which a Purchase Notice has been delivered and not withdrawn is conditioned upon
delivery of such Note (together with any necessary endorsements) to the Paying
Agent at its office in the Borough of Manhattan, The City of New York, or any
additional office of the Paying Agent maintained for such purpose, at any time
on or prior to the Purchase Date or, if such Note is not immediately available
or cannot be delivered on a timely basis, in accordance with the procedures for
guaranteed delivery set forth herein. See 'The Offer--Procedures for Tendering
Notes,' '--Withdrawal of Purchase Notices' and the instructions contained in the
Purchase Notice.
Questions and requests for assistance or for additional copies of this Offer
to Purchase and the Purchase Notice may be directed to the Paying Agent at the
address and telephone number set forth on the back cover page hereof.
------------------------
The Paying Agent is:
HARRIS TRUST AND SAVINGS BANK
June 25, 1996
<PAGE>
To the Holders of Zero Coupon Convertible Subordinated Notes due 2006 of Rite
Aid Corporation:
Rite Aid Corporation, a Delaware corporation (the 'Company'), hereby offers
to purchase for cash any and all outstanding Zero Coupon Convertible
Subordinated Notes due 2006 of the Company (the 'Notes'), at the option of each
holder thereof (a 'Holder'), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the accompanying Purchase Notice (which
together constitute the 'Offer'), at a purchase price of $514.86 for each $1,000
principal amount at stated maturity of Notes (the 'Purchase Price'). The Notes
were issued in 1991 pursuant to an Indenture (the 'Indenture'), dated as of July
15, 1991, between the Company and Harris Trust and Savings Bank, as trustee (the
'Trustee').
Any Holder who wishes to be eligible to receive the Purchase Price pursuant
to the Offer must validly deliver (and not withdraw) on or prior to the Purchase
Date a Purchase Notice covering any Note(s) being delivered for purchase. The
Company is not required to give notice of defective tender to a Holder whose
delivery of a Purchase Notice is defective and Holders should not rely on the
Company to give such notice. The Offer will expire on, and Purchase Notices must
be received by the Paying Agent on or prior to, 12:00 midnight, New York City
time, on Wednesday, July 24, 1996 (the 'Purchase Date'). The Indenture does not
provide that the Offer may be extended past the Purchase Date and accordingly
the Offer will not be extended. See 'The Offer--Procedures for Tendering Notes.'
NOTWITHSTANDING ANY OTHER PROVISION OF THE OFFER, THE COMPANY'S OBLIGATION
TO ACCEPT FOR PURCHASE AND TO PAY FOR THE NOTES VALIDLY TENDERED AND NOT
WITHDRAWN PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE
ABSENCE OF (I) A PRELIMINARY OR PERMANENT INJUNCTION OR OTHER ORDER BY ANY
UNITED STATES FEDERAL OR STATE COURT WHICH PREVENTS THE ACCEPTANCE FOR PAYMENT
OF, OR PAYMENT FOR, SOME OR ALL OF THE NOTES OR (II) CERTAIN LEGAL ACTIONS WHICH
WOULD RENDER THE COMPANY UNABLE TO PURCHASE OR PAY FOR THE NOTES OR TO
CONSUMMATE THE OFFER, OR MAKE SUCH PURCHASE, PAYMENT OR CONSUMMATION ILLEGAL.
SEE 'THE OFFER--CONDITIONS OF THE OFFER.'
Any Purchase Notice delivered by a Holder pursuant to the procedures set
forth in this Offer to Purchase and in the accompanying Purchase Notice may be
withdrawn by the Holder by a written notice of withdrawal delivered to the
Paying Agent at any time prior to the Purchase Date. See 'The Offer--Withdrawal
of Purchase Notices.'
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'). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; 75 Park Place, 14th Floor, New York, New
York 10007; and John C. Kluczynski Building, 230 South Dearborn Street, Chicago,
Illinois 60604. Copies of such materials can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material is also available at
the Web site maintained by the Commission at http://www.sec.gov. Such material
should also be available for inspection at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission an Issuer Tender Offer Statement
on Schedule 13E-4 (including all amendments thereto, the 'Schedule 13E-4') under
the Exchange Act with respect to the Offer. For further information pertaining
to the Company and the Offer, reference is made to the Schedule 13E-4 and the
exhibits thereto, which may be examined without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington
D.C. 20549, and copies of which may be obtained from the Commission upon payment
of the prescribed fees.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE OFFER................................................................. 1
Purpose of the Offer.................................................. 1
Principal Terms of the Offer.......................................... 1
Purchase Date; Amendment; Termination................................. 1
Conditions of the Offer............................................... 2
Acceptance of Notes for Purchase; Payment for Notes................... 2
Procedures for Tendering Notes........................................ 3
Backup Withholding.................................................... 5
Withdrawal of Purchase Notices........................................ 5
Certain Effects of the Offer.......................................... 5
Paying Agent.......................................................... 6
Expenses.............................................................. 6
DESCRIPTION OF THE NOTES.................................................. 7
PRICE RANGE OF NOTES AND COMPANY COMMON STOCK............................. 8
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................. 9
HISTORICAL FINANCIAL INFORMATION OF THE COMPANY........................... 10
DESCRIPTION OF THE COMPANY................................................ 11
</TABLE>
i
<PAGE>
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is for the Company to satisfy its obligation under
the Indenture to purchase, on July 24, 1996, at the option of any Holder
thereof, any and all outstanding Notes for which a Purchase Notice has been
delivered (and not withdrawn) by any Holder as set forth herein and in the
accompanying Purchase Notice. Under the Indenture, the Company has the option of
choosing whether to purchase in cash or in shares of Common Stock, $1.00 par
value, of the Company ('Company Common Stock') or in any combination thereof any
Notes validly delivered for purchase. As reflected in this Offer, the Company
has elected to meet its obligation under the Indenture by purchasing for cash
any Notes validly tendered.
PRINCIPAL TERMS OF THE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Purchase Notice, to purchase for cash on
the Purchase Date, at the option of the Holder thereof, any outstanding Note for
which a Purchase Notice has been validly and duly delivered by the Holder to the
Paying Agent at any time from the opening of business on June 25, 1996, the date
that is twenty (20) business days preceding the Purchase Date, until 12:00
midnight, New York City time, on the Purchase Date and for which such Purchase
Notice has not been withdrawn, subject to certain additional conditions set
forth below.
The Purchase Price of a Note per $1,000 principal amount at stated maturity
is $514.86. Pursuant to the Indenture, the Company is required to give notice
(the 'Company Notice') not less than twenty (20) business days prior to the
Purchase Date to all Holders at their addresses shown in the register of the
Registrar (and to beneficial owners as required by applicable law) stating,
among other things, whether the Company will pay the Purchase Price of the Notes
in cash or Company Common Stock or a combination thereof. This Offer to Purchase
constitutes the Company Notice pursuant to the Indenture. The Company has
elected to pay the Purchase Price in cash for any and all Notes validly tendered
pursuant to this Offer. For a discussion of the tax treatment of the purchase of
Notes pursuant to this Offer, see 'Certain Federal Income Tax Considerations.'
Assuming that the Company purchases all of the outstanding Notes, the total
cost of Notes purchased by the Company would be $205,866,771. It is expected
that all funds required to consummate the Offer will be obtained from existing
working capital and existing credit facilities of the Company and sales of the
Company's commercial paper. However, since the market price of the Notes
presently exceeds the Purchase Price of the Notes, the Company does not
anticipate that a significant dollar amount of Notes will be delivered for
purchase pursuant to Purchase Notices.
The Notes are convertible at the option of the Holders into Company Common
Stock, at a conversion rate of 15.993 shares per $1,000 principal amount at
stated maturity of the Notes, or $31.89 per share based on the closing price of
the Notes on the NYSE on June 24, 1996 and $32.19 per share based on the
Purchase Price. On June 24, 1996, the last reported sale price of the Company
Common Stock on the NYSE Composite Tape was $29.00 per share. Notes tendered and
not withdrawn will cease to be convertible on the Purchase Date.
PURCHASE DATE; AMENDMENT; TERMINATION
The Offer will expire at 12:00 midnight, New York City time, on Wednesday,
July 24, 1996 (the 'Purchase Date'). The Indenture does not provide that the
Offer may be extended and, accordingly, the Offer will not be extended beyond
the Purchase Date.
The Company expressly reserves the absolute right, in its sole discretion,
to (i) waive any condition of the Offer and (ii) amend the terms of the Offer.
Any waiver or amendment applicable to the Offer will apply to all Notes
tendered, regardless of when or in what order such Notes were tendered. If the
Company makes a change in the terms of the Offer or in the information
concerning the Offer in a manner determined by the Company, in its sole
discretion, to constitute a material adverse change to the Holders of Notes, the
Company will disseminate additional material in respect of the Offer, in each
case to the extent required by law.
The Company expressly reserves the right, in its sole discretion, to
terminate the Offer if any of the conditions set forth below under 'Conditions
of the Offer' shall remain unfulfilled and shall not have been
1
<PAGE>
waived. Any such termination will promptly be disclosed by the Company. In the
event the Company shall terminate the Offer, it shall give immediate notice
thereof to the Paying Agent, and all Notes theretofore tendered pursuant to the
Offer and not theretofore accepted for purchase shall be returned promptly to
the tendering Holders thereof. UPON SUCH TERMINATION, THE COMPANY SHALL HAVE NO
OBLIGATION TO PAY THE PURCHASE PRICE WITH RESPECT TO THE NOTES TENDERED PURSUANT
TO THE OFFER, ALTHOUGH THE COMPANY WILL STILL HAVE THE LEGAL OBLIGATION PURSUANT
TO THE TERMS OF THE INDENTURE TO PURCHASE NOTES FROM HOLDERS WHO DELIVERED
PURCHASE NOTICES. See '--Withdrawal of Purchase Notices' and '--Conditions of
the Offer.'
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for purchase or pay for any Notes tendered, and may terminate
or amend the Offer, and may postpone the purchase of, and payment for, Notes
tendered if, at any time prior to the time of payment for any such Notes, any of
the following events shall occur:
(a) a preliminary or permanent injunction or other order by any United
States federal or state court which prevents the acceptance for payment of,
or payment for, some or all of the Notes shall have been issued and shall
remain in effect; or
(b) there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Offer,
by any United States federal or state government or governmental agency or
instrumentality or court, which would (i) render the Company unable to
purchase or pay for the Notes or to consummate the Offer or (ii) make such
purchase, payment or consummation illegal;
which, in the sole judgment of the Company, in any such case, and regardless of
the circumstances (including any action or omission by the Company) giving rise
to any condition, makes it inadvisable to proceed with the Offer or with such
acceptance for purchase or payment.
The conditions to the Offer are for the sole benefit of the Company, and
may be asserted by the Company in its sole discretion regardless of the
circumstances giving rise to such conditions or may be waived by the Company, in
whole or in part, in its sole discretion. The Board of Directors of the Company
has not made a decision as to what circumstances would lead it to waive any such
condition, and any such waiver would depend on circumstances prevailing at the
time of such waiver. Any determination by the Company concerning the events
described in the foregoing paragraph shall be final and binding upon all
persons.
ACCEPTANCE OF NOTES FOR PURCHASE; PAYMENT FOR NOTES
Upon the terms and subject to the conditions of the Offer, on the close of
business on the Purchase Date, the Company is obligated to accept Purchase
Notices from any Holders of Notes who desire to deliver such Notes for
purchase. The Company expressly reserves the right, in its sole discretion, to
delay acceptance for purchase of Notes tendered under the Offer or the payment
for Notes accepted for purchase (subject to Rule 14e-1 under the Exchange Act,
which requires that the Company pay the consideration offered or return the
Notes deposited by or on behalf of the Holders of Notes promptly after the
termination or withdrawal of the Offer), or to terminate the Offer, if any of
the conditions set forth above under '--Conditions of the Offer' shall exist
and shall not have been validly waived by the Company or in order to comply in
whole or in part with any applicable law. See '--Conditions of the Offer.' In
all cases, payment for Notes accepted for purchase pursuant to the Offer will
be made only after timely receipt by the Paying Agent of Notes, a properly
completed and duly executed Purchase Notice and any other documents required by
the Purchase Notice.
The Purchase Notice given by each Holder electing to require the Company to
purchase Notes shall state (i) the certificate numbers of the Notes to be
delivered by such Holder for purchase by the Company; (ii) the portion of the
principal amount at maturity of Notes to be purchased, which portion must be
$1,000 or an integral multiple thereof; and (iii) that such Notes are to be
purchased by the Company pursuant to the applicable provisions of the Notes.
Notes may not be purchased pursuant to the provisions described above if
there has occurred and is continuing an Event of Default (other than a default
in the payment of the Purchase Price with respect to such Notes) as described in
the Indenture.
2
<PAGE>
For purposes of the Offer, the Company will be deemed to have accepted for
purchase validly tendered Notes (or defectively tendered Notes with respect to
which the Company has waived such defect) if, as and when the Company gives oral
or written notice thereof to the Paying Agent. Payment of the Purchase Price for
a Note for which a Purchase Notice has been delivered and not withdrawn is
conditioned upon delivery of such Note (together with necessary endorsements) to
the Paying Agent at its office in the Borough of Manhattan, The City of New
York, or any additional office of the Paying Agent maintained for such purpose,
at any time on or prior to the Purchase Date or, if such Note is not immediately
available or cannot be delivered on a timely basis, in accordance with the
procedures for guaranteed delivery set forth herein (see '--Procedures For
Tendering Notes'). Payment of the Purchase Price for Notes will be made promptly
following the Purchase Date. If the Paying Agent holds, in accordance with the
terms of the Indenture, money or securities sufficient to pay the Purchase Price
of Notes on the business day following the Purchase Date, then, on and after
such date, the Original Issue Discount on such Note will cease to accrue,
whether or not such Note is delivered to the Paying Agent, and all other rights
of the Holder shall terminate (other than the right to receive the Purchase
Price upon delivery of the Note).
The Company shall purchase from the Holder thereof a portion of the Note if
the Principal Amount (as defined in the Indenture) of such portion is $1,000 or
an integral multiple of $1,000.
If, for any reason, acceptance for purchase of or payment for validly
tendered Notes pursuant to the Offer is delayed or the Company is unable to
accept for purchase or pay for validly tendered Notes pursuant to the Offer,
then, without prejudice to the rights of the Company under '--Purchase Date;
Amendment; Termination' and '--Conditions of the Offer' above and '--Withdrawal
of Purchase Notices' below, but subject to Rule 14e-1 under the Exchange Act
(which requires that the Company pay the consideration offered or return the
Notes tendered promptly after the termination or withdrawal of an Offer), the
Paying Agent may, nevertheless, on behalf of the Company, retain tendered Notes
and such Notes may not be withdrawn.
If any tendered Notes are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if certificates are submitted
evidencing more Notes than are tendered, certificates evidencing unpurchased
Notes will be returned, without expense, to the tendering Holder, unless
otherwise requested by such Holder under 'Special Delivery Instructions' in the
Purchase Notice, as promptly as practicable following the Purchase Date or
termination of the Offer.
Tendering Holders of Notes purchased in the Offer will not be obligated to
pay brokerage commissions or fees or to pay transfer taxes with respect to the
purchase of their Notes unless the box entitled 'Special Issuance Instructions'
or the box entitled 'Special Delivery Instructions' in the Purchase Notice has
been completed, as described in the Instructions to such Purchase Notice. The
Company will pay all other charges and expenses of the Company in connection
with the Offer. See '--Paying Agent' below.
PROCEDURES FOR TENDERING NOTES
Holders who do not tender their Notes by delivering a Purchase Notice on or
before the Purchase Date will not receive the Purchase Price. In order for a
Holder to validly tender Notes, a properly completed and duly executed Purchase
Notice, together with any signature guarantees and any other documents required
by the Instructions to such Purchase Notice (including any required signature
guarantees by an Eligible Institution (as defined herein)), must be received by
the Paying Agent at one of its addresses set forth herein and certificates for
tendered Notes (or a duly executed Notice of Guaranteed Delivery) must be
received by the Paying Agent at any of such addresses on or prior to the
Purchase Date. NO BOOK-ENTRY TRANSFERS OF NOTES WILL BE ACCEPTED. A HOLDER WHO
DESIRES TO DELIVER FOR PURCHASE ANY NOTE(S) MUST DELIVER OR ARRANGE FOR PHYSICAL
DELIVERY OF SUCH NOTE(S) TO THE PAYING AGENT PRIOR TO THE PURCHASE DATE. A
Holder who desires to tender Notes and who cannot comply with the procedures set
forth herein for tender on a timely basis or whose Notes are not immediately
available must comply with the procedures for guaranteed delivery set forth
below. PURCHASE NOTICES AND NOTES SHOULD BE SENT ONLY TO THE PAYING AGENT AND
NOT TO THE COMPANY.
If the certificates for Notes are registered in the name of a person other
than the signer of a Purchase Notice, then, in order to tender such Notes, the
certificates for such Notes must be endorsed or accompanied by appropriate bond
powers signed exactly as the name or names of the registered owner or owners
appear on the certificates, with the signatures on the certificates or bond
powers guaranteed as provided below.
3
<PAGE>
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
Notes should contact the registered Holder promptly and instruct such registered
Holder to tender Notes and deliver a Purchase Notice on such beneficial owner's
behalf. If such beneficial owner wishes to tender such Notes himself, such
beneficial owner must, prior to completing and executing the Purchase Notice and
delivery of such Notes, either make appropriate arrangements to register
ownership of the Notes in such beneficial owner's name or follow the procedures
described above. The transfer of record ownership may take considerable time.
THE METHOD OF DELIVERY OF NOTES, PURCHASE NOTICES AND ALL OTHER REQUIRED
DOCUMENTS TO THE PAYING AGENT IS AT THE ELECTION AND RISK OF THE HOLDER
TENDERING NOTES. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER
USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT
THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE PURCHASE DATE TO PERMIT
DELIVERY TO THE PAYING AGENT PRIOR TO SUCH DATE.
No signature guarantee is required if (i) the Purchase Notice is signed by
the registered Holder of the Notes tendered therewith and payment of the
Purchase Price is to be made, or if any Notes for principal amounts not tendered
or not accepted for purchase are to be issued, directly to such registered
Holder and neither the 'Special Issuance Instructions' box nor the 'Special
Delivery Instructions' box on the Purchase Notice has been completed or (ii)
such Notes are tendered for the account of a bank, broker, dealer, credit union,
savings association or other entity that is a member of a recognized Medallion
Program approved by the Securities Transfer Association, Inc. (an 'Eligible
Institution'). In all other cases, all signatures on Purchase Notices
accompanying Notes must be guaranteed by an Eligible Institution.
If a Holder desires to tender Notes pursuant to the Offer, but the
certificates evidencing such Notes have been mutilated, lost, stolen or
destroyed, such Holder should write to or telephone the Trustee, at the address
or telephone number listed below, about procedures for obtaining replacement
certificates for Notes and arranging for indemnification or about any other
matter which requires handling by such Trustee:
Trustee: Harris Trust and Savings Bank
311 West Monroe Street
11th Floor, Bond Service Unit
Chicago, IL 60606
(312) 461-2532
Notwithstanding any other provision of the Offer, payment of the Purchase
Price in exchange for Notes tendered and accepted for purchase pursuant to the
Offer will, in all cases, occur only after timely receipt by the Paying Agent of
the tendered Notes together with a properly completed and duly executed Purchase
Notice and any other required documents.
If a Holder desires to tender Notes pursuant to the Offer, and (i)
certificates representing the Notes are not lost but are not immediately
available or (ii) time will not permit such Holder's certificates representing
Notes or other required documents to reach the Paying Agent prior to the
Purchase Date, a tender may be effected if all of the following are complied
with:
(a) on or prior to the Purchase Date, the Paying Agent has received a
properly completed and duly executed Purchase Notice;
(b) such tender is made by or through an Eligible Institution;
(c) on or prior to the Purchase Date, the Paying Agent has received
from such Eligible Institution at one of the addresses of the Paying Agent
set forth herein, a properly completed and duly executed Notice of
Guaranteed Delivery (at the address specified on the cover thereof)
substantially in the form provided by the Company; and
(d) certificates for all physically delivered Notes pursuant to the
Purchase Notice in proper form for transfer and other required documents
are received by the Paying Agent within three NYSE trading days after the
date of the Notice of Guaranteed Delivery.
4
<PAGE>
Tenders of Notes pursuant to any of the procedures described above and
acceptance thereof by the Company will constitute a binding agreement between
the tendering Holder and the Company upon the terms and subject to the
conditions of the Offer.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders of Notes will be determined by
the Company, in its sole discretion, whose determination shall be final and
binding. CONDITIONAL OR CONTINGENT TENDERS WILL NOT BE CONSIDERED VALID. The
Company reserves the absolute right to reject any or all tenders of Notes that
are not in proper form or the acceptance of which would, in the Company's
opinion, be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tenders to particular Notes. Any defect or
irregularity in connection with tenders of Notes must be cured within such time
as the Company determines, unless waived by the Company. Tenders of Notes shall
not be deemed to have been made until all defects and irregularities have been
waived by the Company or cured. None of the Company, the Paying Agent or any
other person will be under any duty to give notice of any defects or
irregularities in tenders of Notes or delivery of Purchase Notices, or will
incur any liability to Holders for failure to give any such notice.
BACKUP WITHHOLDING
A Holder whose tendered Notes are accepted for purchase must provide the
Paying Agent (as payor) with such Holder's correct taxpayer identification
number, which, in the case of a Holder who is an individual, is such Holder's
social security number, or otherwise establish a basis for exemption from backup
withholding. (In this regard, corporations are generally exempt from backup
withholding provided they properly establish their status when required to do
so.) If the Paying Agent is not provided with the correct taxpayer
identification number or adequate basis for exemption, the Holder may be subject
to penalties imposed by the Internal Revenue Service (the 'IRS') and backup
withholding at a rate of 31%. If withholding results in an overpayment of taxes,
a refund may be obtained from the IRS.
TO PREVENT BACKUP WITHHOLDING, EACH TENDERING HOLDER THAT IS A UNITED
STATES PERSON SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE
PURCHASE NOTICE AND EITHER: (I) PROVIDE ITS CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT THE TAXPAYER IDENTIFICATION NUMBER PROVIDED IS CORRECT
(OR THAT SUCH HOLDER IS AWAITING A TAXPAYER IDENTIFICATION NUMBER) AND (A) THE
HOLDER HAS NOT BEEN NOTIFIED BY THE IRS THAT THE HOLDER IS SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (B)
THE IRS HAS NOTIFIED THE HOLDER THAT THE HOLDER IS NO LONGER SUBJECT TO BACKUP
WITHHOLDING, OR (II) OTHERWISE PROVIDE AN ADEQUATE BASIS FOR EXEMPTION.
WITHDRAWAL OF PURCHASE NOTICES
Any Purchase Notice may be withdrawn by the Holder by a written notice of
withdrawal delivered to the Paying Agent at any time on or prior to the close of
business on the Purchase Date. The notice of withdrawal shall state the
principal amount at maturity and the certificate numbers of the Notes as to
which the withdrawal notice relates and the principal amount at maturity, if
any, which remains subject to the Purchase Notice. Any Notes as to which a
Purchase Notice has been given may be converted into Company Common Stock only
if the applicable Purchase Notice has been withdrawn in accordance with the
terms of the Offer and the Indenture.
If the Company is delayed in its acceptance for purchase of, or payment
for, any Notes pursuant to the Offer or is unable to accept for purchase or pay
for Notes pursuant to the Offer, for any reason, then, without prejudice to the
Company's rights hereunder, tendered Notes may be retained by the Paying Agent
on behalf of the Company and may not be withdrawn (subject to Rule 14e-1 under
the Exchange Act, which requires that the Company pay the consideration offered
or return the Notes deposited by or on behalf of the Holders promptly after the
termination or withdrawal of the Offer). See '--Acceptance of Notes for
Purchase; Payment for Notes.'
CERTAIN EFFECTS OF THE OFFER
The purchase of Notes pursuant to the Offer will reduce the amount of Notes
that might otherwise trade publicly and may reduce the number of holders of
Notes. Nonetheless, it is anticipated that there will be a sufficient amount of
Notes outstanding and publicly traded following the Offer so as to not adversely
affect the
5
<PAGE>
market therefor. Based upon the published guidelines of the NYSE, on which the
Notes are currently listed, it is expected that the purchase of Notes pursuant
to the Offer will not cause the Company's remaining Notes to be delisted from
the NYSE.
The Notes are currently 'margin securities' under the rules of the Federal
Reserve Board, which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Notes. It is expected that, following
the repurchase of Notes pursuant to the Offer, the Notes will continue to be
'margin securities' for purposes of the Federal Reserve Board's margin
regulations.
The Notes are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. It is expected that the purchase of
Notes pursuant to the Offer will not result in the Notes becoming eligible for
termination of registration under the Exchange Act.
PAYING AGENT
Harris Trust and Savings Bank is acting as Paying Agent for the Offer.
Purchase Notices and all correspondence in connection with the Offer should be
sent or delivered by each Holder or a beneficial owner's broker, dealer,
commercial bank, trust company or other nominee to the Paying Agent at the
addresses and telephone number set forth on the back cover page of this Offer to
Purchase. Purchase Notices should be sent to the Paying Agent and should not be
sent directly to the Company.
The Company has agreed to pay the Paying Agent reasonable and customary
fees for its services and to reimburse the Paying Agent for its reasonable
out-of-pocket expenses in connection therewith.
EXPENSES
Costs of this Offer will be borne by the Company. In addition to
compensation to the Paying Agent, the Company will pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Offer to Purchase and any related
documents to the beneficial owners of the Notes, and in handling or forwarding
Purchase Notices for their customers. No charge, expense or fee of any kind will
be payable by any Holder in connection with the Offer.
6
<PAGE>
DESCRIPTION OF THE NOTES
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular sections or defined terms of the
Indenture are referred to, such sections or defined terms are incorporated by
reference. A copy of the Indenture may be obtained from the Commission. See
'Available Information.' A copy may also be obtained, free of charge, by writing
to the Trustee.
The Notes are unsecured, subordinated obligations of the Company limited to
$460,000,000 (including the Over-Allotment Option under the Indenture) aggregate
principal amount at maturity due on July 24, 2006. As of June 25, 1996, there
were outstanding Notes representing $399,850,000 aggregate principal amount at
maturity. Each Note has an Issue Price of $369.43 and a principal amount due at
maturity of $1,000. The yield to maturity of the Notes is 6.75% per annum
(computed on a semi-annual bond equivalent basis) calculated from July 24, 1991.
There are no periodic payments of interest on the Notes.
The Notes are convertible at any time on or prior to maturity at the option
of the Holder, unless previously redeemed or otherwise purchased, into Company
Common Stock at the conversion rate of 15.993 shares per Note (the 'Conversion
Rate'). The Conversion Rate will not be adjusted for accrued Original Issue
Discount, but will be subject to adjustment upon the occurrence of certain
events affecting the Common Stock as set forth in the Indenture. Upon
conversion, the Holder will not receive any cash payment representing accrued
Original Issue Discount; such accrued Original Issue Discount will be deemed
paid by the Company Common Stock received on conversion. The name and address of
the Conversion Agent is Harris Trust and Savings Bank, 311 West Monroe Street,
Chicago, Illinois 60606.
The Notes are subordinated in right of payment to all existing and future
senior indebtedness of the Company and effectively subordinated to indebtedness
and other liabilities of subsidiaries of the Company. No sinking fund provision
exists with respect to the Notes.
Each Note was offered at an Original Issue Discount for federal income tax
purposes equal to the excess of the principal amount at maturity of the Note
over the amount of its Issue Price.
The Notes are presently redeemable in cash at any time, at the option of
the Company, in whole or in part, at Redemption Prices equal to the Issue Price
plus accrued Original Issue Discount to the date of redemption.
On July 24, 1996 and July 24, 2001, the Company will become obligated to
purchase, at the option of the Holder thereof, any outstanding Note for which a
Purchase Notice has been delivered by the Holder to the Paying Agent or an
office or agency maintained by the Paying Agent for such purpose in the Borough
of Manhattan, The City of New York, at any time from the opening of business on
the date that is 20 business days preceding such Purchase Date until the close
of business on such Purchase Date and for which such Purchase Notice has not
been withdrawn, subject to certain conditions set forth below.
The Purchase Price of a Note per $1,000 principal amount at stated maturity
on July 24, 1996 is $514.86, and on July 24, 2001 is $717.54. The Company, at
its option, may elect to pay such Purchase Price in cash or shares of Company
Common Stock or in any combination thereof. The Company has elected to pay the
Purchase Price for the July 24, 1996 Purchase Date in cash.
As of thirty-five (35) business days after the occurrence of any Change in
Control of the Company (as defined in the Indenture) occurring on or prior to
July 24, 1996, subject to certain restrictions, the Company will purchase for
cash any Note, at the option of the Holder, at a price equal to the Issue Price
plus accrued Original Issue Discount to the date set for such purchase. The
ability of the Company to pay the Change in Control Purchase Price (as defined
in the Indenture) could result in acceleration of the maturity of other
indebtedness, including senior indebtedness, of the Company pursuant to certain
cross-default provisions.
7
<PAGE>
PRICE RANGE OF NOTES
AND
COMPANY COMMON STOCK
The following tables contain the high/ask and low/bid prices for the Notes
and the high and low sales prices for the Company Common Stock, respectively, as
listed on the NYSE. The Notes and Company Common Stock are currently traded on
the NYSE. Prices for the Notes set forth below are per $1,000 principal amount
at stated maturity. HOLDERS OF NOTES ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE NOTES.
NOTES
<TABLE>
<CAPTION>
HIGH/ASK LOW/BID
-------- -------
<S> <C> <C>
1994
First Calendar Quarter.......................................................... $ 445.00 $433.75
Second Calendar Quarter......................................................... 442.65 435.00
Third Calendar Quarter.......................................................... 453.75 442.50
Fourth Calendar Quarter......................................................... 457.50 450.00
1995
First Calendar Quarter.......................................................... 475.00 450.00
Second Calendar Quarter......................................................... 485.00 467.50
Third Calendar Quarter.......................................................... 500.00 477.50
Fourth Calendar Quarter......................................................... 540.00 497.50
1996
First Calendar Quarter.......................................................... 550.00 510.00
Second Calendar Quarter (through June 24, 1996)................................. 535.00 440.00
</TABLE>
AS OF THE CLOSE OF BUSINESS ON MONDAY, JUNE 24, 1996, THE MARKET PRICE FOR EACH
$1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF NOTES ON THE NYSE WAS $510.00.
HOLDERS OF THE NOTES ARE URGED TO OBTAIN A CURRENT MARKET PRICE QUOTATION PRIOR
TO DELIVERY OF A PURCHASE NOTICE AND PRIOR TO THE PURCHASE DATE.
Since no periodic interest is paid on the Notes, a portion of the increase
in the market price of the Notes is attributable to accrued original issue
discount. Other factors affect the market price, however, including the
prevailing interest rates, the market price of the Company Common Stock into
which the Notes are convertible, the market's perception of the Company's debt
paying abilities and other factors. Each holder of Notes is urged to contact an
investment advisor.
COMPANY COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995
First Fiscal Quarter............................................................ $20.375 $18.125
Second Fiscal Quarter........................................................... 21.50 18.875
Third Fiscal Quarter............................................................ 24.00 20.00
Fourth Fiscal Quarter........................................................... 26.375 21.625
1996
First Fiscal Quarter............................................................ 25.50 22.25
Second Fiscal Quarter........................................................... 29.00 24.25
Third Fiscal Quarter............................................................ 32.625 26.625
Fourth Fiscal Quarter........................................................... 34.25 30.25
1997
First Fiscal Quarter............................................................ 34.50 27.625
Second Fiscal Quarter (through June 24, 1996)................................... 30.25 28.875
</TABLE>
On June 24, 1996, the last reported sale price of the Company Common Stock
on the NYSE Composite Tape was $29.00 per share.
8
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the principal federal income tax
consequences of the sale of Notes pursuant to the Offer by Holders who are
United States persons and who hold such Notes as capital assets. This summary
does not address the federal income tax consequences to all categories of
Holders, and certain Holders (including insurance companies, tax-exempt
organizations, financial institutions, brokers, dealers, nonresident aliens,
foreign corporations, foreign partnerships and foreign estates) may be subject
to special rules not discussed herein. This summary does not discuss federal tax
consequences other than income tax consequences, and does not discuss foreign,
state or local income or other tax laws. This summary is based upon current
provisions of the Internal Revenue Code of 1986, as amended (the 'Code'),
applicable Treasury Regulations promulgated thereunder, judicial authority and
current Internal Revenue Service rulings and practice, all of which are subject
to change, possibly on a retroactive basis. EACH HOLDER IS URGED TO CONSULT A
TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SELLING NOTES PURSUANT TO THE OFFER, IN LIGHT OF SUCH HOLDER'S
PARTICULAR CIRCUMSTANCES.
The sale of Notes by a Holder pursuant to the Offer will be a taxable
transaction. A selling Holder will recognize gain or loss upon the sale equal to
the difference between the amount of cash received and the Holder's adjusted tax
basis in the Notes sold. The adjusted tax basis of a Holder in a Note generally
will equal the price such Holder paid for the Note, increased by market discount
or original issue discount to the extent that any such market discount or
original issue discount was previously included in income by the Holder, and
reduced (but not below zero) by any amortized bond premium in respect of such
Note.
The gain or loss, if any, realized by a selling Holder generally will be
capital gain or loss and will be long-term capital gain or loss if such Holder
has held its Notes for more than one year at the time of the sale. However, any
Holder who acquired Notes with market discount (i.e., who acquired Notes after
their original issuance for a purchase price less than the issue price of such
Notes increased by the amount of original issue discount includible in the
income of all holders for all periods before the taxpayer's acquisition of the
Notes) generally will be required to treat any gain realized pursuant to the
Offer as ordinary income to the extent of the market discount accrued to the
date of the exchange, less any accrued market discount income previously
reported as ordinary income.
9
<PAGE>
HISTORICAL FINANCIAL INFORMATION
OF THE COMPANY
The following table sets forth certain selected historical financial data
of the Company for each of the last five years. The selected historical
financial data for the last five years has been derived from the audited
historical financial statements of the Company and should be read in conjunction
with such information. See 'Available Information'.
<TABLE>
<CAPTION>
MARCH 2, MARCH 4, FEB. 26, FEB. 27, FEB. 29,
1996 1995 1994 1993 1992
(52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net Sales........................................ $5,446,017 $4,533,851 $4,058,711 $3,833,591 $3,530,560
Cost of goods sold, including occupancy costs.... 4,017,351 3,327,920 2,970,025 2,804,787 2,564,751
Selling, general and administrative expenses..... 1,104,123 932,167 865,137 798,848 741,144
Interest expense................................. 68,341 42,300 28,683 29,387 37,463
Restructuring and other charges.................. -- -- 149,196 -- --
---------- ---------- ---------- ---------- ----------
Income from continuing operations before income
taxes.......................................... 256,202 231,464 45,670 200,569 187,202
Income taxes..................................... 97,255 90,178 19,462 76,819 72,261
---------- ---------- ---------- ---------- ----------
Income from continuing operations................ 158,947 141,286 26,208 123,750 114,941
Income (loss) from discontinued operations, net
of income taxes................................ -- -- (16,920) 8,646 9,075
---------- ---------- ---------- ---------- ----------
Net income....................................... $ 158,947 $ 141,286 $ 9,288 $ 132,396 $ 124,016
---------- ---------- ---------- ---------- ----------
PER SHARE OF COMMON STOCK:
Income from continuing operations................ $ 1.90 $ 1.67 $ .30 $ 1.41 $ 1.32
Net income....................................... $ 1.90 $ 1.67 $ .11 $ 1.51 $ 1.43
Dividends per share.............................. $ .695 $ .62 $ .60 $ .5625 $ .5125
Book value, based on shares outstanding at year
end............................................ $ 13.16 $ 12.02 $ 11.10 $ 11.76 $ 10.82
---------- ---------- ---------- ---------- ----------
YEAR-END FINANCIAL POSITION:
Working capital.................................. $ 835,049 $ 795,995 $ 763,216 $ 811,645 $ 723,195
Current ratio.................................... 2.33:1 2.38:1 3.11:1 4.03:1 3.49:1
Property, plant and equipment (net).............. $ 979,549 $ 778,479 $ 638,694 $ 551,392 $ 502,728
Long-term debt................................... $ 994,321 $ 805,984 $ 613,418 $ 489,220 $ 427,503
Total assets..................................... $2,841,995 $2,472,607 $1,989,070 $1,858,506 $1,734,479
Stockholders' equity............................. $1,103,619 $1,011,812 $ 954,714 $1,035,643 $ 950,575
---------- ---------- ---------- ---------- ----------
</TABLE>
* * *
RECENT FINANCIAL RESULTS
------------------------
On June 24, 1996, the Company announced its sales and earnings for the
first quarter ended June 1, 1996. Sales for the quarter were $1,405,302,000 or
3.7% higher compared to $1,354,841,000 in the first quarter of last year.
Earnings for the period were $32,716,000 or $.39 per share compared to
$38,383,000 or $.46 per share a year earlier. The results for the quarter ended
June 1, 1996 included a pre-tax charge of $16,057,000 for expenses associated
with the attempted acquisition of Revco D.S., Inc. On an after tax basis, the
charge was $9,955,000 or $.12 per share.
10
<PAGE>
DESCRIPTION OF THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011. The telephone number
of the Company at such offices is (717)761-2633. The Company is one of the
largest retail drugstore chains in the United States. As of March 2, 1996, the
Company operated 2,759 drugstores, ranging approximately from 7,200 to 11,000
square feet per store in size, in twenty-one states and the District of
Columbia. The Company and its subsidiaries employed over 35,700 employees.
Pharmacy service forms the core of the Company's business, with prescriptions
accounting for approximately 55% of drugstore sales in the year ended March 2,
1996.
The Company's drugstores cater to convenience, offering a full selection of
health and personal care products, seasonal merchandise and a large private
label product line. Express mail with complementary services and one hour photo
departments have recently been added in select locations.
The Company also operates Eagle Managed Care Corporation, a wholly owned
subsidiary, which markets prescription plans and sells other managed health care
services to large employer and government-sponsored employee benefit programs.
11
<PAGE>
The Purchase Notice, certificates for the Notes and any other required
documents should be sent or hand-delivered by each Holder or his broker, dealer,
commercial bank, trust company or other nominee to the Paying Agent as follows:
The Paying Agent is:
HARRIS TRUST AND SAVINGS BANK
By Mail or Overnight Courier: By Hand:
Harris Trust Company of New York Harris Trust Company of New York
77 Water Street Receive Window
4th Floor 77 Water Street
New York, NY 10005 4th Floor
New York, NY 10005
or or
Harris Trust and Savings Bank Harris Trust and Savings Bank
311 West Monroe Street 311 West Monroe Street
11th Floor, Bond Service Unit 11th Floor, Bond Service Unit
Chicago, Illinois 60606 Chicago, Illinois 60606
Telephone:
(312) 461-2532
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Purchase Notice or other materials may be directed to the
Paying Agent at the telephone number and addresses listed above. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.
<PAGE>
PURCHASE NOTICE
and
LETTER OF TRANSMITTAL
To Tender Zero Coupon Convertible
Subordinated Notes due 2006
of
RITE AID CORPORATION
Pursuant to the Offer to Purchase
Dated June 25, 1996
by
RITE AID CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996.
THE PAYING AGENT FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C>
By Hand: By Overnight Courier or By Mail:
Harris Trust Company of New York Harris Trust Company of New York
Receive Window 77 Water Street
77 Water Street 4th Floor
4th Floor New York, NY 10005
New York, NY 10005
or
or
Harris Trust and Savings Bank
Harris Trust and Savings Bank 311 West Monroe Street
311 West Monroe Street 11th Floor, Bond Service Unit
11th Floor, Bond Service Unit Chicago, Illinois 60606
Chicago, Illinois 60606
</TABLE>
------------------------
NOTE: THE PURCHASE PRICE OF THE NOTES IS $514.86 FOR EACH $1,000 PRINCIPAL
AMOUNT AT STATED MATURITY OF THE NOTES. THE MARKET PRICE FOR EACH $1,000
PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES ON JUNE 24, 1996 WAS $510.00.
HOLDERS ARE URGED TO CONSIDER THE CURRENT MARKET PRICE OF THE NOTES BEFORE
TENDERING SUCH NOTES IN THE OFFER AND PRIOR TO THE PURCHASE DATE.
THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK,
PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A
CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY
OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF THE NOTES ON THE
NEW YORK STOCK EXCHANGE (THE 'NYSE') ON JUNE 24, 1996 AND $32.19 PER SHARE BASED
ON THE PURCHASE PRICE. ON JUNE 24, 1996, THE LAST REPORTED SALE PRICE OF THE
COMPANY COMMON STOCK ON THE NYSE COMPOSITE TAPE WAS $29.00 PER SHARE. NOTES
TENDERED AND NOT WITHDRAWN WILL CEASE TO BE CONVERTIBLE ON THE PURCHASE DATE.
DELIVERY OF THIS PURCHASE NOTICE AND LETTER OF TRANSMITTAL (THE 'PURCHASE
NOTICE') TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS PURCHASE NOTICE SHOULD BE READ CAREFULLY
BEFORE THIS PURCHASE NOTICE IS COMPLETED.
This Purchase Notice is to be completed by holders of Zero Coupon
Convertible Subordinated Notes due 2006 (the 'Notes') of Rite Aid Corporation
(the 'Company') tendering Notes into the Offer (as defined in the Offer to
Purchase (as defined herein)).
Holders of Notes ('Noteholders') whose certificates evidencing Notes ('Note
Certificates') are not immediately available or who cannot deliver their Note
Certificates and all other documents required hereby to the Paying Agent prior
to midnight, New York City time, on July 24, 1996 (the 'Purchase Date') and who
wish to tender their Notes must do so pursuant to the guaranteed delivery
procedure described in 'THE OFFER--Procedures for Tendering Notes' of the Offer
to Purchase. See Instruction 2.
/ / CHECK HERE IF NOTES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY SENT TO THE PAYING AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Noteholder(s): _________________________
Window Ticket No. (if any): __________________________________
Date of Execution of Notice of Guaranteed Delivery: __________
Name of Institution which Guaranteed Delivery: _______________
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF NOTES TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
NOTEHOLDER(S) NOTE CERTIFICATE(S) AND NOTE(S)
(PLEASE FILL IN EXACTLY AS NAME(S) TENDERED
APPEAR(S) ON NOTE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- --------------------------------------------------------------------------------
TOTAL
PRINCIPAL
AMOUNT TOTAL
(AT MATURITY) PRINCIPAL
OF NOTES AMOUNT (AT
NOTE EVIDENCED BY MATURITY)
CERTIFICATE NOTE OF NOTES
NUMBER(S) CERTIFICATE(S) TENDERED*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
TOTAL NOTES:
- --------------------------------------------------------------------------------
</TABLE>
* Unless otherwise indicated, it will be assumed that the entire principal
amount (at maturity) of all Notes evidenced by each Note Certificate
delivered to the Paying Agent is being tendered hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
PURCHASE NOTICE CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Rite Aid Corporation, a Delaware
corporation (the 'Company'), the above-described Zero Coupon Convertible
Subordinated Notes due 2006 (the 'Notes') of the Company pursuant to the terms
and conditions of Paragraph 6 of the Notes and to the Company's offer to
purchase any and all outstanding Notes of the Company, at a purchase price (the
'Purchase Price') of $514.86 for each $1,000 principal amount at stated maturity
of the Notes, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 25, 1996 (the 'Offer
to Purchase'), receipt of which is hereby acknowledged, and in this Purchase
Notice (which, as amended from time to time, together constitute the 'Offer').
The Company has elected to repurchase the Notes for cash pursuant to the terms
of the Notes and the Indenture, dated as of July 15, 1991, between the Company
and Harris Trust and Savings Bank, as trustee, with respect to the Notes (the
'Indenture').
Subject to, and effective upon, acceptance for purchase of the Notes
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Notes that are being tendered hereby
and all interest accrued upon and to accrue upon such Notes and the right to
receive the principal amount of such Notes at maturity and irrevocably appoints
the Paying Agent the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Note Certificates evidencing such Notes, together with
all accompanying evidences of transfer and authenticity, to or upon the order of
the Company, (ii) present such Notes for transfer on the books of the Company
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Notes, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has not
delivered to the Company or the Conversion Agent (as defined in the Indenture)
any notice of conversion of Notes into Company Common Stock with respect to the
Notes tendered hereby and further covenants and agrees not to so convert the
Notes tendered hereby unless such Notes are first withdrawn from the Offer
pursuant to the terms of the Offer to Purchase. The undersigned hereby
represents and warrants that the undersigned has full power and authority to
tender, sell, assign and transfer the Notes tendered hereby, and that when such
Notes are accepted for payment by the Company, the Company will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Notes will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Paying Agent or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Notes tendered hereby.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Notes pursuant to the
procedures described in 'THE OFFER--Procedures for Tendering Notes' of the Offer
to Purchase and in the instructions hereto will constitute the undersigned's
acceptance of the terms and conditions of the Offer. The Company's acceptance of
such Notes for payment will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
Unless otherwise indicated herein in the box entitled 'Special Payment
Instructions,' please issue the check for the purchase price of all Notes
purchased, and return all Note Certificates evidencing Notes not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
'Description of Notes Tendered.' Similarly, unless otherwise indicated in the
box entitled 'Special Delivery Instructions,' please mail the check for the
purchase price of all Notes purchased and all Note Certificates evidencing Notes
not tendered or not purchased (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing above under 'Description
of Notes Tendered.' In the event that the boxes entitled 'Special Payment
Instructions' and 'Special Delivery Instructions' are both completed, please
<PAGE>
issue the check for the purchase price of all Notes purchased and return all
Note Certificates evidencing Notes not purchased or not tendered in the name(s)
of, and mail such check and Note Certificates to, the person(s) so indicated.
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase To be completed ONLY if the check for the purchase price
price of Notes purchased or Note Certificates evidencing of Notes purchased or Note Certificates evidencing Notes
Notes not tendered or not purchased are to be issued in not tendered or not purchased are to be mailed to someone
the name of someone other than the undersigned. other than the undersigned, or to the undersigned at an
address other than that shown under 'Description of Notes
Tendered.'
Issue / / check / / Note Certificate(s) to: Mail / / check / / Note Certificate(s) to:
Name: _____________________________________________ Name: _____________________________________________
(PRINT) (PRINT)
Address: __________________________________________ Address: __________________________________________
___________________________________________________ ___________________________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
___________________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
</TABLE>
<PAGE>
IMPORTANT
NOTEHOLDERS: SIGN HERE
(Please Complete Substitute Form W-9 on Reverse)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Holder(s)
Dated: , 1996
------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Note Certificates or by a person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please provide
the following information. See Instruction 5.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
----------------------------------------------------
Taxpayer Identification or Social Security No.:
---------------------------------
(See Substitute Form W-9 on reverse side)
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Print)
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 1996
--------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Purchase Notice must be guaranteed by a financial institution
(including most banks, savings and loans associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program or the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each an 'Eligible Institution'). No signature guarantee is
required on this Purchase Notice (a) if this Purchase Notice is signed by the
registered holder(s) of Notes tendered herewith, unless such holder(s) has
completed either the box entitled 'Special Delivery Instructions' or the box
entitled 'Special Payment Instructions' above, or (b) if such Notes are tendered
for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Purchase Notice and Note Certificates; Notice of Guaranteed
Delivery. This Purchase Notice is to be used to tender the Note Certificates
forwarded herewith. Note Certificates evidencing all tendered Notes as well as a
properly completed and duly executed Purchase Notice and any other documents
required by this Purchase Notice, must be received by the Paying Agent at one of
its addresses set forth on the front hereof prior to midnight, New York City
time, on July 24, 1996. If Note Certificates are forwarded to the Paying Agent
in multiple deliveries, a properly completed and duly executed Purchase Notice
must accompany each such delivery. Noteholders whose Note Certificates are not
immediately available or who cannot deliver their Note Certificates and all
other required documents to the Depositary prior to midnight, New York City
time, on July 24, 1996 may tender their Notes pursuant to the guaranteed
delivery procedure described in 'THE OFFER--Procedures for Tendering Notes' of
the Offer to Purchase. Pursuant to such procedure: (i) on or prior to the
Purchase Date, the Paying Agent must receive a properly completed and duly
executed Purchase Notice; (ii) such tender must be made by or through an
Eligible Institution; (iii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Company,
must be received by the Paying Agent prior to the midnight, New York City time,
on July 24, 1996; and (iv) the Note Certificates evidencing all physically
delivered Notes in proper form for transfer by delivery, properly completed and
duly executed, with any required signature guarantees, and any other documents
required by this Purchase Notice, must be received by the Paying Agent within
three New York Stock Exchange, Inc. ('NYSE') trading days after the date of
execution of such Notice of Guaranteed Delivery, all as described in 'THE
OFFER--Procedures for Tendering Notes' of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS PURCHASE NOTICE, NOTE CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING NOTEHOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE PAYING
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. By
execution of this Purchase Notice (or a facsimile hereof), all tendering
Noteholders waive any right to receive any notice of the acceptance of their
Notes for payment.
3. Inadequate Space. If the space provided herein under 'Description of
Notes Tendered' is inadequate, the Note Certificate numbers, the number of Notes
evidenced by such Note Certificates and the number of Notes tendered should be
listed on a separate schedule and attached hereto.
4. Partial Tenders. If fewer than all the Notes evidenced by any Note
Certificate delivered to the Paying Agent herewith are to be tendered hereby,
fill in the principal amount at stated maturity of Notes which are to be
tendered in the box entitled 'Total Principal Amount (at maturity) of Notes
Tendered.' The Company will purchase a portion of the Notes evidenced by any
Note Certificate if the Principal Amount (as defined in the Indenture) of such
portion is $1,000 or an integral multiple of $1,000. In such cases, new Note
Certificate(s) evidencing the remainder of the Notes that were evidenced by the
Note Certificates delivered to the Paying Agent herewith will be sent to the
person(s) signing this Purchase Notice, unless otherwise provided in the box
entitled 'Special Delivery Instructions' above, as soon as practicable after the
expiration or termination of the Offer. All Notes evidenced by Note Certificates
delivered to the Paying Agent will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Purchase Notice; Stock Powers and Endorsements. If this
Purchase Notice is signed by the registered holder(s) of the Notes tendered
hereby, the signature(s) must correspond with the name(s) as written on the face
of the Note Certificates evidencing such Notes without alteration, enlargement
or any other change whatsoever.
If any Note tendered hereby is owned of record by two or more persons, all
such persons must sign this Purchase Notice.
If any of the Notes tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Purchase Notices as there are different registrations of such Notes.
<PAGE>
If this Purchase Notice is signed by the registered holder(s) of the Notes
tendered hereby, no endorsements of Note Certificates or separate stock powers
are required, unless payment is to be made to, or Note Certificates evidencing
Notes not tendered or not purchased are to be issued in the name of, a person
other than the registered holder(s), in which case the Note Certificate(s)
evidencing the Notes tendered hereby must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Note Certificate(s). Signatures on such
Note Certificate(s) and bond powers must be guaranteed by an Eligible
Institution.
If this Purchase Notice is signed by a person other than the registered
holder(s) of the Notes tendered hereby, the Note Certificate(s) evidencing the
Notes tendered hereby must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Note Certificate(s). Signatures on such Note Certificate(s)
and bond powers must be guaranteed by an Eligible Institution.
If this Purchase Notice or any Note Certificate or bond power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Company of such person's authority so to act must be submitted.
6. Transfer Taxes. Except as otherwise provided in this Instruction 6,
the Company will pay all transfer taxes with respect to the sale and transfer of
any Notes to it or its order pursuant to the Offer. If, however, payment of the
purchase price of any Notes purchased is to be made to, or Note Certificate(s)
evidencing Notes not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), the amount of any transfer taxes
(whether imposed on the registered holder(s), such other person or otherwise)
payable on account of the transfer to such other person will be deducted from
the purchase price of such Notes purchased, unless evidence satisfactory to the
Company of the payment of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the Note Certificates evidencing the Notes tendered
hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Notes tendered hereby is to be issued, or Note Certificate(s)
evidencing Notes not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Purchase Notice or if such check
or any such Note Certificate is to be sent to someone other than the person(s)
signing this Purchase Notice or to the person(s) signing this Purchase Notice
but at an address other than that shown in the box entitled 'Description of
Notes Tendered' above, the appropriate boxes on this Purchase Notice must be
completed.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Paying Agent at its address
set forth above or by calling (312) 461-2532. Additional copies of the Offer to
Purchase and this Purchase Notice may be obtained from the Paying Agent or from
brokers, dealers, commercial banks or trust companies.
9. Substitute Form W-9. Each tendering Noteholder is required to provide
the Paying Agent with a correct Taxpayer Identification Number ('TIN') on the
Substitute Form W-9 which is provided under 'Important Tax Information' below,
and to certify, under penalties of perjury, that such number is correct and that
such Noteholder is not subject to backup withholding of federal income tax. If a
tendering Noteholder has been notified by the Internal Revenue Service that such
Noteholder is subject to backup withholding, such Noteholder must cross out item
(2) of the Certification box of the Substitute Form W-9, unless such Noteholder
has since been notified by the Internal Revenue Service that such Noteholder is
no longer subject to backup withholding. Failure to provide the information on
the Substitute Form W-9 may subject the tendering Noteholder to 31% federal
income tax withholding on the payment of the purchase price of all Notes
purchased from such Noteholder. If the tendering Noteholder has not been issued
a TIN and has applied for one or intends to apply for one in the near future,
such Noteholder should write 'Applied For' in the space provided for the TIN in
Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9. If
'Applied For' is written in Part I and the Paying Agent is not provided with a
TIN within 60 days, the Paying Agent will withhold 31% on all payments of the
purchase price to such Noteholder until a TIN is provided to the Paying Agent.
10. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Notes has been lost, destroyed or stolen, the Noteholder should
promptly notify the Paying Agent. The Noteholder will then be instructed as to
the steps that must be taken in order to replace the Note Certificate(s). This
Purchase Notice and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS PURCHASE NOTICE PROPERLY COMPLETED AND DULY EXECUTED
(TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND NOTE CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE PAYING AGENT PRIOR TO THE MIDNIGHT,
NEW YORK CITY TIME, ON JULY 24, 1996.
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a Noteholder whose tendered Notes are
accepted for payment is required by law to provide the Paying Agent (as payer)
with such Noteholder's correct TIN on Substitute Form W-9 below. If such
Noteholder is an individual, the TIN is such Noteholder's social security
number. If the Paying Agent is not provided with the correct TIN, the Noteholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such Noteholder with respect to Notes
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain Noteholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Paying Agent. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any payments made to the Noteholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Noteholder
with respect to Notes purchased pursuant to the Offer, the Noteholder is
required to notify the Paying Agent of such Noteholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such Noteholder is awaiting a TIN), and (b) that
(i) such Noteholder has not been notified by the Internal Revenue Service that
such Noteholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such Noteholder that such Noteholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE PAYING AGENT
The Noteholder is required to give the Paying Agent the social security
number or employer identification number of the record holder of the Notes
tendered hereby. If the Notes are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering Noteholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the Noteholder should write 'Applied For' in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If 'Applied For' is
written in Part I and the Paying Agent is not provided with a TIN within 60
days, the Paying Agent will withhold 31% of all payments of the purchase price
to such Noteholder until a TIN is provided to the Paying Agent.
<PAGE>
PAYOR'S NAME: HARRIS TRUST AND SAVINGS BANK
SUBSTITUTE PART I--Taxpayer
FORM W-9 Identification Number-- -------------------------
For all accounts, enter Social Security Number
DEPARTMENT OF THE taxpayer identification OR
TREASURY number in the box at ------------------------
INTERNAL REVENUE SERVICE right. (For most Employee Identification
individuals, this is your Number
social security number.
If you do not have a (If awaiting TIN write
number, see Obtaining a 'Applied For')
Number in the enclosed
Guidelines.) Certify by
signing and dating below.
Note: If the account is
in more than one name,
see the chart in the
enclosed Guidelines to
determine which number to
give the payer.
Payer's Request for PART II--For Payee Exempt From Backup Withholding,
Taxpayer Identification see the enclosed Guidelines and complete as
Number (TIN) instructed herein.
CERTIFICATION--Under penalties of perjury, I
certify that:
(l) The number shown in this form is my correct Taxpayer Identification
Number (or a Taxpayer Identification Number has not been issued to me
and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ('IRS') or Social Security Administration office or (b) I
intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number
within sixty (60) days, 31% of all acceptable payments made to me
thereafter will be withheld until I provide a number), and
(2) I am not subject to backup withholding either because I have not been
notified by the IRS that I am subject to backup withholding as a result
of failure to report all interest or dividends, or the IRS has notified
me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
------------------------------------- ---------------------------------------
SIGNATURE DATE , 1996
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
JUNE 25, 1996
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
Tender of Zero Coupon Convertible
Subordinated Notes due 2006
of
RITE AID CORPORATION
(Not To Be Used For Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
('Note Certificates') evidencing Zero Coupon Convertible Notes due 2006
('Notes'), of Rite Aid Corporation, a Delaware corporation (the 'Company'),
issued pursuant to the Indenture, dated as of July 15, 1991, between the Company
and Harris Trust and Savings Bank, as trustee, are not immediately available or
(ii) if Note Certificates and all other required documents cannot be delivered
to Harris Trust and Savings Bank, as Paying Agent (the 'Paying Agent'), prior to
midnight, New York City time, on July 24, 1996. This Notice of Guaranteed
Delivery may be delivered by hand or mail to the Paying Agent. See 'THE
OFFER--Procedures for Tendering Notes' of the Offer to Purchase.
The Paying Agent for the Offer is:
HARRIS TRUST AND SAVINGS BANK
By Hand: By Overnight Courier or
By Mail:
Harris Trust Company of New York Harris Trust Company of New York
Receive Window 77 Water Street
77 Water Street 4th Floor
4th Floor New York, NY 10005
New York, NY 10005
or or
Harris Trust and Savings Bank Harris Trust and Savings Bank
311 West Monroe Street 311 West Monroe Street
11th Floor, Bond 11th Floor, Bond
Service Unit Service Unit
Chicago, Illinois 60606 Chicago, Illinois 60606
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Purchase Notice and Letter of Transmittal (the 'Purchase Notice') is required to
be guaranteed by an 'Eligible Institution' under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Purchase Notice.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Rite Aid Corporation, a Delaware
corporation (the 'Company'), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'),
and the related Purchase Notice and Letter of Transmittal (the 'Purchase
Notice') (which, as amended from time to time, together constitute the 'Offer'),
receipt of each of which is hereby acknowledged, the aggregate principal amount
at maturity of Notes specified below pursuant to the guaranteed delivery
procedures described in 'THE OFFER--Procedures for Tendering Notes' of the Offer
to Purchase.
<TABLE>
<S> <C>
Principal Amount at
Stated Maturity of Notes: Name(s) of Record Holder(s):
-------------------------- ------------------------------------------------
Certificate Nos. (if available):
--------------------- ------------------------------------------------
(Please Print)
Address(es):
------------------------------------
------------------------------------------------
(Zip Code)
Company Area Code and Tel. No.:
-----------------
Area Code and Tel. No.:
-------------------------
Signature(s):
-----------------------------------
Dated:
----------------------------------------------- ------------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program hereby guarantees to deliver to the Paying
Agent the certificates representing the Notes tendered hereby, in proper form
for transfer of such Notes, together with any other documents required by the
Purchase Notice within three New York Stock Exchange, Inc. trading days after
the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Paying Agent and must deliver the Note Certificates to the
Paying Agent within the time period shown herein. Failure to do so could result
in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
---------------------------------------- ------------------------------------------------
(Authorized Signature)
Address: Title:
--------------------------------------------- ------------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Tel. No.: Date:
------------------------------ -------------------------------------------
</TABLE>
2
<PAGE>
HARRIS TRUST AND SAVINGS BANK
Offer to Purchase for Cash
by
RITE AID CORPORATION
Any and All of Its
Zero Coupon Convertible Subordinated Notes due 2006
At a Purchase Price of $514.86
For each $1,000 Principal Amount at Stated Maturity of Notes
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
We have been appointed by Rite Aid Corporation, a Delaware corporation (the
'Company'), to act as Paying Agent in connection with the Company's offer to
purchase any and all outstanding Zero Coupon Convertible Subordinated Notes due
2006 (the 'Notes') of the Company, at a purchase price (the 'Purchase Price') of
$514.86 for each $1,000 principal amount at stated maturity of the Notes,
payable in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'), and the
related Purchase Notice and Letter of Transmittal (the 'Purchase Notice')
(which, as amended from time to time, together constitute the 'Offer') enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Notes registered in your name or in the name
of your nominee.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated June 25, 1996;
2. Purchase Notice to be used by holders of Notes in accepting the
Offer and tendering Notes;
3. A letter which may be sent to your clients for whose accounts you
hold Notes registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer; and
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 24, 1996.
In all cases, payment for Notes accepted for payment pursuant to the Offer
will be made only after timely receipt by the Paying Agent of certificates
evidencing such Notes, a Purchase Notice properly completed and duly executed
and any other required documents in accordance with the instructions contained
in the Purchase Notice.
The Company will not pay any fees or commissions to any broker, dealer or
other person (other than the Paying Agent as described in the Offer) in
connection with the solicitation of tenders of Notes pursuant to the Offer.
However, the Company will reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Company will pay or cause to be paid any transfer taxes payable
with respect to the transfer of Notes to it, except as otherwise provided in
Instruction 6 of the Purchase Notice.
<PAGE>
Any inquiries you may have with respect to the Offer and requests for
additional copies of the enclosed material should be addressed to the Paying
Agent at our address and telephone number set forth on the back cover page of
the Offer to Purchase.
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY OR THE PAYING AGENT, OR OF ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
2
<PAGE>
Offer to Purchase for Cash
by
RITE AID CORPORATION
Any and All of Its
Zero Coupon Convertible Subordinated Notes due 2006
At a Purchase Price of $514.86
For each $1,000 Principal Amount at Stated Maturity of Notes
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996.
June 25, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated June 25,
1996 (the 'Offer to Purchase'), and a related Purchase Notice and Letter of
Transmittal (the 'Purchase Notice') (which, as amended from time to time,
together constitute the 'Offer') in connection with the Offer by Rite Aid
Corporation, a Delaware corporation (the 'Company'), to purchase any and all
outstanding Zero Coupon Convertible Subordinated Notes due 2006 of the Company,
at a purchase price (the 'Purchase Price') of $514.86 for each $1,000 principal
amount at stated maturity of the Notes, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer.
We are the holder of record of Notes held by us for your account. A TENDER
OF SUCH NOTES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE PURCHASE NOTICE IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER NOTES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Notes held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The Purchase Price is $514.86 for each $1,000 principal amount at
stated maturity of the Notes, payable in cash. THE MARKET PRICE OF THE
NOTES ON JUNE 24, 1996 WAS $510.00 FOR EACH $1,000 PRINCIPAL AMOUNT AT
STATED MATURITY. IF THE THEN CURRENT MARKET PRICE OF THE NOTES FOR EACH
$1,000 PRINCIPAL AMOUNT AT STATED MATURITY IS GREATER THAN $514.86 ON THE
PURCHASE DATE, JULY 24, 1996, ANY HOLDER OF NOTES WHOSE NOTES ARE PURCHASED
IN THE OFFER WILL RECEIVE LESS THAN THE THEN CURRENT MARKET PRICE OF THE
NOTES. HOLDERS OF NOTES ARE URGED TO CONSIDER THE MARKET PRICE OF THE NOTES
BEFORE TENDERING SUCH NOTES IN THIS OFFER AND PRIOR TO THE PURCHASE DATE.
THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK,
PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A
CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED
MATURITY OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF
THE NOTES ON THE NEW YORK STOCK EXCHANGE (THE 'NYSE') ON JUNE 24, 1996 AND
$32.19 PER SHARE BASED ON THE PURCHASE PRICE. ON JUNE 24, 1996, THE LAST
REPORTED SALE PRICE OF THE COMPANY COMMON STOCK ON THE NYSE COMPOSITE TAPE
WAS $29.00 PER SHARE. NOTES TENDERED AND NOT WITHDRAWN WILL CEASE TO BE
CONVERTIBLE ON THE PURCHASE DATE.
2. The Offer is being made for all outstanding Notes.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 24, 1996.
<PAGE>
4. Tendering Noteholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Purchase Notice, transfer taxes with respect to the purchase of Notes by
the Company pursuant to the Offer.
If you wish to have us tender any or all of your Notes, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Notes, all such Notes will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Purchase
Notice and is being made to all holders of Notes. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If the Company becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Notes pursuant thereto, the Company will make a good faith effort
to comply with such state statute. If, after such good faith effort, the Company
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Notes in such state. In
any jurisdiction where the securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Company by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
2
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
by
RITE AID CORPORATION
Any and All of Its
Zero Coupon Convertible Subordinated Notes due 2006
At a Purchase Price of $514.86
For each $1,000 Principal Amount at Stated Maturity of Notes
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated June 25, 1996, and the related Purchase Notice and
Letter of Transmittal (which, as amended from time to time, together constitute
the 'Offer'), in connection with the offer by Rite Aid Corporation, a Delaware
corporation (the 'Company'), to purchase any and all Zero Coupon Convertible
Subordinated Notes due 2006 (the 'Notes') of the Company.
This will instruct you to instruct your nominee to tender the principal
amount at stated maturity of Notes indicated below (or, if no amount is
indicated below, all Notes) that are held for the account of the undersigned,
upon the terms and subject to the conditions set forth in the Offer.
<TABLE>
<CAPTION>
SIGN HERE
<S> <C>
Principal Amount at Stated
Maturity of Notes to be Tendered:
--------------------------- Notes* ----------------------------------------
Account Number:
------------------- ----------------------------------------
Signature(s)
----------------------------------------
Dated: , 1996
----------------------------------------
Please type or print name(s)
----------------------------------------
----------------------------------------
Please type or print address(es) here
----------------------------------------
Area Code and Telephone Number
----------------------------------------
Taxpayer Identification or
Social Security Number(s)
</TABLE>
- ------------------
* Unless otherwise indicated, it will be assumed that all Notes held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
8. Sole proprietorship account The owner(4)
</TABLE>
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
</TABLE>
- ----------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
- --------------------------------------------------------------------------------
RITE AID CORPORATION
$460,000,000
Zero Coupon Convertible Subordinated Notes
due 2006
--------------------
INDENTURE
Dated as of July 15, 1991
--------------------
HARRIS TRUST AND SAVINGS BANK
TRUSTEE
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
TIA Indenture
Section Section
- ------- ---------
310(a)(1)...................................................7.10
(a)(2)...................................................7.10
(a)(3)...................................................N.A.**
(a)(4)...................................................N.A.
(b)......................................................7.8;
7.10
(c)......................................................N.A.
311(a)......................................................7.11
(b)......................................................7.11
(c)......................................................N.A.
312(a)......................................................2.5
(b)......................................................12.3
(c)......................................................12.3
313(a)......................................................7.6
(b)(1)...................................................N.A.
(b)(2)...................................................7.6
(c)......................................................12.2
(d)......................................................7.6
314(a)......................................................4.2;
12.2
(b)......................................................N.A.
(c)(1)...................................................12.4
(c)(2)...................................................12.4
(c)(3)...................................................N.A.
(d)......................................................N.A.
(e)......................................................12.5
(f)......................................................4.3
315(a)......................................................7.1
(b)......................................................7.5;
12.2
(c)......................................................7.1
(d)......................................................7.1
(e)......................................................6.11
- --------
* This Cross Reference Table shall not, for any
purpose, be deemed part of the Indenture.
** N.A. means Not Applicable.
i
<PAGE>
TIA Indenture
Section Section
- ------- ---------
316(a) (last sentence)......................................2.8
(a)(1)(A)................................................6.5
(a)(1)(B)................................................6.4
(a)(2)...................................................N.A.
(b)......................................................6.7
317(a)(1)...................................................6.8
(a)(2)...................................................6.9
(b)......................................................2.4
318(a)......................................................12.1
ii
<PAGE>
TABLE OF CONTENTS*
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions....................................... 1
SECTION 1.2. Other Definitions................................. 6
SECTION 1.3. Incorporation by Reference of Trust
Indenture Act..................................... 7
SECTION 1.4. Rules of Construction............................. 8
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating................................... 8
SECTION 2.2. Execution and Authentication...................... 8
SECTION 2.3. Registrar, Paying Agent and Conversion
Agent............................................. 9
SECTION 2.4. Paying Agent to Hold Money and Securi-
ties in Trust..................................... 10
SECTION 2.5. Securityholder Lists.............................. 11
SECTION 2.6. Transfer and Exchange............................. 11
SECTION 2.7. Replacement Securities............................ 12
SECTION 2.8. Outstanding Securities; Determinations
of Holders' Action................................ 13
SECTION 2.9. Temporary Securities.............................. 14
SECTION 2.10. Cancellation...................................... 14
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.1. Right to Redeem; Notices to Trustee............... 15
SECTION 3.2. Selection of Securities to Be
Redeemed.......................................... 15
SECTION 3.3. Notice of Redemption.............................. 16
SECTION 3.4. Effect of Notice of Redemption.................... 17
SECTION 3.5. Deposit of Redemption Price....................... 18
SECTION 3.6. Securities Redeemed in Part....................... 18
SECTION 3.7. Conversion Arrangement on Call for
Redemption........................................ 18
- --------
* This Table of Contents shall not, for any purpose, be
deemed part of the Indenture.
iii
<PAGE>
Page
SECTION 3.8. Purchase of Securities at Option of
the Holder........................................ 19
SECTION 3.9. Purchase of Securities at Option of
the Holder upon Change in Control................. 28
SECTION 3.10. Effect of Purchase Notice of Change
in Control Purchase Notice........................ 32
SECTION 3.11. Deposit of Purchase Price or Change
in Control Purchase Price......................... 34
SECTION 3.12. Securities Purchased in Part...................... 34
SECTION 3.13. Covenant to Comply with Securities
Laws upon Purchase of Securities.................. 34
SECTION 3.14. Repayment to the Company.......................... 35
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities............................. 35
SECTION 4.2. SEC and Other Reports............................. 36
SECTION 4.3. Compliance Certificate............................ 36
SECTION 4.4. Further Instruments and Acts...................... 37
SECTION 4.5. Maintenance of Office or Agency................... 37
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge or Transfer
Assets............................................ 38
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default................................. 39
SECTION 6.2. Acceleration...................................... 41
SECTION 6.3. Other Remedies.................................... 41
SECTION 6.4. Waiver of Past Defaults........................... 42
SECTION 6.5. Control by Majority............................... 42
SECTION 6.6. Limitation on Suits............................... 42
SECTION 6.7. Rights of Holders to Receive Payment.............. 43
SECTION 6.8. Collection Suit by Trustee........................ 43
SECTION 6.9. Trustee May File Proofs of Claim.................. 44
SECTION 6.10. Priorities........................................ 45
SECTION 6.11. Undertaking for Costs............................. 45
SECTION 6.12. Notice of Defaults................................ 46
SECTION 6.13. Waiver of Stay, Extension or Usury
Laws.............................................. 46
iv
<PAGE>
Page
ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee................................. 47
SECTION 7.2. Rights of Trustee................................. 48
SECTION 7.3. Individual Rights of Trustee...................... 49
SECTION 7.4. Trustee's Disclaimer.............................. 49
SECTION 7.5. Notice of Defaults................................ 49
SECTION 7.6. Reports by Trustee to Holders..................... 49
SECTION 7.7. Compensation and Indemnity........................ 50
SECTION 7.8. Replacement of Trustee............................ 50
SECTION 7.9. Successor Trustee by Merger....................... 52
SECTION 7.10. Eligibility; Disqualification..................... 52
SECTION 7.11. Preferential Collection of Claims
against Company................................... 52
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1. Discharge of Liability on
Securities........................................ 52
SECTION 8.2. Repayment to the Company.......................... 53
ARTICLE 9
AMENDMENTS
SECTION 9.1. Without Consent of Holders........................ 53
SECTION 9.2. With Consent of Holders........................... 54
SECTION 9.3. Compliance with Trust Indenture Act............... 55
SECTION 9.4. Revocation and Effect of Consents,
Waivers and Actions............................... 55
SECTION 9.5. Notation on or Exchange of
Securities........................................ 56
SECTION 9.6. Trustee to Sign Supplemental
Indentures........................................ 56
SECTION 9.7. Effect of Supplemental Indentures................. 57
ARTICLE 10
SUBORDINATION
SECTION 10.1. Securities Subordinate to Senior
Indebtedness...................................... 57
SECTION 10.2. Payment over of Proceeds Upon
Dissolution, etc.................................. 57
SECTION 10.3. Acceleration of Securities........................ 60
v
<PAGE>
Page
SECTION 10.4. Default on Senior Indebtedness.................... 60
SECTION 10.5. Payment Permitted If No Default................... 62
SECTION 10.6. Subrogation to Rights of Holders of
Senior Indebtedness............................... 62
SECTION 10.7. Provisions Solely to Define Relative
Rights............................................ 63
SECTION 10.8. Trustee to Effectuate Subordination............... 63
SECTION 10.9. No Waiver of Subordination
Provisions........................................ 64
SECTION 10.10. Notice to Trustee................................. 64
Section 10.11. Reliance on Judicial Order or
Certificate of Liquidating Agent.................. 66
SECTION 10.12. Trustee Not Fiduciary for Holders of
Senior Indebtedness............................... 66
SECTION 10.13. Rights of Trustee as Holder of
Senior Indebtedness; Preservation of
Trustee's Rights.................................. 66
SECTION 10.14. Article 10 Applicable to Paying
Agents............................................ 67
ARTICLE 11
CONVERSION
SECTION 11.1. Conversion Privilege.............................. 67
SECTION 11.2. Conversion Procedure.............................. 69
SECTION 11.3. Fractional Shares................................. 71
SECTION 11.4. Taxes on Conversions.............................. 71
SECTION 11.5. Company to Provide Stock.......................... 71
SECTION 11.6. Adjustment for Change in Capital
Stock............................................. 72
SECTION 11.7. Adjustment for Rights Issue....................... 73
SECTION 11.8. Adjustment for Other Distributions................ 74
SECTION 11.9. When Adjustment May Be Deferred................... 77
SECTION 11.10. When No Adjustment Required....................... 77
SECTION 11.11. Notice of Adjustment.............................. 78
SECTION 11.12. Voluntary Increase................................ 78
SECTION 11.13. Notice of Certain Transactions.................... 78
SECTION 11.14. Reorganization of Company; Special
Distributions..................................... 79
SECTION 11.15. Company Determination Final....................... 80
SECTION 11.16. Trustee's Adjustment Disclaimer................... 80
SECTION 11.17. Simultaneous Adjustments.......................... 81
SECTION 11.18. Successive Adjustments............................ 81
SECTION 11.19. Rights Issued in Respect of Common
Stock Issued Upon Conversion...................... 81
vi
<PAGE>
Page
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. Trust Indenture Act Controls...................... 81
SECTION 12.2. Notices........................................... 82
SECTION 12.3. Communication by Holders with Other
Holders........................................... 83
SECTION 12.4. Certificate and Opinion as to
Conditions Precedent.............................. 83
SECTION 12.5. Statements Required in Certificate or
Opinion........................................... 83
SECTION 12.6. Separability Clause............................... 84
SECTION 12.7. Rules by Trustee, Paying Agent,
Conversion Agent and Registrar.................... 84
SECTION 12.8. Legal Holidays.................................... 84
SECTION 12.9. GOVERNING LAW..................................... 84
SECTION 12.10. No Recourse Against Others........................ 84
SECTION 12.11. Successors........................................ 84
SECTION 12.12. Multiple Originals................................ 85
SIGNATURES........................................................ 86
EXHIBIT A Form of Security
vii
<PAGE>
INDENTURE, dated as of July 15, 1991, between Rite Aid Corporation, a
Delaware corporation (the "Company"), and Harris Trust and Savings Bank, an
Illinois banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's Zero Coupon
Convertible Subordinated Notes due 2006 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"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 or cause the direction of 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.
"Board of Directors" means, with respect to any matter, either the board of
directors of the Company or any committee of such board authorized, with respect
to such matter, to exercise the powers of such board.
"Business Day" means each day of the year on which banking institutions in
the City of New York are not required or authorized to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"Capitalized Lease Obligations" means, with respect to any person, all
obligations of such person under any agreement to lease, or lease of, any real
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personal property that are required to be capitalized for financial reporting
purposes in accordance with generally accepted accounting principles and the
amount of such Debt shall be the capitalized amount of such obligations
determined in accordance with such principles.
"Cash" or "cash" means such coin or currency of the United States as at any
time of payment is legal tender for the payment of public and private debts.
"Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, a Vice Chairman,
its President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Debt" means (i) all indebtedness for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of the borrower or only to
a portion thereof and including all indebtedness evidenced by notes, bonds,
debentures, or other securities sold for money), (ii) all indebtedness incurred
or assumed in the acquisition (whether by way of purchase, merger,
consolidation, or otherwise) of any business, real property, or other assets
(except assets other than real property acquired in the ordinary course of the
conduct of the acquirer's usual business), (iii) all Capitalized Lease
Obligations, (iv) Hedging Obligations, (v) guarantees of indebtedness described
in clauses (i), (ii), (iii), or (iv) of any other person and (vi) renewals,
extensions, refundings, deferrals, restructurings, amendments, and modifications
of any such indebtedness (including, without limitation, by way of exchange
offers), obligation, or guarantee.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Hedging Obligations" means with respect to the
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Company, the net liability of the Company under interest rate swap agreements
and interest rate collar agreements, and all other agreements or arrangements
designed to protect the Company against fluctuations in interest rates or
currency exchange rates.
"Holder" or "Securityholder" means a person in whose name a Security is
registered on the Registrar's books.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is sold
as set forth on the face of the Security.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 12.4 and 12.5, signed in the name of the
Company by its Chairman of the Board, a Vice Chairman, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 12.4 and 12.5, rendered by legal counsel who is acceptable
to the Trustee. The counsel may be an employee of, or counsel to, the Company or
the Trustee.
"Original Issue Discount" of any Security means the difference between the
Issue Price and the Principal Amount of the Security as set forth on the face of
the Security.
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"Person" or "person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Principal" or "Principal Amount" of a Security means the Principal Amount
as set forth on the face of the Security.
"Redemption Date" or "redemption date" shall mean the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.
"Redemption Price" or "redemption price" shall have the meaning set forth
in paragraph 5 of the Securities.
"Sale Price" means, for any given day, the last reported per share sale
price (or, if no sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and average
ask prices) on such day of the Common Stock on the New York Stock Exchange
Composite Tape or, in the event shares of Common Stock are not listed on the New
York Stock Exchange, such other national or regional securities exchange upon
which the Common Stock is listed, or, if the shares of Common Stock are not
listed on a national or regional securities exchange, as quoted on the National
Association of Securities Dealers Automated Quotation System or by the National
Quotation Bureau Incorporated. In the absence of one or more such quotations
specified in the definition of Sale Price, the Company shall determine such
price on the basis of such quotations as it deems appropriate.
"SEC" means the Securities and Exchange Commission.
"Securities" means any of the Company's Zero Coupon Convertible
Subordinated Notes due 2006, as amended or supplemented from time to time in
accordance with the terms hereof, issued under this Indenture.
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"Securityholder" or "Holder" means a person in whose name a Security is
registered on the Registrar's books.
"Senior Indebtedness" means the principal of, (and premium, if any) and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law, but only to the extent
allowed or permitted to the holder of such Debt against the bankruptcy or any
other insolvency estate of the Company in such proceeding) or accrued Original
Issue Discount on and other amounts due on or in connection with any Debt
incurred, assumed or guaranteed by the Company whether outstanding on the date
of the Indenture or thereafter incurred, assumed or guaranteed, and all
renewals, extensions and refundings of any such Debt; provided, however, that
the following will not constitute Senior Indebtedness; (i) any Debt which
expressly provides (a) that such Debt shall not be senior in right of payment to
the Securities, or (b) that such Debt shall be subordinated to any other Debt of
the Company, unless such Debt expressly provides that such Debt shall be senior
in right of payment to the Securities; (ii) any Debt of the Company in respect
of the Securities; (iii) any Debt or liability for compensation to employees,
for goods or materials purchased in the ordinary course of business or for
services; (iv) any Debt of the Company to any subsidiary for money borrowed or
advanced from such subsidiary; and (v) any liability for federal, state, local
or other taxes owed or owing by the Company.
"Stated Maturity," when used with respect to any Security, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal of such Security is due and payable.
"Subsidiary" means (i) a corporation, a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is, at the
date of determination, directly or indirectly owned by the Company, by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company or (ii) a partnership in which the Company or a Subsidiary of the
Company is, at the date of determination, a general partner of such partnership,
or (iii) any other person (other than a corporation or a
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partnership) in which the Company, a Subsidiary of the Company or the Company
and one or more Subsidiaries of the Company, directly or indirectly, at the date
of determination, has (x) at least a majority ownership interest or (y) the
power to elect or direct the election of a majority of the directors or other
governing body of such person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture; provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.
"Trading Day" means each day on which the securities exchange which is used
to determine the Sale Price is open for trading or quotation.
"Trust Officer" means any officer of the Trustee assigned by the trustee to
administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
SECTION 1.2. Other Definitions.
Defined in
Term Section
---- -------
"Associate".................................. 3.9(a)
"Average Sale Price"......................... 11.1
"Bankruptcy Law"............................. 6.1
"beneficial owner"........................... 3.9(a)
"Change in Control".......................... 3.9(a)
"Change in Control Purchase Date"............ 3.9(a)
"Change in Control Purchase Notice".......... 3.9(c)
"Change in Control Purchase Price"........... 3.9(a)
"Common Stock"............................... 3.9(a)
"Company Notice"............................. 3.8(e)
"Company Notice Date"........................ 3.8(e)
"Conversion Agent"........................... 2.3
"Conversion Date"............................ 11.2
"Conversion Rate"............................ 11.1
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"Custodian".................................. 6.1
"Event of Default"........................... 6.1
"Exchange Act"............................... 3.8(d)
"Ex-Dividend Time"........................... 11.1
"Extraordinary Cash Dividend"................ 11.8
"Grass Family"............................... 3.9(a)
"Legal Holiday".............................. 12.8
"Market Price"............................... 3.8(d)
"Notice of Default".......................... 6.1
"Over-Allotment Option"...................... 2.2
"Paying Agent"............................... 2.3
"Purchase Date".............................. 3.8(a)
"Purchase Notice"............................ 3.8(a)
"Purchase Price"............................. 3.8(a)
"Registrar".................................. 2.3
"Rights"..................................... 3.8(d)
"Rights Agreement"........................... 3.8(d)
"Securities Act"............................. 3.8(d)
"Time of Determination"...................... 11.1
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, such provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
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SECTION 1.4. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time in the United States;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the plural
include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A, which is a
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage (provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
SECTION 2.2. Execution and Authentication. The Securities shall be executed
on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and
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delivery of such Securities or did not hold such offices at the date of such
Securities.
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 of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and make available for delivery Securities
for original issue in an aggregate Principal Amount at maturity of up to
$400,000,000 upon a Company order without any further action by the Company;
provided, however, that in the event that the Company sells any Securities
pursuant to the Underwriter's over-allotment option (the "Over-Allotment
Option") granted pursuant to Section 2 of the Underwriting Agreement between the
Company and Bear, Stearns & Co. Inc. and Smith Barney, Harris Upham & Co.
Incorporated, dated July 17, 1991, then the Trustee shall authenticate and make
available for delivery Securities for original issue in an aggregate Principal
Amount at maturity of up to $400,000,000 plus up to $60,000,000 aggregate
Principal Amount at maturity of Securities sold pursuant to the Over-Allotment
Option upon a Company Order without further action by the Company. The aggregate
Principal Amount of Securities Outstanding at any time may not exceed the amount
set forth in the foregoing sentence, subject to the proviso set forth therein,
except as provided in Section 2.7.
SECTION 2.3. Registrar, Paying Agent and Conversion Agent. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for purchase or payment ("Paying Agent") and
an office or agency where Securities may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may have one or more co-registrars,
one or more additional paying agents and one or more additional conversion
agents. The term Paying Agent includes any addi-
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tional paying agent. The term Conversion Agent includes any additional
conversion agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or
the Company). The agreement shall implement the provisions of this Indenture
that relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.7. The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar,
Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Registrar, Conversion Agent
and Paying Agent in connection with the Securities.
SECTION 2.4. Paying Agent to Hold Money and Securities in Trust. Except as
otherwise provided herein, prior to or on each due date of payments in respect
of any Security, the Company shall deposit with the Paying Agent a sum of money
or, if permitted by the terms hereof, securities sufficient to make such
payments when so becoming due. The Company shall require each Paying Agent
(other than the Trustee or the Company) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money and securities held by the Paying Agent for the making of payments in
respect of the Securities and shall notify the Trustee of any default by the
Company in making any such payment. At any time during the continuance of any
such default, the Paying Agent shall, upon the written request of the Trustee,
forthwith pay to the Trustee all money and securities so held in trust. If the
Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it
shall segregate the money and securities held by it as Paying Agent and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money and securities held by it to the Trustee and to account for any
money and securities disbursed by it. Upon doing so, the Paying Agent shall have
no further liability for the money and securities.
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SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders. If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee (i) at least semiannually on
July 1 and January 1 a list of the names and addresses of Securityholders dated
within 15 days of the date on which the list is furnished and (ii) at such other
times as the Trustee may request in writing, within 30 days of such written
request, a list, in such form as the Trustee may reasonably require, of the
names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange. Upon surrender for registration of
transfer of any Security at the office or agency of the Company designated as
Registrar or co-registrar pursuant to Section 2.3 or at the office or agency
referred to in Section 4.5, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate Principal Amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Securities from the Securityholder requesting such transfer
or exchange (other than any exchange of a temporary Security for a definitive
Security not involving any change in ownership).
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of (a) Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion
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thereof not to be redeemed), (b) Securities in respect of which a Purchase
Notice or a Change in Control Purchase Notice has been given and not withdrawn
by the Holder thereof in accordance with the terms of this Indenture (except, in
the case of Securities to be purchased in part, the portion thereof not to be
purchased) or (c) any Securities for a period of 15 days before a selection of
Securities to be redeemed.
SECTION 2.7. Replacement Securities. If (a) any mutilated Security is
surrendered to the Company or the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute, and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and Principal Amount, bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.7, 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) in connection
therewith.
Every new Security issued pursuant to this Section 2.7 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 benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
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The provisions of this Section 2.7 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8. Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those paid for or purchased by the Company pursuant to Section 2.7
and those described in this Section 2.8 as not outstanding. A Security does not
cease to be outstanding because the Company or an Affiliate thereof holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount of Securities have given or concurred in 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 such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following a Purchase Date or a Change in
Control Purchase Date, or on Stated Maturity, money or, if permitted by the
terms hereof, securities sufficient to pay the Securities payable on that date,
then immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount and interest, if any, on
such Securities shall cease to accrue; provided that if such
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Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made.
If a Security is converted in accordance with Article 11, then from and
after such conversion such Security shall cease to be outstanding and Original
Issue Discount and interest, if any, shall cease to accrue on such Security.
SECTION 2.9. 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
conclusively evidenced by their execution of such 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 the office
or agency of the Company designated for such purpose pursuant to Section 2.3,
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 a like Principal Amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefit under
this Indenture as definitive Securities.
SECTION 2.10. Cancellation. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, redemption, conversion pursuant
to Article 11, or registration of transfer or exchange shall, if surrendered to
any person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenti-
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cated and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. The Company may not reissue, or issue new Securities to replace
Securities it has paid or delivered to the Trustee for cancellation or that any
Holder has converted pursuant to Article 11. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section 2.10, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be destroyed by the Trustee and
evidence of their destruction delivered to the Company unless the Company
directs by Company Order that the Trustee deliver cancelled Securities to the
Company.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.1. Right to Redeem; Notices to Trustee. The Company, at its
option, may redeem the Securities for cash in accordance with the provisions of
paragraphs 5 and 7 of the Securities. If the Company elects to redeem Securities
pursuant to paragraph 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the Principal Amount of Securities to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.1 at least 30 days but not more than 60 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee). If fewer
than all the Securities are to be redeemed, the record date relating to such
redemption shall be selected by the Company and given to the Trustee, which
record date shall not be less than 10 days after the date of notice to the
Trustee.
SECTION 3.2. Selection of Securities to Be Redeemed. If less than all the
outstanding securities are to be redeemed, the Trustee shall select the Securi-
ties to be redeemed pro rata or by lot or by a method the Trustee considers fair
and appropriate (so long as such method is not prohibited by the rules of any
stock exchange on which the Securities are then listed). The
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Trustee shall make the selection at least 30 but not more than 60 days before
the Redemption Date from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the Principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in Principal Amounts of $1,000 or an
integral multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
If any Security selected for partial redemption is thereafter surrendered
for conversion 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), solely for purposes of determining
the aggregate Principal Amount of Securities to be redeemed by the Company, to
be the portion selected for redemption. Securities that have been converted
during a selection of Securities to be redeemed may be treated by the Trustee as
outstanding for the purpose of such selection. Nothing in this section 3.2 shall
affect the right of any Holder to convert any Security pursuant to Article 11
before the termination of the conversion right with respect thereto.
SECTION 3.3. Notice of Redemption. At least 15 days but not more than 60
days before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the CUSIP number;
(5) the name and address of the Paying Agent and Conversion Agent;
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(6) that Securities called for redemption may be converted at any time
before the close of business on the Redemption Date;
(7) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(8) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(9) if fewer than all the outstanding Securities are to be redeemed,
the identification and Principal Amounts of the particular Securities to be
redeemed; and
(10) that, unless the Company defaults in making such redemption
payment, Original Issue Discount on Securities called for redemption, and
interest, if any, will cease to accrue on and after the Redemption Date.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that in all cases, the text of such notice of redemption shall be
prepared by the Company.
If the redemption occurs prior to July 24, 1993, prior to mailing the
foregoing notice the Company shall deliver to the Trustee an Officers'
Certificate stating that the restriction on such redemption set forth in
paragraph 5 of the Securities has been complied with; provided, however, that
the stock price stated in paragraph 5 of the Securities shall be proportionately
adjusted to give effect to any (i) dividend or distribution of Common Stock in
shares of Common Stock, (ii) subdivision of outstanding shares of Common Stock
into a greater number of shares of Common Stock or (iii) combination of
outstanding shares of Common Stock into a smaller number of shares of Common
Stock.
SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption is
given, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price stated in the notice, except
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for Securities that are converted in accordance with the terms of this
Indenture. Upon the later of the Redemption Date and the date such Securities
are surrendered to the Paying Agent, such Securities called for redemption shall
be paid at the Redemption Price stated in the notice.
SECTION 3.5. Deposit of Redemption Price. Prior to or on the Redemption
Date, the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which prior thereto have been delivered by the
Company to the Trustee for cancellation or have been converted. The Paying Agent
shall as promptly as practicable return to the Company any money not required
for that purpose because of conversion of Securities pursuant to Article 11. If
such money is then held by the Company or a Subsidiary or an Affiliate of the
Company in trust and is not required for such purpose, it shall be discharged
from such trust.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a Security that
is redeemed in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder, a new Security in an authorized
denomination equal in Principal Amount to the unredeemed portion of the Security
surrendered.
SECTION 3.7. 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 called for redemption by an agreement with one or
more investment bankers or other purchasers to purchase all or a portion of such
Securities by paying to the Paying Agent in trust for the Securityholders whose
Securities are to be so purchased, on or before the close of business on the
Redemption Date, an amount that, together with any amounts deposited with the
Paying Agent by the Company for the redemption of such Securities, is not less
than the Redemption Price, together with interest, if any, accrued to the
Redemption Date, of such Securities. Notwithstanding anything to the contrary
contained in this Article 3, the obligation of the Company to pay the Redemption
Price of such Secu-
18
<PAGE>
rities, including all accrued interest, if any, 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, 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 (notwithstanding anything to the contrary contained in Article 11)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the Redemption Date, subject to payment of the above
amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose
Securities are selected for redemption any such amount paid to it in the same
manner as it would moneys deposited with it by the Company for the redemption of
Securities. Without the prior written consent of the Trustee and the Paying
Agent, 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 or the Paying
Agent as set forth in this Indenture, and the Company agrees to indemnify the
Trustee and the Paying Agent 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, including the costs and expenses incurred by the Trustee and the
Paying Agent 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.
SECTION 3.8. Purchase of Securities at Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant to
paragraph 6 of the Securities as of July 24, 1996 and July 24, 2001 (each, a
"Purchase Date"), at the purchase price specified therein (each, a "Purchase
Price"), at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written notice of
purchase (a "Purchase Notice") at any time from the opening of business on
the date that is 20 Business Days prior to a
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<PAGE>
Purchase Date until the close of business on such Purchase Date, stating:
(A) the certificate number of the Security that the Holder will
deliver to be purchased,
(B) the portion of the Principal Amount of the Security that the
Holder will deliver to be purchased, which portion must be $1,000 or
an integral multiple thereof,
(C) that such Security shall be purchased pursuant to the terms
and conditions specified in paragraph 6 of the Securities, and
(D) whether, if the Company elects pursuant to a Company Notice
to pay the Purchase Price on such Purchase Date, in whole or in part,
in Common Stock, but such portion of the Purchase Price is ultimately
to be paid in cash because any condition in Section 3.8(d) is not
satisfied, such Holder elects (x) to withdraw such Purchase Notice as
to some or all of the Securities to which it relates (stating the
Principal Amount and certificate numbers of the Securities as to which
such withdrawal shall relate), or (y) to receive cash in respect of
the entire Purchase Price for all Securities subject to such Purchase
Notice; and
(2) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements), such
delivery being a condition to receipt by the Holder of the Purchase Price
therefor; provided, however, that such Purchase Price shall be so paid
pursuant to this Section 3.8 only if the Security so delivered conforms in
all respects to the description thereof in the related Purchase Notice.
If a Holder fails to indicate in such Holder's Purchase Notice and in any
written notice of withdrawal delivered by such Holder pursuant to the terms of
Section 3.10 a choice with respect to the election described in clause (1)(D)
above, such Holder shall be deemed to have elected to receive cash in respect of
the Purchase Price
20
<PAGE>
otherwise payable in Common Stock for all Securities subject to such Purchase
Notice in the circumstances set forth in such clause (1)(D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.
Each purchase pursuant to this Section 3.8 shall be consummated by the
delivery of the consideration to be received by the Holder promptly following
the later of the Purchase Date and the time of delivery of the Security to the
Paying Agent.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent a Purchase Notice shall have the right at any time prior to the
close of business on the Purchase Date to withdraw such Purchase Notice by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price. The
Securities to be purchased pursuant to Section 3.8(a) may be paid for, at the
election of the Company, in cash or Common Stock, or in any combination of cash
or Common Stock, subject to the conditions set forth in Sections 3.8(c) and (d).
The Company shall designate, in the Company Notice delivered pursuant to Section
3.8(e), whether the Company will purchase the Securities for cash or Common
Stock, and, if a combination thereof, the percentages of the Purchase Price of
Securities in respect of which it will pay in cash or Common Stock; provided
that the Company will pay cash for fractional interests in Common Stock. For
purposes of determining the existence of potential fractional interests, all
Securities subject to purchases by the Company held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented).
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<PAGE>
Each Holder whose Securities are purchased pursuant to this Section 3.8 shall
receive the same percentage of cash of Common Stock in payment of the Purchase
Price for such Securities, except (i) as provided in Section 3.8(d) with regard
to the payment of cash in lieu of fractional shares of Common Stock and (ii) in
the event that the Company is unable to purchase the Securities of a Holder or
Holders for Common Stock because any necessary qualifications or registrations
of the Common Stock under applicable state securities laws cannot be obtained,
the Company may purchase the Securities of such Holder or Holders for cash. The
Company may not change the form of consideration (or components or percentages
of components thereof) to be paid in respect of the Purchase Price once the
Company has given its Company Notice thereof to Securityholders, except, as set
forth in Section 3.8(d), in the event of a failure to satisfy, prior to the
close of business on the Purchase Date, any condition to the payment of the
Purchase Price, in whole or in part, in Common Stock.
At least two Business Days before the Company Notice Date, the Company
shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.8(e),
(iii) if the Company elects to pay the Purchase Price, or a specified
percentage thereof, in Common Stock, that the conditions to such manner of
payment set forth in Section 3.8(d) have been or will be complied with, and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.8(e).
(c) Payment by Cash. On each Purchase Date, at the option of the Company,
the Purchase Price of the Securities in respect of which a Purchase Notice
pursuant to Section 3.8(a) has been given, or a specified percentage thereof,
may be purchased by the Company with cash equal to the aggregate Purchase Price
of such Securities.
22
<PAGE>
(d) Conditions to Payment by Issuance of Common Stock. On each Purchase
Date, at the option of the Company, the Purchase Price of Securities in respect
of which a Purchase Notice pursuant to Section 3.8(a) has been given, or a
specified percentage thereof, may be paid by the Company by the issuance of a
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the amount of cash to which the Securityholders would have been entitled had the
Company elected to pay all or such specified percentage, as the case may be, of
the Purchase Price of such Securities in cash by (ii) the Market Price of a
share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue any fractional shares of Common Stock in payment
of the Purchase Price. Instead the Company will pay cash for the current market
value of such fractional shares. The current market value of a fraction of a
share shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Security purchased, the number of Shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.
Each share of Common Stock issued upon purchase of Securities pursuant to
Section 3.8(a) shall be entitled to receive the appropriate number of preferred
stock purchase rights (the "Rights"), if any, and the certificates representing
the Common Stock issued upon such conversion shall bear such legends, if any, in
each case as provided by the terms of the Rights Agreement, dated as of April 5,
1989, between the Company and Harris Trust Company of New York, as Rights Agent
(the "Rights Agreement"), as in effect at the time of such purchase.
The Company's right to exercise its election to purchase the Securities
pursuant to Section 3.8 through the issuance of shares of Common Stock shall be
conditioned upon:
(i) the Company's not having given its Company Notice of an election
to pay entirely in cash and its giving of timely Company Notice of an
election to purchase all or a specified percentage of the Securities with
Common Stock as provided
23
<PAGE>
herein;
(ii) the registration of the shares of Common Stock to be issued in
respect of the payment of the Purchase Price under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), if required;
(iii) in respect of any Holder, any necessary qualification or
registration under applicable state securities laws or the availability of
an exemption from such qualification or registration; and
(iv) the receipt by the Trustee on or prior to the Purchase Date of an
Officers' Certificate and an Opinion of Counsel each stating that (A) the
terms of the issuance of the Common Stock are in conformity with this
Indenture and (B) the shares of Common Stock to be issued by the Company in
payment of the Purchase Price in respect of Securities have been duly
authorized and, when issued and delivered pursuant to the terms of this
Indenture in payment of the Purchase Price in respect of Securities, will
be validly issued, fully paid and nonassessable and shall be free of any
preemptive rights and any lien or adverse claim, and, in the case of such
Officers' Certificate, stating that conditions (i), (ii) and (iii) above
and the condition set forth in the second succeeding sentence have been
satisfied and, in the case of such Opinion of Counsel, stating that
conditions (ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth in the number of shares of
Common Stock to be issued for each $1,000 Principal Amount of Securities and the
Sale Price of a share of Common Stock for the five Trading Day period ending on
(if the third Business Day prior to the applicable Purchase Date is a Trading
Day, or if not, then on the last Trading Day Prior to) the third Business Day
prior to the Purchase Date. The Company may pay the Purchase Price (or any
portion thereof) in Common Stock only if the information necessary to calculate
the Market Price is reported in a daily newspaper of national circulation. If
such conditions are not satisfied with respect to a Holder or Holders prior to
or on the Purchase
24
<PAGE>
Date and the Company elected to purchase the Securities to be purchased as of
such Purchase Date pursuant to this Section 3.8 through the issuance of shares
of Common Stock, the Company shall pay the entire Purchase Price in respect of
the Securities of such Holder or Holders in cash.
The "Market Price" means the average of the Sales Prices of the Common
Stock for the five Trading Day period ending on (if the third Business Day prior
to the applicable Purchase Date is a Trading Day, or if not, then on the last
Trading Day prior to) the third Business Day prior to the applicable Purchase
Date, appropriately adjusted to take into account the actual occurrence, during
the seven Trading Days preceding such Purchase Date, of any event described in
Section 11.6, 11.7 or 11.8; subject, however, to the conditions set forth in
Sections 11.9 and 11.10.
(e) Notice of Election. The Company shall send a notice of its election to
purchase with cash or Common Stock or any combination thereof (a "Company
Notice") to the Holders (and to beneficial owners as required by applicable law
including, without limitation, Rule 13e-4 under the Exchange Act ("Rule 133-4"))
in the manner provided in Section 12.2 not less than 20 Business Days prior to
the Purchase Date (the "Company Notice Date"). Such Company Notice shall state
the manner of payment elected and:
In the event the Company has elected to pay the Purchase Price (or any
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock having a Market
Price determined as of a specified date prior to the Purchase Date equal to
such specified percentage of the Purchase Price of the Securities held by
such Holder (except for any cash amount to be paid in lieu of fractional
shares);
(2) set forth the method of calculating the Market Price of the Common
Stock; and
(3) state that because the Market Price of Common Stock will be
determined prior to the
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<PAGE>
Purchase Date, Holders will bear the market risk with respect to the value
of the Common Stock to be received from the date such Market Price is
determined to the Purchase Date.
In any case, each notice shall include a form of Purchase Notice to be
completed by the Securityholder and shall state:
(i) the Purchase Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion
Agent;
(iii) that Securities as to which a Purchase Notice has been given may
be converted only if the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent to
collect payment;
(v) that the Purchase Price for any security as to which a Purchase
Notice has been given and not withdrawn will be paid promptly following the
later of the Purchase Date and the time of surrender of such Security as
described in (iv);
(vi) the procedures the Holder must follow to exercise rights under
Section 3.8 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities; and
(viii) the procedures for withdrawing a Purchase Notice (including,
without limitation, procedures for a conditional withdrawal pursuant to the
terms of Section 3.8(a)(1)(D) or Section 3.10).
At the Company's request, the Trustee shall give notice in the Company's
name and at the Company's expense; provided, however, that, in all cases, the
text of such Company Notice shall be prepared by the Company.
Upon determination of the actual number of
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<PAGE>
shares of Common Stock to be issued for each $1,000 Principal Amount of
Securities, the Company will publish such determination in a daily newspaper of
national circulation.
(f) Covenants of the Company. All shares of Common Stock delivered upon
purchase of the Securities shall be newly issued shares or treasury shares,
shall be fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have quoted any
shares of Common Stock to be issued to purchase Securities on each national
securities exchange or over-the-counter or other domestic market on which any
other shares of the Common Stock are then listed or quoted.
(g) Procedure upon Purchase. On the Business Day following the Purchase
Date the Company shall deposit with the Paying Agent cash (in respect of a cash
purchase under Section 3.8(a) or for fractional interests, as applicable) or
shares of Common Stock, or a combination thereof, as applicable; sufficient to
pay the Purchase Price due and owing as of the close of business on the Purchase
Date of the Securities to be purchased pursuant to this Section 3.8. Promptly
following the Purchase Date, the Company shall deliver to each Holder entitled
to receive Common Stock, through the Paying Agent, a certificate for the number
of full shares of Common Stock issuable in payment of such Purchase Price and
cash in lieu of any fractional interests. The person in whose name the
certificate for Common Stock is registered shall be treated as a holder of
record of such Common Stock immediately after the Purchase Date. Subject to
Section 3.8(d), no payment or adjustment will be made for dividends on the
Common Stock the record date for which occurred on or prior to the Purchase
Date.
(h) Taxes. If a Holder is paid in Common Stock, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on such issue of shares
of Common Stock. However, the Holder shall pay any such tax which is due because
the Holder requests the shares of Common Stock to be issued in a name other than
the Holder's name. The Paying Agent may refuse to deliver the certificates
representing the Common Stock being
27
<PAGE>
issued in a name other than the Holder's name until the Paying Agent receives a
sum sufficient to pay any tax which will be due because the shares of Common
Stock are to be issued in a name other than the Holder's name. Nothing herein
shall preclude any income tax withholding required by law or regulations.
SECTION 3.9. Purchase of Securities at Option of the Holder upon Change in
Control.
(a) If on or prior to July 24, 1996, there shall have occurred a Change in
Control, Securities shall be purchased by the Company at the option of the
Holder thereof, at the purchase price specified in paragraph 6 of the Securities
(the "Change in Control Purchase Price"), as of the date that is 35 Business
Days after the occurrence of the Change in Control (the "Change in Control
Purchase Date"), subject to satisfaction by or on behalf of the Holder of the
requirements set forth in Section 3.9(c).
A "Change in Control" shall be deemed to have occurred at such time as
either of the following events shall occur:
(i) There shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
or pursuant to which the Common Stock would be converted into cash,
securities or other property, 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 Common Stock of the continuing or surviving corporation immediately
after such consolidation or of the common stock of the surviving
corporation immediately after such merger as they had of the Common Stock
immediately prior to such consolidation or merger; or
(ii) There is a report filed on Schedule 13D or 14D-1 (or any
successor schedule, form or report) pursuant to the Exchange Act,
disclosing that any person (for the purposes of this Section 3.9 only, as
the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act or
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<PAGE>
any successor provision to either of the foregoing) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the combined voting power of all the Company's then
outstanding securities entitled to vote generally for the election of
directors; provided, however, that a person shall not be deemed to be the
beneficial owner of, or to own beneficially, (A) any securities tendered
pursuant to a tender or exchange offer made by or on behalf of such person
or any of such person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange thereunder, or (B) any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation
made pursuant to the applicable rules and regulations under the Exchange
Act, and (2) is not also then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
Notwithstanding the foregoing provisions of this Section 3.9, a Change in
Control shall not be deemed to have occurred by virtue of the Company, any
Subsidiary, any employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary, any person holding securities of the Company
for or pursuant to the terms of any such employee benefit plan, or the Grass
Family, filing or becoming obligated to file a report under or in response to
Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report) under
the Exchange Act disclosing beneficial ownership by it of shares of securities
of the Company, whether in excess of 50% or otherwise.
"Common Stock" shall mean the shares of Common Stock, par value $1.00 per
share, of the Company as it exists on the date of this Indenture or any other
shares of Capital Stock of the Company into which the Common Stock shall be
reclassified or changed.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
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"Grass Family" shall mean Alex Grass, Martin L. Grass or any entity over
which Alex Grass or Martin L. Grass has direct or indirect control.
(b) Within 15 Business Days after the occurrence of a Change in Control,
the Company shall mail a written notice of Change in Control by first-class mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law) and shall cause a copy of such notice to be published in a daily
newspaper of national circulation. The notice shall include a Change in Control
Purchase Notice (as defined below) to be completed by the Holder and shall
state:
(1) the date of such Change in Control and, briefly, the events
causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant
to this Section 3.9 must be given;
(3) the Change of Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
(6) the name and address of the Paying Agent and the Conversion Agent;
(7) the Conversion Rate and any adjustments thereto;
(8) that Securities as to which a Change in Control Purchase Notice
has been given may be converted into Common Stock only if the Change in
Control Purchase Notice has been withdrawn in accordance with the terms of
this Indenture;
(9) the procedures the Holder must follow to exercise rights under
this Section 3.9;
(10) the procedures for withdrawing a Change in Control Purchase
Notice;
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<PAGE>
(11) that Securities must be surrendered to the Paying Agent to
collect payment; and
(12) that the Change in Control Purchase Price for any Security as to
which a Change in Control Purchase Notice has been duly given and not
withdrawn will be paid promptly following the later of the Change in
Control Purchase Date and the time of surrender of such security as
described in (11) above.
(c) A Holder may exercise its rights specified in Section 3.9(a) upon
delivery of a written notice of purchase (a "Change in Control Purchase Notice")
to the Paying Agent at any time prior to the close of business on the Change in
Control Purchase Date, stating:
(1) the certificate number of the Security which the Holder will
deliver to be purchased;
(2) the portion of the Principal Amount of the Security which the
Holder will deliver to be purchased, which portion must be $1,000 or an
integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the terms and
conditions specified in paragraph 6 of the Securities.
The delivery of such Security to the Paying Agent prior to, on or after the
Change in Control Purchase Date (together with all necessary endorsements) at
the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change in Control Purchase Price therefor; provided, however, that
such Change in Control Purchase Price shall be so paid pursuant to this Section
3.9 only if the Security so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change in Control
Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.9, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a
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<PAGE>
Security also apply to the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.9 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Change in Control
Purchase Date and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 3.9(c) shall have the right to withdraw such Change in Control Purchase
Notice at any time prior to the close of business on the Change in Control
Purchase Date by delivery of a written notice of withdrawal to the Paying Agent
in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 3.10. Effect of Purchase Notice of Change in Control Purchase
Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 3.8(a) or Section 3.9(c), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Change in Control Purchase Notice, as the case may be, was given shall
(unless such Purchase Notice or Change in Control Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price or Change in Control Purchase Price, as the case may
be, with respect to such Security. Such Purchase Price or Change in Control
Purchase Price shall be paid to such Holder promptly following the later of (x)
the Purchase Date or the Change in Control Purchase Date, as the case may be,
with respect to such Security (provided the conditions in Section 3.8(a) or
Section 3.9(c), as applicable, have been satisfied) and (y) the time of delivery
of such Security to the Paying Agent by the Holder thereof in the manner
required by Section 3.8(a) or Section 3.9(c), as applicable. Securities in
respect of which a Purchase Notice or Change in Control Purchase Notice, as the
case may be, has been given by the Holder thereof may not be converted into
shares of
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Common Stock on or after the date of the delivery of such Purchase Notice or
Change in Control Purchase Notice, as the case may be, unless such Purchase
Notice or Change in Control Purchase Notice, as the case may be, has first been
validly withdrawn as specified in the following two
paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case may be,
may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent at any time prior to the close of business on the
Purchase Date or the Change in Control Purchase Date, as the case may be, to
which it relates specifying:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted,
(2) the Principal Amount of the Security with respect to which such
notice of withdrawal is being submitted, and
(3) the Principal Amount, if any, of such Security which remains
subject to the original Purchase Notice or Change in Control Purchase
Notice, as the case may be, and which has been or will be delivered for
purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form set
forth in the preceding paragraph or may be in the form of (i) a conditional
withdrawal contained in the Purchase Notice pursuant to the terms of Section
3.8(a)(1)(D) or (ii) a conditional withdrawal containing the information set
forth in Section 3.8(a)(1)(D) and the preceding paragraph and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.
There shall be no purchase of any Securities pursuant to Section 3.8 (other
than through the issuance of Common Stock, including cash in lieu of fractional
shares) or 3.9 if there has occurred (prior to, on or after, as the case may be,
the giving, by the Holders of such Securities, of the required Purchase Notice
or Change in Control Purchase Notice, as the case may be)
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<PAGE>
and is continuing an Event of Default (other than a default in the payment of
the Purchase Price or Change in Control Purchase Price, as the case may be, with
respect to such Securities).
SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase
Price. On or before the Business Day following a Purchase Date or a Change in
Control Purchase Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an
Affiliate of either of them is acting as the Paying Agent, shall segregate and
hold in trust as provided in Section 2.4) an amount of money or, if permitted by
the terms hereof, securities sufficient to pay the aggregate Purchase Price or
Change in Control Purchase Price, as the case may be, of all the Securities or
portions thereof which are to be purchased as of such Purchase Date or Change in
Control Purchase Date, as the case may be.
SECTION 3.12. Securities Purchased in Part. Any Security which is to be
purchased only in part shall be surrendered at the office of the Paying Agent
(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 such Holder's 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 portion
of the Principal Amount of the Security so surrendered which is not purchased.
SECTION 3.13. Covenant to Comply with Securities Laws upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 3.8 or 3.9 hereof (provided that such offer or purchase
constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) at the time of such offer
of purchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all Federal and state securi-
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ties laws so as to permit the rights and obligations under Section 3.8 and 3.9
to be exercised in the time and in the manner specified in Sections 3.8 and 3.9.
SECTION 3.14. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company any cash or shares of Common Stock, together with
any dividends on such shares of Common Stock, held by them for the payment of a
Purchase Price or Change in Control Purchase Price, as the case may be, in
respect of cash or shares of Common Stock that remain unclaimed as provided in
paragraph 13 of the Securities; provided, however, that to the extent that the
aggregate amount of cash or shares of Common Stock deposited by the Company
pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change in
Control Purchase Price, as the case may be, of the Securities or portions
thereof to be purchased, then promptly after the Business Day following the
Purchase Date or Change in Control Purchase Date, as the case may be, the
Trustee shall return any such excess to the Company together with dividends, if
any, thereon.
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Principal Amount, Issue Price,
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price and interest, if any, shall be considered paid on the
applicable date due if on such date the Trustee or the Paying Agent holds, in
accordance with this Indenture, money or securities, if permitted hereunder,
sufficient to pay all such amounts then due.
The Company shall pay interest on overdue amounts at the rate set forth in
paragraph 1 of the Securities, compounded semi-annually, and it shall pay
interest on overdue interest at the same rate, compounded semi-annually (to the
extent that the payment of such interest shall be legally enforceable), which
interest on overdue interest shall accrue from the date such amounts became
overdue. All such interest shall be payable on
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demand.
SECTION 4.2. SEC and Other Reports. (a) The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time
no longer subject to the reporting requirements of Section 13 and 15(d) of the
Exchange Act, it shall provide the Trustee, in accordance with the rules and
regulations prescribed from time to time by the SEC, such reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations. In such event, such reports
shall be provided at the times the Company would have been required to provide
reports had it continued to have been subject to such reporting requirements.
The Company also shall comply with the other provisions of TIA Section 314(a).
(b) The Company shall, at its expense, transmit to Holders of Securities
within 30 days after the filing thereof with the Trustee such summaries of any
information, documents and reports required to be filed by the Company pursuant
to subsection (a) as may be required to be transmitted to such Holders by the
rules and regulations prescribed from time to time by the SEC.
SECTION 4.3. Compliance Certificate. (a) The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on March 31, 1993) a brief certificate
from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under the Indenture and, if the signer has obtained
knowledge of any default by the Company in the performance, observance or
fulfillment of any such condition or covenant, specifying each such default and
the nature thereof. For purposes of this Section 4.3, such compliance shall be
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determined without regard to any period of grace or requirement of notice
provided under the terms of the Indenture.
(b) The Company shall file with the Trustee written notice of the
occurrence of any Default or Event of Default within five Business Days of its
becoming aware of such Default or Event of Default.
SECTION 4.4. Further Instruments and Acts. Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.
SECTION 4.5. Maintenance of Office or Agency. The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency of the
Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange, purchase, redemption or conversion and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The corporate trust office of the Trustee in care of
Harris Trust Company of New York, 77 Water Street, New York, N.Y. 10005 shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of any change of
location of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 12.2.
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 the Borough of
Manhattan, The City of New York, for such purposes.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge or Transfer Assets. The Company, in a
single transaction or through a series of related transactions, shall not
consolidate with or merge with or into any other person or transfer (by lease,
assignment, sale or otherwise) all or substantially all of its properties and
assets to another person or group of affiliated persons, unless:
(a) either (1) the Company shall be the continuing corporation or (2) the
person (if other than the Company) formed by such consolidation or into which
the Company is merged or to which all or substantially all of the properties and
assets of the Company are transferred (i) shall be 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 (ii) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under the
Securities and this Indenture;
(b) immediately after giving effect to such transaction, and the assumption
contemplated by clause (a) above, no Default or Event of Default shall have
occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Article 5
and that all conditions precedent herein provided for relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of one or more Subsidiaries (other than
to the Company or another wholly owned Subsidiary), which, if such assets were
owned by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the
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Company.
The successor person formed by such consolidation or into which the Company
is merged or the successor person 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 had been named as the Company herein; and thereafter, except in the
case of (i) a lease of its properties and assets substantially as an entirety
and (ii) obligations the Company may have under a supplemental indenture
pursuant to Section 11.14, the Company shall be discharged and released from all
obligations and covenants under this Indenture and the Securities. The Trustee
shall enter into a supplemental indenture to evidence the succession and
substitution of such successor person and such discharge and release of the
Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default. An "Event of Default" occurs if one of the
following shall have occurred and be continuing:
(1) the Company defaults in the payment of the Principal Amount, Issue
Price plus accrued Original Issue Discount, Redemption Price, Purchase
Price or Change in Control Purchase Price on any Security when the same
becomes due and payable at its Stated Maturity, upon redemption, upon
declaration, when due for purchase by the Company or otherwise, whether or
not such payment shall be prohibited by Article 10;
(2) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in clause (1)
above) and such failure continues for 90 days after receipt by the Company
of a Notice of Default;
(3) a decree or order by a court having
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jurisdiction in the premises shall have been entered adjudging the Company
as bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization of the Company under any Bankruptcy Law, and such decree or
order shall have continued undischarged and unstayed for a period of 90
consecutive days; or a decree or order or a court having jurisdiction in
the premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its property, or
for the winding up or liquidation of its affairs, shall have been entered,
and such decree or order shall have remained in force undischarged and
unstayed of a period of 90 consecutive days; or
(4) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization under any Bankruptcy Law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency
of it or of its property or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors. "Custodian" means any receiver, trustee,
assignee, liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
A Default under clause (2) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default
within the time specified in clause (2) above after receipt of such notice. Any
such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
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The Company shall deliver to the Trustee, within 30 days after it becomes
aware of the occurrence thereof, written notice of any event which with the
giving of notice or the lapse of time, or both, would become an Event of Default
under clause (2) above, its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.1(3) or (4) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in aggregate Principal
Amount of the Securities at the time outstanding by notice to the Company and
the Trustee, may declare the Issue Price and accrued Original Issue Discount to
the date of declaration on all the Securities to be immediately due and payable.
Upon such a declaration, such Issue Price and accrued Original Issue Discount
shall be due and payable immediately. If an Event of Default specified in
Section 6.1(3) or (4) occurs and is continuing, the Issue Price plus accrued
Original Issue Discount on all the Securities shall become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in aggregate Principal Amount
of the Securities at the time outstanding, by notice to the Trustee (and without
notice to any other Securityholder), may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of the Issue Price and accrued Original Issue Discount that have
become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 7.7 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Issue Price and accrued Original Issue Discount on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Securities or does not produce any of the Securities in the
proceeding.
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A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of, or acquiescence in, the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount of the Securities at the time outstanding, by notice
to the Trustee (and without notice to any other Securityholder), may waive an
existing Default and its consequences except (a) an Event of Default described
in Section 6.1(1), (b) a Default in respect of a provision that under Section
9.2 cannot be amended without the consent of each Securityholder affected or (c)
a Default under Article 11. When a Default is waived, it is deemed cured and
shall cease to exist, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right. This Section 6.4 shall be in lieu of
Section 316(a)1(B) of the TIA and said Section 316(a)1(B) is hereby expressly
excluded from this Indenture, as permitted by the TIA.
SECTION 6.5. Control by Majority. The Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines in good faith is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability. This Section 6.5 shall be in lieu of Section 316(a)1(A) of the TIA
and said Section 316(a)1(A) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
SECTION 6.6. Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
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(2) the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense satisfactory to the
Trustee;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, the request and the offer of security or indemnity;
and
(5) the Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of any
other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, but subject to Article 10, the right of any
Holder to receive payment of the Principal Amount, Issue Price plus accrued
Original Issue Discount, Redemption Price, Purchase Price, Change in Control
Purchase Price or interest, if any, in respect of the Securities held by such
Holder, on or after the respective due dates expressed in the Securities or any
Redemption Date, and to convert the Securities in accordance with Article 11 at
the Conversion Rate, or to bring suit for the enforcement of any such payment on
or after such respective dates or the right to convert at the Conversion Rate,
shall not be impaired or affected adversely without the consent of each such
Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default described
in Section 6.1(1) occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount owing with respect to
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the Securities and the amounts provided for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the Principal Amount, Issue Price plus accrued Original Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or
interest, if any, in respect of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of any such
amount) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of the Principal Amount,
Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase
Price, Change in Control Purchase Price, or interest, if any, and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian 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 the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
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reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the Securities
for the Principal Amount, Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price or
interest, if any, as the case may be, ratably, without preference or
priority of any kind, according to such amounts due and payable on the
Securities; and
FOURTH: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Company shall mail to each Securityholder and the Trustee a
notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit
by Holders of more than 10% in aggregate Principal Amount of
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the Securities at the time outstanding. This Section 6.11 shall be in lieu of
Section 315(e) of the TIA and said Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.
SECTION 6.12. Notice of Defaults. The Trustee shall, within 90 days after
the occurrence of any Default, mail to all Securityholders, as the names and
addresses of such Holders appear on the books of registry of the Company, notice
of all Defaults of which the Trustee shall be aware, unless such Defaults shall
have been cured or waived before the giving of such notice, provided that,
except in the case of a Default described in Section 6.1(1), the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors or Trust
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Securityholders.
SECTION 6.13. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, that would prohibit or
forgive the Company from paying all or any portion of the Principal Amount,
Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase
Price or Change in Control Purchase Price in respect of Securities, or any
interest on any such amounts, as contemplated herein, or that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default,
(1) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
This Section 7.1(b) shall be in lieu of Section 3.15(a) of the TIA and said
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA. The Trustee shall not be liable for any interest on any money received
by it, except as the Trustee may otherwise agree with the Company.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this paragraph (c) does not limit the effect of paragraph (b) of
this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust
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Officer unless it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)1),
315(d)(2) and 315(d)(3) of the TIA and said Sections 315(d)(1), (2) and (3) are
hereby excluded from this Indenture, as permitted by the TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law.
SECTION 7.2. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) Subject to the provisions of Section 7.1(c), the Trustee shall not be
liable for any action it
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takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
Conversion Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement in the registration statement for the
Securities under the Securities Act (other than statements contained in the Form
T-1 filed with the Commission under the TIA and any statements provided by the
Trustee in writing specifically for use in such registration statement) or in
the Indenture or the Securities (other than its certificate of authentication),
or the determination as to which beneficial owners are entitled to receive any
notices hereunder.
SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall give to each Securityholder
notice of the Default within 90 days after it occurs. Except in the case of a
Default described in Section 6.1(1), the Trustee may withhold such notice if and
so long as a committee of its Trust Officers in good faith determines that the
withholding of such notice is in the interests of Securityholders. The second
sentence of this Section 7.5 shall be in lieu of the proviso to Section 315(b)
of the TIA and said proviso is hereby expressly excluded from this Indenture, as
permitted by the TIA.
SECTION 7.6. Reports by Trustee to Holders. Within 60 days after each July
24 beginning with July 24, 1993, the Trustee shall mail to each Securityholder a
brief report dated as of such July 24 that complies with TIA Section 313(a) if
required by such Section 313(a). The Trustee also shall comply with TIA Section
313(b).
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A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company agrees to promptly notify the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time such compensation as shall be
agreed between the Company and the Trustee for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request and, if required by the
Company, submission of reasonable documentation, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses, disbursements and advances of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any and
all loss, liability or expense, incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(3) or (4), the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign by so notifying
the Company; provided, however, no such resignation shall be effective until a
successor Trustee has accepted its appointment pursuant
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to this Section 7.8. The Holders of a majority in aggregate Principal Amount of
the Securities at the time outstanding may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee subject to the consent of the
Company, which consent shall not be unreasonable withheld. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by resolution of
its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount of the Securities at the
time outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the
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appointment of a successor Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates wit,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b). In determining whether the Trustee has conflicting interests as
defined in TIA Section 310(b)(1), the provisions contained in the proviso to TIA
Section 310(b)(1) shall be deemed incorporated herein.
SECTION 7.11. Preferential Collection of Claims against Company. The
Trustee shall comply with TIA section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1. Discharge of Liability on Securities. When (i) the company
delivers to the Trustee all outstanding securities (other than Securities
replaced pursuant to Section 2.7) for cancellation or (ii) all outstanding
Securities have become due and payable and the Company deposits with the Trustee
cash sufficient to pay at Stated Maturity the Principal Amount of all
outstanding Securities (other than Securities replaced pursuant to Section 2.7),
and if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 7.7, cease to be of
further effect. The Trustee shall join in the execution of a document prepared
by the Company acknowledging satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certif-
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icate and Opinion of Counsel and at the cost and expense of the Company.
SECTION 8.2. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company upon written request any money or securities held by
them for the payment of any amount with respect to the Securities that remains
unclaimed for two years, provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, may at the expense of the
Company cause to be published once in a newspaper of national circulation or
mail to each such Holder notice that such money or securities remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed money or securities
then remaining will be returned to the Company. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
ARTICLE 9
AMENDMENTS
SECTION 9.1. Without Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without the consent of any
Securityholder:
(1) to cure any ambiguity, defect or inconsistency, provided that such
amendment does not materially adversely affect the rights of any
Securityholder; or
(2) to comply with Article 5 or Section 11.14; or
(3) to provide for uncertificated Securities in addition to
certificated Securities so long as such uncertificated Securities are in
registered form for purposes of the Internal Revenue Code of 1986, as
amended; or
(4) to make any other change that does not adversely affect the rights
of any Securityholder;
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(5) to add to the covenants or obligations of the Company hereunder or
to surrender any right, power or option herein conferred upon the Company;
or
(6) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA.
SECTION 9.2. With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate Principal Amount of the Securities
at the time outstanding, the Company and the Trustee may amend this Indenture or
the Securities. However, without the consent of each Securityholder affected, an
amendment to this Indenture or the Securities may not:
(1) make any change to the Principal Amount of Securities whose
Holders must consent to an amendment;
(2) make any change to the rate or manner of accrual of Original Issue
Discount, reduce the rate of interest referred to in paragraph 1 of the
Securities or extend the time for payment of Original issue Discount or
interest, if any, on any Security;
(3) reduce the Principal Amount or the Issue Price, or extend the
Stated Maturity, of any Security;
(4) reduce the Redemption Price, Purchase Price or Change in Control
Purchase Price of any Security;
(5) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Article 10 that adversely effects the rights
of any Securityholder;
(7) make any change in Section 6.4, Section 6.7 or this Section 9.2,
except to increase any applicable percentage;
(8) make any change that adversely affects the
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right to convert any Security;
(9) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof and
this indenture;
(10) except as provided in this Indenture, decrease the Conversion
Rate of any Security;
(11) modify the provisions of this Indenture relating to the
subordination of the Securities in a manner adverse to the Securityholders;
or
(12) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Securities.
It shall not be necessary for the consent of the Holders under this Section
9.2 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
An amendment under this Section 9.2 or Section 9.1 may not make any change
that adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the requisite holders of such Senior
Indebtedness consent to such change pursuant to the terms of such Senior
Indebtedness.
After an amendment under this Section 9.2 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.
SECTION 9.3. Compliance with Trust Indenture Act. Every supplemental
indenture executes pursuant to this Article 9 shall comply with the TIA.
SECTION 9.4. Revocation and Effect of Consents, Waivers and Actions. Until
an amendment, waiver or other action by Holders becomes effective, a consent to
it or any other action by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the con-
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sent, waiver or action is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the Company or an agent of the Company certifies to the
Trustee that the consent of the requisite aggregate principal amount of the
Securities then outstanding has been obtained and not revoked. After an
amendment, waiver or action becomes effective, it shall bind every
Securityholder, except as provided in Section 9.2.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then, notwithstanding the first two sentences
of the immediately preceding paragraph, those persons who were Holders at such
record date (or their duly designated proxies), and only those persons, shall be
entitled to revoke any consent previously given, whether or not such persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 9 may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
SECTION 9.6. Trustee to Sign Supplemental Indentures. The Trustee shall
sign any supplemental Indenture authorized pursuant to this Article 9 if the
supplemental indenture does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
it. In signing such amendment the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating
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that such supplemental indenture is authorized or permitted by this Indenture.
SECTION 9.7. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article 9, 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.
ARTICLE 10
SUBORDINATION
SECTION 10.1. Securities Subordinate to Senior Indebtedness. The Company
covenants and agrees, and each Holder of a Security by such Holder's acceptance
thereof likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article 10, the indebtedness represented by the
Securities and the payment of the Principal Amount at maturity, Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price and interest, if any, in respect of 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 10.2. Payment over of Proceeds Upon Dissolution, etc. Upon any
distribution of assets of the Company in the event of:
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or
(b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or
(c) any assignment for the benefit of credi-
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tors or any other marshalling of assets and liabilities of the Company,
then and in such event
(1) 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, before
the Holders of the Securities are entitled to receive any payment on
account of the Principal Amount, Issue Price plus accrued Original Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase
Price or interest, if any, in respect of the Securities; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Trustee would be entitled but for
the provisions of this Article 10, including any such payment or
distribution which may be payable or deliverable by reason of the payment
of any other Debt of the Company being subordinated to the payment of the
Securities, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have issued,
ratably according to the aggregate amounts remaining unpaid on account of
the principal of, and premium, if any, and interest on, the Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this Section
10.2, the Trustee or the Holder of any Security shall receive any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including
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any such payment or distribution which may be payable or deliverable by reason
of the payment of any other Debt 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 then have been made known
to the Trustee, or, as the case may be, such Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, Custodian, assignee, agent or
other person making payment or distribution of assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Article 10 only, the words "cash, property or
securities" shall not be deemed to include shares of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Article 10 with respect to
the Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding; provided, however, that (i) Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment.
The consolidation of the Company with, or the merger of the Company into,
another corporation or the liquidation or dissolution of the Company following
the conveyance or transfer of all or substantially all of its properties and
assets to another person upon the terms and conditions set forth in Article 5
shall not be deemed a dissolution, winding up, liquidation, reorganization,
assignment for the benefit of creditors or marshalling of assets and liabilities
of the Company for the purposes of this Section 10.2 if the corporation formed
by such consolidation or into which the Company is merged or the person which
acquires by conveyance or transfer all or substantially all of the assets of the
Company, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the condi-
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tions set forth in Article 5.
SECTION 10.3. Acceleration of Securities. In the event that any Securities
are declared or become due and payable before their Stated Maturity pursuant to
Section 6.2, then and in such event the Company shall promptly notify holders of
Senior Indebtedness of such acceleration. The Company may not pay the Securities
until 120 days have passed after such acceleration occurs and may thereafter pay
the Securities if this Article 10 permits the payment at that time.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Securities prohibited by the
foregoing provisions of this Section 10.3, and if such facts then shall have
been known or thereafter shall have been made known to the Trustee as provided
in Section 10.10 or such Holder, as the case may be, pursuant to the terms of
this Indenture, then and in such event such payment shall be paid over and
delivered forthwith to the company by or on behalf of the person holding such
payment for the benefit of the holders of Senior Indebtedness.
The provisions of this Section 10.3 shall not apply to any payment with
respect to which Section 10.2 would be applicable.
SECTION 10.4. Default on Senior Indebtedness. The Company may not make any
payment of the Principal Amount at maturity, Issue Price plus accrued original
Issue Discount, Redemption Price, Change in Control Purchase Price or interest,
if any, in respect of the Securities and may not pay cash in respect of the
Purchase Price (or portion thereof) of any Security (other than for fractional
shares of Common Stock) or otherwise acquire any Securities for cash or property
(except as otherwise provided by Article 11 and other than for Capital Stock of
the Company) if:
(1) a default on Senior indebtedness occurs and is continuing that
permits holders of such Senior Indebtedness to accelerate its maturity and
the Company has actual knowledge of such default; and
(2) after giving effect to such payment or
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acquisition, any default on Senior indebtedness that would permit the
holders of Senior Indebtedness to accelerate its maturity would occur.
The Company may resume payments on the Securities and may acquire
Securities if and when:
(A) the default is cured or waived (including, without limitation, by
payment of Senior Indebtedness in full); or
(B) 120 or more days pass after the receipt by the Trustee of the
notice described in clause (1) above and the default is not then the
subject of judicial proceedings; and
this Article 10 otherwise permits the payment or acquisition at that time.
The Company covenants and agrees to give the Trustee notice of any default
referred to in clause (1) above or potential default referred to in clause (2)
above within five Business Days after the Company has actual knowledge of Such
default or potential default.
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 10.4, and if such fact then shall have been
known or thereafter shall have been made known to the Trustee, as provided in
Section 10.10, or such Holder, as the case may be, pursuant to the terms of this
indenture, then and in such event such payment shall be paid over and delivered
forthwith to the Company by or on behalf of the person holding such payment for
the benefit of the holders of the Senior Indebtedness.
Nothing contained in this Article 10 or elsewhere in this Indenture or in
any of the Securities shall prevent the conversion by a Holder of any Securities
in accordance with the provisions for conversion of such Securities set forth in
this Indenture, including the payment of cash in lieu of fractional shares of
Common stock in accordance with Article 11, or in any of such Securities in the
event of an occurrence of the events described in clauses (1) and (2) of this
Section 10.4.
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The provisions of this Section 10.4 shall not apply to any payment with
respect to which Section 10.2 would be applicable.
SECTION 10.5. Payment Permitted If No Default. Nothing contained in this
Article 10 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, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 10.2 or under the conditions described in Section
10.3 or 10.4, from making payments at any time of the Principal Amount at
maturity, Issue Price plus accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price or interest, if any, as the
case may be, in respect of the Securities, or (b) the application by the Trustee
or the retention by any Holder of any money deposited with it hereunder to the
payment of or on account of the Principal Amount at maturity, Issue Price Plus
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price or interest, if any, as the case may be, in respect of
the Securities if the Trustee did not have, at the time provided in the proviso
to the first paragraph of Section 10.10, notice that such payment would have
been prohibited by the provisions of this Article 10.
SECTION 10.6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all 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 10 to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities applicable to
the Senior Indebtedness until the Principal Amount at Maturity, Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price or Change in
Control Purchase Price or interest, if any, as the case may be, in respect of
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 10,
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and no payments pursuant to the provisions of this Article 10 to the Company or
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, be deemed to be a payment
or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 10.7. Provisions Solely to Define Relative Rights. The provisions
of this Article 10 are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on one hand, and the holders
of Senior Indebtedness, on the other hand. Nothing contained in this Article 10
or elsewhere in this Indenture or in the Securities is intended to or shall:
(a) impair, as between the Company 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 Amount at maturity, Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, and interest, if any, as the case may be, in respect of
the Securities as and when the same shall become due and payable in accordance
with the terms of the Securities and this Indenture and which, subject to the
rights under this Article 10 of the holders of Senior Indebtedness, are intended
to rank equally with all other general obligations of the Company; or
(b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than 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 10 of the holders
of Senior Indebtedness to receive cash, property or securities otherwise payable
or deliverable to the Trustee or such Holder.
SECTION 10.8. Trustee to Effectuate Subordination. Each Holder of a
Security by such Holder's acceptance thereof authorizes and directs the
Trustee on such Holder's behalf to take such action as may be necessary
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or appropriate to effectuate the subordination provided in this Article 10 and
appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
SECTION 10.9. 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 10 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 dispose
of 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 or any other person.
SECTION 10.10. 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. Failure
to give such notice shall not affect the subordination of the Securities to
Senior Indebtedness. Notwithstanding the provisions of this Article 10 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
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to or by the Trustee in respect of the Securities, unless and until the Trustee
shall have received written notice thereof at the address specified in Section
12.2 from the Company or a holder of Senior Indebtedness or from any trustee or
agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 7.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if a Trust
Officer of the Trustee shall not have received, at least three Business Days
prior to the date upon which by the terms hereof any such money may become
payable for any purpose (including, without limitation, the payment of the
Principal Amount at maturity, Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price or interest,
if any, as the case may be, in respect of any Security), the notice with respect
to such money provided for in this Section 10.10, 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 three Business Days prior to such date.
Subject to the provisions of Section 7.1, 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 or agent on behalf of such
holder) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee or agent on behalf of any such holder). 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 10, 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 10, and if such evidence is not furnished, the Trustee
may defer any payment which it may be required to make for the benefit of such
person pursuant to the terms of this Indenture pending judicial determination as
to the right of such person to receive such
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payment.
Section 10.11. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, subject to the provisions of Section 7.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
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, liquidating trustee, Custodian, receiver, 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 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 10.
SECTION 10.12. 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 the Trustee
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
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10 or otherwise. The Trustee shall not be charged with knowledge of the
existence of Senior Indebtedness or of any facts that would prohibit any payment
hereunder unless a Trust Officer of the Trustee shall have received notice to
that effect at the address of the Trustee set forth in Section 12.2. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants or obligations as are specifically set
forth in this Article 10 and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
SECTION 10.13. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled
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to all the rights set forth in this Article 10 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 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
SECTION 10.14. Article 10 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 10
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 10 in
addition to or in place of the Trustee; provided, however, that Sections 10.10
and 10.12 shall not apply to the Company or any Affiliate of the Company if it
or such Affiliate acts as Paying Agent.
ARTICLE 11
CONVERSION
SECTION 11.1. Conversion Privilege. A Holder of a Security may convert such
Security into Common Stock before the close of business on July 24, 2006;
provided, however, that if such Security is called for redemption pursuant to
this Indenture, the Holder may convert it only until the close of business on
the Redemption Date. The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount at Stated Maturity
thereof (the "Conversion Rate") shall be that set forth in paragraph 9 in the
Securities, subject to adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount of a Security if the
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion
of a portion of a Security.
A Security in respect of which a Holder has
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delivered a Purchase Notice pursuant to Section 3.8 exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Purchase Notice is withdrawn by a written notice of withdrawal
delivered to the Paying Agent prior to the close of business on the Purchase
Date in accordance with Section 3.10.
"Average Sale Price" means the average of the Sale Price of the Common
Stock for the shorter of:
(i) 30 consecutive Trading Days ending on the last full Trading Day
prior to the Time of Determination with respect to the rights, warrants or
options or distribution in respect of which the Average Sale Price is being
calculated, or
(ii) the period (x) commencing on the date next succeeding the first
public announcement of (a) the issuance of rights, warrants or options or
(b) the distribution, in each case, in respect of which the Average Sale
Price is being calculated and (y) proceeding through the last full Trading
Day prior to the Time of Determination with respect to the rights, warrants
or options or distribution in respect of which the Average Sale Price is
being calculated, or
(iii) the period, if any, (x) commencing on the date next succeeding
the Ex-Dividend Time with respect to the next preceding (a) issuance of
rights, warrants or options or (b) distribution, in each case, for which an
adjustment is required by the provisions of Section 11.6(d), 11.7 or 11.8
and (y) proceeding through the last full Trading Day prior to the Time of
Determination with respect to the rights, warrants or options or
distribution in respect of which the Average Sale Price is being
calculated.
If the Ex-Dividend Time (or in the case of a subdivision, combination or
reclassification, the effective date with respect thereto) with respect to a
dividend, subdivision, combination or reclassification to which Section 11.6(a),
(b), (c) or (e) applies occurs during the period applicable for calculating
"Average Sale Price" pursuant to the definition in the preceding
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sentence, "Average Sale Price" shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such dividend,
subdivision, combination or reclassification on the Sale Price of the Common
Stock during such period.
"Time of Determination" means the time and date of the earlier of (i) the
determination of stockholders entitled to receive rights, warrants or options or
a distribution, in each case, to which Sections 11.7 and 11.8 apply and (ii) the
time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend"
trading for such rights, warrants or options or distribution on the New York
Stock Exchange, Inc. or such other national or regional exchange or market on
which the Common Stock is then listed or quoted.
SECTION 11.2. Conversion Procedure. To convert a Security a Holder must (1)
complete and manually sign the conversion notice on the back of the Security (or
complete and manually sign a facsimile of such notice) and deliver such notice
to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3)
furnish appropriate endorsements and transfer documents if required by the
Registrar, the Conversion Agent, the Company or the Trustee and (4) pay any
transfer or similar tax, if required. The date on which the Holder satisfies all
those requirements is the conversion date (the "Conversion Date"). As soon as
practicable after the Conversion Date, the Company shall deliver to the Holders
through the Conversion Agent, a certificate for the number of full shares of
Common Stock issuable upon the conversion and cash in lieu of any fractional
share pursuant to Section 11.3.
The person in whose name the certificate is registered shall be treated as
a stockholder of record on and after the Conversion Date; provided, however,
that no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business
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on the next succeeding day on which such stock transfer books are open;
provided, further, that such conversion shall be at the Conversion Rate in
effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Security, such person shall no longer be a Holder of such
Security.
No payment or adjustment will be made for dividends or other distributions
with respect to any Common Stock except as provided in this Article 11. On
conversion of a Security, that portion of accrued Original Issue Discount
attributable to the period from the Issue Date of the Security through the
Conversion Date with respect to the converted Security shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Security
being converted pursuant to the provisions hereof; and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for Original Issue Discount accrued through the Conversion Date, and
the balance, if any, of such fair market value of such Common Stock (and any
such cash payment) shall be treated as issued in exchange for the Issue Price of
the Security being converted pursuant to the provisions hereof.
If the Holder converts more than one Security at the same time, the number
of shares of Common Stock issuable upon the conversion shall be computed based
on the total Principal Amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security in an authorized denomination equal in Principal Amount at Stated
Maturity to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in
a place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is
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not a Legal Holiday.
SECTION 11.3. Fractional Shares. The Company will not issue a fractional
share of Common Stock upon conversion of a Security. Instead, the Company will
deliver cash for the current market value of the fractional share. The current
market value of a fractional share shall be determined to the nearest 1/1,000th
of a share by multiplying the Sale Price, on the last Trading Day prior to the
Conversion Date, of a full share by the fractional amount and rounding the
product to the nearest whole cent.
SECTION 11.4. Taxes on Conversions. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common Stock upon such conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulations.
SECTION 11.5. Company to Provide Stock. The Company shall, prior to
issuance of any Securities hereunder, and from time to time as may be necessary,
reserve out of its authorized but unissued Common Stock a sufficient number of
shares of Common Stock to permit the conversion of the Securities for shares of
Common Stock.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or in the
over-the-counter market or
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such other market on which the Common Stock is then listed or quoted.
SECTION 11.6. Adjustment for Change in Capital Stock. If, after the Issue
Date of the Securities, the Company:
(a) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock;
(b) subdivides its outstanding shares of Common Stock into a greater number
of shares;
(c) combines its outstanding shares of Common Stock into a smaller number
of shares;
(d) pays a dividend or makes a distribution on its Common Stock in shares
of its Capital Stock (other than Common Stock or rights, warrants, or options
for its Capital Stock); or
(e) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants, or options for its Capital Stock),
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of Capital Stock of the
Company which such Holder would have owned immediately following such action if
such Holder had converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article 11 with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article 11.
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SECTION 11.7. Adjustment for Rights Issue. If, after the Issue Date, the
Company distributes any rights, warrants or options to all holders of its Common
Stock entitling them, for a period expiring within 60 days after the record date
for such distribution, to purchase shares of Common Stock at a price per share
less than the Sale Price as of the Time of Determination, the Conversion Rate
shall be adjusted in accordance with the formula:
R' = R x (O + N)
---------------
(O + (N x P)/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the record date
for the distribution to which this Section 11.7 is being applied.
N = the number of additional shares of Common Stock offered pursuant
to the distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the case of (i) a distribution to
which Section 11.6(d) applied or (ii) a distribution to which
Section 11.8 applies, for which, in each case, (x) the record date
shall occur on or before the record date for the distribution to
which this Section 11.7 applies and (y) the Ex-Dividend Time shall
occur on or after the date of the Time of Determination for the
distribution to which this Section 11.7 applies, the fair market
value (on the record date for the distribution to which this Section
11.7 applies) of (1) the Capital Stock of the Company distributed in
respect of each share of Common Stock in such Section 11.6(d)
distribution and (2) the assets of the Company or debt securities or
any rights, warrants or options to purchase securities of the
Company distributed in respect of each shares
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of Common Stock in such Section 11.8 distribution.
The Board of Directors shall determine fair market values for the purposes of
this Section 11.7.
The adjustment shall become effective immediately after the record date for
the determination of stockholders entitled to receive the rights, warrants or
options to which this Section 11.7 applies.
No adjustment shall be made under this Section 11.7 if the application of
the formula sated above in this Section 11.7 would result in a value of R' that
is less than the value of R.
SECTION 11.8. Adjustment for Other Distributions. If, after the Issue Date
of the Securities, the Company distributes to all holders of its Common Stock
any of its assets or debt securities or any rights, warrants or options to
purchase securities of the Company (including securities or cash, but excluding
(x) distributions of Capital Stock referred to in Section 11.6 and distributions
of rights, warrants or options referred to in Section 11.7 and (y) cash
dividends or other cash distributions that are paid out of consolidated current
net earnings or earnings retained in the business as shown on the books of the
Company unless such cash dividends or other cash distributions are Extraordinary
Cash Dividends) the Conversion Rate shall be adjusted, subject to the provisions
of the last paragraph of this Section 11.8, in accordance with the formula:
R' = R x M
---
M-F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price, minus, in the case of a distribution to
which Section 11.6(d) applies, for which (i) the record date shall
occur on or before the record date for the distribution to which
this Section 11.8 applies and (ii) the
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Ex-Dividend Time shall occur on or after the date of the Time of
Determination for the distribution to which this Section 11.8
applies, the fair market value (on the record date for the
distribution to which this Section 11.8 applies) of any Capital
Stock of the Company distributed in respect of each share of Common
Stock in such Section 11.6(d) distribution.
F = the fair market value (on the record date for the distribution to
which this Section 11.8 applies) of the assets, securities, rights,
warrants or options to be distributed in respect of each share of
Common Stock in the distribution to which this Section 11.8 is being
applied (including, in the case of cash dividends or other cash
distributions giving rise to an adjustment, all such cash distribut-
ed concurrently).
The Board of Directors shall determine fair market values for the purposes
of this Section 11.8.
The adjustment shall become effective immediately after the record date for
the determination of stockholders entitled to receive the distribution to which
this Section 11.8 applied.
For purposes of this Section 11.8, the term "Extraordinary Cash Dividend"
shall mean any cash dividend with respect to the Common Stock the amount of
which, together with the aggregate amount of cash dividends on the Common Stock
to be aggregated with such cash dividend in accordance with the provisions of
this paragraph, equals or exceeds the threshold percentages set forth in item
(i) or (ii) below:
(1) If, upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
dividend together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 85 consecutive day period
ending on the date prior to the Ex-Dividend Time, with respect to the cash
dividend to which this provision is being applied, equals or exceeds 12.5%
on a per share basis of
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the average of the Sale Prices during the period beginning on the date
after the first such Ex-Dividend Time in such period and ending on the date
prior to the Ex-Dividend Time, with respect to the cash dividend to which
this provision is being applied (except that if no other cash dividend has
had an Ex-Dividend Time occurring in such period, the period for
calculating the average of the Sale Prices shall be the period commencing
85 days prior to the date prior to the Ex-Dividend Time with respect to the
cash dividend to which this provision is being applied), such cash dividend
together with each other cash dividend with an Ex-Dividend Time occurring
in such 85 day period shall be deemed to be an Extraordinary Cash Dividend
and for the purposes of applying the formula set forth above in this
Section 11.8, the value of "F" shall be equal to (w) the aggregate amount
of such cash Dividend together with the amounts of the other cash dividends
with Ex-Dividend Times occurring in such period minus (x) the aggregate
amount of such other cash dividends with Ex-Dividend Times occurring in
such period for which a prior adjustment in the Conversion Rate was
previously made under this Section 11.8.
(2) If, upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
Dividend together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 365 consecutive day period
ending on the date prior to the Ex-Dividend Time with respect to the cash
dividend to which this provision is being applied equals or exceeds on a
per share basis 25% of the average of the Sale Prices during the period
beginning on the date after the first such Ex-Dividend Time in such period
and ending on the date prior to the Ex-Dividend Time with respect to the
cash dividend to which this provision is being applied (except that if no
other cash dividend has had an Ex-Dividend Time occurring in such period,
the period for calculating the average of the Sale Prices shall be the
period
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commencing 365 days prior to the date prior to the Ex-Dividend Time with
respect to the cash dividend to which this provision is being applied),
such cash dividend together with each other cash dividend with an
Ex-Dividend Time occurring in such 365 day period shall be deemed to be an
Extraordinary Cash Dividend and for purposes of applying the formula set
forth above in this Section 11.8, the value of "F" shall be equal to (y)
the aggregate amount of such cash dividend together with amounts of the
other cash dividends with Ex-Dividend Times occurring in such period minus
(z) the aggregate amount of such other cash dividends with Ex-Dividend
Times occurring in such period for which a prior adjustment in the
Conversion Rate was previously made under this Section 11.8.
In making the determinations required by items (i) and (ii) above, the
amount of cash dividends paid on a per share basis and the average of the Sale
Prices, in each case during the period specified in item (i) or (ii) above, as
applicable, shall be appropriately adjusted to reflect the occurrence during
such period of any event described in Section 11.6.
In the event that, with respect to any distribution to which this Section
11.8 would otherwise apply, the difference "M-F" as defined in the above formula
is less than $1.00 or "F" is equal to or greater than "M", then the adjustment
provided by this Section 11.8 shall not be made and in lieu thereof the
provisions of Section 11.14 shall apply to such distribution.
SECTION 11.9. When Adjustment May Be Deferred. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article 11 shall be made to the nearest cent or
to the nearest 1/1,000th of a share, as the case may be.
SECTION 11.10. When No Adjustment Required. No adjustment need be made for
a transaction referred to
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in Section 11.6, 11.7, 11.8 or 11.14 if Securityholders are to participate in
the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
SECTION 11.11. Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is correct.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate except to exhibit the same
to any Holder desiring inspection thereof.
SECTION 11.12. Voluntary Increase. The Company from time to time may
increase the Conversion Rate by any amount and for any period of time (provided,
that such period is not less than 20 Business Days). Whenever the Conversion
Rate is increased, the Company shall mail to Securityholders and file with the
Trustee and the Conversion Agent a notice of the increase. The Company shall
mail the notice at least 15 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
A voluntary increase of the Conversion Rate does not change or adjust the
Conversion Rate otherwise in effect for purposes of Section 11.6 or 11.8.
SECTION 11.13. Notice of Certain Transactions. If:
(a) the Company takes any action that would
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require an adjustment in the Conversion Rate pursuant to Section 11.6, 11.7 or
11.8 (unless no adjustment is to occur pursuant to Section 11.10); or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.14; or
(c) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.
SECTION 11.14. Reorganization of Company; Special Distributions. If the
Company is a party to a transaction subject to Section 5.1 (other than a sale of
all or substantially all of the assets of the Company in a transaction in which
the holders of Common Stock immediately prior to such transaction do not receive
securities, cash, or other assets of the Company or any other person) or a
merger or binding share exchange which reclassifies or changes its outstanding
Common Stock, the person obligated to deliver securities, cash or other assets
upon conversion of Securities shall enter into a supplemental indenture. If the
issuer of securities deliverable upon conversion of Securities is an Affiliate
of the successor Company, that issuer shall join in the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security may
convert it into the kind and amount of securities, cash or other assets which
such Holder would have received immediately after the consolidation, merger,
binding share exchange or transfer if such Holder had converted the Security
immediately before the effective date of the transaction, assuming (to the
extent applicable) that such Holder (i) was not a constituent person or an
Affiliate of a constituent person
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to such transaction; (ii) made no election with respect thereto; and (iii) was
treated alike with the plurality of non-electing Holders. The supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practical to the adjustments provided for in this Article 11. The
successor Company shall mail to Securityholders a notice briefly describing the
supplemental indenture.
If this Section applies, neither Section 11.6 nor 11.7 applies.
If the Company makes a distribution to all holders of its Common Stock of
any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company that, but for the provisions of the last
paragraph of Section 11.8, would otherwise result in an adjustment in the
Conversion Rate pursuant to the provisions of Section 11.8, then, from and after
the record date for determining the holders of Common Stock entitled to receive
the distribution, a Holder of a Security that converts such Security in
accordance with the provisions of this Indenture would upon such conversion be
entitled to receive, in addition to the shares of Common Stock into which the
Security is convertible, the kind and amount of securities, cash or other assets
comprising the distribution that such Holder would have received if such Holder
had converted the Security immediately prior to the record date for determining
the holders of Common Stock entitled to receive the distribution.
SECTION 11.15. Company Determination Final. Any determination that the
Company or the Board of Directors must make pursuant to this Article 11 is
conclusive.
SECTION 11.16. Trustee's Adjustment Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article 11 should be made, how it should
be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 11.14 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for the Company's failure to comply
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with this Article 11. Each Conversion Agent (other than a Company or Affiliate
of the Company) shall have the same protection under this Section 11.16 as the
Trustee.
SECTION 11.17. Simultaneous Adjustments. If this Article 11 requires
adjustments to the Conversion Rate under more than one of Sections 11.6(d), 11.7
or 11.8, and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made by
applying, first the provisions of Section 11.6, second, the provisions of
Section 11.8 and, third, the provisions of Section 11.7.
SECTION 11.18. Successive Adjustments. After an adjustment to the
Conversion Rate under this Article 11, any subsequent event requiring an
adjustment under this Article 11 shall cause an adjustment to the Conversion
Rate as so adjusted.
SECTION 11.19. Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 11 shall be entitled to receive the appropriate number
of Rights, if any, and the certificates representing the Common Stock issued
upon such conversion shall bear such legends, if any, in each case as provided
by the terms of the Rights Agreement, as in effect at the time of such
conversion. Notwithstanding anything else to the contrary in this Article 11,
there shall not be any adjustment to the conversion privilege or Conversion Rate
as a result of (i) the distribution of separate certificates representing the
Rights, (ii) the occurrence of certain events entitling holders of Rights to
receive, upon exercise thereof, Common Stock of the Company or Capital Stock of
another corporation, or (iii) the exercise of such Rights in accordance with the
Rights Agreement.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by operation of
subsection (c) of Section 318 of the TIA, the imposed duties
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shall control. The provisions of Sections 310 to 317, inclusive, of the TIA that
impose duties on any person (including provisions automatically deemed included
in an indenture unless the indenture provides that such provisions are excluded)
are a part of and govern this Indenture, except as, and to the extent, expressly
excluded from this Indenture, as permitted by the TIA.
SECTION 12.2. Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail, postage prepaid,
addressed as follows:
if to the Company:
Rite Aid Corporation
431 Railroad Avenue
Shiremanstown, Pennsylvania 17011
Attention: Franklin C. Brown
if to the Trustee:
Harris Trust and Savings Bank
P. 0. Box
Chicago, Illinois 60690
Attention: Indenture Trust Division
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication given to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication
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to the Securityholders, it shall mail a copy to the Trustee and each Registrar,
Paying Agent, Conversion Agent or co-registrar.
SECTION 12.3. Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else
shall have the protection of TIA Section 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 12.5. Statements Required in Certificate or Opinion. Each Officers'
Certificate or Opinion of Counsel with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(a) a statement that each person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such Officers'
Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of each such person, he has made such
examination or investigation as is necessary to enable such person to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement that, in the opinion of such
83
<PAGE>
person, such covenant or condition has been complied with.
SECTION 12.6. 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 12.7. Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, Conversion Agent and Paying Agent may make
reasonable rules for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no Original Issue Discount or interest, if any, shall
accrue for the intervening period.
SECTION 12.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 12.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
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SECTION 12.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
RITE AID CORPORATION
By _________________________
Name: Franklin C. Brown
Title: Sr. Vice President
Attest:
__________________________
Name: Frank Bergonzi
Title: Sr. Vice President
HARRIS TRUST AND SAVINGS BANK
Trustee
By _________________________
Name:
Title:
Attest:
__________________________
Name:
Title:
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
RITE AID CORPORATION
By _________________________
Name:
Title:
Attest:
__________________________
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
Trustee
By _________________________
Name: J. BARTOLINI
Title: VICE PRESIDENT
Attest:
__________________________
Name: C. POTTER
Title: ASSISTANT SECRETARY
86
<PAGE>
EXHIBIT A
[FORM OF FACE OF NOTE]
TEMPORARY NOTE EXCHANGEABLE FOX DEFINITIVE NOTE WHEN READY FOR DELIVERY.
FOR PURPOSES OF SECTIONS 1272 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, THE AMOUNT AT MATURITY OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH
$1,000 OF PRINCIPAL AMOUNT OF THIS SECURITY IS $630.57, THE ISSUE DATE IS July
24, 1991, AND THE YIELD TO MATURITY IS 6.75%.
Rite Aid Corporation
Zero Coupon Convertible Subordinated
Note due 2006
No.
Issue Date: July 24, 1991
Issue Price: $369.43
(for each $1,000 Principal Amount at Maturity)
Original Issue Discount: $630.57
(for each $1,000 Principal Amount at Maturity)
RITE AID CORPORATION, a Delaware corporation, promises to pay to
___________ or registered assigns, the Principal Amount of __________ Dollars on
July 24, 2006.
This Security shall not bear interest except as specified on the other side
of this Security. Original Issue Discount will accrue as specified on the other
side of this Security. This Security is convertible as specified on the other
side of this Security.
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<PAGE>
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: July 24, 1991 RITE AID CORPORATION
By ______________________
Name:
Title:
[SEAL] By ______________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
HARRIS TRUST AND SAVINGS BANK
as Trustee, certifies
that this is one of the
Securities referred to
in the within-mentioned Indenture.
By _________________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE SIDE OF NOTE]
Zero Coupon Convertible Subordinated
Note due 2006
1. Interest
This Security shall not bear interest, except that if the Principal Amount
hereof or any portion of such Principal Amount is not paid when due (whether
upon acceleration pursuant to Section 6.2 of the Indenture, upon the date set
for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the
date set for payment of a Purchase Price or Change in Control Purchase Price
pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security),
then in each such case the overdue amount shall bear interest at the rate of
6.75% per annum, compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from the
date such overdue amount was due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall be
payable on demand.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount of the Security), in the period during which a Security remains
outstanding, shall accrue at 6.75% per annum, on a semiannual bond equivalent
basis using a 360-day year composed of twelve 30-day months, commencing on the
Issue Date of this Security.
2. Method of Payment
Subject to the terms and conditions of the Indenture, Rite Aid Corporation
(the "Company") will make payments in respect of Redemption Prices, Purchase
Prices, Change in Control Purchase Prices and at Stated Maturity to Holders who
surrender Securities to a Paying Agent to collect such payments in respect of
the Securities. The Company will pay cash amounts in money of The United States
of America that at the time of payment is legal tender for payment of public and
private debts. However, the Company may make such cash payments by check payable
in such money.
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<PAGE>
3. Paying Agent, Conversion Agent and Registrar
Initially, the Trustee will act as Paying Agent, Conversion Agent and
Registrar. The Company may appoint and change any Paying Agent, Conversion
Agent, Registrar or co-registrar, upon notice to the Trustee and the Holders.
The Company or any of its Subsidiaries or any of their Affiliates may act as
Paying Agent, Conversion Agent, Registrar or co-registrar
4. Indenture
The Company issued the Securities under an Indenture, dated as of July 15,
1991 (the "Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, and, as in effect on the date of the
Indenture (the "TIA"), except as provided in Section 9.3 of the Indenture.
Capitalized terms used herein or on the face hereof and not defined herein have
the meanings ascribed thereto in the Indenture. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of those terms.
The Securities are general unsecured obligations of the Company limited to
$460,000,000 aggregate Principal Amount at Maturity (subject to Section 2.7 of
the Indenture). The Indenture does not limit other Debt of the Company, secured
or unsecured, including Senior indebtedness.
5. Redemption at the Option of the Company
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below; provided that the
Securities are not redeemable prior to July 24, 1993 unless the Sale Price of
the Common Stock has equaled or exceeded $34.65 per share (subject to adjustment
in accordance with Section 3.3 of the Indenture) for at least 20 Trading Days
within a period of 30 consecutive Trading Days ending within five Trading Days
prior to the date of the notice of redemption mailed to each Holder of Securi-
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<PAGE>
ties as provided in paragraph 7 below.
The table below shows the Redemption Prices of a Security per $1,000
Principal Amount (i) at the Issue Date, (ii) on the dates shown below and (iii)
at Stated Maturity, which prices reflect accrued Original Issue Discount
calculated to each such date. The Redemption Price of a Security redeemed
between such dates would include an additional amount reflecting the additional
Original Issue Discount accrued from and including the next preceding date in
the table to, but excluding, the Redemption Date.
(1) (2) (3)
Accrued
Original
Note Issue Redemption
Issue Discount Price
Redemption Date Price at 6.75% (1) + (2)
- --------------- ----- -------- -----------
At issuance.......... $369.43 $ 0.00 $369.43
July 24, 1992...... $369.43 25.36 394.79
July 24, 1993...... $369.43 52.46 421.89
July 24, 1994...... $369.43 81.42 450.85
July 24, 1995...... $369.43 112.36 481.79
July 24, 1996...... $369.43 145.43 514.86
July 24, 1997...... $369.43 180.77 550.20
July 24, 1998...... $369.43 218.54 587.97
July 24, 1999...... $369.43 258.89 628.32
July 24, 2000...... $369.43 302.02 671.45
July 24, 2001...... $369.43 348.11 717.54
July 24, 2002...... $369.43 397.36 766.79
July 24, 2003...... $369.43 449.99 819.42
July 24, 2004...... $369.43 506.23 875.66
July 24, 2005...... $369.43 566.34 935.77
At Stated Maturity... $369.43 630.57 1,000.00
6. Purchase by the Company at the Option of the Holder
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount at Stated Maturity of such Securities, upon
delivery of a
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<PAGE>
Purchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 Business Days prior to
such Purchase Date until the close of business on such Purchase Date and upon
delivery of the Securities to the Paying Agent by the Holder as set forth in the
Indenture. Such Purchase Price may be paid, at the option of the Company, in
cash or by the issuance and delivery of shares of Common Stock of the Company,
or in any combination thereof.
Purchase Date Purchase Price
------------- --------------
July 24, 1996 $514.86
July 24, 2001 $717.54
Subject to the terms and conditions of the Indenture, if any Change in
Control occurs on or prior to July 24, 1996, the Company shall, at the option of
the Holders, purchase all Securities for which a Change in Control Purchase
Notice shall have been delivered as provided in the Indenture and not withdrawn,
on the date that is 35 Business Days after the occurrence of such Change in
Control, for a Change in Control Purchase Price equal to the Issue Price plus
accrued Original Issue Discount to the Change in Control Purchase Date, which
Change in Control Purchase price shall be paid in cash.
Holders have the right to withdraw any Purchase Notice or Change in Control
Purchase Notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.
If cash (or securities if permitted under the Indenture) sufficient to pay
the Purchase Price or Change in Control Purchase Price, as the case may be, of
all Securities or portions thereof to be purchased as of the Purchase Date or
the Change in Control Purchase Date, as the case may be, is deposited with the
Paying Agent on the Business Day following the Purchase Date or the Change in
Control Purchase Date, as the case may be, Original Issue Discount ceases to
accrue on such Securities (or portions thereof) on and after such date, and the
Holders thereof shall have no other rights as such (other than the right to
receive the Purchase Price or Change in Control Purchase Price, as the case may
be, upon surrender of such Security).
A-6
<PAGE>
7. Notice of Redemption
Notice of redemption will be mailed at least 15 days but not more than 60
days before the Redemption Date to each Holder of Securities to be redeemed at
the Holder's registered address. If money sufficient to pay the Redemption Price
of all Securities (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent prior to or on the Redemption Date, on and after
such date Original Issue Discount ceases to accrue on such Securities or
portions thereof. Securities in denominations larger than $1,000 of Principal
Amount may be redeemed in part but only in integral multiples of $1,000 of
Principal Amount.
8. Subordination
The Securities are subordinated to all existing and future Senior
Indebtedness. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Indenture does not limit the
present or future amount of Senior Indebtedness the Company may have. The
Company agrees, and each Securityholder by accepting a Security agrees, to the
subordination and authorizes the Trustee to give it effect and appoints the
Trustee as attorney-in-fact for such purpose.
9. Conversion
Subject to the next two succeeding sentences, a Holder of a Security may
convert it into Common Stock of the Company at any time before the close of
business on July 24, 2006; provided however, that if a Security is called for
redemption, the Holder may convert it only until the close of business on the
Redemption Date. The number of shares of Common Stock to be delivered upon
conversion of a Security into Common Stock per $1,000 of Principal Amount shall
be equal to the Conversion Rate. A Security in respect of which a Holder has
delivered a Purchase Notice or Change in Control Purchase Notice exercising the
option of such Holder to require the Company to purchase such Security may be
converted only if the notice of exercise is withdrawn in accordance with the
terms of the Indenture.
The initial Conversion Rate is 15.993 shares of
A-7
<PAGE>
Common Stock per $1,000 Principal Amount, subject to adjustment in certain
events described in the Indenture. The Company will deliver cash or a check in
lieu of any fractional share of Common Stock.
To convert a Security a Holder must (i) complete and manually sign the
conversion notice on the back of the Security (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent, (ii)
surrender the Security to a Conversion Agent, (iii) furnish appropriate
endorsements and transfer documents if required by the Conversion Agent, the
Company or the Trustee and (iv) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount of
such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture. On conversion of a Security, that portion of the accrued Original
Issue Discount attributable to the period from the Issue Date to the Conversion
Date with respect to the converted Security shall not be cancelled, extinguished
or forfeited, but rather shall be deemed paid in full to the Holder thereof
through the delivery of the Common Stock (together with the cash payment, if
any, in lieu of fractional shares) in exchange for the Security being converted
pursuant to the terms hereof.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Sale Price at the Time of
Determination; and distributions to such holders of assets or debt securities of
the Company or certain rights to purchase securities of the Company (excluding
certain cash dividends or distributions). However, no adjustment need be made if
Securityholders may participate in the transaction or in certain other cases.
The Company from time to time may voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange of the type specified in
A-8
<PAGE>
the Indenture, or certain transfers of all or substantially all of its assets to
another person, or in certain other circumstances described in the Indenture,
the right to convert a Security into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.
10. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Securities at an amount not less than the
Redemption Price, together with accrued interest, if any, to the Redemption
Date, by one or more investment bankers or other purchasers who may agree with
the Company to purchase such Securities from the Holders to convert them into
Common Stock and to make payment for such Securities to the Paying Agent in
trust for such Holders.
11. Denominations; Transfer; Exchange
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities in respect of which a Purchase Notice or Change in Control Purchase
Notice has been given and not withdrawn (except, in the case of a Security to be
purchased in part, the portion of the Security not to be purchased) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
12. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of this
Security for all purposes.
A-9
<PAGE>
13. Unclaimed Money or Securities
The Trustee and the Paying Agent shall return to the Company upon written
request any money or securities held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such return, may at the expense of the Company cause to be published once in
a newspaper of national circulation or mail to each such Holder notice that such
money or securities remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication or
mailing, any unclaimed money or securities then remaining will be returned to
the Company. After return to the Company, Holders entitled to the money or
securities must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in aggregate Principal Amount of the Securities at the time
outstanding and (ii) certain defaults or noncompliance with certain provisions
may be waived with the written consent of the Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, or to comply with
Article 5 or Section 11.14 of the Indenture, or to provide for uncertificated
Securities in addition to certificated securities, or to comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or to make any change that does not adversely affect the rights
of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default in payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, Redemption
Price,
A-10
<PAGE>
Purchase Price or Change in Control Purchase Price, as the case may be, in
respect of the Securities when the same becomes due and payable; (ii) failure by
the Company to comply with other agreements in the Indenture or the Securities,
subject to notice and lapse of time; or (iii) certain events of bankruptcy or
insolvency. If an Event of Default occurs and is continuing, the Trustee, or the
Holders of at least 25% in aggregate Principal Amount of the Securities at the
time outstanding, may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities becoming due and payable immediately upon
the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of amounts specified in clause
(i) above) if it determines that withholding notice is in their interests.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and
A-11
<PAGE>
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized officer of the Trustee
manually signs the Certificate of Authentication on the other side of this
Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=Joint tenants with right of survivorship and not as
tenants in common) and CUST (=custodian), and UNIF TRANS MIN ACT (=Uniform
Transfers to Minors Act).
20. GOVERNING LAW
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND TO BE PERFORMED WITHIN THE STATE Of NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill
in the form below:
I or we assign and transfer
this Security to
- -------------------------
(Insert assignee's soc.
sec. or tax ID no.)
- --------------------------
- --------------------------
- --------------------------
- --------------------------
(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.
CONVERSION NOTICE
To convert this Security into
Common Stock of the Company,
check the box:
----
: :
: :
----
To convert only part of this
Security, state the Principal
Amount to be converted (which must
be $1,000 or an integral multiple
of $1,000):
------------------
:$ :
------------------
If you want the stock certificate
made out in another person's name,
fill in the form below:
------------------
:$ :
------------------
(Insert person's soc. sec. or
tax ID no.)
- --------------------------
- --------------------------
- --------------------------
- --------------------------
(Print or type person's
name, address and zip code)
- -----------------------------------------------------------------
Date:________________Your Signature:____________________________*
_________________________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
* Your signature must be guaranteed by a commercial bank or trust company or
by a member or members' organization of the New York Stock Exchange or
American Stock Exchange.
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