SUBJECT TO COMPLETION, DATED NOVEMBER 6, 1997.
As filed with the Securities and Exchange Commission on November 6, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RITE AID DELAWARE 23-1614034
CORPORATION (State or other (I.R.S. Employer
(Exact name of jurisdiction of Identification
registrant as specified incorporation or Number)
in its charter) organization)
30 HUNTER LANE, CAMP HILL, PENNSYLVANIA 17011, (717) 761-2633
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
ELLIOT S. GERSON, ESQ.
RITE AID CORPORATION
30 HUNTER LANE, CAMP HILL, PENNSYLVANIA 17011, (717) 761-2633
(Name, Address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
STACY J. KANTER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE, NEW YORK, NEW YORK 10022, (212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. ( )
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended, (the "Securities Act") other
than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. (X)
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. ( )
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed Amount
Maximum Maximum of
Amount Offering Aggregate Regist-
Title of Each Class of to be Price Offering ration
Securities to be Registered Registered Per Note Price Fee
<S> <C> <C> <C> <C>
Convertible Subordinated
Notes of Rite Aid
Corporation . . . . . . . $650,000,000 100%(1)(2) $650,000,000(1)(2) $196,969.70
Common Stock of Rite Aid
Corporation (3) . . . . . 8,993,400(3) -- -- --
Total . . . . . . . . . $650,000,000 100% $ $
</TABLE>
(1) Estimated solely for the purpose of computing the registration
fee in accordance with Rule 457(i) of the Securities Act.
(2) Exclusive of accrued interest and distributions, if any.
(3) Such shares of Company Common Stock are issuable upon conversion
of the Convertible Notes registered hereunder. This Registration
Statement also covers such shares as may be issuable pursuant to
anti-dilution adjustments.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
[FLAG]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
PROSPECTUS
LOGO
$650,000,000
RITE AID CORPORATION
5.25% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2002
This Prospectus relates to the 5.25% Convertible Subordinated
Notes due September 15, 2002 (the "Notes"), and the shares of common
stock, par value $1.00 per share (the "Company Common Stock"), of Rite
Aid Corporation, a Delaware corporation (the "Company"), issuable upon
conversion of the Notes. The Notes were issued and sold (the "Original
Offering") on September 10, 1997 and September 16, 1997 (together, the
"Original Offering Date") to the Initial Purchasers (as defined
herein) and were simultaneously sold by the Initial Purchasers in
transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), in the
United States to persons reasonably believed by the Initial Purchasers
to be qualified institutional buyers as defined in Rule 144A under the
Securities Act, and outside the United States to non-U.S. persons in
offshore transactions in reliance on Regulation S under the Securities
Act.
The Notes and the Company Common Stock issuable upon conversion
of the Notes (collectively the "Offered Securities") may be offered
and sold from time to time by the holders named herein or by their
transferees, pledgees, donees or their successors (collectively, the
"Selling Holders") pursuant to this Prospectus. The Offered Securities
may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Selling
Holders" and "Plan of Distribution". If required, the names of any
such agents or underwriters involved in the sale of the Offered
Securities and the applicable agent's commission, dealer's purchase
price or underwriter's discount, if any, will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus
Supplement"). The Selling Holders will receive all of the net proceeds
from the sale of the Offered Securities and will pay all underwriting
discounts, selling commissions and transfer taxes, if any, applicable
to any such sale. The Company is responsible for payment of all other
expenses incident to the registration of the Offered Securities. The
Selling Holders and any broker-dealers, agents or underwriters that
participate in the distribution of the Offered Securities may be
deemed to be "underwriters" within the meaning of the Securities Act,
and any commission received by them and any profit on the resale of
the Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See
"Plan of Distribution" for a description of indemnification
arrangements.
Each Note is convertible at the option of the holder thereof into
shares of Company Common Stock at a conversion rate of 13.836 shares
of Company Common Stock for each Note (equivalent to $72.275 per share
of Company Common Stock), subject to adjustment in certain
circumstances. The Company Common Stock is quoted on the New York
Stock Exchange ("NYSE") under the symbol "RAD". On November 5, 1997,
the last reported sale price of the Company Common Stock on the NYSE
Composite Tape was $63 1/4.
Interest on the Notes is payable semiannually on March 15 and
September 15 of each year, commencing on March 15, 1998. The Notes may
be redeemed at the option of the Company on or after September 15,
2000, in whole or in part at the redemption prices set forth herein.
See Description of Notes Optional Redemption . The Notes are not
entitled to any sinking fund.
In the event of a Change in Control (as defined in the
Indenture), each holder of Notes may require the Company to repurchase
its Notes, in whole or in part, for cash or, at the Company's option,
Common Stock (valued at 95% of the average closing prices for the five
trading days immediately preceding and including the third trading day
prior to the repurchase date) at a repurchase price of 100% of the
principal amount of Notes to be repurchased, plus accrued interest to
the repurchase date. See "Description of Notes--Repurchase at Option
of Holders Upon a Change in Control".
The Notes are general unsecured obligations subordinated in right
of payment to all existing and future Senior Debt (as defined in the
Indenture) of the Company and effectively subordinated in right of
payment to all indebtedness and other liabilities of the Company's
subsidiaries. As of August 30, 1997, the aggregate amount of
outstanding Senior Debt of the Company was approximately $2.7 billion.
The Indenture will not restrict the Company or its subsidiaries from
incurring additional Senior Debt or other indebtedness. See
"Description of Notes--Subordination".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
THE COMPANY
Rite Aid Corporation, incorporated in 1968, is one of the largest
retail drugstore chains in the United States. As of August 30, 1997,
Rite Aid operated over 3,965 drugstores, averaging within a range of
approximately 7,200 to 20,000 square feet per store in size, in 31
eastern and western states and the District of Columbia and employed
over 75,000 associates. Pharmacy service forms the core of Rite Aid's
business, with prescriptions accounting for 50.2% of drugstore sales
in the 26-week period ended August 30, 1997. Rite Aid'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 been added in select locations. Rite Aid's Eagle
Managed Care Corp. subsidiary markets prescription plans and sells
other managed health care services to employers, health maintenance
organizations and government-sponsored employee benefit programs.
On December 12, 1996, Rite Aid acquired Thrifty PayLess Holdings,
Inc. ("Thrifty PayLess"), which was one of the largest drugstore
retailers in the western United States with over 1,000 stores in 10
states, pursuant to a merger of Thrifty PayLess into Rite Aid (the
"Thrifty PayLess Merger"). On August 27, 1997 the Company completed its
acquisitions of K&B Incorporated, ("K&B") and Harco, Inc. ("Harco").
K&B, based in New Orleans, Louisiana, operates 186 stores in
Louisiana, Alabama, Mississippi, Texas, Tennessee and Florida. It was
the 13th largest drugstore chain in the U.S. with sales of $580
million for fiscal year 1996. Harco headquartered in Tuscaloosa,
Alabama, operates 146 stores in Alabama, Mississippi and Florida. It
was the 17th largest drugstore chain in the U.S. with sales of $258
million in fiscal year 1996.
Rite Aid is in the process of integrating the Thrifty PayLess
stores with its operations. Rite Aid has completed the installation of
its point-of-sale system in each Thrifty PayLess store. Rite Aid is
also near completion of the conversion of all Thrifty PayLess
pharmacies to its proprietary pharmacy system. Rite Aid expects the
elimination of duplicative overhead expenses and the combined
Company's enhanced purchasing efficiencies to result in cost savings
of approximately $75.0 million in the fiscal year ending February 28,
1998. In the first half of calendar year 1998, Rite Aid expects to
begin renaming Thrifty PayLess stores "Rite Aid". Shortly after the
completion of the Thrifty PayLess Merger, Rite Aid divested Bi-Mart
Corporation, a warehouse merchandising operation.
Rite Aid expects to rename all K&B and Harco stores "Rite Aid"
and integrate them with Rite Aid's operations. Rite Aid expects to
eliminate duplicative overhead expenses and believes that there are
other cost-saving opportunities presented by the K&B and Harco
acquisitions, due to the increased scale of operations and geographic
diversity resulting from the K&B and Harco acquisitions. In addition,
the application of Rite Aid's systems and technology to the K&B and
Harco operations should result in greater efficiencies.
Rite Aid's strategy is to operate drugstores in large, fast-
growing metropolitan areas. Of the 60 largest metropolitan statistical
areas ("MSAs") in the United States, Rite Aid operates in 33 and is
the largest or second largest for retail drugstore prescription sales
in 23 of those MSAs. In June 1997, consistent with Rite Aid's strategy
of maintaining a leading market share position in each of its
operating territories, Rite Aid completed the termination of its
operations in North Carolina and South Carolina, selling approximately
186 stores.
On September 15, 1997, Rite Aid commenced the redemption of (the
"6 3/4% Notes Redemption") all of its outstanding 6 3/4% Convertible
Subordinated Notes due 2006 (the "6 3/4% Notes"). Substantially all of
6 3/4% Notes were converted to shares of Rite Aid common stock prior
to the close of the 6 3/4% Notes Redemption period on October 15, 1997.
Rite Aid is a Delaware corporation with its principal executive
offices located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011. The
telephone number of Rite Aid at such offices is (717) 761-2633.
USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from the
sale of the Offered Securities. The Company will not receive any
proceeds from the sale of the Offered Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed
charges for each of the last five fiscal years and for the 26-week
period ended August 30, 1997.
26
Weeks Year Ended
Ended ____________________________________
August March March March Feb. Feb.
30, 1, 2, 4, 26, 27,
1997 1997 1996 1995 1994 1993
Ratio of Earnings to
Fixed Charges . . . . . 2.62 2.56 3.08 3.78 1.66 3.97
For purposes of computing the ratio of earnings to fixed charges,
earnings represent earnings from continuing operations before income
taxes plus interest expense on indebtedness, amortization of debt
discount and premium and the portion of rent expense deemed
representative of an interest factor. Fixed charges include interest
on indebtedness (whether expensed or capitalized), amortization of
debt discount and premium and the portion of rent expense deemed
representative of an interest factor.
DESCRIPTION OF NOTES
The Notes were issued under an Indenture, dated as of September
10, 1997 (the "Indenture"), between the Company and Harris Trust and
Savings Bank, as Trustee (the "Trustee"), copies of which are
available for inspection at the Corporate Trust Office of the Trustee
in Chicago, Illinois. In addition, the Trustee will maintain an office
or agency in the Borough of Manhattan, The City of New York, where
Notes may be surrendered for registration of transfer or exchange, for
payment or where notices and demands to or upon the Trustee may be
served. Wherever particular defined terms of the Indenture (including
the Notes and the various forms thereof) are referred to, such defined
terms are incorporated herein by reference (the Notes and various
terms relating to the Notes being referred to in the Indenture as
"Securities"). References in this section to the "Company" are solely
to Rite Aid Corporation and not to its subsidiaries. The following
summaries of certain provisions of the Indenture do not purport to be
complete and are subject to, and are qualified in their entirety by
reference to, the detailed provisions of the Notes and the Indenture,
including the definitions therein of certain terms.
GENERAL
The Notes are unsecured subordinated obligations of the Company,
are limited to $650,000,000 aggregate, and will mature on September
15, 2002. Payment in full of the principal amount of the Notes will be
due on September 15, 2002. The Notes bear interest at the rate of
5.25% per annum from September 10, payable semiannually on March 15
and September 15 of each year, commencing on March 15, 1998. Interest
payable per $1,000 principal amount of Notes for the period from
September 10, 1997 to March 15, 1998 will be $26.98.
The Notes are convertible into shares of Common Stock at the
conversion price stated on the cover page hereof, subject to
adjustment upon the occurrence of certain events described under
"-Conversion Rights", at any time on or after September 15, 2000,
prior to the close of business on the maturity date, unless previously
redeemed or repurchased.
The Notes are redeemable under the circumstances and at the
redemption prices set forth below under "-Optional Redemption", plus
accrued interest to the redemption date. The Notes are also subject to
repurchase by the Company at the option of the Holders, as described
below under "-Repurchase Option of Holders Upon Change in Control".
FORM AND DENOMINATION
Except as provided below, the Notes are represented by one or
more global Notes in definitive, fully registered form without
interest coupons (collectively, the "Global Notes") and will be
deposited with the Trustee as custodian for DTC and registered in the
name of a nominee of DTC.
The Company initially appointed the Trustee at its corporate
trust office as paying agent, transfer agent, registrar and conversion
agent for the Notes. In such capacities, the Trustee will be
responsible for, among other things, (i) maintaining a record of the
aggregate holdings of Notes and accepting Notes for exchange and
registration of transfer, (ii) ensuring that payments of principal,
premium, if any, and interest in respect of the Notes received by the
Trustee from the Company are duly paid to DTC or its nominees, (iii)
transmitting to the Company any notices from holders, (iv) accepting
conversion notices and related documents, and transmitting the
relevant items to the Company and (v) delivering certificates for
Common Stock issued in conversion of the Notes.
The Company will cause each transfer agent to act as a registrar
and will cause to be kept at the office of each transfer agent a
register in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration of the Notes
and registration of transfers of the Notes. The Company may vary or
terminate the appointment of any paying agent, transfer agent or
conversion agent, or appoint additional or other such agents or
approve any change in the office through which any such agent acts,
provided that there shall at all times be a paying agent, a transfer
agent and a conversion agent in the Borough of Manhattan, The City of
New York, New York. The Company will cause notice of any resignation,
termination or appointment of the Trustee or any paying agent,
transfer agent or conversion agent, and of any change in the office
through which any such agent will act, to be provided to Holders of
the Notes.
GLOBAL NOTES
The following description of the operations and procedures of DTC
is provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement
systems and are subject to changes by them from time to time. The
Company takes no responsibility for these operations and procedures
and urges investors to contact the system or their participants
directly to discuss these matters.
Upon the issuance of the Global Notes, DTC credited, on its
internal system, the respective principal amount of the individual
beneficial interests represented by such Global Notes to the accounts
with DTC ("participants") or persons who hold interests through
participants. Ownership of beneficial interests in the Global Notes
will be shown on, and the transfer of that ownership will be effected
only through, records maintained by DTC or its nominee (with respects
to interests of participants) and the records of participants (with
respect to interest of persons other than participants).
AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF A
GLOBAL NOTE, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE
CONSIDERED THE SOLE OWNER AND HOLDER OF THE NOTES REPRESENTED BY SUCH
GLOBAL NOTE FOR ALL PURPOSES UNDER THE INDENTURE AND THE NOTES. Unless
DTC notifies the Company that it is unwilling or unable to continue as
depository for a Global Note, or ceases to be a "Clearing Agency"
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or announces an intention permanently to cease
business or does in fact do so, or an Event of Default has occurred
and is continuing with respect to a Global Note, owners of beneficial
interests in a Global Note will not be entitled to have any portions
of such Global Note registered in their names, will not receive or be
entitled to receive physical delivery of Notes in definitive form and
will not be considered the owners or Holders of the Global Note (or
any Notes presented thereby) under the Indenture or the Notes. In
addition, no beneficial owner of an interest in a Global Note will be
able to transfer that interest except in accordance with DTC's
applicable procedures (in addition to those under the Indenture
referred to herein). In the event that owners of beneficial interests
in a Global Note become entitled to receive Notes in definitive form,
such Notes will be issued only in registered form in denominations of
$1,000 and integral multiples thereof.
Payments of the principal of, premium, if any, and interest on
Global Notes will be made to DTC or its nominee as the registered
owner thereof. Neither the Company, the Trustee nor any of their
respective agents will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests in the Global Notes or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
Subject to the following considerations, beneficial interests in
the Global Notes will trade in DTC's Same-Day Funds Settlement System,
and secondary market trading activity in such interests will therefore
settle in immediately available funds. The Company expects that DTC or
its nominee, upon receipt of any payment of principal or interest in
respect of a Global Note representing any Notes held by it or its
nominee, will immediately credit participants' accounts with payment
in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Notes for such Notes as shown on
the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interest in such
Global Notes held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street
name". Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in same-day
funds.
DTC has advised the Company that it will take any action
permitted to be taken by a holder of Notes (including the presentation
of Notes for exchange as described below) only at the direction of one
or more participants to whose account with DTC interests in the Global
Notes are credited and only in respect of such portion of the
aggregated principal amount of the Notes as to which such participant
or participants has or have given such direction. However, if there is
an Event of Default (as defined below) under the Notes, DTC reserves
the right to exchange the Global Notes for legended Notes in
certificated form, and to distribute such Notes to its participants.
DTC has advised the Company as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within
the meaning of the Uniform Commercial Code, as amended, and a
"Clearing Agency" registered pursuant to the provisions of Section 17A
of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need
for physical transfer and delivery of certificates. Participants
include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to other entities such
as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly
or indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of beneficial ownership interests in the Global
Notes among participants of DTC they are under no obligation to
perform or continue to perform such procedures, and such procedures
may be discontinued at any time. None of the Company, the Trustee nor
any of their respective agents will have any responsibility for the
performance by DTC, its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial
ownership interests in Global Notes.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a
depositary for the reasons set forth above under "-Global Notes" (as
the case may be) is closed for business for 14 continuous days or
announces an intention to cease or permanently ceases business, the
Company will issue certificates for the Notes in definitive, fully
registered, non-global form without interest coupons in exchange for
the Global Notes, as the case may be.
The holder of a Note in non-global form may transfer such Note,
subject to compliance with the provisions of such legend, by
surrendering it at the office or agency maintained by the Company for
such purpose in the Borough of Manhattan, the City of New York, which
initially will be the office of the Trustee. Upon the transfer,
exchange or replacement of Notes bearing the legend, or upon specific
request for removal of the legend on a Note, the Company will deliver
only Notes that bear such legend, or will refuse to remove such
legend, as the case may be, unless there is delivered to the Company
such satisfactory evidence, which may include an opinion of counsel,
as may reasonably be required by the Company that neither the legend
nor the restrictions on transfer set forth therein are required to
ensure compliance with the provisions of the Securities Act. Before
any Note in non-global form may be transferred to a person who takes
delivery in the form of an interest in any Global Note, the transferor
will be required to provide the Trustee with a Global Note
Certificate, as the case may be.
Notwithstanding any statement herein, the Company and the Trustee
reserve the right to impose such transfer, certification, exchange or
other requirements, and to require such restrictive legends on
certificates evidencing Notes, as they may determine are necessary to
ensure compliance with the securities laws of the United States and
the States therein and any other applicable laws, to ensure that the
Shelf Registration Statement or amendment covering the Notes and the
Common Stock is declared effective by the Commission or as DTC may
require.
CONVERSION RIGHTS
The Holder of any Note has the right, at the Holder's option, to
convert any portion of the principal amount of a Registered Note that
is an integral multiple of $1,000, into shares of Common Stock at any
time prior to the close of business on the maturity date, unless
previously redeemed or repurchased at a conversion rate of 13.836
shares per $1,000 principal amount of Notes (equivalent to a
conversion price of $72.275 per share) (subject to adjustment as
described below). The right to convert a Note called for redemption or
delivered for repurchase will terminate at the close of business on
the redemption date or repurchase date for such Note.
The right of conversion attaching to any Note may be exercised by
the Holder by delivering the Note at the specified office of the
Conversion Agent, accompanied by a duly signed and completed notice of
conversion, a copy of which may be obtained from the Conversion Agent.
The conversion date will be the date on which the Note and the duly
signed and completed notice of conversion are so delivered, unless
otherwise provided by such notice. As promptly as practicable on or
after the conversion date, the Company will issue and deliver to the
Trustee a certificate or certificates for the number of full shares of
Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share or, at the Company's option, rounded up to
the next whole number of shares; such certificate, and payment, if
any, will be sent by the Trustee to the Conversion Agent for delivery
to the Holder. Any Note surrendered for conversion during the period
from the close of business on any Regular Record Date to the opening
of business on the next succeeding Interest Payment Date (except Notes
called for redemption on a Redemption Date or to be repurchased on a
Repurchase Date and as a result, the right to convert such Notes with
respect to which the Holder has exercised redemption or repurchase
rights would terminate during such period) must be accompanied by
payment in New York Clearing House Funds or other funds acceptable to
the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Notes being
surrendered for conversion. In the case of any Note which has been
converted after any Regular Record Date but before the next Interest
Payment Date, interest the Stated Maturity of which is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest shall be paid to
the Holder of such Note on such Regular Record Date. As a result of
the foregoing provisions, Holders that surrender Notes for conversion
on a date that is not an Interest Payment Date will not receive any
interest for the period from the Interest Payment Date next preceding
the date of conversion to the date of conversion or for any later
period, even if the Notes are surrendered after a notice of redemption
(except for the payment of interest on Notes called for redemption on
a Redemption Date or to be repurchased on a Repurchase Date for which
the right to convert such Notes would terminate during the period
between a Regular Record Date and the Interest Payment Date to which
it relates). No other payment or adjustment for interest, or for any
dividends in respect of Common Stock, will be made upon conversion.
Holders of Common Stock issued upon conversion will not be entitled to
receive any dividends payable to holders of Common Stock as of any
record time before the close of business on the conversion date. No
fractional shares will be issued upon conversion but, in lieu thereof,
the Company will calculate an appropriate amount to be paid in cash
based on the market price of Common Stock at the close of business on
the day of conversion. Such market price will be calculated by the
Company and shall be deemed to be the average of the daily Closing
Prices per share for the five consecutive Trading Days selected by the
Company commencing not more than 10 Trading Days before, and ending
not later than, the earlier of the day in question and the day before
the "ex" date with respect to an issuance or distribution requiring
such computation. The term "ex" date, when used with respect to any
issuance or distribution, means the first date on which the Common
Stock trades without the right to receive such issuance or
distribution. "Closing Price Per Share" means, for any day, the last
reported sales price per share on the NYSE. A "Trading Day" is any day
on which the NYSE is open for business.
A Holder delivering a Note for conversion will not be required to
pay any taxes or duties in respect of the issue or delivery of Common
Stock on conversion but will be required to pay any tax or duty which
may be payable in respect of any transfer involved in the issue or
delivery of the Common Stock in a name other than that of the Holder
of the Note. Certificates representing shares of Common Stock will not
be issued or delivered unless the person requesting such issue has
paid to the Company the amount of any such tax or duty or has
established to the satisfaction of the Company that such tax or duty
has been paid.
The conversion rate is subject to adjustment in certain events,
including: (a) dividends (and other distributions) payable in Common
Stock on shares of capital stock of the Company, (b) the issuance to
all holders of Common Stock of rights, options or warrants entitling
them to subscribe for or purchase Common Stock at less than the then
current market price (determined as provided in the Indenture) of
Common Stock, (c) subdivisions, combinations and reclassifications of
Common Stock, (d) distributions to all holders of Common Stock of
evidences of indebtedness of the Company, shares of capital stock,
cash or assets (including securities, but excluding those dividends,
rights, options, warrants and distributions referred to above,
dividends and distributions paid exclusively in cash and distributions
upon mergers or consolidations to which the next succeeding paragraph
applies), (e) distributions consisting exclusively of cash (excluding
any cash portion of distributions referred to in (d) above, or cash
distributed upon a merger or consolidation to which the next
succeeding paragraph applies) to all holders of Common Stock in an
aggregate amount that, combined together with (i) other such all-cash
distributions made within the preceding 12 months in respect of which
no adjustment has been made and (ii) any cash and the fair market
value of other consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has
been made, exceeds 12.5% of the Company's market capitalization (being
the product of the then current market price of the Common Stock and
the number of shares of Common Stock then outstanding) on the record
date for such distribution, and (f) the successful completion of a
tender offer made by the Company or any of its subsidiaries for Common
Stock which involves an aggregate consideration that, together with
(i) any cash and other consideration payable in a tender offer by the
Company or any of its subsidiaries for Common Stock expiring within
the 12 months preceding the expiration of such tender offer in respect
of which no adjustment has been made and (ii) the aggregate amount of
any such all-cash distributions referred to in (e) above to all
holders of Common Stock within the 12 months preceding the expiration
of such tender offer in respect of which no adjustments have been
made, exceeds 12.5% of the Company's market capitalization on the
expiration of such tender offer. The Company reserves the right to
make such increases in the conversion rate in addition to those
required in the foregoing provisions as it considers to be advisable
in order that any event treated for federal income tax purposes as a
dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock will not be taxable to the recipients.
No adjustment of the conversion rate will be required to be made until
the cumulative adjustments amount to 1.0% or more of the conversion
rate. The Company shall compute any adjustments to the conversion
price pursuant to this paragraph and will give notice to the Holders
of the Notes of any adjustments.
In case of any consolidation or merger of the Company with or
into another Person or any merger of another Person into the Company
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock), or in case
of any sale or transfer of all or substantially all of the assets of
the Company, each Note then outstanding will, without the consent of
the Holder of any Note or coupon, become convertible only into the
kind and amount of securities, cash and other property, if any,
receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of Common Stock into which such Note
was convertible immediately prior thereto (assuming such holder of
Common Stock failed to exercise any rights of election and that such
Note was then convertible).
If at any time the Company makes a distribution of property to
its stockholders which would be taxable to such stockholders as a
dividend for federal income tax purposes (e.g., distribution of
evidences of indebtedness or assets of the Company, but generally not
stock dividends on Common Stock or rights to subscribe for Common
Stock) and, pursuant to the anti-dilution provisions of the Indenture,
the number of shares into which Notes are convertible is increased,
such increase may be deemed for federal income tax purposes to be the
payment of a taxable dividend to Holders of Notes. See "Certain U.S.
Federal Income Tax Consequences".
SUBORDINATION
The payment of the principal of, premium, if any and interest on,
the Notes and coupons will be subordinated in right of payment to the
extent set forth in the Indenture to the prior payment in full of all
Senior Debt of the Company. "Senior Debt" means the principal of (and
premium, if any) and interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is
allowable as a claim in any such proceeding) on, and all fees and
other amounts (including collection expenses, attorney's fees and late
charges) owing with respect to, the following, whether direct or
indirect, absolute or contingent, secured or unsecured, due or to
become due, outstanding at the date of execution of the Indenture or
thereafter incurred, created or assumed: (a) indebtedness of the
Company for money borrowed or evidence by bonds, debentures, notes or
similar instruments, (b) reimbursement obligations of the Company with
respect to letters of credit, bankers' acceptances and similar
facilities issued for the account of the Company, (c) every obligation
of the Company issued or assumed as the deferred purchase price of
property or services purchased by the Company, excluding any trade
payables and other accrued current liabilities incurred in the
ordinary course of business, (d) obligations of the Company as lessee
under leases required to be capitalized on the balance sheet of the
lessee under U.S. generally accepted accounting principles, (e)
obligations of the Company under interest rate and currency swaps,
caps, floors, collars or similar arrangements intended to protect the
Company against fluctuations in interest or currency exchange rates,
(f) indebtedness of others of the kinds described in the preceding
clauses (a) through (e) that the Company has assumed, guaranteed or
otherwise assured the payment thereof, directly or indirectly, and/or
(g) deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness or obligation
described in the preceding clauses (a) through (f) whether or not
there is any notice to or consent of the Holders of Notes; provided,
however, that the following shall not constitute Senior Debt: (i) any
particular indebtedness or obligation that is owed by the Company to
any of its direct and indirect Subsidiaries and (ii) any particular
indebtedness, deferral, renewal, extension or refunding if it is
expressly stated in the governing terms or in the assumption thereof
that the indebtedness involved is not senior in right of payment to
the Notes or that such indebtedness is pari passu with or junior to
the Notes.
No payment on account of principal, premium, if any, or interest
on, the Notes or any coupon may be made if there shall have occurred
(i) a default in the payment of principal, premium, if any, or
interest (including a default under any repurchase or redemption
obligation) with respect to any Senior Debt or (ii) any other event of
default with respect to any Senior Debt, permitting the holders
thereof to accelerate the maturity thereof, and such event of default
shall not have been cured or waived or shall not have ceased to exist
after written notice of such event of default shall have been given to
the Company and the Trustee by any holder of Senior Debt. Upon any
acceleration of the principal due on the Notes or payment or
distribution of assets of the Company to creditors upon any
dissolution, winding up, liquidation or reorganization, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership
or other proceedings, all principal, premium, if any and interest due
on all Senior Debt must be paid in full before the Holders of the
Notes are entitled to receive any payment. By reason of such
subordination, in the event of insolvency, creditors of the Company
who are holders of Senior Debt may recover more, ratably, than the
Holders of the Notes, and such subordination may result in a reduction
or elimination of payments to the Holders of the Notes.
As of August 30, 1997, the aggregate principal amount of
outstanding Senior Debt was approximately $2.7 billion. In addition,
the Notes will be structurally subordinated to all indebtedness and
other liabilities (including trade payable and lease obligations) of
the Company's subsidiaries, as any right of the Company to receive any
assets of its subsidiaries upon their liquidation or reorganization
(and the consequent right of the Holders of the Notes to participate
in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the
extent that the Company itself is recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be
subordinate to any security interest in the assets of such subsidiary
and any indebtedness of such subsidiary senior to that held by the
Company.
The Indenture does not limit the Company's ability to incur
Senior Debt or any other indebtedness.
OPTIONAL REDEMPTION
The Notes may not be redeemed prior to September 15, 2000.
Thereafter, the Notes may be redeemed, in whole or in part, at the
option of the Company, upon not less than 30 nor more than 60 days'
prior notice as provided under "-Notices" below, at the redemption
prices set forth below.
The redemption prices (expressed as a percentage of principal
amount) are as follows for the 12-month period beginning on September
15 of the following years:
Redemption
Year Price
------ ----------
2000 . . . . . 102.10%
2001 . . . . . 101.05%
and thereafter at a redemption price equal to 100% of the principal
amount, in each case together with accrued interest to the date of
redemption.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined) occurs, each Holder of Notes
shall have the right, at the Holder's option, to require the Company
to repurchase all of such Holder's Notes, or any portion of the
principal amount thereof that is equal to $1,000 or an integral
multiple of $1,000 in excess thereof, on the date (the "Repurchase
Date") that is 45 days after the date of the Company Notice (as
defined), at a price equal to 100% of the principal amount of the
Notes to be repurchased (the "Repurchase Price"), together with
interest accrued to the Repurchase Date.
The Company may, at its option, in lieu of paying the Repurchase
Price in cash, pay the Repurchase Price in Common Stock, the fair
market value of which Common Stock shall be equal to 95% of the
average of the closing prices of the Common Stock for the five
consecutive Trading Days ending on and including the third Trading Day
preceding the Repurchase Date, provided that payment may not be made
in Common Stock unless such shares are listed on a national securities
exchange or traded on the Nasdaq National Market at the time of
payment.
Within 30 days after the occurrence of a Change in Control, the
Company is obligated to give to all Holders of the Notes notice, as
provided in the Indenture (the "Company Notice"), of the occurrence of
such Change in Control and of the repurchase right arising as a result
thereof. The Company Notice shall be sufficiently given to Holders of
Notes if in writing and mailed, first class postage prepaid, to each
Holder of a Note affected by such event, at the address of such
Holder. The Company must also deliver a copy of the Company Notice to
the Trustee. To exercise the repurchase right, a Holder of Notes must
deliver on or before the 30th day after the date of the Company Notice
irrevocable written notice to the Trustee of the Holder's exercise of
such right, together with the Notes with respect to which the right is
being exercised. At least two business days prior to the Repurchase
Date, the Company must publish a notice in the manner described above
specifying whether the Company will pay the Repurchase Price in cash
or in Common Stock.
A Change in Control shall be deemed to have occurred at such time
after the original issuance of the Notes as there shall occur:
(i) the acquisition by any Person of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or
more of the total voting power of all shares of capital stock of the
Company entitled to vote generally in elections of directors, other
than any such acquisition by the Company, any subsidiary of the
Company or any employee benefit plan of the Company; or
(ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another person into the
Company, or any sale or transfer of all or substantially all of the
assets of the Company to another Person (other than (a) any such
transaction (x) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common
Stock and (y) pursuant to which holders of Common Stock immediately
prior to such transaction have the entitlement to exercise, directly
or indirectly, 50% or more of the total voting power of all shares of
capital stock entitled to vote generally in the election of directors
of the continuing or surviving person immediately after such
transaction and (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of
Common Stock into solely shares of common stock);
provided, however, that a Change in Control shall not be deemed to
have occurred if either (a) the closing price per share of the Common
Stock for any five Trading Days within the period of 10 consecutive
Trading Days ending immediately after the later of the Change in
Control or the public announcement of the Change in Control (in the
case of a Change in Control under clause (i) above) or ending
immediately before the Change in Control (in the case of a Change in
Control under clause (ii) above) shall equal or exceed 105% of the
Conversion Price of the Notes in effect on each such Trading Day, or
(b) all of the consideration (excluding cash payments for fractional
shares) in the transaction or transactions constituting the Change in
Control consists of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market and as a result of
such transaction or transactions the Notes become convertible solely
into such common stock. "Beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Commission under the
Exchange Act, as in effect on the date of original execution of the
Indenture.
Any repurchase in connection with a Change in Control would,
absent a waiver from the holders of Senior Debt, be blocked by the
subordination provisions of the Notes. See "-Subordination". Failure
by the Company to repurchase the Notes when required would result in
an Event of Default with respect to the Notes whether or not such
repurchase is permitted by the subordination provisions. See "-Events
of Default".
Rule 13e-4 under the Exchange Act requires the dissemination of
certain information to security holders in the event of an issuer
tender offer and may apply in the event that the repurchase option
becomes available to Holders of the Notes. The Company will comply
with this rule to the extent applicable at that time.
The foregoing provisions would not necessarily afford Holders of
the Notes protection in the event of highly leveraged or other
transactions involving the Company that may adversely affect Holders.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other
Person or, directly or indirectly, convey, transfer, sell, lease or
otherwise dispose of all or substantially all of its properties and
assets to any Person (other than a wholly owned subsidiary), and the
Company may not permit any Person (other than a wholly owned
subsidiary) to consolidate with or merge into the Company or convey,
transfer, sell, lease or otherwise dispose of all or substantially all
of its properties and assets to the Company, unless (a) the Person
formed by such consolidation or into which the Company is merged or
the Person to which the properties and assets of the Company are so
transferred or leased is a corporation, limited liability company,
partnership or trust organized and existing under the laws of the
United States, any State thereof or the District of Columbia and has
expressly assumed the due and punctual payment of the principal of,
premium, if any, and interest on the Notes and coupons and the
performance of the other covenants of the Company under the Indenture,
(b) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by
the Company or such Subsidiary at the time of such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be
continuing, (c) if, as a result of any such consolidation or merger or
such conveyance, transfer or lease, properties or assets of the
Company would become subject to a mortgage, pledge, lien, security
interest or other encumbrance which would not be permitted by this
Indenture, the Company or such successor corporation or Person, as the
case may be, shall take such steps as shall be necessary effectively
to secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby, and (d) the Company has provided to the
Trustee an Officers' Certificate and Opinion of Counsel as provided in
the Indenture.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a)
failure to pay any interest (including Liquidated Damages) on any Note
or coupon when due, continuing for 30 days, whether or not such
payment is prohibited by the subordination provisions of the
Indenture; (b) failure to pay the principal or Redemption Price or
Repurchase Price of any Note when due, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (c)
default in the Company's obligation to provide notice of a Change in
Control; (d) failure to perform any other covenant or warranty of the
Company in the Indenture, continuing for 60 days after written notice
to the Company by the Trustee as provided in the Indenture; (e)
default under any bond, debenture, note or other evidence of
Indebtedness of the Company or under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company (including the
Notes), whether such Indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay an aggregate
principal amount exceeding $10,000,000 of such Indebtedness when due
and payable after the expiration of any applicable grace period with
respect thereto and shall have resulted in such Indebtedness in an
aggregate principal amount exceeding $10,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise
have become due and payable, without such Indebtedness having been
discharged, or such acceleration having been rescinded or annulled,
within a period of 10 days written notice (a Notice of Default) must
be given to the Company by the Trustee or to the Company and the
Trustee as provided in the Indenture, unless remedied, cured or waived
as provided in the Indenture; and (f) certain events of bankruptcy,
insolvency or reorganization. Subject to the provisions of the
Indenture relating to the duties of the Trustee in case an Event of
Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the Holders of
a majority in aggregate principal amount of the Outstanding Notes will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any
trust or power conferred on the Trustee.
If an Event of Default (other than an Event of Default specified
in subsections (a), (b), and (f) above) occurs and is continuing, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Notes may declare the principal amount (or specified
amount) of all the Notes to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by
Holders), and upon any such declaration such principal and any accrued
interest and any unpaid Liquidated Damages thereon will become
immediately due and payable. If an Event of Default specified in
subsections (a) or (b) occurs and is continuing, the Holder of any
Outstanding Note may, by notice in writing to the Company (with a copy
to the Trustee), declare the principal of such Note to be due and
payable immediately, and upon any such declaration such principal and
(subject to Indenture) any accrued interest and Liquidated Damages
thereon will become immediately due and payable. If an Event of
Default specified in subsection (f) occurs and is continuing, the
principal and any accrued interest, together with any Liquidated
Damages thereon, on all of the Notes then Outstanding shall ipso facto
become due and payable immediately without any declaration or other
Act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made but
before a judgment or decree based on acceleration, the Holders of a
majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the nonpayment of accelerated principal
and interest have been cured or waived as provided in the Indenture.
No Holder of any Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default and unless also the Holders of
at least 25% in aggregate principal amount of the Outstanding Notes
shall have made written request, and offered reasonable indemnity, to
the Trustee to institute such proceeding as trustee, and the Trustee
shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding
within 60 days. However, such limitations do not apply to a suit
instituted by a Holder of a Note for the enforcement of payment of the
principal of, premium, if any, or interest on such Note on or after
the respective due dates expressed in such Note or of the right to
convert such Note in accordance with the Indenture.
The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its
obligations under the Indenture and as to any default in such
performance.
MODIFICATION AND WAIVER
The Indenture contains provisions permitting the Company and the
Trustee to enter into a supplemental indenture without the consent of
the Holders, (a) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants and
obligations under the Indenture and the Notes, (b) to add to the
covenants for the benefit of the Holders or to surrender any right or
power conferred upon the Company under the Indenture, (c) to secure
the Notes, (d) to modify the restrictions on, and procedures for,
resale and other transfers of the notes pursuant to law, regulation or
practice relating to the resale or transfer of restricted securities
generally, (e) to make provision with respect to the conversion rights
of Holders pursuant to the Indenture, (f) to accommodate the issuance
of Notes in book-entry or definitive form and related matters not
affecting adversely the interests of the Holders, (g) to comply with
the requirements of the Commission in order to effect and maintain the
qualification of the Indenture under the Trust Indenture Act of (h) to
cure any ambiguity or correct or supplement any provision of the
Indenture, provided that such action shall not adversely affect the
interests of the Holders in any material respect. In addition,
modifications and amendments of the Indenture may be made, and certain
past defaults by the Company may be waived, with the written consent
of the Holders of not less than a majority in aggregate principal
amount of the Notes at the time Outstanding. However, no such
modification or amendment may, without the consent of the Holder of
each Outstanding Note affected thereby, (a) change the Stated Maturity
of the principal of, or any installment of interest on, any Note, (b)
reduce the principal amount of, or the premium, if any, or rate of
interest on, any Note, (c) reduce the amount payable upon redemption
or repurchase, (d) modify the provisions with respect to the
repurchase right of the Holders in a manner adverse to the Holders,
(e) change the coin or currency of payment of principal of, premium,
if any, or interest on, any Note or coupon, (f) impair the right to
institute suit for the enforcement of any payment on or with respect
to any Note or coupon, (g) adversely affect the right to convert
Notes, (h) modify the subordination provisions in a manner adverse to
the Holders of the Notes, (i) reduce the above-stated percentage of
Outstanding Notes necessary to modify or amend the Indenture, (j)
reduce the percentage of aggregate principal amount of Outstanding
Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults, (k) reduce the
percentage in aggregate principal amount of Notes Outstanding required
for the adoption of a Resolution or the quorum required at any meeting
of Holders of Notes at which a Resolution is adopted, or (1) modify
the obligation of the Company to deliver information required under
Rule 144A to permit resales of Notes and Common Stock issuable upon
conversion thereof in the event the Company ceases to be subject to
certain reporting requirements under the U.S. securities laws.
The Holders of a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain
restrictive provisions of the Indenture. The Holders of a majority in
aggregate principal amount of the Outstanding Notes may waive any past
default under the Indenture, except a default in the payment of
principal, premium, if any, or interest.
TRANSFER AND EXCHANGE
The Company has initially appointed the Trustee as security
registrar and transfer agent, acting through its office or agency in
the City of New York. The Company reserves the right to vary or
terminate the appointment of the security registrar or of any transfer
agent or to appoint additional or other transfer agents or to approve
any change in the office through which any security registrar or any
transfer agent acts.
PURCHASE AND CANCELLATION
The Company or any subsidiary may at any time and from time to
time purchase Notes at any price in the open market or otherwise.
All Securities and coupons surrendered for payment, redemption,
repurchase, registration of transfer or exchange or conversion shall,
if surrendered to any Person other than the Trustee, be delivered to
the Trustee. All Securities so delivered to the Trustee shall be
canceled promptly by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in
the Indenture. Unless otherwise requested by the Company and confirmed
in writing, the Trustee shall, from time to time but not less than
once annually, destroy all canceled Securities and coupons and deliver
to the Company a certificate of destruction, which certificate shall
specify the number, principal amount and, in the case of Securities,
the form of each canceled Security and coupon so destroyed.
TITLE
The Company and the Trustee may treat the registered owner (as
reflected in the Security Register) of any Note as the absolute owner
thereof (whether or not such Note shall be overdue) for the purpose of
making payment and for all other purposes.
NOTICES
Notice to Holders of the Notes will be given by mail to the
addresses of such Holders as they appear in the Security Register.
Such notices will be deemed to have been given on the date of the
first such publication or on the date of such mailing, as the case may
be.
Notice of a redemption of Notes will be given at least once not
less than 30 nor more than 60 days prior to the redemption date (which
notice shall be irrevocable) and will specify the redemption date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be
replaced by the Company at the expense of the Holder upon delivery to
the Trustee or to a transfer agent outside the United States of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost,
stolen or destroyed Note indemnity satisfactory to the Trustee and the
Company may be required at the expense of the Holder of such Note
before a replacement Note will be issued.
PAYMENT OF STAMP AND OTHER TAXES
The Company shall pay all stamp and other duties, if any, which
may be imposed by the United States or the United Kingdom or any
political subdivision thereof or taxing authority thereof or therein
with respect to the issuance of the Notes. The Company will not be
required to make any payment with respect to any other tax, assessment
or governmental charge imposed by any government or any political
subdivision thereof or taxing authority therein.
GOVERNING LAW
The Indenture, the Notes and the coupons will be governed by and
construed in accordance with the laws of the State of New York, United
States of America.
THE TRUSTEE
The Trustee for the Holders of the Notes issued under the
Indenture will be Harris Trust and Savings Bank.
In case an Event of Default shall occur (and shall not be cured),
the Trustee will be required to use the degree of care of a prudent
person in the conduct of his own affairs in the exercise of its
powers. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture
at the request of any of the Holders of Notes, unless they shall have
offered to the Trustee reasonable security or indemnity.
DESCRIPTION OF CAPITAL STOCK
The statements set forth under this heading with respect to Rite
Aid's Restated Certificate of Incorporation (the "Rite Aid Charter"),
Rite Aid's By-laws (the "Rite Aid By-laws") and the Delaware General
Corporation Law (the "DGCL"), are brief summaries thereof and do not
purport to be complete. Such statements are subject to the detailed
provisions of the Rite Aid Charter, the Rite Aid By-laws and the DGCL.
Under the Rite Aid Charter, Rite Aid's authorized capital stock
consists of 300,000,000 shares of Common Stock and 20,000,000 shares
of Preferred Stock, par value $1.00 per share ("Preferred Stock").
PREFERRED STOCK
No shares of Preferred Stock are issued or outstanding. The Board
of Directors of Rite Aid (the "Board") is authorized to issue Preferred
Stock in one or more series and to determine liquidation preferences,
voting rights, dividend rights, conversion rights and redemption
rights thereof. The ability of the Board to issue and set the terms of
Preferred Stock could have the effect of making it more difficult for
a third person to acquire, or of discouraging a third person from
attempting to acquire, control of Rite Aid.
COMMON STOCK
There were 128,855,676 shares of Common Stock issued and
outstanding as of October 31, 1997, which includes shares of Common
Stock issuable as a result of the Thrifty PayLess Merger upon
surrender of the certificates formerly representing shares of Thrifty
PayLess common stock. On such date, an additional 6,532,169 shares of
Common Stock were issued and held in the treasury of Rite Aid,
8,993,400 shares were reserved for issuance pursuant to the terms of
the Notes and 9,867,326 shares of Common Stock were reserved for
issuance under Rite Aid's 1990 Omnibus Stock Incentive Plan, as
amended.
The holders of Common Stock are entitled to receive ratably, from
funds legally available for the payment thereof, dividends when and as
declared by resolution of the Board, subject to any preferential
dividend rights granted to the holders of any outstanding Preferred
Stock.
Each holder of Common Stock is entitled to one vote in respect of
each share of such stock. Holders of Common Stock do not have
preemptive, subscription, redemption or conversion rights. The
outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable.
CHARTER PROVISIONS
The Rite Aid Charter specifies that the Board shall be divided
into three classes, as nearly equal in number as possible, and shall
consist of not less than three nor more than 15 directors elected for
three-year staggered terms. The Rite Aid By-laws provide that the
number of directors on the Board may be fixed by the Board only, or if
the number is not fixed, the number will be seven. The number of
directors may be increased or decreased by the Board only. In the
interim period between annual meetings of stockholders or of special
meetings of stockholders, vacancies and newly created directorships
may be filled by the Board. Any directors so elected will hold office
until the next election of the class to which such directors have been
elected. The Board currently consists of 12 directors.
The Rite Aid Charter requires that any mergers, consolidations,
asset dispositions and other transactions involving a beneficial owner
of 10% or more of the voting power of the then outstanding classes of
stock entitled to vote in the election of directors (the "Voting
Stock") be approved, unless certain conditions are satisfied, by the
affirmative vote of the holders of shares representing not less than
75% of the Voting Stock. These special voting requirements do not
apply if the transaction is approved by a majority of the Continuing
Directors (as defined below) or the consideration offered to the
stockholders of Rite Aid meets specified fair price standards
(including related procedural requirements as to the form of
consideration and continued payment of dividends). "Continuing
Director" as defined in the Rite Aid Charter means a member of the
Board who was not affiliated with a Related Person (as defined below)
and was a member of the Board prior to the time that the Related
Person acquired the last shares of Common Stock entitling such Related
Person to exercise, in the aggregate, in excess of 10% of the total
voting power of all classes of Voting Stock, or any individual,
corporation, partnership, person or other entity ("Person")
recommended to succeed a Continuing Director by a majority of
Continuing Directors. "Related Person" as defined in the Rite Aid
Charter means any Person, affiliate or associate of such Person, which
has beneficial ownership directly or indirectly of shares of stock of
Rite Aid entitling such Person to exercise more than 10% of the total
voting power of all classes of Voting Stock.
The Rite Aid Charter also provides that any corporate action
either (i) taken at a special meeting of stockholders called by the
Board, a majority of whose members are not Continuing Directors or
(ii) approved by written consent of stockholders, shall require the
approval of not less than 75% of the then outstanding Voting Stock.
CHANGE OF CONTROL
Section 203 of the DGCL prohibits generally a public Delaware
corporation, including Rite Aid, from engaging in a Business
Combination (as defined below) with an Interested Stockholder (as
defined below) for a period of three years after the date of the
transaction in which an Interested Stockholder became such, unless:
(i) the board of directors of such corporation approved, prior to the
date such Interested Stockholder became such, either such Business
Combination or such transaction; (ii) upon consummation of such
transaction, such Interested Stockholder owns at least 85% of the
voting shares of such corporation (excluding specified shares); or
(iii) such Business Combination is approved by the board of directors
of such corporation and authorized by the affirmative vote (at an
annual or special meeting and not by written consent) of at least 66
2/3% of the outstanding voting shares of such corporation (excluding
shares held by such Interested Stockholder). A Business Combination
includes (i) mergers, consolidations and sales or other dispositions
of 10% or more of the assets of a corporation to or with an Interested
Stockholder, (ii) certain transactions resulting in the issuance or
transfer to an Interested Stockholder of any stock of such corporation
or its subsidiaries and (iii) certain other transactions resulting in
a financial benefit to an Interested Stockholder. An "Interested
Stockholder" is a person who owns (or, if such person is an affiliate
or associate of the corporation, within a three-year period did own)
15% or more of a corporation's stock entitled to vote generally in the
election of directors and, the affiliates and associates of such
person.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain U.S. Federal income
and estate tax consequences of the ownership and disposition to
initial holders of the Notes and the Common Stock held as capital
assets. For purposes of this summary, a "U.S. Holder" is (i) a citizen
or resident of the U.S., (ii) a corporation or other entity taxable as
a corporation created or organized in the U.S. or under the laws of
the U.S. or of any political subdivision thereof, (iii) an estate or
trust whose income is includible in gross income for U.S. Federal
income tax purposes regardless of its source, or (iv) an individual or
entity otherwise subject to U.S. Federal income tax on its worldwide
income on a net income basis; and a "Non-U.S. Holder" is any holder
other than a U.S. Holder. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), regulations, rulings,
and decisions in effect or available on the date of this Prospectus.
All of the foregoing are subject to change, which change may apply
retroactively and could affect the continued validity of this summary.
This summary does not address all aspects of U.S. Federal income tax
law that may be relevant to holders that may be subject to special
treatment under such laws (for example, insurance companies,
tax-exempt organizations, financial institutions, broker-dealers,
holders whose "functional" currency is not the U.S. dollar, or holders
who engage in certain "straddle" or "hedging" transactions).
ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR TAX
ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX CONSEQUENCES OF OWNING AND DISPOSING OF THE NOTES AND COMMON
STOCK.
TAX TREATMENT OF U.S. HOLDERS
Dividends and Sale or Disposition
A U.S. Holder will not recognize gain or loss upon the conversion
of the Notes solely into Common Stock of the Company (except with
respect to cash in lieu of fractional shares). The U.S. Holder's basis
in the Common Stock received on conversion will be the same as the
U.S. Holder's adjusted tax basis in the Notes at the time of the
conversion, and a U.S. Holder's holding period for the Common Stock
will include the U.S. Holder's holding period of the Notes that were
converted.
A U.S. Holder will recognize gain or loss upon the sale,
redemption, repurchase or other taxable disposition (collectively, a
"Disposition") of the Notes or Common Stock in an amount equal to the
difference between the U.S. Holder's adjusted tax basis in the Notes
or Common Stock and the amount received therefor (other than amounts
attributable to accrued but unpaid interest on the Notes which will be
treated as interest). Such gain applicable to non-corporate U.S.
Holders generally will be long-term capital gain if the Notes or
Common Stock were held for more than one year (and will be subject to
a further reduced tax rate if the Notes or Common Stock were held for
more than eighteen months).
The conversion price of the Notes is subject to adjustment under
certain circumstances. Under Section 305 of the Code and the Treasury
regulations issued thereunder, there may be a taxable constructive
distribution to U.S. Holders of Notes, resulting in ordinary income
(subject to a possible dividends received deduction for corporate
holders) to the extent of the Company's current and accumulated
earnings and profits if, and to the extent that, certain adjustments
in the Conversion Price increase such U.S. Holders' proportionate
interest in the earnings and profits and assets of the Company. Such
adjustment may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to U.S. Holders of Common
Stock of the Company) and in such a case a constructive distribution
would arise, whether or not the U.S. Holders ever convert the Notes.
Generally, a U.S. Holder's tax basis in a Note will be increased by
the amount of any such constructive dividend.
TAX TREATMENT OF NON-U.S. HOLDERS
Interest and Sale or Disposition of the Notes
Payments on Notes to a Non-U.S. Holder, or gain realized on the
Disposition of the Notes by a Non-U.S. Holder, will not be subject to
U.S. Federal income or withholding tax, as the case may be, unless
such income is effectively connected with a trade or business
conducted by such Non-U.S. Holder in the U.S., provided that (A) in
the case of payments of interest or principal, (i) the Non-U.S. Holder
satisfies certain certification requirements set forth in Section
871(h) and Section 881(c) of the Code and the regulations thereunder,
(ii) the Non-U.S. Holder does not actually or constructively own 10%
or more of the total combined voting power of the Company within the
meaning of Section 871(h)(3) of the Code and the regulations
thereunder, (iii) the Non-U.S. Holder is not a controlled foreign
corporation that is related to the Company through equity ownership,
and (iv) the beneficial owner is not a bank whose receipt of interest
on a Note is described in Section 881(c)(3)(A) of the Code, or, (B) in
the case of gain, (i) such Non-U.S. Holder holds the Notes as a
capital asset and is not present in the U.S. for 183 days or more in
the taxable year of Disposition. A Non-U.S. Holder may also be subject
to tax pursuant to the provisions of U.S. tax law applicable to
certain expatriates.
Dividends
In general, the gross amount of dividends paid to a Non-U.S.
Holder will be subject to U.S. withholding tax at a 30% rate (or any
lower rate prescribed by an applicable U.S. tax treaty) unless the
dividends are effectively connected with a U.S. trade or business
conducted by the Non-U.S. Holder within the U.S. In determining the
applicability of a tax treaty that provides for a lower rate of
withholding, dividends paid to an address in a foreign country are
presumed under current Treasury regulations to be paid to a resident
of that country. Under proposed Treasury regulations, however, a
Non-U.S. Holder would be required to file certain forms in order to
claim the benefit of an applicable treaty rate. Dividends effectively
connected to a trade or business carried on by a Non-U.S. Holder
within the U.S. generally will not be subject to withholding (if the
Non-U.S. Holder properly files Internal Revenue Service ("IRS") Form
4224 with the payor of the dividend) and generally will be subject to
U.S. Federal income taxation at ordinary U.S. Federal income tax
rates. Effectively connected income may be subject to different
treatment under an applicable tax treaty depending on whether such
dividends are attributable to a permanent establishment of the
Non-U.S. Holder in the U.S. In the case of a Non-U.S. Holder that is a
corporation, effectively connected income may be subject to the branch
profits tax (which generally is imposed upon a foreign corporation at
a rate of 30% of the deemed repatriation from the U.S. of "effectively
connected earnings and profits") except to the extent that an
applicable tax treaty provides otherwise. A Non-U.S. Holder eligible
for a reduced rate of U.S. withholding tax pursuant to an income tax
treaty may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund with the IRS.
Sale or Disposition of Common Stock
Generally, a Non-U.S. Holder will not be subject to U.S. Federal
income tax on any gain realized upon the disposition of his Common
Stock unless: (i) the Company has been, or is a "U.S. real property
holding corporation" for U.S. Federal income tax purposes and certain
other requirements are met, (ii) the gain is effectively connected
with the conduct of a trade or business carried on by the Non-U.S.
Holder within the U.S., or (iii) the Common Stock is disposed of by a
Non-U.S. Holder who holds the Common Stock as a capital asset and is
present in the U.S. for 183 days or more in the taxable year of
Disposition. The Company believes that it has not been, is not
currently, and based upon its current business plans, is not likely to
become a U.S. real property holding corporation. A Non-U.S. Holder may
also be subject to tax pursuant to the provisions of U.S. tax law
applicable to certain expatriates. Non-U.S. Holders should consult
applicable tax treaties, which may exempt from U.S. Federal income tax
gains realized upon the Disposition of Common Stock in certain cases.
ESTATE TAX
A Note beneficially owned by an individual who at the time of
death is a Non-U.S. Holder will not be subject to U.S. Federal estate
tax provided that (A) such individual does not actually or
constructively own 10% or more of the total combined voting power of
the Company within the meaning of Section 871(h)(3) of the Code and
the regulations thereunder and (B) such payments with respect to the
Note would not have been, if received at the time of such individual's
death, effectively connected with a trade or business carried on by
such individual within the U.S.
Common Stock owned or treated as owned by an individual Non-U.S.
Holder at the time of death will be includible in the individual's
gross estate for U.S. Federal estate tax purposes, unless an
applicable treaty provides otherwise, and may be subject to U.S.
Federal estate tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders
Under certain circumstances, a U.S. Holder who is an individual
may be subject to backup withholding (generally imposed at the rate of
31%) on interest, dividends and principal payments made to, and the
proceeds of sales before maturity made by, certain U.S. Holders. This
withholding generally applies only if such individual U.S. Holder (i)
fails to furnish his or her taxpayer identification number ("TIN") to
the U.S. financial institution or any other person responsible for the
payment of dividends on the Common Stock, (ii) furnishes an incorrect
TIN, (iii) is notified by the IRS that he or she has failed to
properly report payments of interest and dividends and the IRS has
notified the Company that he or is subject to backup withholding, or
(iii) fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided is
her or her correct number and that he or she is not subject to backup
withholding.
Non-U.S. Holders
The Company must report annually to the IRS and to each Non-U.S.
Holder the amount of dividends paid to, and the tax withheld, if any,
with respect to, each Non-U.S. Holder. These information reporting
requirements apply regardless of whether withholding was reduced or
eliminated by an applicable tax treaty or if withholding was not
required because the dividends were effectively connected with a trade
or business carried on by the Non-U.S. Holder within the U.S. Copies
of these information returns may also be made available under the
provisions of a specific treaty or agreement with the tax authorities
in the country in which the Non-U.S. Holder resides or is established.
U.S. backup withholding (generally imposed at the rate of 31% on
certain payments to persons that fail to furnish the information
required under the U.S. information reporting requirements) and
information reporting generally will not apply (i) to dividends paid
on Common Stock to a Non-U.S. Holder at an address outside of the
U.S., absent actual knowledge by the payor that the payee is not a
Non-U.S. Holder, or (ii) to dividends paid to Non-U.S. Holders that
are either subject to the U.S. withholding tax (whether at 30% or at a
reduced treaty rate), or (iii) that are exempt from such withholding
because such dividends constitute effectively connected income. These
information reporting and backup withholding rules are under review by
the U.S. Treasury and their application to the Common Stock is subject
to change. On October 7, 1997, the IRS issued final Treasury
Regulations concerning the withholding of tax and reporting for
certain amounts paid to non-resident individuals and foreign
corporations. The Treasury Regulations, will be effective for
payments made after December 31, 1999. These Treasury Regulations
generally apply backup withholding and information reporting to
dividends paid on Common Stock to a Non-U.S. Holder at an address
outside of the U.S. unless such Non-U.S. Holder owner, under
penalties of perjury, certifies, among other things, its status as a
Non-U.S. Holder or otherwise establishes an exemption. Prospective
purchasers should consult their tax advisors concerning such Treasury
Regulations and the potential effect on their ownership of the Common
Stock.
The payment of the proceeds from the Disposition of Common Stock
to or through a U.S. office of a broker will be subject to information
reporting and backup withholding unless the owner, under penalties of
perjury, certifies, among other things, its status as a Non-U.S.
Holder, or otherwise establishes an exemption. The payment of the
proceeds from the Disposition of Common Stock to or through a non-U.S.
office of a non-U.S. broker generally will not be subject to backup
withholding and information reporting. Unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder
and certain conditions are met or the holder otherwise establishes an
exemption, information reporting generally will apply to Dispositions
through (a) a non-U.S. office of a U.S. broker and (b) a non-U.S.
office of a non-U.S. broker that is either a controlled foreign
corporation for U.S. Federal income tax purposes or a person 50% or
more of whose gross income from all sources for a three year testing
period was effectively connected with a U.S. trade or business.
Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules will be refunded or credited
against the Non-U.S. Holder's U.S. Federal income tax liability,
provided that the required information is furnished to the IRS.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL TAX CONSEQUENCES
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF OWNING AND DISPOSING OF THE NOTES AND COMMON STOCK.
SELLING HOLDERS
The Notes were originally issued by the Trust and sold by Goldman
Sachs & Co., Morgan Stanley & Co. Incorporated, Bear, Stearns & Co.
Inc. and Salomon Brothers Inc (the "Initial Purchasers"), in a
transaction exempt from the registration requirements of the
Securities Act, to persons reasonably believed by such Initial
Purchasers to be "qualified institutional buyers" (as defined in Rule
144A under the Securities Act), or outside the United States to
non-U.S. persons in offshore transactions in reliance on Regulation S
under the Securities Act. The Selling Holders may from time to time
offer and sell pursuant to this Prospectus any or all of the Notes and
Company Common Stock issued upon conversion of the Notes. The term
Selling Holders includes the holders listed below and the beneficial
owners of the Notes and their transferees, pledgees, donees or other
successors.
The following table sets forth information with respect to the
Selling Holders of the Notes and the respective number of Notes
beneficially owned by each Selling Holder that may be offered pursuant
to this Prospectus.
PRINCIPAL AMOUNT
SELLING HOLDER OF NOTES
-------------- ----------------
Cede & Co. $650,000,000
=============
TOTAL $650,000,000
None of the Selling Holders has, or within the past three years
has had, any position, office or other material relationship with the
Company or any of their predecessors or affiliates. Because the
Selling Holders may, pursuant to this Prospectus, offer all or some
portion of the Notes or the Company Common Stock issuable upon
conversion of the Notes, no estimate can be given as to the amount of
the Notes or the Company Common Stock issuable upon conversion of the
Notes that will be held by the Selling Holders upon termination of any
such sales. In addition, the Selling Holders identified above may have
sold, transferred or otherwise disposed of all or a portion of their
Notes since the date on which they provided the information regarding
their Notes, in transactions exempt from the registration requirements
of the Securities Act.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to
purchasers directly by the Selling Holders. Alternatively, the Selling
Holders may from time to time offer the Offered Securities to or
through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and
any underwriters, broker/dealers or agents that participate in the
distribution of Offered Securities may be deemed to be "underwriters"
within the meaning of the Securities Act and any profit on the sale of
such securities and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the
Securities Act.
The Offered Securities may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at
negotiated prices. The sale of the Offered Securities may be effected
in transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which the
Offered Securities may be listed or quoted at the time of sale, (ii)
in the over-the-counter market, (iii) in transactions otherwise than
on such exchanges or in the over-the-counter market or (iv) through
the writing of options. At the time a particular offering of the
Offered Securities is made, a Prospectus Supplement, if required, will
be distributed which will set forth the aggregate amount and type of
Offered Securities being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers or
agents, any discounts, commissions and other terms constituting
compensation from the Selling Holders and any discounts, commissions
or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Offered Securities will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
In addition, in certain jurisdictions the Offered Securities may not
be offered or sold unless they have been registered or qualified for
sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the
Offered Securities by the Selling Holders. The foregoing may affect
the marketability of such securities.
Pursuant to the Registration Rights Agreement, all expenses of
the registration of the Offered Securities will be paid by the
Company, including, without limitation, Commission filing fees and
expenses of compliance with state securities or "blue sky" laws;
provided, however, that the Selling Holders will pay all underwriting
discounts and selling commissions, if any. The Selling Holders will be
indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith. The Company will be
indemnified by the Selling Holders severally against certain civil
liabilities, including certain liabilities under the Securities Act,
or will be entitled to contribution in connection therewith.
LEGAL MATTERS
Certain legal matters in connection with the offering to which
this Prospectus relates will be passed upon for the Company by Elliot
S. Gerson, Esq., Senior Vice President and General Counsel for the
Company and by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York. Nancy A. Lieberman, a partner in the law firm of Skadden, Arps,
Slate, Meagher & Flom LLP, serves as a director of the Company.
EXPERTS
The consolidated financial statements and schedule of the Company
and its subsidiaries as of March 1, 1997 and March 2, 1996 and for
each of the years in the three-year period ended March 1, 1997, have
been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference
herein, and upon authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the March 4,
1995 consolidated financial statements refers to a change in the
method of accounting for investments.
With respect to the unaudited interim financial information of
the Company and subsidiaries for the periods ended May 31, 1997 and
August 30, 1997, incorporated by reference herein, the independent
certified public accountants have reported that they applied limited
procedures in accordance with professional standards for a review of
such information. However, their separate reports included in the
Company's quarterly reports on Form 10-Q for the quarters ended May
31, 1997 and August 30, 1997, and incorporated by reference herein,
state that they did not audit and they do not express an opinion on
the interim financial information. Accordingly, the degree of reliance
on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim financial
information because that report is not a "report" or a "part" of the
registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Securities Act.
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents incorporated by
reference herein) contains certain forward-looking statements (as such
term is defined in the Private Securities Litigation Reform Act of
1995) and information relating to the Company that are based on the
beliefs of the management of the Company as well as assumptions made
by and information currently available to the management of the
Company. When used in this Prospectus, the words "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as
they relate to the Company or the management of the Company, identify
forward-looking statements. Such statements, which include, without
limitation, the matters set forth herein under the captions The
Company, reflect the current views of the Company with respect to
future events, the outcome of which is subject to certain risks,
including among others (i) competition from other drugstore chains,
supermarkets, membership clubs and other retailers as well as
third-party plans and mail order providers, (ii) the continued efforts
of third-party payors to reduce prescription drug costs, and (iii)
possible federal and state health care reform initiatives to reduce
governmental health costs. The forward-looking statements referred to
above are also subject to uncertainties and assumptions relating to
the operations and results of operations of the benefits of the
Thrifty PayLess Merger, the K&B acquisition and the Harco acquisition
assumed by the Company. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those
described herein as anticipated, believed, estimated, expected or
intended.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy and
information statements and other information with the SEC. Such
reports, proxy and information statements and other information filed
by the Company with the SEC can be inspected and copied at the Public
Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of
the SEC located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained from the Public
Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC
maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the SEC's
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
This Web site can be accessed at http://www.sec.gov. Such reports,
proxy and information statements and other information can also be
inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration
Statement (which term shall encompass any amendments thereto) on Form
S-3 under the Securities Act with respect to the securities offered by
this Prospectus (the "Registration Statement"). This Prospectus, which
constitutes part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement, certain
items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the securities
offered by this Prospectus, reference is made to the Registration
Statement, including the exhibits thereto, and the financial
statements and notes thereto filed or incorporated by reference as a
part thereof, which are on file at the offices of the Commission and
may be obtained upon payment of the fee prescribed by the Commission,
or may be examined without charge at the offices of the Commission.
Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete, and, in each
such instance, are qualified in all respects by reference to the
applicable documents filed with the Commission. The Registration
Statement and the exhibits thereto filed by the Company with the
Commission may be inspected and copied at the locations described
above.
The Company distributes to the holders of its shares of Common
Stock annual reports containing consolidated financial statements
audited by an independent accountant.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC are incorporated by
reference into this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
March 1, 1997;
(ii) the Company's Quarterly Report on Form 10-Q for the
quarterly period ended May 31, 1997;
(iii) the Company's Quarterly Report on Form 10-Q for the
quarterly period ended August 30, 1997;
(iv) the Company's Annual Report to Shareholders for the fiscal
year ended March 1, 1997 (incorporated by reference into the Annual
Report on Form 10-K); and
(v) the Company's Proxy Statement for the Annual Meeting of
Shareholders held on July 9, 1997 (incorporated by reference into the
Annual Report on Form 10-K).
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus but prior to the termination of this offering shall be
deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in
any other subsequently filed document which is also incorporated
herein by reference, modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute
a part of this Prospectus except as so modified or superseded.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the
written or oral request of any such person, a copy of any or all of
the documents referred to above which have been or may be incorporated
into this Prospectus by reference, other than exhibits to such
documents. Requests for such copies should be directed to Investor
Relations, Rite Aid Corporation, 30 Hunter Lane, Camp Hill,
Pennsylvania 17011, telephone number (717) 761-2633.
================================ ================================
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE NY REPRESENTATIONS OTHER
THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF $650,000,000
AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO RITE AID CORPORATION
WHICH IT RELATES OR AN OFFER
TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SUCH 5.25% CONVERTIBLE SUBORDINATED
SECURITIES BY ANY PERSON IN NOTES DUE 2002
ANY CIRCUMSTANCES IN WHICH SUCH
OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE ---------------
MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN PROSPECTUS
IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE ---------------
COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY
SUBSEQUENT DATE.
TABLE OF CONTENTS
PAGE
The Company . . . . . . . 3
Use of Proceeds . . . . . 4
Ratio of Earnings to
Fixed Charges . . . . . 4
Description of Notes . . 4
Description of Capital
Stock . . . . . . . . . 15
Certain United States
Federal Income Tax
Considerations . . . . 16
Selling Holders . . . . . 20
Plan of Distribution . . 20
Legal Matters . . . . . . 21
Experts . . . . . . . . . 21
Certain Forward-
Looking Statements . . 21
Available Information . . 23
Incorporation of
Certain Information . . 23
============================== ================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses (other than the SEC filing fee) are estimated.
SEC registration fee . . . . . . . . . . . . . . . . $196,969
Printing and engraving expenses . . . . . . . . . . 15,000
Legal fees and expenses . . . . . . . . . . . . . 125,000
Accounting fees and expenses . . . . . . . . . . . . 12,000
Miscellaneous . . . . . . . . . . . . . . . . . . 51,031
--------
Total . . . . . . . . . . . . . . . . . . . . . . . $400,000
========
ITEM 15. INDEMNIFICATION OF DIRECTOR AND OFFICERS.
As authorized by Section 145 of the General Corporation Law of
the State of Delaware (the "Delaware Corporation Law"), each director
and officer of the Company may be indemnified by the Company against
expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred in connection with the
defense or settlement of any threatened, pending or completed legal
proceedings in which he is involved by reason of the fact that he is
or was a director or officer of the Company if he acted in good faith
and in a manner that he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal
action or proceeding, if he had no reasonable cause to believe that
his conduct was unlawful. If the legal proceeding, however, is by or
in the right of the Company, the director or officer may not be
indemnified in respect of any claim, issue or matter as to which he
shall have been adjudged to be liable for negligence or misconduct in
the performance of this duty to the Company unless a court determines
otherwise.
Article Ten of the Certificate of Incorporation of the Company
provides that, to the fullest extent permitted by law, directors of
the Company will not be liable for monetary damages to the Company or
its stockholders for breaches of their fiduciary duties.
The directors and officers of the Company and its subsidiaries
are insured (subject to certain exceptions and deductions) under
liability insurance policies carried by the Company against
liabilities which they may incur in their capacity as such including
liabilities under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. EXHIBITS
The Exhibits listed in the following Exhibit Index are filed as
part of the Registration Statement:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
4.1 Indenture, dated as of September 10,
1997, between Rite Aid Corporation and
Harris Trust and Savings Bank, as
trustee.
4.2 Form of Note (included in Exhibit 4.1
hereto)
5.1 Opinion and Consent of Elliot J.
Gerson, Esq.*
5.2 Opinion of Skadden, Arps, Slate Meagher
& Flom LLP*
10.1 Registration Rights Agreement, dated as
of September 4, 1997
12.1 Ratio of Earnings to Fixed Charges
15.1 Letter of KPMG Peat Marwick LLP
regarding unaudited interim financial
information
23.1 Consent of Elliot S. Gerson (included
in Exhibit 5.1 hereto)*
23.2 Consent of Skadden, Arps, Slate Meagher
& Flom LLP*
23.3 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney (set forth on
signature page of the Registration
Statement)
25.1 T-1
------------------
* To be filed by amendment.
B. FINANCIAL STATEMENTS AND SCHEDULES
All schedules for which provision is made in Regulation S-X of
the Securities and Exchange Commission either are not required under
the related instructions or the information required to be included
therein has been included in the financial statements of the Company.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(d) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the
trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act.
(e) The Company hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
Prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of Prospectus filed by the
Registrants pursuant to Rule 424(b) (1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(2) For purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains
a form of Prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Camp Hill,
State of Pennsylvania, on November 6, 1997.
RITE AID CORPORATION
By /s/ Martin L. Grass
------------------------------
Martin L. Grass
Chairman of the Board, Chief
Executive Officer and Director
Know All Men By These Presents, that each person whose signature
appears below constitutes and appoints Martin L. Grass, Franklin M.
Bergonzi and Elliot S. Gerson, and each of them acting singly, such
person's true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for such person and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including pre-effective and post-effective amendments) to
this registration statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them acting singly, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully and to all intents and
purposes as such person might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of
them may lawfully do or cause to be done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Martin L. Grass Chairman of the Board, November 6, 1997
------------------------- Chief Executive Officer
Martin L. Grass and Director
/s/ Timothy J. Noonan President, Chief Operating November 6, 1997
------------------------- Officer and Director
Timothy J. Noonan
/s/ Frank M. Bergonzi Executive Vice President, November 6, 1997
------------------------- Chief Financial Officer
Frank M. Bergonzi and Chief Accounting
Officer
/s/ Franklin C. Brown Vice Chairman and Director November 6, 1997
-------------------------
Franklin C. Brown
/s/ Alex Grass Director November 6, 1997
-------------------------
Alex Grass
/s/ Nancy A. Lieberman Director November 6, 1997
-------------------------
Nancy A. Lieberman
/s/ Phillip Neivert Director November 6, 1997
-------------------------
Philip Neivert
/s/ Leonard N. Stern Director November 6, 1997
-------------------------
Leonard N. Stern
/s/ Leonard I. Green Director November 6, 1997
-------------------------
Leonard I. Green
/s/ Preston Robert Tisch Director November 6, 1997
-------------------------
Preston Robert Tisch
/s/ William J. Bratton Director November 6, 1997
-------------------------
William J. Bratton
/s/ Gerald Tsai, Jr. Director November 6, 1997
-------------------------
Gerald Tsai, Jr.
EXHIBIT 4.1
$650,000,000
5.25% CONVERTIBLE SUBORDINATED NOTES
DUE SEPTEMBER 15, 2002
Between
RITE AID CORPORATION
as Issuer
and
HARRIS TRUST AND SAVINGS BANK
as Trustee
Dated as of September 10, 1997
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions . . . . . . . . . . . . 1
SECTION 1.02. Compliance Certificates and
Opinions; Form of Documents
Delivered to Trustee . . . . . . . . 15
SECTION 1.03. Acts of Holders of Securities . . . 16
SECTION 1.04. Notices, etc. . . . . . . . . . . . 18
SECTION 1.05. Notice to Holders of Securities;
Waiver . . . . . . . . . . . . . . . 18
SECTION 1.06. Effect of Headings and Table
of Contents . . . . . . . . . . . . 19
SECTION 1.07. Successors and Assigns . . . . . . . 19
SECTION 1.08. Separability Clause . . . . . . . . 19
SECTION 1.09. Benefits of Indenture. . . . . . . . 19
SECTION 1.10. Governing Law . . . . . . . . . . . 20
SECTION 1.11. Legal Holidays . . . . . . . . . . . 20
SECTION 1.12. Conflict with Trust Indenture Act. . 20
ARTICLE II
Security Forms
SECTION 2.01 Forms Generally . . . . . . . . . . 21
SECTION 2.02 Form of Face of Security . . . . . . 23
SECTION 2.03 Form of Reverse of Security . . . . 29
SECTION 2.04 Form of Trustee's Certificate
of Authentication. . . . . . . . . . 38
ARTICLE III
The Securities
SECTION 3.01 Title and Terms . . . . . . . . . . 39
SECTION 3.02 Denominations . . . . . . . . . . . 40
SECTION 3.03 Execution, Authentication,
Delivery and Dating . . . . . . . . 40
SECTION 3.04 Temporary Securities . . . . . . . . 41
SECTION 3.05 Registration, Registration of
Transfer and Exchange;
Restrictions on Transfer . . . . . . 42
SECTION 3.06 Mutilated, Destroyed, Lost or
Stolen Securities . . . . . . . . . 49
SECTION 3.07 Payment of Interest, Interest
Rights Preserved . . . . . . . . . . 50
SECTION 3.08 Persons Deemed Owners . . . . . . . 52
SECTION 3.09 Cancelation . . . . . . . . . . . . 52
SECTION 3.10 Computation of Interest . . . . . . 52
SECTION 3.11 CUSIP Numbers . . . . . . . . . . . 52
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01 Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . 53
SECTION 4.02 Application of Trust Money . . . . . 54
ARTICLE V
Remedies
SECTION 5.01 Events of Default . . . . . . . . . 55
SECTION 5.02 Acceleration of Maturity;
Rescission and Annulment . . . . . . 58
SECTION 5.03 Collection of Indebtedness and
Suits for Enforcement by
Trustee . . . . . . . . . . . . . . 59
SECTION 5.04 Trustee May File Proofs of
Claim . . . . . . . . . . . . . . . 60
SECTION 5.05 Trustee May Enforce Claims
Without Possession of Securities . . 61
SECTION 5.06 Application of Money Collected . . . 62
SECTION 5.07 Limitation on Suits . . . . . . . . 62
SECTION 5.08 Unconditional Right of Holders
to Receive Principal and Interest
and to Convert . . . . . . . . . . . 63
SECTION 5.09 Restoration of Rights and
Remedies . . . . . . . . . . . . . . 63
SECTION 5.10 Rights and Remedies Cumulative . . . 64
SECTION 5.11 Delay or Omission Not Waiver . . . . 64
SECTION 5.12 Control by Holders of Securities . . 64
SECTION 5.13 Waiver of Past Defaults . . . . . . 65
SECTION 5.14 Undertaking for Costs . . . . . . . 65
SECTION 5.15 Waiver of Stay or Extension Laws . . 66
ARTICLE VI
The Trustee
SECTION 6.01 Certain Duties and
Responsibilities . . . . . . . . . . 66
SECTION 6.02 Notice of Defaults . . . . . . . . . 67
SECTION 6.03 Certain Rights of Trustee . . . . . 68
SECTION 6.04 Not Responsible for Recitals or
Issuance of Securities . . . . . . . 69
SECTION 6.05 May Hold Securities, Act as
Trustee Under Other Indentures . . . 69
SECTION 6.06 Money Held in Trust . . . . . . . . 70
SECTION 6.07 Compensation and Reimbursement . . . 70
SECTION 6.08 Corporate Trustee Required;
Eligibility . . . . . . . . . . . . 71
SECTION 6.09 Resignation and Removal;
Appointment of Successor . . . . . . 71
SECTION 6.10 Acceptance of Appointment by
Successor . . . . . . . . . . . . . 73
SECTION 6.11 Merger, Conversion, Consolidation
or Succession to Business . . . . . 74
SECTION 6.12 Authenticating Agent . . . . . . . . 74
ARTICLE VII
Holder's Lists and Reports
by Trustee and Company
SECTION 7.01 Company to Furnish Trustee Names
and Addresses of Holders . . . . . . 76
SECTION 7.02 Preservation of Information;
Communications to Holders . . . . . 76
SECTION 7.03 Reports by the Company . . . . . . . 77
ARTICLE VIII
Consolidation, Merger, Conveyance,
Transfer or Lease
SECTION 8.01 Company May Consolidate, Etc.,
Only on Certain Terms . . . . . . . 78
SECTION 8.02 Successor Substituted . . . . . . . 79
ARTICLE IX
Supplemental Indentures
SECTION 9.01 Supplemental Indentures
Without Consent of Holders of
Securities . . . . . . . . . . . . . 80
SECTION 9.02 Supplemental Indentures with
Consent of Holders of Securities . . 81
SECTION 9.03 Execution of Supplemental
Indentures . . . . . . . . . . . . . 82
SECTION 9.04 Effect of Supplemental
Indentures . . . . . . . . . . . . . 82
SECTION 9.05 Reference in Securities to
Supplemental Indentures . . . . . . 82
ARTICLE X
Covenants
SECTION 10.01 Payment of Principal and
Interest . . . . . . . . . . . . . . 83
SECTION 10.02 Maintenance of Offices or
Agencies . . . . . . . . . . . . . . 83
SECTION 10.03 Money for Security Payments
To Be Held in Trust . . . . . . . . 84
SECTION 10.04 Corporate Existence . . . . . . . . 86
SECTION 10.05 Maintenance of Properties . . . . . 86
SECTION 10.06 Compliance with Laws . . . . . . . . 87
SECTION 10.07 Payment of Taxes and Other
Claims . . . . . . . . . . . . . . . 87
SECTION 10.08 Delivery of Certain Information . . 87
SECTION 10.09 Statement by Officers as to
Default . . . . . . . . . . . . . . 88
SECTION 10.10 Resale of Certain Securities . . . . 88
SECTION 10.11 Waiver of Certain Covenants . . . . 89
SECTION 10.12 Registration Rights . . . . . . . . 89
SECTION 10.13 Book-Entry System . . . . . . . . . 89
ARTICLE XI
Redemption of Securities
SECTION 11.01 Right of Redemption . . . . . . . . 90
SECTION 11.02 Applicability of Article . . . . . . 90
SECTION 11.03 Election To Redeem; Notice to
Trustee . . . . . . . . . . . . . . 90
SECTION 11.04 Notice of Redemption . . . . . . . . 90
SECTION 11.05 Deposit of Redemption Price . . . . 91
SECTION 11.06 Securities Payable on Redemption
Date . . . . . . . . . . . . . . . . 92
ARTICLE XII
Conversion of Securities
SECTION 12.01 Conversion Privilege and
Conversion Rate . . . . . . . . . . 92
SECTION 12.02 Exercise of Conversion Privilege . . 93
SECTION 12.03 Fractions of Common Stock . . . . . 95
SECTION 12.04 Adjustment of Conversion Rate . . . 96
SECTION 12.05 Notice of Adjustments of
Conversion Rate . . . . . . . . . . 103
SECTION 12.06 Notice of Certain Corporate
Action . . . . . . . . . . . . . . . 103
SECTION 12.07 Company To Reserve Common Stock . . 105
SECTION 12.08 Taxes on Conversions . . . . . . . . 105
SECTION 12.09 Covenant as to Common Stock . . . . 105
SECTION 12.10 Cancelation of Converted
Securities . . . . . . . . . . . . . 105
SECTION 12.11 Provision in Case of
Consolidation, Merger or
Conveyance of Assets . . . . . . . . 105
SECTION 12.12 Responsibility of Trustee for
Conversion Provisions . . . . . . . 107
SECTION 12.13 Repayment of Certain Funds Upon
Conversion . . . . . . . . . . . . . 107
ARTICLE XIII
Subordination
SECTION 13.01 Securities Subordinate to
Senior Debt . . . . . . . . . . . . 108
SECTION 13.02 Payment Over of Proceeds Upon
Dissolution, Etc. . . . . . . . . . 108
SECTION 13.03 No Payment When Senior Debt in
Default . . . . . . . . . . . . . . 110
SECTION 13.04 Payment Permitted If No Default . . 111
SECTION 13.05 Subrogation to Rights of
Holders of Senior Debt . . . . . . . 111
SECTION 13.06 Provisions Solely To Define
Relative Rights . . . . . . . . . . 112
SECTION 13.07 Trustee To Effectuate
Subordination . . . . . . . . . . . 112
SECTION 13.08 No Waiver of Subordination
Provisions . . . . . . . . . . . . . 112
SECTION 13.09 Notice to Trustee . . . . . . . . . 113
SECTION 13.10 Reliance on Judicial Order or
Certificate of Liquidating Agent . . 114
SECTION 13.11 Trustee Not Fiduciary for Holders
of Senior Debt . . . . . . . . . . . 114
SECTION 13.12 Rights of Trustee as Holder of
Senior Debt; Preservation of
Trustee's Rights . . . . . . . . . . 115
SECTION 13.13 Article Applicable to Paying
Agents . . . . . . . . . . . . . . . 115
SECTION 13.14 Subsidiaries . . . . . . . . . . . . 115
SECTION 13.15 Rescission . . . . . . . . . . . . . 115
SECTION 13.16 Payment . . . . . . . . . . . . . . 115
ARTICLE XIV
Repurchase of Securities at the Option of the
Holder upon a Change in Control
SECTION 14.01 Right to Require Repurchase . . . . 116
SECTION 14.02 Notices; Method of Exercising
Repurchase Right, Etc. . . . . . . . 117
SECTION 14.03 Certain Definitions . . . . . . . . 121
INDENTURE dated as of September 10,
1997, between RITE AID CORPORATION, a
Delaware corporation (herein called the
"Company"), and Harris Trust and Savings
Bank, an Illinois banking corporation, as
Trustee hereunder (herein called the
"Trustee").
W I T N E S S E T H :
WHEREAS the Company has duly authorized the
creation of an issue of its 5.25% Convertible Subordinated
Notes due September 15, 2002 (herein called the
"Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this
Indenture; and
WHEREAS all things necessary to make the
Securities, when executed by the Company and authenticated
and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture
a valid agreement of the Company in accordance with their
and its terms, have been done.
NOW, THEREFORE, in consideration of the premises
and the purchase of the Securities by the Holders thereof,
it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of
this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include
the plural as well as the singular;
(b) all other terms used herein which are defined
in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them
therein;
(c) any reference to an "Article" or a "Section",
or to an "Annex", refers to an Article or Section of,
or an Annex attached to, this Indenture, as the case
may be;
(d) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with generally accepted accounting principles in the
United States prevailing at the time of any relevant
computation hereunder; and
(e) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this
Indenture as a whole and not to any particular Article,
Section or other subdivision; provided, however, that
where such words are used in any form of Security, form
of notice or form of certificate, such words shall
refer only to the particular form of Security, form of
notice or form of certificate, as the case may be, in
which such words are contained.
"Act", when used with respect to any Holder of a
Security, has the meaning specified in Section 1.03.
"Affiliate" of any specified Person means any
other Person directly or indirectly controlling or
controlled by or under direct or indirect common control
with such specified Person. For the purposes of this
definition, "control" when used with respect to any
specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent Members" has the meaning specified in
Section 3.05.
"Applicable Procedures" has the meaning specified
in Section 3.05.
"Authenticating Agent" means any Person authorized
by the Trustee pursuant to Section 6.13 to act on behalf of
the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper, in an
official language of the country of publication or in the
English language, customarily published on each Business
Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in the place in
connection with which the term is used or in the financial
community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different
newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.
"Board of Directors", when used with reference to
the Company, means the board of directors of the Company, or
any committee of the board of directors of the Company,
empowered to act for the Company, as the case may be, with
respect to this Indenture.
"Board Resolution" means a resolution duly adopted
by the Board of Directors, a copy of which, certified by the
Secretary or an Assistant Secretary of the Company, as the
case may be, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of
such certification, shall have been delivered to the
Trustee.
"Business Day" means, with respect to any
particular place of payment, place of conversion or any
other place, as the case may be, each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any such day on
which banking institutions in The City of New York, New
York, or in such particular place are authorized or
obligated by law or executive order to close. If any day on
which any delivery, request, surrender, payment or other
action is required or permitted hereunder to be taken by or
on behalf of a Holder is not a Business Day in any place
where such action is required or permitted hereunder to be
taken, then such actions may be taken at such or any other
permitted place on the next succeeding Business Day at such
place with the same force and effect as if taken at the same
time on such day that is not a Business Day at such place.
"CEDEL" means Cedel Bank Societe Anonyme.
"Change in Control" has the meaning specified in
Section 14.03.
"Closing Price Per Share" means, with respect to
the Common Shares of the Company, for any day, the reported
last sales price regular way per share on such day or, in
case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case (a) on the principal (as determined by
the Company's Board of Directors) national securities
exchange on which the Common Shares are listed or admitted
to trading or (b) if not listed or admitted to trading on
any national securities exchange, on the Nasdaq National
Market or (c) if the Common Shares are not listed or
admitted to trading on any national securities exchange or
quoted on such National Market, the average of the closing
bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose.
"Code" means the United States Internal Revenue
Code of 1986, as amended.
"Commission" means the U.S. Securities and
Exchange Commission, as from time to time constituted,
created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such
Commission is not existing and performing the duties now
assigned to it under applicable law, then the body
performing such duties at such time.
"Common Stock", as applied to the capital stock of
any corporation other than the Company shall mean the
capital stock of any class which has no preference in
respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of such corporation and which is not subject to
redemption by such corporation; and as applied to the
Company shall mean the Common Stock of the Company, par
value $1.00. However, subject to the provisions of
Section 12.12, shares issuable on conversion of Securities
shall include only shares of the class designated as Common
Stock of the Company at the date of execution of this
instrument or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which
have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and
which are not subject to redemption by the Company;
provided, however, that if at any time there shall be more
than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion
which the total number of shares of such class resulting
from all such reclassifications bears to the total number of
shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company"
in the first paragraph of this instrument until a successor
corporation shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a
written request or order signed in the name of the Company
by any one of its Chairman of the Board, its President, or
any Vice President, and by any one of its Treasurer, any
Assistant Treasurer, its Secretary or any Assistant
Secretary, and delivered to the Trustee.
"Conversion Agent" means any Person authorized by
the Company to convert Securities in accordance with
Article XII.
"Conversion Price" and "Conversion Rate" have the
meanings specified in Section 12.01 hereof, as adjusted in
accordance with Section 12.04.
"Conversion Securities" means the securities
delivered on conversion of Securities (or any securities
successor thereto), together with any securities successor
thereto to those so delivered on conversions.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered (which at the
date of this Indenture is located at 311 West Monroe Street,
12th Floor, Chicago, Illinois 60603), Attention of Indenture
Trust.
"Corporation" means a corporation, association,
company, joint-stock company or business trust.
"Defaulted Interest" has the meaning specified in
Section 3.07.
"Depository" means, with respect to the Securities
issued in whole or in part in the form of one or more Global
Securities, the clearing agency registered under the
Exchange Act, specified for that purpose as contemplated by
Section 2.01 or any successor clearing agency registered
under the Exchange Act as contemplated by Section 2.01.
"Dollar", "$" or "U.S. $" means a dollar or other
equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment
of public and private debts.
"DTC" means The Depository Trust Company.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, including any successor or
amendatory statutes.
"Euroclear" means the Euroclear System.
"Event of Default" has the meaning specified in
Section 5.01.
"Exchange Act" means the U.S. Securities Exchange
Act of 1934 (including any successor act thereto), as it may
be amended from time to time, and (unless the context
otherwise requires) includes the rules and regulations of
the Commission promulgated thereunder.
"Global Security" means any of the Restricted
Global Security and the Regulation S Global Security.
"Holder" means, with respect to any Security, a
Person in whose name such Security is registered in the
Security Register.
"Indebtedness" means (i) all items of indebtedness
or liability (except capital and surplus) which in
accordance with generally accepted accounting principles
would be included in determining total liabilities as shown
on the liability side of a balance sheet as at the date as
of which indebtedness is to be determined, (ii) indebtedness
secured by any Mortgage existing on property owned subject
to such Mortgage, whether or not the indebtedness secured
thereby shall have been assumed, and (iii) guarantees,
endorsements (other than for purposes of collection) and
other contingent obligations in respect of, or to purchase
or otherwise acquire, indebtedness of others, unless the
amount thereof is included in indebtedness under the
preceding clause (i) or (ii); provided, however, that any
obligations or guarantees of obligations in respect of lease
rentals, whether or not such obligations or guarantees of
obligations would be included as liabilities on a
consolidated balance sheet of the Company and its
Subsidiaries, shall not be included in indebtedness.
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such
supplemental indenture, the Annexes attached to this
instrument.
"Interest Payment Date" means the Stated Maturity
of an installment of interest on the Securities.
"Institutional Accredited Investor" means an
institutional accredited investor within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
"Liquidated Damages" has the meaning specified in
Section 2.03.
"Maturity", when used with respect to any
Security, means the date on which the principal of such
Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption, exercise of the
repurchase right set forth in Article XV or otherwise.
"Mortgage" means and includes any mortgage,
pledge, lien, security interest, conditional sale or other
title retention agreement or other similar encumbrance.
"Non-Conversion Period" has the meaning specified
in Section 2.03.
"Non-Electing Share" has the meaning specified in
Section 12.11.
"Officer", when used with reference to the
Company, means the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial
Officer, the Treasurer, the Controller, an Assistant
Treasurer, an Assistant Controller, the Secretary, an
Assistant Secretary or any Vice President of the Company.
"Officers' Certificate", when used with reference
to the Company, means a written certificate signed by any
one of the Chairman of the Board, the President or any Vice
President of the Company and by any one of the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee provided,
however, that, for purposes of Section 10.09, an "Officers'
Certificate" means a written certificate signed by the
principal executive, financial or accounting officer of the
Company and any one of the other Officers referred to above
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of
independent counsel selected by the Company, which counsel
shall be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to
Securities, means, as of the date of determination, all
Securities theretofore authenticated and delivered under
this Indenture, except:
(a) Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancelation;
(b) Securities for the payment or redemption of
which money in the necessary amount has been
theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company
shall act as its own Paying Agent) for the Holders of
such Securities; provided that if such Securities are
to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(c) Securities which have been paid pursuant to
Section 3.06 or in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such
Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of
the Company;
provided, however, that in determining whether the Holders
of the requisite principal amount of Outstanding Securities
are present at a meeting of Holders of Securities for quorum
purposes or have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities
owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee
shall be protected in conclusively relying upon any such
determination as to the presence of a quorum or upon any
such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall
be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or such
other obligor. In case of a dispute as to such right, any
decision by the Trustee upon the advice of counsel shall be
full protection to the Trustee. Upon request of the
Trustee, the Company shall furnish to the Trustee promptly
an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held
by or for the account of any of the above-described persons;
and, subject to Section 6.01, the Trustee shall be entitled
to accept such Officers' Certificate as conclusive evidence
of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the
purposes of any such determination.
"Paying Agent" means any Person authorized by the
Company to pay the principal of or interest on any
Securities on behalf of the Company.
"Person" means any individual, corporation,
company, partnership, joint venture, association, joint-
stock company, trust, estate, unincorporated organization or
other legal entity or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security
means every previous Security evidencing all or a portion of
the same debt as that evidenced by such particular Security;
and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange
for or in lieu of a mutilated, destroyed, lost or stolen
Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"Qualified Institutional Buyer" has the meaning
specified in Rule 144A.
"Record Date" means any Regular Record Date or
Special Record Date.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to
be redeemed pursuant to this Indenture.
"Registration Default" has the meaning specified
in Section 2.03.
"Registration Rights Agreement" has the meaning
specified in Section 10.12.
"Regular Record Date" for interest payable in
respect of any Security on any Interest Payment Date means
the March 1 or September 1 (whether or not a Business Day)
next preceding the relevant Interest Payment Date.
"Regulation S" means Regulation S under the
Securities Act (including any successor regulation thereto),
as it may be amended from time to time.
"Regulation S Global Security" has the meaning
specified in Section 2.01.
"Repurchase Date" has the meaning specified in
Section 14.01.
"Repurchase Price" has the meaning specified in
Section 14.01.
"Responsible Officer", when used with respect to
the Trustee, means any officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"Restricted Global Security" has the meaning
specified in Section 2.01.
"Restricted Period" has the meaning specified in
Section 2.01.
"Restricted Securities" has the meaning specified
in Section 2.1.
"Rule 144" means Rule 144 under the Securities Act
(including any successor rule thereto), as the same may be
amended from time to time.
"Rule 144A" means Rule 144A under the Securities
Act (including any successor rule thereto), as the same may
be amended from time to time.
"Rule 144A Information" has the meaning specified
in Section 10.08.
"Securities" has the meaning ascribed to it in the
first paragraph of this Indenture.
"Securities Act" means the Securities Act of 1933
(including any successor act thereto), as it may be amended
from time to time, and (unless the context otherwise
requires) includes the rules and regulations of the
Commission promulgated thereunder.
"Securities Payment" has the meaning specified in
Section 13.02.
"Security Register" and "Security Registrar" have
the respective meanings specified in Section 3.05.
"Senior Debt" means the principal of (and premium,
if any) and interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on,
and all fees and other amounts (including collection
expenses, attorney's fees and late charges) owing with
respect to, the following, whether direct or indirect,
absolute or contingent, secured or unsecured, due or to
become due, outstanding at the date of execution of the
Indenture or thereafter incurred, created or assumed:
(a) indebtedness of the Company for money borrowed
or evidenced by bonds, debentures, notes or similar
instruments;
(b) reimbursement obligations of the Company with
respect to letters of credit, bankers' acceptances and
similar facilities issued for the account of the
Company;
(c) every obligation of the Company issued or
assumed as the deferred purchase price of property or
services purchased by the Company, excluding any trade
payables and other accrued current liabilities incurred
in the ordinary course of business;
(d) obligations of the Company as lessee under
leases required to be capitalized on the balance sheet
of the lessee under United States generally accepted
accounting principles;
(e) obligations of the Company under interest rate
and currency swaps, caps, floors, collars or similar
arrangements intended to protect the Company against
fluctuations in interest or currency exchange rates;
(f) indebtedness of others of the kinds described
in the preceding clauses (a) through (e) that the
Company has assumed, guaranteed or otherwise assured
the payment thereof, directly or indirectly; and/or
(g) deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any
indebtedness or obligation described in the preceding
clauses (a) through (f) whether or not there is any
notice to or consent of the Holders of Notes; provided,
however, that the following shall not constitute Senior
Debt:
(i) any particular indebtedness or
obligation that is owed by the Company to any of
its direct and indirect Subsidiaries and
(ii) any particular indebtedness, deferral,
renewal, extension or refunding if it is expressly
stated in the governing terms or in the assumption
thereof that the indebtedness involved is not
senior in right of payment to the Notes or that
such indebtedness is pari passu with or junior to
the Notes.
"Shelf Registration Statement" has the meaning
specified in Section 2.03.
"Special Record Date" for the payment of any
Defaulted Interest means a date fixed by the Trustee
pursuant to Section 3.07.
"Stated Maturity", when used with respect to any
Security or any installment of principal thereof or interest
thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or
indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason
of any contingency.
"Trading Days" means (a) if the Common Stock are
listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is
open for business or (b) if the Common Stock are not listed
or admitted for trading on any national securities exchange,
days on which trades may be made on the Nasdaq National
Market or any similar system of automated dissemination of
quotations of securities prices on which the Common Stock
are quoted or (c) if the Common Stock are not listed or
admitted to trading on any national securities exchange or
quoted on such National Market or similar system, days on
which the Common Stock are traded regular way in the over-
the-counter market and for which a closing bid and a closing
asked price for the Common Stock are available.
"Trustee" means the Person named as the "Trustee"
in the preamble of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter "Trustee" shall mean such
successor Trustee. If at any time there is more than one
such Person, "Trustee" as used with respect to the
Securities shall mean the Trustee with respect to such
Securities.
"Trust Indenture Act" means the United States
Trust Indenture Act of 1939 (including any successor act
thereto), as it may be amended from time to time, and
(unless the context otherwise requires) includes the rules
and regulations of the Commission thereunder.
"U.S. Depository" means DTC until a successor U.S.
Depository shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "U.S.
Depository" shall mean such successor U.S. Depository.
"Unrestricted Securities" has the meaning
specified in Section 2.01.
"U.S. Government Obligations" means securities
which are (i) direct obligations of the United States of
America for the payment of which its full faith and credit
is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect
to any such obligation evidenced by such depository receipt
or a specific payment of interest on or principal of any
such obligation held by such custodian for the account of
the holder of a depository receipt; provided that (except as
required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian
in respect of the obligation set forth in (i) or (ii) above
or the specific payment of interest on or principal of such
obligation evidenced by such depository receipt.
"U.S. Person" means a citizen or resident of the
United States, a domestic partnership, a domestic
corporation or any estate or trust the income of which is
subject to U.S. Federal income taxation regardless of its
source.
"Vice President", when used with respect to the
Company, means any Vice President, whether or not designated
by a number or a word or words added before or after the
title "Vice President".
"Western Europe" means Austria, Belgium, Denmark,
France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland
and the United Kingdom.
SECTION 1.02 Compliance Certificates and
Opinions; Form of Documents Delivered to Trustee. (a) Upon
any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with,
except that in the case of any such application or request
as to which the furnishing of such documents is specifically
required by any provision of this Indenture relating to such
particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(i) a statement that each individual signing such
certificate or opinion has read such covenant or
condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(iii) a statement that, in the opinion of such
individual, he has made such examination or
investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such individual, such condition or covenant has
been complied with.
(b) In any case where several matters are
required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give
an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an Officer of the
Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or
in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to
the matters upon which such certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an
Officer or Officers of the Company stating that the
information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in
the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or
execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 1.03. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by
this Indenture to be given or taken by Holders of Securities
may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in
person or by agent or proxy duly appointed in writing.
Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it
is hereby expressly required, to the Company. Such
instrument or instruments and record (and the action
embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders of Securities
signing such instrument or instruments and so voting at such
meeting. Subject to Section 6.01, the execution of any
instrument by a Holder or his agent, or proxy, may be proved
in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall
be satisfactory to the Trustee. Proof of execution of any
such instrument or of a writing appointing any such agent or
proxy, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and (subject
to Section 6.01) conclusive in favor of the Trustee and the
Company if made in the manner provided in this Section.
(b) The fact and date of the execution by any
Person of any such instrument or writing may be proved by
the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged
to him the execution thereof. Where such execution is by a
signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be
proved in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in any
other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proven
by the Security Register.
(d) Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is
made upon such Security.
(e) If the Company shall solicit from the Holders
any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its
option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to
give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If the Company does not so fix a
record date in any such case, the Trustee may fix such a
record date by giving written notice to the Company. If
such a record date is fixed, upon request, demand,
authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only
the Holders of record at the close of business on such
record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion
of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose
the Outstanding Securities shall be computed as of such
record date; provided that no such authorization, agreement
or consent by the Holders on such record date shall be
deemed to be effective unless it shall become effective
pursuant to the provisions of this Indenture not later than
six months after the record date.
SECTION 1.04. Notices, etc. Any request, demand,
authorization, direction, notice, consent, election, waiver
or other Act of Holders of Securities or other document
provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with either of the
following:
(a) the Trustee by any Holder of Securities or by
the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing
to or with the Trustee and received at its Corporate
Trust Office, Attention: Corporate Trust
Administration, or
(b) the Company by the Trustee or by any Holder of
Securities shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided)
if in writing, mailed, first-class postage prepaid,
addressed to the Company at 30 Hunter Lane, Camp Hill,
Pennsylvania 17011, Notice: Chief Financial Officer or
at any other address previously furnished in writing to
the Trustee by the Company.
SECTION 1.05. Notice to Holders of Securities;
Waiver. Except as otherwise provided herein, where this
Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at
his registered address as recorded in the Security Register.
In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Holder
entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance
upon such waiver.
In case by reason of the suspension of regular
mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such
notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every
purpose hereunder.
SECTION 1.06. Effect of Headings and Table of
Contents. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 1.07. Successors and Assigns. All
covenants and agreements in this Indenture by the Company
shall bind its respective successors and assigns, whether so
expressed or not.
SECTION 1.08. Separability Clause. In case any
provision in this Indenture or 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 1.09. Benefits of Indenture. Nothing in
this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and
their successors and assigns hereunder, the holders of
Senior Debt of the Company (solely with respect to
Article XIII) and the Holders of Securities and, solely with
respect to this Article I and Sections 10.08, 12.08 and
12.09, the Holders of Conversion Securities, any benefit or
legal or equitable right, remedy or claim under this
Indenture.
This Article I and Sections 10.08, 12.08 and 12.09
shall not be amended or modified, and neither compliance by
the Company with, nor any default by it under, such Article
or any such Sections, shall be waived, in any manner that
adversely affects the interest of any Holder of a Conversion
Security at the time outstanding without such Holder's
consent.
SECTION 1.10. Governing Law. THIS INDENTURE AND
THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE
UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
SECTION 1.11. Legal Holidays. In any case where
any Interest Payment Date, Redemption Date, Repurchase Date
or Stated Maturity of any Security or the last day on which
a Holder of a Security has a right to convert his Security
shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of
interest or principal or delivery for conversion of such
Security need not be made on or by such day, but may be made
on or by the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date,
Redemption Date, Repurchase Date, or at the Stated Maturity
or by such last day for conversion, as the case may be;
provided, however, that in the case that payment is made on
such succeeding Business Day, no interest shall accrue on
the amount so payable for the period from and after such
Interest Payment Date, Redemption Date, Repurchase Date,
Stated Maturity or last day for conversion, as the case may
be.
SECTION 1.12. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
a provision of the Trust Indenture Act that is required
under such Act to be a part of and govern this Indenture (or
would be required to be a part of and govern this Indenture
if this Indenture were required to be qualified under the
Trust Indenture Act), the latter provision shall control.
If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified
or excluded, the latter provision shall be deemed to apply
to this Indenture as so modified or to be excluded, as the
case may be.
ARTICLE II
Security Forms
SECTION 2.01. Forms Generally. The Securities
shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or
permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depository
thereof, the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations thereunder, or as may, consistently
herewith, be determined by the Officers executing such
Securities, as evidenced by their execution thereof. The
Company shall approve the form of the Securities and any
notation, legend or endorsement on the Securities.
The definitive Securities shall be printed,
lithographed or engraved or produced by any combination of
these methods on steel engraved borders or may be produced
in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as
determined by the Officers executing such Securities as
evidenced by their execution thereof.
In certain cases described elsewhere herein, the
legends set forth in the first four paragraphs of
Section 2.02 may be omitted from Securities issued
hereunder.
After a transfer of any Securities during the
period of the effectiveness of a Shelf Registration
Statement with respect to the Securities which are included
in such Shelf Registration Statement, all requirements
pertaining to legends on such Security will cease to apply,
the requirements requiring any such Security issued to
certain Holders be issued in global form will cease to
apply, and, except as provided herein, a certificated
Security without legends will be available to the Holder of
such Securities.
Securities offered and sold in their initial
distribution in reliance on Regulation S shall be initially
represented by one or more Regulation S Global Securities
issued in fully registered form without interest coupons,
substantially in the form of Security set forth in
Sections 2.02 and 2.03, with such applicable legends as are
provided for in Section 2.02. Such Regulation S Global
Security shall be registered in the name of the U.S.
Depository or its nominee and deposited with the Trustee, at
its New York office, as custodian for the U.S. Depository,
duly executed by the Company and authenticated by the
Trustee as hereinafter provided, for credit to the
respective accounts at the U.S. Depository of the
depositories for Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear, or CEDEL. Until
such time as the Restricted Period shall have terminated,
Securityholders may hold beneficial interests in such
Regulation S Global Securities only through Euroclear and
CEDEL, unless delivery of such beneficial interest shall be
made through the Restricted Global Note in accordance with
the certification requirements discussed below in Section
3.05(b)(iii). After such time as the Restricted Period
shall have terminated, such certification requirements shall
no longer be required for such transfers. As used herein,
the term "Restricted Period" means the period up to (but not
including) the 40th day following the later of (a) the day
that Goldman, Sachs & Co., an initial purchaser of the
Securities, advises the Company and the Trustee of the day
on which the Securities are first offered to persons other
than distributors (as defined in Regulation S) in reliance
on Regulation S and (b) October 20, 1997. The Regulation S
Global Security following the Restricted Period and all
other Securities that are not Restricted Securities shall
collectively be referred to herein as the "Unrestricted
Securities".
Securities offered and sold in their initial
distribution in reliance on Rule 144A shall be issued in the
form of one or more Global Securities (collectively, the
"Restricted Global Security") in fully registered form
without interest coupons, substantially in the form of
Security set forth in Sections 2.02 and 2.03, with such
applicable legends as are provided for in Section 2.02,
except as otherwise permitted herein. Such Global Security
shall be registered in the name of the U.S. Depository or
its nominee and deposited with the Trustee, at its New York
office, as custodian for the U.S. Depository, duly executed
by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the
Restricted Global Security may be increased or decreased
from time to time by adjustments made on the records of the
Trustee, as custodian for the U.S. Depository, in connection
with a corresponding decrease or increase in the aggregate
principal amount of the Regulation S Global Security, as
hereinafter provided. The Restricted Global Security and
all other Securities evidencing the debt, or any portion of
the debt, initially evidenced by such Global Security, other
than Securities transferred or exchanged upon certification
as provided in Section 3.05(b)(ii) or (iv), shall
collectively be referred to herein as the "Restricted
Securities".
The Securities will be issued only in registered
form. The Securities will be issued in minimum
denominations of $1,000, as provided in Section 3.02.
SECTION 2.02. Form of Face of Security.
[INCLUDE IF SECURITY IS A REGULATION S GLOBAL
SECURITY--THIS SECURITY IS A REGULATION S GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER.
EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN SECTION 3.05(b) OF
THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN INTEREST IN
THIS REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN
INTEREST IN THE RESTRICTED GLOBAL SECURITY DURING THE
RESTRICTED PERIOD.]
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY--
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON
ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. SECURITIES MAY ONLY BE SOLD IN ACCORDANCE WITH
THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF RITE AID CORPORATION AND ITS
SUCCESSORS THAT (A) THIS SECURITY AND ANY COMMON STOCK
ISSUABLE UPON ITS CONVERSION MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (I) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (III) UNLESS PREVIOUSLY AGREED
WITH THE COMPANY, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN EACH
OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE
UNITED STATES, AND THAT (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE
UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE
RESTRICTION ON ANY PROCEDURES FOR RESALES AND OTHER
TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT
ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THERETO) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE
HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL BE DEEMED
BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO
HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
CONVERSION OF THIS SECURITY IS SUBJECT TO
CERTIFICATION AND OTHER REQUIREMENTS, AND ANY SECURITIES
ISSUED ON SUCH CONVERSION WILL BE SUBJECT TO THE TRANSFER
RESTRICTIONS REFERRED TO ABOVE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY--THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY
MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY
REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN
SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY AND THE
DEPOSITORY TRUST COMPANY IS THE U.S. DEPOSITORY--UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("DTC"), A NEW YORK
CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CEDE &
CO. (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
RITE AID CORPORATION
5.25% CONVERTIBLE SUBORDINATED NOTES
DUE SEPTEMBER 15, 2002
No. $
CUSIP No.:
RITE AID CORPORATION, a Delaware corporation
(herein called the "Company", which term includes any
successor Person under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay
to Cede & Co., or registered assigns, the principal sum of
U.S. Dollars, or such other amount (not to
exceed six hundred and fifty million dollars ($650,000,000)
when taken together with all of the Company's 5.25%
Convertible Subordinated Notes due September 15, 2002 issued
and outstanding in definitive certificated form or in the
form of another Global Security) as may from time to time
represent the principal amount of the Company's 5.25%
Convertible Subordinated Notes due September 15, 2002 in
respect of which beneficial interests are held through the
U.S. Depositary in the form of a [Restricted] [Regulation S]
Global Security, on September 15, 2002 and to pay interest
thereon from September 10, 1997 or from the most recent
Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semiannually in arrears
on March 15 and September 15 in each year, commencing on
March 15, 1998, and at Maturity at the rate of 5.25% per
annum, until the principal hereof is paid or made available
for payment; provided that any amount of such principal or
interest that is overdue shall bear interest at the rate of
5.25% per annum (to the extent that payment of such interest
shall be legally enforceable), from the date such amount is
due until it is paid or made available for payment, and such
interest on any overdue amount shall be payable on demand.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record
Date for such interest, which shall be the March 1 or
September 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed,
if such manner shall be deemed practical by the Trustee, and
upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of and interest on this
Security will be made in immediately available funds and in
such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public
and private debts, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The
City of New York, or, at the option of the Holder and
subject to any fiscal or other laws and regulations, at any
other office or agency maintained by the Company for such
purpose; provided, however, that upon written application
(including wire payment instructions) by the Holder to the
Security Registrar not later than the 10th day immediately
preceding the relevant Regular Record Date, such Holder may
receive payment by wire transfer to a U.S. Dollar account
(such transfers to be made only to Holders of an aggregate
principal amount in excess of U.S. $2,000,000) maintained by
the payee with a bank in The City of New York; and provided
further that, subject to the preceding proviso, payment of
interest may, at the option of the Company, be made by check
mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register; and provided
further that payment of principal of, or interest on this
Security and payment of any Liquidated Damages (as defined
on the reverse hereof) may be made at an office or agency of
the Corporate Trust Office of the Trustee in The City of
New York, if (but only if) payment of the full amount of
such principal, interest or Liquidated Damages, as the case
may be, at all offices outside the United States maintained
for such purpose by the Company in accordance with the
Indenture is illegal or effectively precluded because of
exchange controls or other similar restrictions on the full
payment or receipt of such amounts in United States Dollars,
as determined by the Company. Unless such designation is
revoked, any such designation made by the Holder with
respect to this Security will remain in effect with respect
to future payments with respect to this Security payable to
the Holder. The Company will pay any administrative costs
imposed by banks in connection with making any such payments
upon application of such Holder for reimbursement. If this
Security is a Global Security, then, notwithstanding the
second sentence of this paragraph, each such payment will be
made in accordance with the procedures of the U.S.
Depository as then in effect.
Reference is hereby made to the further provisions
of this Security set forth on the reverse hereof, which
further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon
has been executed by the Trustee referred to on the reverse
hereof by the manual signature of one of its authorized
signatories, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Security to be duly executed under its corporate seal.
RITE AID CORPORATION,
[Corporate Seal] by
__________________________
Title:
Attest:
______________________
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: HARRIS TRUST AND SAVINGS BANK,
as Trustee,
By
________________________
Authorized Signatory
SECTION 2.03. Form of Reverse of Security. This
Security is one of a duly authorized issue of securities of
the Company designated as its "5.25% Convertible
Subordinated Notes due September 15, 2002" (herein called
the "Securities"), limited in aggregate principal amount to
$650,000,000, issued and to be issued under an Indenture,
dated as of September 10, 1997 (herein called the
("Indenture") between the Company and Harris Trust and
Savings Bank, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to
which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the Holders of
Senior Debt of the Company and the Holders of the Securities
and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
No sinking fund is provided for in the Securities.
The Securities may not be redeemed at the option of the
Company prior to September 15, 2000. Thereafter, the
Securities may be redeemed at the option of the Company, in
whole or in part, at the Redemption Prices set forth below.
The Redemption Prices (expressed as a percentage
of principal amount) are as follows for the 12-month period
beginning on September 15 of the following years:
Redemption
Year Price
2000 102.10%
2001 101.05%
and thereafter at a Redemption Price equal to 100% of the
principal amount, in each case together with accrued
interest to the Redemption Date.
Notice of redemption (which notice shall be
irrevocable) will be given by first-class mail to Holders of
Securities at their registered addresses as recorded in the
Security Register. Notice will be given not more than 60
nor less than 30 days prior to the Redemption Date, as
provided in the Indenture.
In any case where the due date for the payment of
the principal of or interest, including Liquidated Damages,
on any Security or the last day on which a Holder of a
Security has a right to convert his Security shall be at any
place of payment or place of conversion, as the case may be,
a day on which banking institutions at such place of payment
or place of conversion are authorized or obligated by law or
executive order to close, then payment of principal or
interest, including Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such
date at such place but may be made on or by the next
succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as
if made on the date for such payment or the date fixed for
redemption or repurchase, or at the Stated Maturity or by
such last day for conversion, and no interest shall accrue
for the period after such date.
Subject to and upon compliance with the provisions
of the Indenture, the Holder of this Security is entitled,
at his option, at any time on or after December 9, 1997 (the
"Non-Conversion Period") and prior to the close of business
on September 15, 2002, or in case this Security is called
for redemption or the Holder hereof has exercised its right
to require the Company to repurchase this Security, then in
respect of this Security until and including, but (unless
the Company defaults in making the payment due upon
redemption or repurchase, as the case may be) not after, the
close of business on the Redemption Date or the Repurchase
Date, as the case may be, to convert this Security into
validly issued fully paid and nonassessable Common Stock of
the Company at an initial Conversion Rate equal to 13.836
shares of Common Stock per $1,000 principal amount of
Securities (or at the current adjusted Conversion Rate if an
adjustment has been made as provided in the Indenture) by
surrender of this Security, and also a duly executed
conversion notice, substantially in the form provided in
Annex A of the Indenture (including the tax certification
contained in such notice), to the Company, subject to any
laws or regulations applicable thereto and subject to the
right of the Company to terminate the appointment of the
Conversion Agent (as defined below), at the principal
corporate trust office of the Trustee in The City of
New York or at such other offices or agencies outside the
United States that the Company may designate (each a
"Conversion Agent"). No payment or adjustment is to be made
on conversion for cash dividends on the Common Stock issued
on conversion or, if the date of conversion is not an
Interest Payment Date, interest accrued hereon from the
Interest Payment Date next preceding the date of conversion.
No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any
fractional interest (calculated to the nearest 1/100th of a
share) the Company shall pay a cash adjustment as provided
in the Indenture, or alternatively, at the Company's option,
the Company shall round up the conversion transaction to the
next higher whole share. In addition, the Indenture
provides that in case of certain consolidations or mergers
to which the Company is a party or the sale or transfer of
all or substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the
period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and
other property receivable upon consolidation, merger, sale
or transfer by a holder of the number of Common Stock of the
Company into which this Security might have been converted
immediately prior to such consolidation, merger, sale or
transfer (assuming such holder of Common Stock failed to
exercise any rights of election and received per share the
kind and amount received per share by a plurality of
Non-Electing Shares). Adjustments in the Conversion Rate
of less than one percent of such price will not be required,
but any adjustment that would otherwise be required to be
made will be carried forward and taken into account in the
computation of any subsequent adjustment.
Notwithstanding any provision hereof, no
securities will be delivered on conversion of this Security
or any portion hereof unless the certification and other
requirements described in the Indenture are satisfied.
Subject to certain limitations in the Indenture,
at any time when the Company is not subject to Section 13
or 15(d) of the United States Securities Exchange Act of
1934, as amended, upon the request of a Holder of a
Restricted Security or the holder of Common Stock issued
upon conversion thereof, the Company will promptly furnish
or cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such
holder of Common Stock issued upon conversion of Restricted
Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by
any such holder with Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"). "Rule 144A
Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto).
The Holder of this Security and the Common Stock
of the Company issuable upon conversion thereof is entitled
to the benefits of a Registration Rights Agreement (subject
to the provisions thereof), dated as of September 4, 1997,
between the Company and Goldman, Sachs & Co., Morgan
Stanley & Co. Incorporated, Bear Stearns & Co. Inc. and
Salomon Brothers Inc (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Company
has agreed for the benefit of the Holders from time to time
of the Securities and the Common Stock issuable upon
conversion thereof that it will, at its expense, (a) within
90 days after the date of issuance of the original
Securities, file a shelf registration statement (the "Shelf
Registration Statement") with the Commission with respect to
resales of the Securities and the Common Stock issuable upon
conversion thereof, (b) use its best efforts to cause such
Shelf Registration Statement to be declared effective by the
Commission within 180 days after the date of original
issuance of the Securities, and (c) use its best efforts to
maintain such Shelf Registration Statement continuously
effective under the Securities Act, until the second
anniversary of the date of the effectiveness of the Shelf
Registration Statement or such earlier date as is provided
in the Registration Rights Agreement.
If (a) on or prior to 90 days following the date
of original issuance of the Securities, a Shelf Registration
Statement has not been filed with the Commission, or (b) on
or prior to the 180th day following the date of original
issuance of the Securities, such Shelf Registration
Statement is not declared effective (each, a "Registration
Default"), additional interest ("Liquidated Damages") will
accrue on this Security from and including the day following
such Registration Default to but excluding the day on which
such Registration Default has been cured. Liquidated
Damages will be paid semiannually in arrears, with the first
semiannual payment due on the first interest payment date in
respect of the Securities following the date on which such
Liquidated Damages begin to accrue, and will accrue at a
rate per annum equal to an additional one-quarter of one
percent (0.25%) of the principal amount of the Securities
outstanding to and including the 90th day following such
Registration Default and at a rate per annum equal to one-
half of one percent (0.50%) thereof from and after the 91st
day following such Registration Default. In the event that
the Shelf Registration Statement ceases to be effective
prior to the second annual anniversary of the initial
effective date of the Shelf Registration Statement or such
earlier date as is provided in the Registration Rights
Agreement for a period in excess of 60 days, whether or not
consecutive, during any 12-month period, then the interest
rate borne by the Securities shall increase by an additional
one-half of one percent (0.50%) per annum from the 61st day
of the applicable 12-month period such Shelf Registration
Statement ceases to be effective to but excluding the day on
which the Shelf Registration Statement again becomes
effective.
Whenever in this Security there is a reference, in
any context, to the payment of the principal of, premium, if
any, or interest on, or in respect of, any Security such
mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding
paragraph to the extent that, in such context, Liquidated
Damages are, were or would be payable in respect of such
Security and express mention of the payment of Liquidated
Damages (if applicable) in any provisions of this Security
shall not be construed as excluding Liquidated Damages in
those provisions of this Security where such express mention
is not made.
The Holder of this Security, by its acceptance
thereof, agrees to be bound by the terms of the Registration
Rights Agreement relating to the Securities and the Common
Stock issuable upon conversion thereof.
If a Change in Control occurs, the Holder of this
Security shall have the right, at the Holder's option in
accordance with the provisions of the Indenture, to require
the Company to repurchase this Security (or any portion of
the principal amount hereof that is an integral multiple of
$1,000) for cash at a Repurchase Price equal to 100% of the
principal amount thereof plus interest accrued to the
Repurchase Date. At the option of the Company, the
Repurchase Price may be paid in cash or, except as otherwise
provided in the Indenture, by delivery of Common Stock
having a fair market value equal to the Repurchase Price;
provided that payment may not be made in Common Stock unless
at the time of payment such stock is listed on a national
securities exchange or quoted on the Nasdaq National Market.
For purposes of this paragraph, the fair market value of
shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing
Prices Per Share for the five consecutive Trading Days
ending on and including the third Trading Day immediately
preceding the Repurchase Date. Whenever in this Security
there is a reference, in any context, to the principal of
any Security as of any time, such reference shall be deemed
to include reference to the Repurchase Price payable in
respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and
express mention of the Repurchase Price in any provision of
this Security shall not be construed as excluding the
Repurchase Price in those provisions of this Security when
such express mention is not made.
The indebtedness evidenced by this Security is, to
the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior
payment in full of all amounts then or thereafter to become
due on all Senior Debt of the Company, and this Security is
issued subject to such provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on its
behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and
(c) appoints the Trustee its attorney-in-fact for any and
all such purposes.
If an Event of Default shall occur and be
continuing, the principal of all the Securities may be
declared due and payable to the extent, in the manner and
with the effect provided in the Indenture. Upon payment
(i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue
interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities
shall terminate.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification
of the rights and obligations of the Company and the rights
of the Holders of the Securities under the Indenture at any
time by the Company and the Trustee with the written consent
of the Holders of a majority in principal amount of the
Securities at the time outstanding. The Indenture also
contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of
this Security and of any Security issued in exchange herefor
or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security or such other Security.
As provided in and subject to the provisions of
the Indenture, the Holder of this Security shall not have
the right to institute any proceeding with respect to the
Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a
continuing Event of Default, the Holders of not less than
25% in aggregate principal amount of the Outstanding
Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default
and offered the Trustee indemnity satisfactory to it and the
Trustee shall not have received from the Holders of a
majority in principal amount of the Securities Outstanding a
direction inconsistent with such request and shall have
failed to institute any such proceedings for 60 days after
receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the
Holder of this Security for the enforcement of any payment
of principal hereof or interest hereon (including any
Liquidated Damages) on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no
provision of this Security or of the Indenture shall alter
or impair the obligations of the Company, which are absolute
and unconditional, to pay the principal of and interest
(including Liquidated Damages) on this Security at the
times, places and rate, and in the coin or currency, herein
prescribed or to convert this Security as provided in the
Indenture.
The Securities are issuable only in fully
registered form, without exception, and, except as provided
in Section 2.01 of the Indenture, in denominations of $1,000
and any integral multiples of $1,000 in excess thereof. As
provided in the Indenture and subject to certain limitations
and satisfaction of certain requirements therein set forth,
Securities are exchangeable for a like aggregate principal
amount of securities of the same or a different authorized
denomination, as requested by the Holder surrendering the
same.
As provided in the Indenture and subject to
certain limitations and satisfaction of certain requirements
therein set forth, the transfer of this Security is
registrable on the Security Register upon surrender of this
Security for registration of transfer at the office or
agency of the Company as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York,
duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to recover any tax or
other governmental charge payable in connection therewith.
Prior to due presentation of this Security for
registration of transfer the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name such Security is registered, as the owner thereof
for all purposes, whether or not such Security be overdue,
and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, THE UNITED STATES OF AMERICA.
All terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in
the Indenture.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 15.01 of the Indenture,
the undersigned hereby elects to have this Security
repurchased by the Company.
2. The undersigned hereby directs the Trustee or
the Company to pay it or
an amount in cash or, at
the Company's election, Common Stock valued as set forth in
the Indenture, equal to 100% of the principal amount hereof,
plus interest accrued to the Repurchase Date, as provided in
the Indenture.
Dated:
___________________________
Signature
___________________________
Signature Guaranteed
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Trustee, which requirements will include membership or
participation in the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP)
and the New York Stock Exchange Medallion Signature Program
(MSP) or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution
for, STAMP, SEMP or MSP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Principal amount to be repurchased:
Remaining principal amount following such repurchase:
NOTICE: The signature to the foregoing Election must
correspond to the Name as written upon the face of this
Security in every particular, without alteration or any
change whatsoever.
SECTION 2.04. Form of Trustee's Certificate of
Authentication. This is one of the Securities referred to
in the within-mentioned Indenture.
Dated: HARRIS TRUST AND SAVINGS BANK,
as Trustee,
by
_________________________
Authorized Signatory
ARTICLE III
The Securities
SECTION 3.01. Title and Terms. The aggregate
principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to
$650,000,000 except for Securities authenticated and
delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to
Sections 3.04, 3.05, 3.06, 9.05, or 12.02.
The Securities shall be known and designated as
the "5.25% Convertible Subordinated Notes due September 15,
2002" of the Company. Their Stated Maturity shall be
September 15, 2002 and they shall bear interest at the rate
of 5.25% per annum from September 10, 1997 or from the most
recent Interest Payment Date to which interest has been paid
or duly provided for, as the case may be, payable
semiannually in arrears on March 15 and September 15 of each
year, commencing March 15, 1998, and at Maturity, until the
principal thereof is paid or made available for payment;
provided that any amount of such principal or interest that
is overdue shall bear interest at the rate of 5.25% per
annum (to the extent that payment of such interest shall be
legally enforceable), from the date such amount is due until
it is paid or made available for payment, and such interest
on any overdue amount shall be payable on demand.
The principal of and interest on the Securities
shall be payable in immediately available funds and in such
coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and
private debts, at the Corporate Trust Office of the Trustee
in the Borough of Manhattan, The City of New York or, at the
option of the Holder and subject to any fiscal or other laws
and regulations applicable thereto, at any other office of
the Trustee or any Paying Agent outside The City of New
York; provided, however, that upon application (including
wire payment instructions) by the Holder to the Trustee not
later than the relevant Regular Record Date, such Holder may
receive payment by wire transfer to a U.S. Dollar account
(such transfers to be made only to Holders of an aggregate
principal amount in excess of U.S. $2,000,000) maintained by
the payee with a bank in The City of New York, New York; and
provided further that subject to the preceding proviso,
payment of interest may, at the option of the Company, be
made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security
Register. Unless such designation is revoked, any such
designation made by such Holder with respect to such
Security will remain in effect with respect to any future
payments with respect to such Security payable to such
Holder. The Company will pay any administrative costs
imposed by banks in connection with making such payments,
upon application by the relevant Holder. Notwithstanding
the second sentence of this paragraph, each payment of
principal and interest in respect of a Global Security will
be made in accordance with the procedures of the U.S.
Depository as then in effect.
The Securities shall be redeemable at the
Company's option, in whole or in part, under the
circumstances and at the Redemption Prices specified in the
form of Securities set forth in Sections 2.02 and 2.03.
The Securities shall be convertible as provided in
Article XII.
The Securities shall be subordinated in right of
payment to Senior Debt of the Company as provided in
Article XIII.
The Securities shall be subject to repurchase by
the Company at the option of the Holders as provided in
Article XIV.
SECTION 3.02. Denominations. The Securities
shall be issuable only in registered form without coupons
and, except as provided in Section 2.01, only in
denominations of $1,000 and any integral multiple of $1,000
in excess thereof.
SECTION 3.03. Execution, Authentication, Delivery
and Dating. The Securities shall be executed on behalf of
the Company by any one of its Chairman of the Board, its
Chief Executive Officer, its President, or any one of its
Vice Presidents, under a facsimile of its corporate seal
reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or
facsimile.
Securities bearing the manual or facsimile
signature of individuals who were at any time the proper
Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at
the date of such Securities.
At any time and from time to time after the
execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company to the Trustee
for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the
Trustee in accordance with such Company Order shall
authenticate and make available for delivery such Securities
as in this Indenture provided and not otherwise. In
connection with any Company Order for authentication, a
compliance certificate and Opinion of Counsel pursuant to
Section 1.02 shall not be required.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose
unless there appears on such Security a certificate of
authentication substantially in the form provided for herein
executed by the Trustee or the Authenticating Agent by
manual signature of an authorized signatory, and such
certificate upon such Security shall be conclusive evidence,
and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold or delivered
by the Company, and the Company shall deliver such Security
to the Trustee for cancelation as provided in Section 3.09,
for all purposes of this Indenture and such Security shall
be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of
this Indenture.
SECTION 3.04. Temporary Securities. Pending the
preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall
authenticate and make available for delivery, temporary
Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Securities may
determine, as evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company
will cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable
for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated
pursuant to Section 10.2, without charge to the Holder.
Upon surrender for cancelation of any one or more temporary
Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery 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
benefits under this Indenture as definitive Securities.
SECTION 3.05. Registration, Registration of
Transfer and Exchange; Restrictions on Transfer. (a) The
Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such
office and in any other office or agency designated pursuant
to Section 10.02 being herein sometimes collectively
referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security
at an office or agency of the Company designated pursuant to
Section 10.02 for such purpose, and subject to the other
provisions of this Section 3.05, the Company shall execute,
and the Trustee shall authenticate and make available for
delivery, in the name of the designated transferee or
transferees, one or more new Securities of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, and subject to the
other provisions of this Section 3.05, Securities may be
exchanged for other Securities of any authorized
denominations and 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, and subject to the other provisions of this
Section 3.05, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, the
Securities which the Holder making the exchange is entitled
to receive.
All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same debt, and
subject to the other provisions of this Section 3.05,
entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for
registration of transfer or for exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any
registration of transfer or exchange of securities, but the
Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.04,
12.02 or 14.02(f) not involving any transfer and subject to
Section 12.09.
(b) Notwithstanding any other provisions of this
Indenture or the Securities (but subject to Section 2.01),
transfers of a Global Security, in whole or in part,
transfers and exchanges of interests therein of the kinds
described in clauses (2), (3), (4) and (5) below and
exchanges of interests in Global Securities, and transfers
or exchanges of other Securities as described in clause (6)
below, shall be made only in accordance with this
Section 3.05(b). Transfers and exchanges subject to this
Section 3.05 shall also be subject to the other provisions
of this Indenture that are not inconsistent with this
Section 3.05.
(i) Limitation on Transfers of a Global Security.
A Global Security may not be transferred, in whole or
in part, to any Person other than the U.S. Depository
or a nominee thereof, and no such transfer to any such
other Person may be registered; provided that this
clause (1) shall not prohibit any transfer of a
Security that is issued in exchange for a Global
Security but is not itself a Global Security. No
transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until
such Security has been registered in the name of such
Person. Nothing in this Section 3.05(b)(ii) shall
prohibit or render ineffective any transfer of a
beneficial interest in a Global Security effected in
accordance with the other provisions of this
Section 3.05(b).
(ii) Restricted Global Security to Regulation S
Global Security. If the holder of a beneficial
interest in the Restricted Global Security wishes at
any time to transfer such interest to a Person who
wishes to take delivery thereof in the form of a
beneficial interest in the Regulation S Global
Security, such transfer may be effected, subject to the
rules and procedures of the U.S. Depository, Euroclear
and CEDEL, in each case to the extent applicable (the
"Applicable Procedures"), only in accordance with this
Section 3.05(b)(ii). Upon receipt by the Trustee, as
Security Registrar, at its office in The City of
New York of (A) written instructions given in
accordance with the Applicable Procedures from an Agent
Member directing the Trustee to credit or cause to be
credited to a specified Agent Member's account a
beneficial interest in the Regulation S Global Security
in a principal amount equal to that of the beneficial
interest in the Restricted Global Security to be so
transferred, (B) a written order given in accordance
with the Applicable Procedures containing information
regarding the account of the Agent Member (and, if
applicable, the Euroclear or CEDEL account, as the case
may be) to be credited with, and the account of the
Agent Member to be debited for, such beneficial
interest and (C) a certificate in substantially the
form set forth in Annex B given by the holder of such
beneficial interest, the Trustee, as Security
Registrar, shall instruct the U.S. Depository to reduce
the principal amount of the Restricted Global Security,
and to increase the principal amount of the Regulation
S Global Security, by the principal amount of the
beneficial interest in the Restricted Global Security
to be so transferred, and to credit or cause to be
credited to the account of the Person specified in such
instructions (which during the Restricted Period shall
be the Agent Member for Euroclear or CEDEL or both, as
the case may be) a beneficial interest in the
Regulation S Global Security having a principal amount
equal to the amount by which the principal amount of
the Restricted Global Security was reduced upon such
transfer.
(iii) Regulation S Global Security to Restricted
Global Security. If during the Restricted Period the
holder of a beneficial interest in the Regulation S
Global Security wishes to transfer such interest to a
Person who wishes to take delivery thereof in the form
of a beneficial interest in the Restricted Global
Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this
Section 3.05(b)(iii). Upon receipt by the Trustee, as
Security Registrar, at its office in The City of
New York of (A) written instructions given in
accordance with the Applicable Procedures from an Agent
Member directing the Trustee to credit or cause to be
credited to a specified Agent Member's account a
beneficial interest in the Restricted Global Security
in a principal amount equal to that of the beneficial
interest in the Regulation S Global Security to be so
transferred, (B) a written order given in accordance
with the Applicable Procedures containing information
regarding the account of the Agent Member to be
credited with, and the account of the Agent Member
(and, if applicable, the Euroclear or CEDEL account, as
the case may be) to be debited for, such beneficial
interest and (C) a certificate in substantially the
form set forth in Annex C given by the holder of such
beneficial interest, the Trustee, as Security
Registrar, shall instruct the U.S. Depository to reduce
the principal amount of the Regulation S Global
Security and to increase the principal amount of the
Restricted Global Security, by the principal amount of
the beneficial interest in the Regulation S Global
Security to be so transferred, and to credit or cause
to be credited to the account of the Person specified
in such instructions a beneficial interest in the
Restricted Global Security having a principal amount
equal to the amount by which the principal amount of
the Regulation S Global Security, as the case may be,
was reduced upon such transfer.
(iv) Exchanges. In the event that a Restricted
Global Security or any portion thereof is exchanged for
a Regulation S Global Security or Securities other than
Global Securities, such other Securities may in turn be
exchanged (on transfer or otherwise) for Securities
that are not Global Securities or for beneficial
interests in a Global Security (if any is then
outstanding) only in accordance with such procedures,
which shall be substantially consistent with the
provisions of clauses (i) through (iii) above and (v)
below (including the certification requirements
intended to insure that transfers and exchanges of
beneficial interests in a Global Security comply with
Rule 144A, Rule 144 or Regulation S, as the case may
be) and any Applicable Procedures, as may be from time
to time adopted by the Company and the Trustee.
(v) Interests in Regulation S Global Security To
Be Held Through Euroclear or CEDEL. Until the
termination of the Restricted Period, interests in the
Regulation S Global Security may be held only through
Agent Members acting for and on behalf of Euroclear and
CEDEL provided that this Clause (v) shall not prohibit
any transfer in accordance with Section 3.05(b)(iii)
hereof.
(c) Each Restricted Security and Global Security
issued hereunder shall, upon issuance, bear the legends
required by Section 2.02 to be applied to such a Security
and such required legends shall not be removed from such
Security except as provided in the next sentence or
paragraph (d) of this Section 3.05. The legend required for
a Restricted Security may be removed from such Security upon
the earlier of (i) the later of the expiration of two years
from the last date of original issuance of the Securities
and the last date on which the Company or any affiliate of
the Company reacquired such Securities, if any, and (ii) the
date such Security is resold pursuant to an effective
Registration Statement relating thereto. Upon provision of
such satisfactory evidence, the Trustee, at the written
direction of the Company, shall authenticate and deliver in
exchange for such Security another Security or Securities
having an equal aggregate principal amount that does not
bear such legend. If such a legend required for a
Restricted Security has been removed from a Security as
provided above, no other Security issued in exchange for all
or any part of such Security shall bear such legend, unless
the Company has reasonable cause to believe that such other
Security is a "restricted security" within the meaning of
Rule 144 and instructs the Trustee in writing to cause a
legend to appear thereon.
(d) The provisions of clauses (i), (ii), (iii)
and (iv) below shall apply only to Global Securities:
(i) Each Global Security authenticated under this
Indenture shall be registered in the name of the U.S.
Depository or a nominee thereof and delivered to such
U.S. Depository or a nominee thereof or custodian
therefor, and each such Global Security shall
constitute a single Security for all purposes of this
Indenture.
(ii) Notwithstanding any other provision in this
Indenture or the Securities, no Global Security may be
exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in
whole or in part may be registered, in the name of any
Person other than the U.S. Depository or a nominee
thereof unless (A) the U.S. Depository (1) has notified
the Company that it is unwilling or unable to continue
as U.S. Depository for such Global Security or (2) has
ceased to be a clearing agency registered under the
Exchange Act, (B) in the case of a Global Security held
for an account of Euroclear or CEDEL, Euroclear or
CEDEL, as the case may be, (1) is closed for business
for a continuous period of 14 days (other than by
reason of statutory or other holidays) or (2) announces
an intention permanently to cease business or does in
fact do so, (C) there shall have occurred and be
continuing an Event of Default with respect to such
Global Security or (D) a request for certificates has
been made upon 60 days' prior written notice given to
the Trustee in accordance with the U.S. Depository's
customary procedures and a copy of such notice has been
received by the Company from the Trustee. Any Global
Security exchanged pursuant to clause (A) or (B) above
shall be so exchanged in whole and not in part and any
Global Security exchanged pursuant to clause (C) or (D)
above may be exchanged in whole or from time to time in
part as directed by the U.S. Depository. Any Security
issued in exchange for a Global Security or any portion
thereof shall be a Global Security, provided that any
such Security so issued that is registered in the name
of a Person other than the U.S. Depository or a nominee
thereof shall not be a Global Security.
(iii) Securities issued in exchange for a Global
Security or any portion thereof pursuant to clause (ii)
above shall be issued in definitive, fully registered
form, without interest coupons, shall have an aggregate
principal amount equal to that of such Global Security
or portion thereof to be so exchanged, shall be
registered in such names and be in such authorized
denominations as the U.S. Depository shall designate
and shall bear any legends required hereunder. Any
Global Security to be exchanged in whole shall be
surrendered by the U.S. Depository to the Trustee, as
Security Registrar. With regard to any Global Security
to be exchanged in part, either such Global Security
shall be so surrendered for exchange or, if the Trustee
is acting as custodian for the U.S. Depository or its
nominee with respect to such Global Security, the
principal amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by
means of an appropriate adjustment made on the records
of the Trustee. Upon any such surrender or adjustment,
the Trustee shall authenticate and make available for
delivery the Security issuable on such exchange to or
upon the written order of the U.S. Depository or an
authorized representative thereof.
(iv) In the event of the occurrence of any of the
events specified in clause (ii) above, the Company will
promptly make available to the Trustee a reasonable
supply of certificated Securities in definitive, fully
registered form, without interest coupons.
(v) Neither any members of, or participants in,
the U.S. Depository ("Agent Members") nor any other
Persons on whose behalf Agent Members may act
(including Euroclear and CEDEL and account holders and
participants therein) shall have any rights under this
Indenture with respect to any Global Security, or under
any Global Security, and the U.S. Depository or such
nominee, as the case may be, may be treated by the
Company, the Trustee and any agent of the Company or
the Trustee as the absolute owner and holder of such
Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any
written certification, proxy or other authorization
furnished by the U.S. Depository or such nominee, as
the case may be, or impair, as between the U.S.
Depository, its Agent Members and any other person on
whose behalf an Agent Member may act, the operation of
customary practices of such Persons governing the
exercise of the rights of a holder of any Security.
SECTION 3.06. Mutilated, Destroyed, Lost or
Stolen Securities. If there shall be delivered to the
Company and the Trustee (i) (A) any mutilated Security or
(B) evidence to their satisfaction of the destruction, loss
or theft of any Security and (ii) such security or indemnity
as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for such mutilated Security, a new
Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and
payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.
A Holder shall bear the cost to the Company of
replacing a mutilated, destroyed, stolen or lost Security.
Upon the issuance of any new Security under this Section,
the Company also may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith.
Every new Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other
Securities duly issued hereunder.
The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest, Interest
Rights Preserved. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security which is payable, but
is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities)
are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on
each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each
Holder of Securities at such Holder's address as it
appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in
whose names the Securities (or their respective
Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no
longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on
which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this
Section and Section 3.05, each Security delivered under this
Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
Any Security surrendered for conversion during the
period from the close of business on any Regular Record Date
to the opening of business on the next succeeding Interest
Payment Date (except Securities called for redemption on a
Redemption Date or to be repurchased on a Repurchase Date
and, as a result, the right to convert such Securities with
respect to which the Holder has exercised redemption or
repurchase rights would terminate during such period) must
be accompanied by payment in New York Clearing House Funds
or other funds acceptable to the Company of an amount equal
to the Interest payable on such Interest Payment Date on the
principal amount of such Securities being surrendered for
conversion. In the case of any Security which is converted
after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Security
whose Maturity is prior to such Interest Payment Date) whose
Stated Maturity is on such Interest Payment Date, interest
shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether
or not punctually paid or duly provided for) shall be paid
to the Person in whose name such Security (or one or more
Predecessor Securities) is registered at the close of
business on such Regular Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in
the case of any Security which is converted, interest whose
Stated Maturity is after the date of conversion of such
Security shall not be payable.
SECTION 3.08. Persons Deemed Owners. Prior to
due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee shall treat the Person in whose name such Security
is registered as the owner of such Security for the purpose
of receiving payment of principal of and (subject to
Sections 3.05 and 3.07) interest on such Security and for
all other purposes whatsoever, whether or not such Security
be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.09. Cancelation. All Securities
surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be
delivered to the Trustee. All Securities so delivered shall
be canceled promptly by the Trustee. The Company may at any
time deliver to the Trustee for cancelation any Securities
previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancelation any Securities
previously authenticated hereunder which the Company has not
issued and sold or delivered, and all Securities so
delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section
3.09, except as expressly permitted by this Indenture. The
Trustee shall destroy canceled Securities and deliver a
certificate of such destruction to the Company.
SECTION 3.10. Computation of Interest. Interest
on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 3.11. CUSIP Numbers. The Company in
issuing the Securities may use "CUSIP" and "CINS" numbers
(if then generally in use), and the Trustee shall use CUSIP
numbers or CINS numbers, as the case may be, in notices of
redemption, repurchase or exchange as a convenience to the
Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any
notice of redemption, repurchase or exchange and that
reliance may be placed only on the other identification
numbers printed on the Securities.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of
Indenture. This Indenture shall upon Company Request cease
to be of further effect (except as to any surviving rights
of conversion, or replacement of Securities herein expressly
provided for, any right to receive the payment of principal
of, or interest on, such Securities or Liquidated Damages
under the tenth paragraph on the reverse of the form of
Securities set forth in Section 2.03 and the rights,
obligations and immunities of the Trustee hereunder), and
the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge
of this Indenture, when
(a) either
(i) all Securities theretofore authenticated
and delivered (other than (A) Securities which
have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.06
and (B) Securities for whose payment money has
theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter
repaid to the Company or discharged from such
trust, as provided in Section 10.03) have been
delivered to the Trustee for cancelation; or
(ii) all such Securities not theretofore
delivered to the Trustee for cancelation
(A) have become due and payable, or
(B) will have become due and payable at
their Stated Maturity within one year, or
(C) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the
name, and at the expense, of the Company;
and the Company, in the case of (A), (B) or (C) above,
has deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose
(1) money in an amount, or (2) U.S. Government
Obligations that through the scheduled payment of
principal and interest in respect thereof in accordance
with their terms will provide, not later than one day
before the due date of any payment, money in an amount,
or (3) a combination thereof, sufficient to pay and
discharge the entire indebtedness on such Securities
not theretofore delivered to the Trustee for
cancelation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with, and that any consents required
under any document evidencing and/or securing Senior Debt
have been obtained and are in full force and effect.
Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the
Trustee under Section 6.07 shall survive. Funds held in
trust pursuant to this Section are not subject to the
provisions of Article XIII.
SECTION 4.02. Application of Trust Money.
(a) Subject to the provisions of the last paragraph of
Section 10.03, all moneys and U.S. Government Obligations
deposited with the Trustee pursuant to Section 4.01 shall be
held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto,
of the principal and interest for whose payment such money
has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to
Section 4.01 (and held by it or any Paying Agent) for the
payment of Securities subsequently converted shall be
returned to the Company upon Company Request.
(b) The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations deposited
pursuant to Section 4.01 or the interest and principal
received in respect of such obligations other than any
payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the
Company from time to time upon Company Request any U.S.
Government Obligations or money held by it as provided in
Section 4.01, which, in the opinion of a nationally
recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee,
are then in excess of the amount thereof which then would
have been required to be deposited for the purpose for which
such obligations or money were deposited or received.
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default. "Event of
Default", whenever used herein, means any one of the
following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions
of Article XIII or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest
(including any Liquidated Damages) upon any Security
when it becomes due and payable, whether or not such
payment is prohibited pursuant to Article XIII hereof,
and continuance of such default for a period of 30
days; or
(b) default in the payment of the principal or
Redemption Price or Repurchase Price of any Security at
its Maturity, whether or not such payment is prohibited
pursuant to Article XIII hereof; or
(c) default in the Company's obligation to provide
notice of a Change in Control as provided by
Section 14.02; or
(d) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of
such default or breach for a period of 60 days after
there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 10% in aggregate
principal amount of the Outstanding Securities a
written notice specifying such default or breach and
requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(e) default under any bond, debenture, note or
other evidence of Indebtedness of the Company or under
any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or
evidenced any Indebtedness of the Company (including
this Indenture), whether such Indebtedness now exists
or shall hereafter be created, which default shall
constitute a failure to pay an aggregate principal
amount exceeding $10,000,000 of such Indebtedness when
due and payable after the expiration of any applicable
grace period with respect thereto and shall have
resulted in such Indebtedness in an aggregate principal
amount exceeding $10,000,000 becoming or being declared
due and payable prior to the date on which it would
otherwise have become due and payable, without such
Indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within
a period of 10 days after there shall have been given,
by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the
Outstanding Securities a written notice specifying such
default and requiring the Company to cause such
Indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating
that such notice is a Notice of Default hereunder;
provided, however, that if such default under such
bond, debenture, note, mortgage, indenture or other
instrument or evidence of Indebtedness shall be
remedied or cured by the Company or waived pursuant to
such agreement or instrument, then, unless the maturity
of the Securities shall have been accelerated as
provided herein, the Event of Default hereunder by
reason therefor shall be deemed likewise to have been
thereupon remedied, cured or waived without further
action upon the part of either the Trustee or the
Holders. Subject to the provisions of Section 6.01 and
6.02, the Trustee shall not be deemed to have knowledge
of such default unless either (i) a Responsible Officer
of the Trustee shall have actual knowledge of such
default or (ii) the Trustee shall have received written
notice thereof from the Company, from any Holder, from
the holder of any such Indebtedness or from the trustee
under any such mortgage, indenture or other instrument;
(f) the entry by a court having jurisdiction in
the premises of (i) a decree or order for relief in
respect of the Company in an involuntary case or
proceeding under the Bankruptcy Code or any applicable
Federal or state bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree or order
adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable
Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any
substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(g) the commencement by the Company of a voluntary
case or proceeding under the Bankruptcy Code or any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in
an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable
federal or State law, or the consent by it to the
filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of
its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as
they become due and its willingness to have a case
commenced against it or to seek an order for relief
under the Bankruptcy code or any applicable bankruptcy,
insolvency or other similar law or the taking of
corporate action by the Company in furtherance of any
such action.
SECTION 5.02. Acceleration of Maturity;
Rescission and Annulment. If an Event of Default (other
than an Event of Default specified in Section 5.01(a), (b),
(f) and (g)) occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities may declare
the principal amount of all the Securities to be due and
payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) and
any accrued interest and any unpaid Liquidated Damages
thereon shall become immediately due and payable. If an
Event of Default specified in Section 5.01(a) or (b) occurs
and is continuing, the Holder of any Outstanding Security
may, by notice in writing to the Company (with a copy to the
Trustee), declare the principal of such Security to be due
and payable immediately, and upon any such declaration such
principal and (subject to Section 3.07) any accrued interest
and Liquidated Damages thereon shall become immediately due
and payable. If an Event of Default specified in
Sections 5.01(f) and (g) occurs ad is continuing, the
principal and any accrued interest, together with any
Liquidated Damages thereon, on all of the Securities then
Outstanding shall ipso facto become due and payable
immediately without any declaration or other Act on the part
of the Trustee or any Holder.
At any time after such declaration of acceleration
has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as
hereinafter in this Article V provided, the Holders of a
majority in principal amount of the Outstanding Securities,
by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if
(a) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(i) all overdue interest and any Liquidated
Damages thereon on all Securities,
(ii) the principal of any Securities which
have become due otherwise than by such declaration
of acceleration and any interest thereon at the
rate borne by the Securities,
(iii) to the extent that payment of such
interest is lawful, interest upon overdue interest
at a rate per annum equal to the rate otherwise
borne by the Securities plus 1% per annum, and
(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation,
expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default, other than the
nonpayment of the principal of, and any interest on,
Securities which have become due solely by such
declaration of acceleration, have been cured or waived
as provided in Section 5.13.
No such rescission or annulment shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.03. Collection of Indebtedness and
Suits for Enforcement by Trustee. The Company covenants
that if
(a) default is made in the payment of any interest
on any Security when such interest becomes due and
payable and such default continues for a period of 30
days, or
(b) default is made in the payment of the
principal of any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole
amount then due and payable on such Securities for principal
and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any
overdue principal and on any overdue interest, at a rate of
5.25% per annum, and in addition thereto, such further
amount as shall be sufficient to cover the costs and
expenses of collection, including amounts due the Trustee
and any predecessor Trustee under Section 6.07.
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid,
may prosecute such proceeding to judgment or final decree
and may enforce the same against the Company or any other
obligor upon the Securities and collect the moneys adjudged
or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing,
the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of
Securities by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any
other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim.
(a) 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 either of their creditors, the Trustee
(irrespective of whether the principal of, and any interest
on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the
Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount
of principal and interest owing and unpaid in respect
of the Securities and to file such other papers or
documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements
and advances of the Trustee and each predecessor
Trustee, its agents and counsel) and of the Holders of
Securities allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claim and
to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder of Securities
by his acceptance thereof 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 of
Securities, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and
advances of the Trustee, and each predecessor Trustee, its
agents and counsel and any other amounts due the Trustee
under Section 6.07.
Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder of a Security any plan of
reorganization, arrangement, adjustment, or composition
affecting the Securities or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim
of any Holder of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such
Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other
similar committee.
(b) If, as of the third day prior to the bar date
for filing proofs of claim in connection with any
bankruptcy, reorganization or similar judicial proceeding
relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other
obligor, the Trustee has failed to file such proofs of claim
under subparagraph (a) of this Section for any and all
amounts owing and unpaid in respect of the Securities, the
holders of Senior Debt shall be entitled and empowered to
file proofs of claim on behalf of the Trustee in accordance
with subparagraph (a) of this Section.
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Securities. All rights of action and claims
under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, and
each predecessor Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect
of which judgment has been recovered.
SECTION 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article V shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or
interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under Section 6.07; and
SECOND: Subject to Article XIII, to the payment
of the amounts then due and unpaid for principal of and
interest (including Liquidated Damages, if any) on the
Securities in respect of which or for the benefit of
which such money has been collected, ratably, without
preference or priority of any kind, according to the
amounts due and payable on such Securities for
principal and interest, respectively.
SECTION 5.07. Limitation on Suits. No Holder of
any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee indemnity satisfactory to it against the costs,
expenses and liabilities to be incurred in compliance
with such request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-
day period by the Holders of a majority in aggregate
principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or seek to obtain
priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all
such Holders.
SECTION 5.08. Unconditional Right of Holders to
Receive Principal and Interest and to Convert.
Notwithstanding any other provision in this Indenture, but
subject to the provisions of Article XIII, the Holder of any
Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and
(subject to Section 3.07) interest on such Security on the
respective Stated Maturities expressed in such Security (or,
in the case of redemption or repurchase, on the Redemption
Date or Repurchase Date, as the case may be), and to convert
such Security in accordance with Article XII; provided that
such Holder delivers the conversion notice required by
Section 12.02, and to institute suit for the enforcement of
any such payment and right to convert, and such rights shall
not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted
any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders of Securities shall be
restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies
of the Trustee and such Holders shall continue as though no
such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen
Securities in the last paragraph of Section 3.06, no right
or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive
of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or
remedy.
SECTION 5.11. Delay or Omission Not Waiver. No
delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Holders of
Securities may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders
of Securities, as the case may be.
SECTION 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the
Outstanding Securities shall, subject to Section 6.03(e),
have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the
Trustee; provided that such direction shall not be in
conflict with any rule of law or with this Indenture, and
provided further that (subject to the provisions of
Sections 6.01 and 6.03) the Trustee shall have the right to
decline to follow any such direction if (a) the Trustee,
being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken, (b) the
Trustee by its board of directors or the executive committee
thereof or a trust committee of its directors and/or
Responsible Officers shall determine that the action or
proceedings so directed would involve the Trustee in
personal liability or (c) the Trustee shall so determine
that the actions or forbearances specified in or pursuant to
such direction would be unduly prejudicial to the interests
of Holders of the Securities not joining in the giving of
said direction, it being understood that (subject to
Sections 6.01 and 6.03) the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right
of the Trustee to take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The
Holders of not less than a majority in principal amount of
the Outstanding Securities may on behalf of the Holders of
all the Securities waive any past default hereunder and its
consequences, except a default (1) in the payment of the
principal of or interest on any Security, or (2) in respect
of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the
Holders of each Outstanding Security affected.
Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties
to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit
instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate
principal amount of the Outstanding Securities, or to any
suit instituted by any Holder of any Security for the
enforcement of the payment of the principal of or interest
on any Security on or after the respective Stated Maturity
or Maturities expressed in such Security (or, in the case of
redemption or repurchase, on or after the Redemption Date or
the Repurchase Date, as the case may be) or for the
enforcement of the right to convert any Security in
accordance with Article XII.
SECTION 5.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or
in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and
Responsibilities. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(b) Except during the continuance of an Event of
Default,
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on 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; but in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture.
(c) No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its
own wilful misconduct, except that
(i) this paragraph (c) shall not be construed to
limit the effect of paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;
and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of
such funds or indemnity satisfactory to it against such
risk or liability is not assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
SECTION 6.02. Notice of Defaults. Within 90 days
after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Security Register,
notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived;
provided, however, that except in the case of a default in
the payment of the principal of (or premium, if any) or
interest on any Security, 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 Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in
the interest of the Holders of the Securities; and provided,
further, that in the case of any default of the character
specified in Section 5.01(4), no such notice to Holders of
Securities shall be given until at least 30 days after the
occurrence of such default. For the purpose of this
Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event
of Default.
SECTION 6.03. Certain Rights of Trustee. Subject
to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any Board Resolution,
resolution, Officers' Certificate, other certificate,
statement, instrument, Opinion of Counsel, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the
Board of Directors of the Company shall be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an
Officers' Certificate or an Opinion of Counsel;
(d) the Trustee may consult with counsel (at the
expense of the Company) and the advice of such counsel or
any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders
of Securities pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or
indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents, attorneys, custodians or
nominees and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney,
custodian or nominee appointed with due care by it
hereunder.
SECTION 6.04. Not Responsible for Recitals or
Issuance of Securities. The recitals contained herein and
in the Securities (except the Trustee's certificates of
authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the
proceeds thereof.
SECTION 6.05. May Hold Securities, Act as Trustee
Under Other Indentures. The Trustee, any Authenticating
Agent, any Paying Agent, any Conversion Agent or any other
agent of the Company or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company with the
same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent,
Security Register or such other agent.
SECTION 6.06. Money Held in Trust. Money held by
the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed
with the Company.
SECTION 6.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse each of the Trustee and any predecessor
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by it in
accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and
disbursements of its agents and counsel), except to the
extent any such expense, disbursement or advance may be
attributable to its own negligence or bad faith; and
(3) to indemnify each of the Trustee and any
predecessor Trustee for, and to hold it harmless against,
any loss, liability or expense, arising out of or in
connection with the acceptance or administration of the
trust or trusts hereunder or the performance of its duties
hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its power or duties
hereunder and the cost and expenses of enforcing this right
of indemnity, except to the extent any such loss, liability
or expense is due to its own negligence, willful misconduct
or bad faith.
To ensure the performance of the obligations of
the Company under this Section, the Trustee shall have a
senior claim to which the Securities are hereby made
subordinate upon all property and funds held or collected by
the Trustee as such, except property and funds held in trust
for the payment of principal of, premium, if any, or
interest on particular Securities.
Without limiting any rights available to the
Trustee under applicable law, when the Trustee incurs
expenses or renders services in connection with an Event of
Default specified in Section 5.01(f) or Section 5.01(g), the
expenses (including the reasonable charges and expenses of
its counsel) and compensation for the services are intended
to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other
similar law.
The provisions of this Section shall survive the
termination of this Indenture and the resignation or removal
of the Trustee.
SECTION 6.08. Corporate Trustee Required;
Eligibility. There shall at all times be a Trustee
hereunder which shall be a corporation organized and doing
business under the laws of the United States of America, any
state thereof, or the District of Columbia, authorized under
such laws to exercise corporate trust powers, having a
combined capital and surplus of at least U.S. $50,000,000,
subject to supervision or examination by Federal or state
authority, in good standing and having an established place
of business or an agent with an established place of
business in The City of New York. If such corporation
publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section,
the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 6.09. Resignation and Removal;
Appointment of Successor. (a) No resignation or removal of
the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by this
Section 6.09 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by an
Act of the Holders of a majority in principal amount of the
Outstanding Securities, delivered to the Trustee and the
Company.
(d) If at any time:
(i) the Trustee shall fail to comply with
Section 310(b) of the Trust Indenture Act after
written request therefor by the Company or by any
Holder who has been a bona fide Holder of a
Security for at least six months, or
(ii) the Trustee shall cease to be eligible
under Section 6.08 and shall fail to resign after
written request therefor by the Company or by any
Holder, or
(iii) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer
shall take charge or control of the Trustee or of
its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution
may remove the Trustee, or (ii) subject to Section 5.14, any
Holder of a Security who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in
the office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of this
Section 6.09. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy,
a successor Trustee shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with
the applicable requirements of this Section 6.09, become the
successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or the Holders of
Securities and accepted appointment in the manner required
by this Section 6.09, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor Trustee to all Holders of
Securities by mailing written notice of such event by first-
class mail, postage prepaid, to all Holders of Securities as
their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee
and the address of its Corporate Trust Office.
SECTION 6.10. Acceptance of Appointment by
Successor. Every successor Trustee appointed hereunder
shall execute, acknowledge and deliver to the Company and to
the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Company
or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor
Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be eligible under this Article.
Upon the acceptance of appointment by any
successor Trustee, all fees, charges and expenses of the
retiring Trustee shall become immediately due and payable
upon the rendering of a statement thereof.
SECTION 6.11. Merger, Conversion, Consolidation
or Succession to Business. Any corporation into which the
Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder; provided such
corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.
SECTION 6.12. Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents acceptable to
the Company with respect to the Securities which shall be
authorized to act on behalf of the Trustee to authenticate
Securities issued upon exchange or substitution pursuant to
this Indenture. Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by
the Trustee hereunder, and every reference in this Indenture
to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication shall
be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall at
all times be a corporation organized and doing business
under the laws of the United States of America or any State
thereof and authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus
of not less than U.S. $50,000,000 or its equivalent (or its
parent holding company has a combined capital and surplus of
not less than U.S. $50,000,000 or its equivalent) in another
currency or composite currencies and subject to supervision
or examination by government authority. If such
Authenticating Agent (or its parent holding company)
publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or
examining authority, then for the purposes of this
Section 6.12, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect
specified in this Section 6.12.
Any corporation into which an Authenticating Agent
may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating
Agent; provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of
any paper or any further act on the part of the Trustee or
the Authenticating Agent.
An Authenticating Agent may resign at any time by
giving written notice thereof to the Trustee and to the
Company. The Trustee may at any time terminate the agency
of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to
the Company. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of
this Section 6.12.
If an Authenticating Agent is appointed with
respect to the Securities pursuant to this Section 6.12, the
Securities may have endorsed thereon, in addition to or in
lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: Harris Trust and Savings Bank,
as Trustee,
by Authenticating Agent (or
authorized representative), as
Authenticating Agent,
by ___________________________
Authorized Signatory
ARTICLE VII
Holder's Lists and Reports by Trustee and Company
SECTION 7.01. Company to Furnish Trustee Names
and Addresses of Holders. The Company will furnish or cause
to be furnished to the Trustee
(a) semiannually, not more than 15 days after the
Regular Record Date, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of such
Regular Record Date, and
(b) at such other times as the Trustee may
reasonably request in writing, within 30 days after the
receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15
days prior to the time such list is furnished;
excluding from any such list names and addresses received by
the Trustee in its capacity as Security Registrar.
SECTION 7.02. Preservation of Information;
Communications to Holders. (a) The Trustee shall preserve,
in as current a form as is reasonably practicable, the names
and addresses of Holders contained in the most recent list
furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders received by the Trustee in
its capacity as Security Registrar. The Trustee may destroy
any list furnished to it pursuant to Section 7.01 upon
receipt of a new list so furnished.
(b) The rights of Holders to communicate with
other Holders with respect to their rights under this
Indenture or under the Securities, and the corresponding
rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act for holders of securities issued
under an indenture qualified pursuant to the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any agent of
either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act or the
Code.
SECTION 7.03. Reports by the Company. (a) The
Company shall file with the Trustee, within 15 days after
the Company is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by
rules and regulations prescribe) which the Company is
required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. In the event the Company is
not subject to Section 13 or 15(d) of the Exchange Act, it
shall file with the Trustee upon request the information
required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
(b) The Company shall file with the Trustee such
additional information, documents and reports with respect
to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be requested
from time to time by the Trustee.
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 8.01. Company May Consolidate, etc., Only
on Certain Terms. The Company shall not consolidate with or
merge into any other Person or, directly or indirectly,
convey, transfer, sell or lease or otherwise dispose of all
or substantially all of its properties and assets to any
Person (other than a wholly owned subsidiary), and the
Company shall not permit any Person (other than a wholly
owned Subsidiary of the Company) to consolidate with or
merge into the Company or convey, transfer, sell or lease
all or substantially all of its properties and assets to the
Company, unless:
(a) in case the Company shall consolidate with or
merge into another Person or convey, transfer, sell or
lease all or substantially all of its properties and
assets to any Person, the Person formed by such
consolidation or into which the Company is merged or
the Person which acquires by conveyance, transfer or
sale, or which leases, all or substantially all of the
properties and assets of the Company shall be a
corporation, partnership or trust, shall be organized
and validly existing under the laws of the United
States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the
Trustee, the due and punctual payment of the principal
of and interest (including Liquidated Damages) on all
of the Securities, as applicable, and the performance
or observance of every covenant of this Indenture on
the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance
with Section 12.12;
(b) immediately after giving effect to such
transaction and treating any indebtedness which becomes
an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by
the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an
Event of Default, shall have happened and be
continuing; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer, sale or lease and, if a supplemental
indenture is required in connection with such
transaction, such supplemental indenture comply with
this Article VIII and that all conditions precedent
herein provided for relating to such transaction have
been complied with.
SECTION 8.02. Successor Substituted. Upon any
consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer, sale or
lease of all or the properties and assets of the Company in
accordance with Section 8.01, the successor Person formed by
such consolidation or into which the Company is merged or to
which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named
as the Company herein, and thereafter the predecessor Person
shall be relieved of all obligations and covenants under
this Indenture and the Securities.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without
Consent of Holders of Securities. Without the consent of
any Holders of Securities, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental
hereto, for any of the following purposes:
(a) to evidence the succession of another Person
to the Company and the assumption by any such successor
of the covenants and obligations of the Company herein
and in the Securities as permitted by this Indenture;
or
(b) to add to the covenants of the Company for the
benefit of the Holders of Securities, or to surrender
any right or power herein conferred upon the Company;
or
(c) to secure the Securities; or
(d) to modify the restrictions on, and procedures
for, resale and other transfers of the Securities to
the extent required by any change in applicable law or
regulation (or the interpretation thereof) or in
practice relating to the resale or transfer of
restricted securities generally; or
(e) to make provision with respect to the
conversion rights of Holders of Securities pursuant to
Section 12.12; or
(f) to accommodate the issuance, if any, of
Securities in book-entry or definitive form and matters
related thereto which do not adversely affect the
interest of the Holders of Securities; or
(g) to comply with any requirements of the
Commission in order to effect and maintain the
qualification of this Indenture under the Trust
Indenture Act; or
(h) to cure any ambiguity, to correct or
supplement any provision herein, which may be
inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions
with respect to matters or questions arising under this
Indenture as the Company and the Trustee may deem
necessary or desirable; provided that such action
pursuant to this clause (h) shall not adversely affect
the interests of the Holders of Securities in any
material respect.
Upon Company Request, accompanied by a Board Resolution
authorizing the execution of any such supplemental
indenture, and subject to and upon receipt by the Trustee of
the documents described in Section 9.03 hereof, the Trustee
shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms
of this Indenture and any further appropriate agreements and
stipulations which may be therein contained.
SECTION 9.02. Supplemental Indentures with
Consent of Holders of Securities. With the consent of the
Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner
the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental
indenture shall, without the consent or affirmative vote of
the Holder of each Outstanding Security affected thereby,
(i) change the Stated Maturity of the principal
of, or any installment of interest on, any Security, or
reduce the principal amount thereof or the rate of
interest payable thereon or any premium payable upon
redemption or mandatory repurchase thereof, or change
the coin or currency in which any Security or the
interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the
case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date, as the case may be)
or, except as permitted by Section 12.12, adversely
affect the right to convert any Security as provided in
Article XII, or modify the provisions of this Indenture
with respect to the subordination of the Securities in
a manner adverse to the Holders of Securities, or
(ii) reduce the requirements of Section 10.04 for
quorum or voting, or reduce the percentage in aggregate
principal amount of the Outstanding Securities the
consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders
is required for any waiver provided for in this
Indenture, or
(iii) modify any of the provisions of this Section,
Section 5.13 or Section 10.11, except to increase any
percentage contained herein or therein or to provide
that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby, or
(iv) modify any provisions of Article XII, XIII or
XIV in a manner adverse to the Holders.
It shall not be necessary for any Act of Holders
of Securities under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental
Indentures. In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by
this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully
protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is
authorized or permitted by this Indenture and an Officers'
Certificate to the effect that all conditions precedent have
been satisfied. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part
of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 9.05. Reference in Securities to
Supplemental Indentures. Securities authenticated and
delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the
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 Company and
the Trustee, 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.
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of
and interest on the Securities in accordance with the terms
of the Securities and this Indenture.
SECTION 10.02. Maintenance of Offices or
Agencies. The Company hereby appoints the principal
corporate trust office of the Trustee (or its agent in The
City of New York) as its agent in The City of New York where
Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of
transfer or exchange, where conversion notices, certificates
and other items required to be delivered to effect
conversion may be delivered and where notices and demands to
or upon the Company in respect of the Securities and this
Indenture may be served.
The Company hereby appoints the principal
corporate trust office of the Trustee (or its agent in The
City of New York) as Paying Agent for the payment of
principal of and interest on the Securities and as
Conversion Agent for the Conversion of any of the Securities
in accordance with Article XII, and appoints such office of
the Trustee or its agent in the City of New York as transfer
agent where Securities may be surrendered for registration
of transfer or exchange.
The Company may at any time and from time to time
vary or terminate the appointment of any such agent or
appoint any additional agents with or without cause for any
or all of such purposes; provided, however, that until all
of the Securities have been delivered to the Trustee for
cancelation, or moneys sufficient to pay the principal of
and interest on the Securities have been made available for
payment and either paid or returned to the Company pursuant
to the provisions of Section 10.03, the Company will
maintain (i) in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may
be surrendered for registration of transfer or exchange,
where Securities may be surrendered for conversion and where
notices and demands to or upon the Company, in respect of
the Securities and this Indenture may be served, and
(ii) subject to any laws or regulations applicable thereto,
in any city in a Western European country, an office or
agency where Securities may be presented and surrendered for
payment and where Securities may be presented for
registration of transfer or exchange or conversion thereof.
The Company will give prompt written notice to the Trustee,
and will give notice to Holders of Securities in the manner
specified in Section 1.05, of the appointment or termination
of any such agents and of the location and any change in the
location of any such office or agency.
If at any time the Company shall fail to maintain
any such required office or agency, or shall fail to furnish
the Trustee with the address thereof, presentations and
surrenders may be made and notices and demands may be served
on and Securities may be surrendered for conversion to the
Corporate Trust Office of the Trustee, and the Company
hereby appoints the same as its agent to receive such
respective presentations, surrenders, notices and demands.
SECTION 10.03. Money for Security Payments To Be
Held in Trust. If the Company at any time shall act as its
own Paying Agent, it will, on or before each due date of the
principal of or interest on any of the Securities, segregate
and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and the Company
will promptly notify the Trustee of its action or failure so
to act.
Whenever the Company shall have one or more Paying
Agents, it will, prior to or on each due date of the
principal of or interest on any Securities, deposit with a
Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal or
interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of any failure so
to act.
The Company will cause each Paying Agent other
than the Trustee or affiliate of the Trustee to execute and
deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of
the principal of or interest on Securities in trust for
the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee written notice of any default
by the Company (or any other obligor upon the
securities) in the making of any payment of principal
or interest; and
(c) at any time during the continuance of any such
default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust
by such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or by Company Order direct
any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment
of the principal of or interest on (together with any
Liquidated Damages in respect thereof) any Security and
remaining unclaimed for two years after such principal or
interest (together with any Liquidated Damages in respect
thereof) has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such
Security shall thereafter, as a general unsecured creditor,
look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect
to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before making any
such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in the Borough
of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then
remaining will be repaid to the Company; and provided
further that any such publication shall not relieve the
Trustee or any Paying Agent of their obligation to pay any
amounts to the Company in the manner provided in this
Section 10.03.
SECTION 10.04. Corporate Existence. Subject to
Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and
statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or
franchise if the Board of Directors of the Company shall
determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.05. Maintenance of Properties. The
Company will cause all material properties used or useful in
the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary
equipment and will cause to be made (subject, however, to
any limitations on expenditures in any document evidencing
and/or securing Senior Debt) all necessary repairs,
renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at
all times; provided, however, that nothing in this
Section 10.05 shall prevent the Company from discontinuing
the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of
any Subsidiary and not disadvantageous in any material
respect to the Holders.
SECTION 10.06. Compliance with Laws. The Company
will comply, and cause each Subsidiary to comply, with the
requirements of all applicable laws, ordinances, rules,
regulations, and requirements of any governmental authority
(including, without limitation, ERISA and the rules and
regulations thereunder), except where the necessity of
compliance therewith is contested in good faith by
appropriate proceedings or where the failure to comply would
not have a material adverse effect upon the Company and its
Subsidiaries taken as a whole.
SECTION 10.07. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the
income, profits or property of the Company or any
Subsidiary, and (b) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate
proceedings.
SECTION 10.08. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act or is exempt therefrom, upon the
request of a Holder of a Restricted Security or the holder
of Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder of Restricted
Securities or such holder of Common Stock issued upon
conversion of Restricted Securities, or to a prospective
purchaser of such security designated by any such Holder or
holder, as the case may be, to the extent required to permit
compliance by such holder with Rule 144A under the
Securities Act (or any successor provision thereto) in
connection with the resale of such Security by such Holder;
provided, however, that the Company shall not be required to
furnish such information in connection with any request made
on or after the date which is two years from the later of
(i) the date such a security (or any predecessor security)
was acquired from the Company or (ii) the date such a
security (or any predecessor security) was last acquired
from the Company or an "affiliate" of the Company within the
meaning of Rule 144 under the Securities Act (or any
successor provision thereto); and provided further that the
Company shall not be required to furnish such information at
any time to a prospective purchaser located outside the
United States who is not a "U.S. Person" within the meaning
of Regulation S under the Securities Act if such Security
may then be sold to such prospective purchaser in accordance
with Rule 904 under the Securities Act (or any successor
provision thereto). "Rule 144A Information" shall be such
information as is specified pursuant to Rule 144A(d)(4)
under the Securities Act (or any successor provision
thereto).
SECTION 10.09. Statement by Officers as to
Default. The Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of
the Officers signing such certificate, with a view to
determining whether any default exists in the performance
and observance of any of the terms, provisions and
conditions of this Indenture and whether the Company has
observed, performed and fulfilled its obligations under this
Indenture. If the Officers signing the Certificate know of
such a default, the Officers' Certificate shall describe
such default and its status with particularity. The Company
shall also promptly notify the Trustee if the Company's
fiscal year is changed so that the end thereof is on any
date other than the then current fiscal year end date.
The Company will also deliver to the Trustee,
forthwith upon any Officer becoming aware of any Event of
Default, an Officers' Certificate specifying with
particularity such default or Event of Default and further
stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this
Section 10.09 shall be delivered to the Trustee at its
Corporate Trust Office and need not comply with
Section 1.04.
SECTION 10.10. Resale of Certain Securities.
During the period beginning on September 10, 1997, and
ending on September 10, 2000, the Company will not, and will
not permit any of its "affiliates" (as defined under
Rule 144 under the Securities Act or any successor provision
thereto) to, resell (x) any Securities which constitute
"restricted securities" under Rule 144 or (y) any securities
into which such Securities have been converted under this
Indenture, which constitute "restricted securities" under
Rule 144 that in either case have been reacquired by any of
them. The Trustee shall have no responsibility in respect
of the Company's performance of its agreement in the
preceding sentence.
SECTION 10.11. Waiver of Certain Covenants. The
Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 10.05 or
10.06 if before the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding
Securities (or such lesser amount as shall have acted at a
meeting pursuant to the provisions of this Indenture) shall
either waive such compliance in such instance or generally
waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any
such covenant or condition shall remain in full force and
effect.
SECTION 10.12. Registration Rights. The holders
of the Securities and the Common Stock issuable upon
conversion thereof are entitled to the benefits of a
Registration Rights Agreement, dated as of September 4,
1997, between the Company and Goldman, Sachs & Co., Morgan
Stanley & Co. Incorporated, Bear, Stearns & Co. Inc. and
Salomon Brothers Inc (the "Registration Rights Agreement").
Whenever in this Indenture there is mentioned, in
any context, the payment of the principal of, premium, if
any, or interest on, or in respect of, any Security, such
mention shall be deemed to include mention of the payment of
Liquidated Damages provided for in this Section to the
extent that, in such context, Liquidated Damages are, were
or would be payable in respect thereof pursuant to the
provisions of this Section and express mention of the
payment of Liquidated Damages (if applicable) in any
provisions hereof shall not be construed as excluding
Liquidated Damages in those provisions hereof where such
express mention is not made.
SECTION 10.13. Book-Entry System. If the
Securities cease to trade in the U.S. Depository's
book-entry settlement system, the Company covenants and
agrees that it shall use reasonable efforts to make such
other book-entry arrangements that it determines are
reasonable for the Securities.
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption. The
Securities shall be redeemable at the Company's option, in
whole or in part, under the circumstances and at the
Redemption Prices specified in the form of Securities set
forth in Sections 2.02 and 2.03.
SECTION 11.02. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted or required by any provision of the Securities or
this Indenture, shall be made in accordance with such
provision and this Article XI.
SECTION 11.03. Election To Redeem; Notice to
Trustee. The election of the Company to redeem any
Securities pursuant to Section 11.01 shall be evidenced by a
Board Resolution. In the case of any redemption at the
election of the Company of all of the Securities, the
Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing
of such Redemption Date. If the Securities are to be
redeemed pursuant to an election of the Company which is
subject to a condition specified in the forms of Securities
set forth in Section 2.02, the Company shall furnish the
Trustee with (a) an Officers' Certificate stating that the
Company is entitled to effect such redemption and setting
forth a statement of facts demonstrating the same and (b) an
Opinion of Counsel to the effect that the Company is
entitled to effect such redemption, and such redemption is
not otherwise in violation of any provisions of Senior Debt.
SECTION 11.04. Notice of Redemption. Notice of
redemption shall be given in the manner provided in
Section 1.05 to the Holders of Securities to be redeemed.
Notice shall be given at least once not less than 30 nor
more than 60 days prior to the Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price, and the amount of
accrued interest, if any;
(c) that on the Redemption Date the Redemption
Price, and accrued interest, if any, will become due
and payable, and that interest thereon shall cease to
accrue on and after said date;
(d) the Conversion Price, the date on which the
right to convert the Securities will terminate and the
places where the Securities may be surrendered for
conversion; and
(e) the place or places where the Securities are
to be surrendered for payment of the Redemption Price
and accrued interest, if any.
Notice of redemption of Securities to be redeemed
at the election of the Company shall be given by the Company
or, at the Company's request, by the Trustee in the name of
and at the expense of the Company, and such notice, when
given to the Holders, shall be irrevocable.
SECTION 11.05. Deposit of Redemption Price. At
least one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as Paying Agent,
segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date other than any Securities
called for redemption on that date which have been converted
prior to the date of such deposit.
If any Security called for redemption is
converted, any money deposited with the Trustee or with a
Paying Agent or so segregated and held in trust for the
redemption of such Security shall (subject to any right of
the Holder of such Security or any Predecessor Security to
receive interest as provided in the last paragraph of
Section 3.07) be paid to the Company on Company Request or,
if then held by the Company, shall be discharged from such
trust.
SECTION 11.06. Securities Payable on Redemption
Date. Notice of redemption having been given as aforesaid,
the Securities so to be redeemed shall, on the Redemption
Date, become due and payable at the Redemption Price herein
specified, and from and after such date (unless the Company
shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for
redemption in accordance with said notice, the Holder of
such Security shall be paid the Redemption Price, together
with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity
is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on
the relevant Record Dates according to their terms and the
provisions of Section 3.07.
If any Security called for redemption shall not be
so paid upon surrender thereof for redemption, the principal
shall, until paid, bear interest from the Redemption Date at
the rate of interest borne by the Security.
ARTICLE XII
Conversion of Securities
SECTION 12.01. Conversion Privilege and
Conversion Rate. Subject to and upon compliance with the
provisions of this Article, at any time on or after December
9, 1997, at the option of the Holder thereof, any Security
or any portion of the principal amount thereof which is
$1,000 or any integral multiple of $1,000 in excess thereof,
may be converted at any time after the Non-Conversion Period
(as such term is defined in Section 2.03 hereof) at the
principal amount thereof, or of such portion thereof, into
fully paid and nonassessable Common Stock of the Company
(calculated as to each conversion to the nearest 1/100 of a
share) at the Conversion Rate, determined as hereinafter
provided, in effect at the time of conversion. Such
conversion right shall expire at the close of business on
the redemption date or repurchase date for such Security;
subject, in the case of conversion of a Global Security, to
any applicable book-entry procedures of the Depository for
such conversion. In case a Security or portion thereof is
called for redemption at the election of the Company or is
delivered for repurchase at the option of the Holder, such
conversion right in respect of the Security or portion
thereof so called shall expire at the close of business on
the Redemption Date or the Repurchase Date, unless the
Company defaults in making the payment due upon redemption
or the repurchase, as the case may be (subject as aforesaid
to any applicable book-entry procedures).
The rate at which Common Stock shall be delivered
upon conversion (herein called the "Conversion Rate") shall
be initially 13.836 shares of Common Stock for each
U.S.$1,000 principal amount of Securities. The Conversion
Rate shall be adjusted in certain instances as provided in
this Article XII. The price at which Common Stock shall be
delivered upon conversion (herein called the "Conversion
Price") shall at any time be equal to U.S. $1,000 divided by
the then applicable Conversion Rate (and rounded to the
nearest cent).
SECTION 12.02. Exercise of Conversion Privilege.
In order to exercise the conversion privilege with respect
to any Security or portion thereof, the Holder of any
Security to be converted or any other person acting on its
behalf shall surrender such Security, duly endorsed or
assigned to the Company or in blank at any office or agency
of the Company maintained for that purpose pursuant to
Section 10.02, accompanied by a duly signed conversion
notice substantially in the form set forth in Annex A
stating that the Holder elects to convert such Security or,
if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted.
Alternatively, if such security is represented by a Global
Security, conversion may be effected by written order given
to the Trustee in accordance with the applicable procedures
of the U.S. Depository then in effect. Each Security
surrendered for conversion (in whole or in part) during the
period from the close of business on any Regular Record Date
next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date shall (except in the
case of any Security or portion thereof which has been
called for redemption on a Redemption Date or repurchase on
a Repurchase Date and, as a result, the right to convert
such Security with respect to which the Holder has exercised
redemption or repurchase rights would terminate during such
period) be accompanied by payment in New York Clearing House
funds or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date
on the principal amount of such Security (or part thereof as
the case may be) being surrendered for conversion. The
interest so payable on such Interest Payment Date in respect
of such Security (or portion thereof, as the case may be)
surrendered for conversion shall be paid to the Holder of
such Security as of such Regular Record Date. Interest
payable in respect of any Security surrendered for
conversion on or after an Interest Payment Date shall be
paid to the Holder of such Security as of the next preceding
Regular Record Date, notwithstanding the exercise of the
right of conversion. Except as provided in this paragraph
and subject to the last paragraph of Section 3.07, no cash
payment or adjustment shall be made on account of any cash
dividends on the Common Stock issued upon conversion or, if
the date of conversion is not an Interest Payment Date, on
account of any interest accrued from the Interest Payment
Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered
for conversion.
Securities shall be deemed to have been converted
immediately prior to the close of business on the day of
surrender of such Securities for conversion in accordance
with the foregoing provisions, and at such time the rights
of the Holders of such Securities as Holders shall cease,
and the Person or Persons entitled to receive the Common
Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common
Stock at such time (unless such Holder shall have so
surrendered such Security and shall have instructed the
Company to effect the conversion on a particular date
following such surrender and such Holder shall be entitled
to convert such Security on such date, in which case such
conversion shall be deemed to be effected immediately prior
to the close of business on such date). As promptly as
practicable on or after the conversion date, the Company
shall issue and deliver, out of its authorized but
previously unissued (or, in the case of treasury stock of
the Company, validly issued) Shares of Common Stock, at the
office of such Conversion Agent a certificate or
certificates for the number of full shares of newly issued
Common Stock issuable upon conversion, together with payment
in lieu of any fraction of a share, as provided in
Section 12.03.
All Common Stock delivered upon such conversion of
Restricted Securities shall bear a restrictive legend
substantially in the form of the legend required to be set
forth on the Restricted Securities pursuant to Section 2.02
and shall be subject to the restrictions on transfer
provided in such legend. Neither the Trustee nor any agent
maintained for the purpose of such conversion shall have any
responsibility for the inclusion or content of any such
restrictive legend on such Common Stock; provided, however,
that the Trustee or any agent maintained for the purpose of
such conversion shall have provided, to the Company or to
the Company's transfer agent for such Common Stock, prior to
or concurrently with a request to the Company to deliver to
such agent maintained for the purpose of such conversion
certificates for such Common Stock, written notice that the
Securities delivered for conversion are Restricted
Securities.
In the case of any Security which is converted in
part only, upon such conversion the Company shall execute
and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in an aggregate
principal amount equal to the unconverted portion of the
principal amount of such Security.
If Common Stock to be issued upon conversion of a
Security, or Securities to be issued upon conversion of a
Security in part only, are to be registered in a name other
than that of the Holder of such Security, the Security
Registrar shall, prior to the conversion of such Security,
record in the Security Register the transfer of that portion
of the Security to be so converted in the name of the person
in whose name such Common Stock or Securities are to be
registered.
SECTION 12.03. Fractions of Common Stock. No
fractional Common Stock or scrip certificates in respect
thereof shall be issued upon conversion of any Security or
Securities. If more than one Security shall be surrendered
for conversion at one time by the same Holder, the number of
full shares which shall be issuable upon conversion thereof
shall be computed on the basis of the aggregate principal
amount of the Securities so surrendered. Instead of any
fractional Common Stock which would otherwise be issuable
upon conversion of any Security or Securities, the Company
shall pay a cash adjustment in respect of such fraction
(calculated to the nearest 1/100 of a share) in an amount in
Dollars equal to the same fraction of the current market
price per Common Share (calculated in accordance with
Section 12.04(h) below) at the close of business on the day
of conversion, or alternatively, at the Company's option,
the Company shall round up the conversion transaction to the
next higher whole share.
SECTION 12.04. Adjustment of Conversion Rate.
The Conversion Rate shall be subject to adjustments from
time to time as follows:
(a) In case at any time after the date hereof,
the Company shall pay or make a dividend or other
distribution on all or any portion of its Common Stock
or shall pay or make a dividend or other distribution
on any other class of capital stock of the Company
which dividend or distribution includes Common Stock,
the Conversion Rate in effect at the opening of
business on the day following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution shall be increased by
dividing such Conversion Rate by a fraction of which
the numerator shall be the number of Common Stock
outstanding at the close of business on the date fixed
for such determination and the denominator shall be the
sum of such number of shares and the total number of
shares constituting such dividend or other
distribution, such increase to become effective
immediately after the opening of business on the day
following the date fixed for such determination. For
the purposes of this paragraph (a), the number of
Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall
include shares issuable in respect of scrip
certificates, if any, issued in lieu of fractions of
Common Stock. If any dividend or distribution of the
type described in this Section 12.04(a) is declared but
not so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate which would then be in
effect if such dividend or distribution had not been
declared.
(b) In case at any time after the date hereof,
the Company shall pay or make a dividend or other
distribution on all of its Common Stock consisting of,
or shall otherwise issue to all holders of its Common
Stock, rights, warrants or options (not being available
on an equivalent basis to Holders of the Securities
upon conversion) entitling the holders of its Common
Stock to subscribe for or purchase Common Stock at a
price per share less than the current market price per
share (determined as provided in paragraph (h) of this
Section 12.04) of the Common Stock on the date fixed
for the determination of shareholders entitled to
receive such rights, warrants or options (other than
pursuant to a dividend reinvestment plan), the
Conversion Rate in effect at the opening of business on
the day following the date fixed for such determination
shall be increased by dividing such Conversion Rate by
a fraction of which the numerator shall be the number
of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number
of Common Stock which the aggregate of the offering
price of the total number of Common Stock so offered
for subscription or purchase would purchase at such
current market price and the denominator shall be the
number of Common Stock outstanding at the close of
business on the date fixed for such determination plus
the number of Common Stock so offered for subscription
or purchase, such increase to become effective
immediately after the opening of business on the day
following the date fixed for such determination. For
the purposes of this paragraph (b), the number of
Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but will
include shares issuable in respect of scrip
certificates, if any, issued in lieu of fractions of
Common Stock. The Company will not issue any rights or
warrants in respect of Common Stock held in the
treasury of the Company (or, if rights or warrants are
issued in respect of all of the Common Stock of the
Company, will not exercise any such rights or warrants
in respect of Common Stock held in the treasury of the
Company). In the event that such rights or warrants
are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be
in effect if such date fixed for the determination of
stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether
any rights or warrants entitle the holders to subscribe
for or purchase shares of Common Stock at less than
such current market price, and in determining the
aggregate offering price of such share of Common Stock,
there shall be taken into account any consideration
received for such rights or warrants, the value of such
consideration, if other than cash, to be determined by
the Board of Directors of the Company.
(c) In case at any time after the date hereof,
all or any portion of the Common Stock outstanding
shall be subdivided into a greater number of Common
Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such
subdivision becomes effective shall be proportionately
increased, and, conversely in case at any time after
the date hereof, all or any portion of the Common Stock
outstanding shall each be combined into a smaller
number of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as
the case may be, to become effective immediately after
the opening of business on the day following the day
upon which such subdivision or combination becomes
effective.
(d) In case at any time after the date hereof,
the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, but
excluding any rights, warrants or options referred to
in paragraph (b) of this Section 12.04, any dividend or
distribution paid exclusively in cash, any dividend or
distribution referred to in paragraph (a) of this
Section 12.04 and any dividend or distribution upon a
merger or consolidation referred to in paragraph (e) of
this Section 12.04), the Conversion Rate shall be
increased so that the same shall equal the rate
determined by dividing the Conversion Rate in effect
immediately prior to the close of business on the date
fixed for the determination of shareholders entitled to
receive such distribution by a fraction of which the
numerator shall be the current market price per share
(determined as provided in paragraph (h) of this
Section 12.04) of the Common Stock on the date fixed
for such determination less the then fair market value
(as determined by the Board of Directors, whose
determination shall be conclusive and described in a
Board Resolution filed with the Trustee) of the portion
of the assets or evidences of indebtedness so
distributed applicable to one Common Share and the
denominator shall be such current market price per
share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business
on the day following the date fixed for the
determination of shareholders entitled to receive such
distribution. If any dividend or distribution of the
type described in this Section 12.04(d) is declared but
not so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate which would be in
effect if such dividend or distribution had not been
declared.
(e) In case at any time after the date hereof,
the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock
consisting exclusively of cash (excluding any cash that
is distributed upon a merger or consolidation or a sale
or transfer of all or substantially all of the assets
of the Company to which Section 12.11 applies or as
part of a distribution referred to in paragraph (d) of
this Section 12.04) in an aggregate amount that,
combined together with (i) the aggregate amount of any
other distributions to all holders of its Common Stock
made exclusively in cash within the 12 months preceding
the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (e)
has been made and (ii) the aggregate of any cash plus
the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Trustee)
of consideration payable in respect of any tender offer
by the Company or any of its Subsidiaries for all or
any portion of the Common Stock concluded within the 12
months preceding the date of payment of such
distribution and in respect of which no adjustment
pursuant to paragraph (f) of this Section 12.04 has
been made, exceeds 12.5% of the product of the current
market price per share of the Common Stock on the date
for the determination of holders of Common Stock
entitled to receive such distribution times the number
of Common Stock outstanding on such date, then, and in
each such case, immediately after the close of business
on such date for determination, the Conversion Rate
shall be increased so that the same shall equal the
rate determined by dividing the Conversion Rate in
effect immediately prior to the close of business on
the date fixed for determination of the shareholders
entitled to receive such distribution by a fraction
(A) the numerator of which shall be equal to the
current market price per share (determined as provided
in paragraph (h) of this Section 12.04) of the Common
Stock on the date fixed for such determination less an
amount equal to the quotient of (x) the excess of such
combined amount over such 12.5% and (y) the number of
shares of Common Stock outstanding on such date for
determination and (B) the denominator of which shall be
equal to the current market price per share (determined
as provided in paragraph (h) of this Section 12.04) of
the Common Stock on such date for determination. If
any dividend or distribution of the type described in
this Section 12.04(e) is declared but not so paid or
made, the Conversion Rate shall again be adjusted to
the Conversion Rate which would be in effect if such
dividend or distribution had not been declared.
(f) In case a tender or exchange offer made by
the Company or any Subsidiary for all or any portion of
the Common Stock shall expire and such tender or
exchange offer (as amended upon the expiration thereof)
shall require the payment to shareholders (based on the
acceptance (up to any maximum specified in the terms of
the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors,
whose determination shall be conclusive and described
in a Board Resolution filed with the Trustee) that
combined together with (i) the aggregate of the cash
plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive
and described in a Board Resolution), as of the
expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or
exchange offer, by the Company or any Subsidiary for
all or any portion of the Common Stock expiring within
the 12 months preceding the expiration of such tender
or exchange offer and in respect of which no
adjustment, pursuant to this paragraph (f) has been
made and (ii) the aggregate amount of any distributions
to all holders of the Company's Common Stock made
exclusively in cash within 12 months preceding the
expiration of such tender or exchange offer and in
respect of which no adjustment pursuant to paragraph
(e) of this Section 12.04 has been made, exceeds 12.5%
of the product of the current market price per share of
the Common Stock (determined as provided in
paragraph (h) of this Section 12.04) as of the last
time (the "Expiration Time") tenders or exchanges could
have been made pursuant to such tender or exchange
offer (as it may be amended) times the number of Common
Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on
the day after the date of the Expiration Time, the
Conversion Rate shall be adjusted so that the same
shall equal the rate determined by dividing the
Conversion Rate immediately prior to the close of
business on the date of the Expiration Time by a
fraction (A) the numerator of which shall be equal to
(1) the product of (x) the current market price per
share of the Common Stock (determined as provided in
paragraph (h) of this Section 12.04) on the date of the
Expiration Time and (y) the number of shares of Common
Stock outstanding (including any tendered or exchanged
shares) on the date of the Expiration Time less (2) the
amount of cash plus the fair market value (determined
as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of
Purchased Shares, and (B) the denominator of which
shall be equal to the product of (x) the current market
price per share of the Common Stock (determined as
provided in paragraph (h) of this Section 12.04) as of
the Expiration Time and (y) the number of shares of
Common Stock outstanding (including any tendered or
exchanged shares) as of the Expiration Time less the
number of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares
deemed so accepted up to any such maximum, being
referred to as the "Purchased Shares"). In the event
that the Company is obligated to purchase shares
pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded,
the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such
tender offer had not been made.
(g) The reclassification of Common Stock into
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to
which Section 12.11 applies) shall be deemed to involve
(i) a distribution of such securities other than Common
Stock to all holders of Common Stock (and the effective
date of such reclassification shall be deemed to be
"the date fixed for the determination of shareholders
entitled to receive such distribution" and "the date
fixed for such determination" within the meaning of
paragraph (c) of this Section 12.04), and (ii) a
subdivision or combination, as the case may be, of the
number of Common Stock outstanding immediately prior to
such reclassification into the number of Common Stock
outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be
"the day upon which such subdivision becomes effective"
or "the day upon which such combination becomes
effective," as the case may be, and "the day upon which
such subdivision or combination becomes effective"
within the meaning of paragraph (3) of this
Section 12.04).
(h) For the purpose of any computation under
paragraphs (b), (d), (e) or (f) of this Section 12.04,
the current market price per share of Common Stock on
any date shall be deemed to be the average of the daily
Closing Prices Per Share for the five consecutive
Trading Days selected by the Company commencing not
more than 10 Trading Days before, and ending not later
than, the earlier of the day in question and the day
before the "ex" date with respect to the issuance or
distribution requiring such computation. For purposes
of this paragraph, the term "'ex' date", when used with
respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way
on the applicable securities exchange or in the
applicable securities market without the right to
receive such issuance or distribution.
(i) No adjustment in the Conversion Rate shall be
required unless such adjustment (plus any adjustments
not previously made by reason of this paragraph (i))
would require an increase or decrease of at least one
percent in such rate; provided, however, that any
adjustments which by reason of this paragraph (i) are
not required to be made shall be carried forward and
taken into account in any subsequent adjustment. In
the case of any adjustment deferred pursuant to this
paragraph (i), the Company shall make appropriate
elections under the Treasury Regulations promulgated
pursuant to Section 305 of the Internal Revenue Code of
1986, as amended.
(j) The Company may make such increases in the
Conversion Rate, for the remaining term of the
Securities or any shorter term, in addition to those
required by paragraphs (a), (b), (c), (d), (e) and (f)
of this Section 12.04, as it considers to be advisable
in order to avoid or diminish any income tax to any
holders of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants
to purchase or subscribe for stock or from any event
treated as such for United States Federal income tax
purposes or for any other reasons. The Company shall
have the power to resolve any ambiguity or correct any
error in this paragraph (j) and its actions in so doing
shall be final and conclusive.
SECTION 12.05. Notice of Adjustments of
Conversion Rate. Whenever the Conversion Rate is adjusted
as herein provided:
(a) the Company shall compute the adjusted
Conversion Rate in accordance with Section 12.04 and
shall prepare a certificate signed by the Treasurer of
the Company setting forth the adjusted Conversion Rate
and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall
forthwith promptly be filed with the Trustee and with
each Conversion Agent; and
(b) a notice stating that the Conversion Rate has
been adjusted and setting forth the adjusted Conversion
Rate shall forthwith be prepared, and as soon as
practicable after it is prepared, such notice shall be
provided by the Company to all Holders in accordance
with Section 1.05.
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 of
Securities desiring inspection thereof at its office during
normal business hours.
SECTION 12.06. Notice of Certain Corporate
Action. In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable
otherwise than in cash out of funds from which such
dividend or other distribution is properly payable; or
(b) the Company shall authorize the granting to
the holders of its Common Stock of rights or warrants
to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of
the Company (other than a subdivision or combination of
its outstanding Common Stock), or of any consolidation,
merger or share exchange to which the Company is a
party and for which approval of any shareholders of the
Company is required, or of any tender offer by the
Company or any Subsidiary for all or any portion of the
Common Stock, or of the conveyance, transfer, sale or
lease of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of
Securities pursuant to Section 10.02, and shall cause to be
provided to all Holders in accordance with Section 1.05, at
least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record or
effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the effective date as of
which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be
determined, or (y) the date on which such reclassification,
consolidation, merger, share exchange, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities, cash
or other property deliverable upon such reclassification,
consolidation, merger, share exchange, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up.
Neither the failure to give such notice or the notice
referred to in the following paragraph nor any defect
therein shall affect the legality or validity of the
proceedings described in clauses (a) through (d) of this
Section 12.06. If at the time the Trustee shall not be the
Conversion Agent, a copy of such notice and any notice
referred to in the following paragraph shall also forthwith
be filed by the Company with the Trustee.
The Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of
Securities pursuant to Section 10.02, and shall cause to be
provided to all Holders in accordance with Section 1.05,
notice of any tender offer by the Company or any Subsidiary
for all or any portion of the Common Stock at or about the
time that such notice of tender offer is provided to the
public generally.
SECTION 12.07. Company To Reserve Common Stock.
The Company shall at all times while any Securities are
Outstanding reserve and keep available, free from preemptive
rights, out of its authorized but previously unissued Common
Stock, for the purpose of effecting the conversion of
Securities, the full number of Common Stock then issuable
upon the conversion of all such Outstanding Securities.
SECTION 12.08 Taxes on Conversions. Except as
provided in the next sentence, the Company will pay any and
all transfer, stamp, documentary and other similar taxes and
duties that may be payable in respect of the issue or
delivery of Common Stock on conversion of Securities
pursuant hereto. A Holder delivering a Security for
conversion will be required to pay any tax or duty which may
be payable in respect of any transfer involved in the issue
and delivery of Common Stock in a name other than that of
the Holder of the Security or Securities to be converted,
and no such issue or delivery shall be made unless and until
the Person requesting such issue has paid to the Company the
amount of any such tax or duty or has established to the
satisfaction of the Company that such tax or duty has been
paid.
SECTION 12.09. Covenant as to Common Stock. The
Company covenants that all Common Stock which may be
delivered upon conversion of Securities will be validly
issued shares and upon such delivery, will have been fully
paid and nonassessable and, except as provided in
Section 12.08, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 12.10. Cancelation of Converted
Securities. All Securities delivered for conversion shall
be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as
provided in Section 3.09.
SECTION 12.11 Provision in Case of Consolidation,
Merger or Conveyance of Assets. In case of any
consolidation of the Company with, or merger of the Company
into or with any other Person, or in case of any sale of all
or substantially all of the assets of the Company, the
Company or the Person formed by such consolidation or the
Person into which the Company shall have been merged or the
Person which shall have acquired such assets, as the case
may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each
Security then outstanding of any series that is convertible
into Common Stock of the Company shall have the right, which
right shall be the exclusive conversion right thereafter
available to said Holder (until the expiration of the
conversion right of such Security), to convert such Security
into the kind and amount of shares of stock or other
securities or property (including cash), if any, receivable
upon such consolidation, merger or sale by a holder of the
number of shares of Common Stock of the Company into which
such Security might have been converted immediately prior to
such consolidation, merger or sale, subject to compliance
with the other provisions of this Indenture, such Security
and such supplemental indenture. Such supplemental
indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in such Security. The above provisions of this
Section shall similarly apply to successive consolidations,
mergers or sales. It is expressly agreed and understood
that anything in this Indenture to the contrary
notwithstanding, if, pursuant to such merger, consolidation
or sale, holders of outstanding shares of Common Stock of
the Company do not receive shares of common stock of the
surviving corporation but receive other securities, cash or
other property or any combination thereof, Holders of
Securities shall not have the right to thereafter convert
their Securities into common stock of the surviving
corporation or the corporation which shall have acquired
such assets, but rather, shall have the right upon such
conversion to receive the other securities, cash or other
property receivable by a holder of the number of shares of
Common Stock of the Company into which the Securities held
by such holder might have been converted immediately prior
to such consolidation, merger or sale, all as more fully
provided in the first sentence of this Section 12.11.
Anything in this Section 12.11 to the contrary
notwithstanding, the provisions of this Section 12.11 shall
not apply to a merger or consolidation of another
corporation with or into the Company pursuant to which both
of the following conditions are applicable: (i) the Company
is the surviving corporation and (ii) the outstanding shares
of Common Stock of the Company are not changed or converted
into any other securities or property (including cash) or
changed in number or character or reclassified pursuant to
the terms of such merger or consolidation.
As evidence of the kind and amount of shares of
stock or other securities or property (including cash) into
which Securities may properly be convertible after any such
consolidation, merger or sale, or as to the appropriate
adjustments of the conversion prices applicable with respect
thereto, the Trustee shall be furnished with and may accept
the certificate or opinion of an independent certified
public accountant with respect thereto; and, in the absence
of bad faith on the part of the Trustee, the Trustee may
conclusively rely thereon, and shall not be responsible or
accountable to any Holder of Securities for any provision in
conformity therewith or approved by such independent
certified accountant which may be contained in said
supplemental indenture.
SECTION 12.12. Responsibility of Trustee for
Conversion Provisions. The Trustee, subject to the
provisions of Section 6.01, and any Conversion Agent shall
not at any time be under any duty or responsibility to any
Holder of Securities to determine whether any facts exist
which may require any adjustment of the Conversion Rate, or
with respect to the nature, extent or amount of any such
adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture
provided to be employed, in making the same, or whether a
supplemental indenture need be entered into. Neither the
Trustee, subject to the provisions of Section 6.01, nor any
Conversion Agent shall be accountable with respect to the
validity or value (or the kind or amount) of any Common
Stock, or of any other securities or property or cash, which
may at any time be issued or delivered upon the conversion
of any Security; and it or they do not make any
representation with respect thereto. Neither the Trustee
nor any Conversion Agent shall be responsible for any
failure of the Company to make any cash payment or to issue,
transfer or deliver any Common Stock or share certificates
or other securities or property or cash upon the surrender
of any Security for the purpose of conversion; and the
Trustee and any Conversion Agent shall not be responsible
for any failure of the Company to comply with any of the
covenants of the Company contained in this Article.
SECTION 12.13. Repayment of Certain Funds Upon
Conversion. Any funds which at any time shall have been
deposited by the Company or on its behalf with the Trustee
or any other paying agent for the purpose of paying the
principal of, and premium, if any, and interest, if any, on
any of the Securities and which shall not be required for
such purposes because of the conversion of such Securities
as provided in this Article XII shall after such conversion
be repaid to the Company by the Trustee upon the Company's
written request.
ARTICLE XIII
Subordination
SECTION 13.01. Securities Subordinate to Senior
Debt. The Company covenants and agrees, and each Holder of
a Security, by his acceptance thereof, likewise covenants
and agrees, that, to the extent and in the manner
hereinafter set forth in this Article (subject to the
provisions of Article IV), the indebtedness represented by
the Securities, and the payment of the principal of,
interest on and all other amounts, if any, owing with
respect to each and all of the Securities are hereby
expressly made subordinate and subject in right of payment
to the prior payment in full in cash or other immediately
available funds of all Senior Debt of the Company.
SECTION 13.02. Payment Over of Proceeds Upon
Dissolution, Etc. In the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or
proceeding 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 creditors or any other marshaling of
assets and liabilities of the Company, then and in any such
event specified in (a), (b) or (c) above (each such event,
if any, herein sometimes referred to as a "Proceeding") the
holders of Senior Debt shall be entitled to receive payment
in full of all amounts due or to become due on or in respect
of all Senior Debt, in cash or other immediately available
funds or provision shall be made for such payment in cash or
other immediately available funds or otherwise in a manner
satisfactory to each holder of Senior Debt with respect to
its indebtedness, before the Holders of the Securities are
entitled to receive any payment or distribution of any kind
or character, whether (i) in cash, property or securities,
on account of principal of, interest on or any other amount,
if any, owing with respect to the Securities or on account
of any purchase or other acquisition of Securities by the
Company or any Subsidiary of the Company, (ii) by way of
cancelation, forgiveness or offset of the indebtedness
evidenced by the Securities against any indebtedness owed by
a Holder to the Company or (iii) payable or deliverable by
reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities
(all such payments, distributions, purchases and
acquisitions herein referred to, individually and
collectively, as a "Securities Payment"), and to that end
the holders of all Senior Debt shall be entitled to receive,
for application to the payment thereof, any Securities
Payment which may be payable or deliverable in respect of
the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of any
Security shall have received any Securities Payment before
all Senior Debt is paid in full in cash or other immediately
available funds or otherwise in a manner satisfactory to
each holder of Senior Debt with respect to its indebtedness,
and if such fact shall, at or prior to the time of such
Securities Payment, have been made actually known to a
Responsible Officer of the Trustee or, as the case may be,
such Holder, then and in such event such Securities Payment
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 Debt, to the extent necessary to pay
all Senior Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of
Senior Debt.
For purposes of this Article only, the words "any
payment or distribution of any kind or character, whether in
cash, property or securities" shall not be deemed to include
a payment or distribution of stock or securities of the
Company provided for by a plan of reorganization or
readjustment giving effect to these subordination provisions
authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any
applicable bankruptcy law or of any other corporation
provided for by such plan of reorganization or readjustment
which stock or securities are subordinated in right of
payment to all then outstanding Senior Debt to substantially
the same extent as the Securities are so subordinated as
provided in this Article, which shall require that (A) the
final maturity of any such subordinated securities shall
exceed the term of the Senior Debt provided for by such plan
of reorganization or readjustment, and there shall not be
any scheduled principal payment in respect of such
subordinated securities prior to that of such Senior Debt
and (B) such subordinated securities shall be unsecured and
unguaranteed. The consolidation of the Company with, or the
merger of the Company into, another Person or the
liquidation or dissolution of the Company following the
conveyance, transfer, sale or lease of all or substantially
all of its properties and assets to another Person upon the
terms and conditions set forth in Article VIII shall not be
deemed a Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which the
Company is merged or the Person which acquires by
conveyance, transfer, sale or lease such properties and
assets, as the case may be, shall, as a part of such
consolidation, merger, conveyance, transfer, sale or lease
comply with the conditions set forth in Article VIII.
SECTION 13.03. No Payment When Senior Debt in
Default. In the event that any Securities are declared or
otherwise shall become due and payable before their Stated
Maturity (including by reason of a Change in Control) and
there shall have occurred (i) a default in the payment of
principal, premium, if any, or interest (including a default
under any repurchase or redemption obligation) with respect
to any Senior Debt or (ii) any other event of default with
respect to any Senior Debt, permitting the holders thereof
to accelerate the maturity thereof, then and in such event
the holders of the Senior Debt outstanding at the time such
Securities so become due and payable shall be entitled to
receive payment in full of all amounts then due on or in
respect of all Senior Debt in cash or other immediately
available funds or otherwise in a manner satisfactory to the
holders of such Senior Debt, before the Holders of the
Securities are entitled to receive any Securities Payment.
In the event and during the continuation of any
default in the payment of any amount owing in respect of any
Senior Debt beyond any applicable grace period with respect
thereto, or in the event that any event of default with
respect to any Senior Debt shall have occurred and be
continuing permitting the holders of such Senior Debt (or a
trustee or other representative on behalf of the holders
thereof) to declare such Senior Debt due and payable prior
to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have
been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or in
the event any judicial proceeding shall be pending with
respect to any such default in payment or event of default,
then no Securities Payment shall be made.
In the event that, notwithstanding the foregoing,
the Company shall make any Securities Payment to the Trustee
or any Holder prohibited by the foregoing provisions of this
Section, and if (1) such fact shall, at or prior to the time
of such Securities Payment, have been made actually known to
a Responsible Officer of the Trustee or, as the case may be,
such Holder or (2) the Securities have been accelerated,
then and in such event such Securities Payment shall be paid
over and delivered forthwith to the Company.
The provisions of this Section shall not apply to
any Securities Payment with respect to which Section 13.02
would be applicable.
SECTION 13.04. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the
Company, at any time except during the pendency of any
proceeding referred to in Section 13.02 or under the
conditions described in Section 13.03, from making
Securities Payments, or (b) the application by the Trustee
of any money deposited with it hereunder to Securities
Payments or the retention of such Securities Payment by the
Holders, if, at the time of such application by the Trustee,
it did not have actual knowledge that such Securities
Payment would have been prohibited by the provisions of this
Article.
SECTION 13.05. Subrogation to Rights of Holders
of Senior Debt. Subject to the payment in full of all
amounts due or to become due on or in respect of Senior
Debt, in cash or other immediately available funds or
otherwise in a manner satisfactory to the holders of Senior
Debt, the Holders of the Securities shall be subrogated to
the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities
applicable to the Senior Debt until the principal of and
interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions
to the holders of the Senior Debt 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, and no payments over pursuant to the provisions of
this Article to the holders of Senior Debt by Holders of the
Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders
of the Securities, be deemed to be a payment or distribution
by the Company to or on account of the Senior Debt.
SECTION 13.06. Provisions Solely To Define
Relative Rights. The provisions of this Article are and are
intended solely for the purpose of defining the relative
rights of the Holders of the Securities on the one hand and
the holders of Senior Debt on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or
in the Securities is intended to or shall (a) impair, as
among the Company, the creditors of the Company other than
holders of Senior Debt and the Holders of the Securities,
the obligation of the Company, which is absolute and
unconditional (and which, subject to the rights under this
Article of the holders of Senior Debt, is intended to rank
equally with all other general obligations of the Company),
to pay to the Holders of the Securities the principal of and
interest on the Securities as and when the same shall become
due and payable in accordance with their terms; or
(b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other
than the holders of Senior Debt; or (c) prevent the Trustee
or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Debt to receive cash,
property and securities otherwise payable or deliverable to
the Trustee or such Holder.
SECTION 13.07. Trustee To Effectuate
Subordination. Each Holder of a Security by his acceptance
thereof authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all
such purposes.
SECTION 13.08. No Waiver of Subordination
Provisions. No right of any present or future holder of any
Senior Debt 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 Debt may, at any
time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination
provided in this Article or the obligations hereunder of the
Holders of the Securities to the holders of Senior Debt, do
any one or more of the following: (a) change the manner,
place or terms of payment or the time of payment of, or
renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt
is outstanding; (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (c) release any Person liable in any
manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against the Company
and any other Person.
SECTION 13.09. Notice to Trustee. The Company
shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any
payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the
Trustee in respect of the Securities, unless and until the
Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee
therefor or representative thereof; and, prior to the
receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least
two Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose
(including, without limitation, the payment of, the
principal of or interest on any Security), then, anything
herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such
money was received and shall not be affected by any notice
to the contrary which may be received by it within two
Business Days prior to such date.
The Trustee shall be entitled to rely conclusively
on the delivery to it of a written notice, and proof of
ownership acceptable to the Trustee, by a Person
representing himself to be a holder of Senior Debt (or a
trustee therefor or representative thereof) to establish
that such notice has been given by a holder of Senior Debt
(or a trustee therefor or representative thereof). 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 Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may
request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt
held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under
this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to
receive such payment.
SECTION 13.10. Reliance on Judicial Order or
Certificate of Liquidating Agent. Upon any payment or
distribution of assets of the Company referred to in this
Article, the Trustee 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 Proceeding is
pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the
benefit of creditors, agent or other Person making such
payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article.
SECTION 13.11. Trustee Not Fiduciary for Holders
of Senior Debt. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt and shall not
be liable to any such holders if it shall in good faith and
absent gross negligence or willful misconduct, 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 Debt shall be entitled by
virtue of this Article or otherwise.
SECTION 13.12. Rights of Trustee as Holder of
Senior Debt; Preservation of Trustee's Rights. The Trustee
in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior
Debt which may at any time be held by it, to the same extent
as any other holder of Senior Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of,
or payments to, the Trustee under or pursuant to
Section 6.07.
SECTION 13.13. Article Applicable to Paying
Agents. In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then
acting hereunder, the term "Trustee" as used in this Article
shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as
if such Paying Agent were named in this Article in addition
to or in place of the Trustee; provided, however, that
Sections 13.09 and 13.12 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECTION 13.14. Subsidiaries. No payment,
distribution of assets or other action may be taken by any
Subsidiary of the Company with respect to the Securities if
the Company would be prohibited by this Article XIII from
taking such action.
SECTION 13.15. Rescission. The provisions of
this Article XIII shall continue to be effective or be
reinstated, as the case may be, if at any time any payment
in respect of any of the Senior Debt is rescinded or must
otherwise be returned by the holder thereof upon the
insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
SECTION 13.16. Payment. For purposes of this
Article XIII, "payment in full" of Senior Debt shall mean
prior payment in full (including payment of reimbursement
obligations under letters of credit) of such Senior Debt
(including all interest accruing after the commencement of
any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowed as a claim in any such
proceeding) in cash or other immediately available funds and
termination, cash collateralization or replacement of
contingent obligations (including all letters of credit
issued thereunder but excluding only any unasserted
indemnity obligations) and termination of all commitments
thereunder.
ARTICLE XIV
Repurchase of Securities at the Option of the
Holder upon a Change in Control
SECTION 14.01. Right to Require Repurchase. In
the event that a Change in Control (as hereinafter defined)
shall occur, then each Holder shall have the right, at the
Holder's option, to require the Company to repurchase, and
upon the exercise of such right the Company shall
repurchase, all of such Holder's Securities, or any portion
of the principal amount thereof that is equal to U.S. $1,000
or any integral multiple of U.S. $1,000 in excess thereof,
on the date (the "Repurchase Date") that is 45 days after
the date of the Company Notice (as defined in Section 14.02)
at a purchase price equal to 100% of the principal amount of
the Securities to be repurchased (the "Repurchase Price")
plus interest accrued to the Repurchase Date; provided,
however, that installments of interest on Securities whose
Stated Maturity is on or prior to the Repurchase Date shall
be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant
Record Date according to their terms and the provisions of
Section 3.07. Such right to require the repurchase of the
Securities shall not continue after a discharge of the
Company from its obligations with respect to the Securities
in accordance with Article IV, unless a Change in Control
shall have occurred prior to such discharge. At the option
of the Company, the Repurchase Price may be paid in cash or,
except as otherwise provided in Section 14.02(j), by
delivery of shares of Common Stock having a fair market
value equal to the Repurchase Price; provided that payment
may not be made in Common Stock unless at the time of
payment such stock is listed on a national securities
exchange or quoted on the Nasdaq National Market. For
purposes of this Section, the fair market value of shares of
Common Stock shall be determined by the Company and shall be
equal to 95% of the average of the Closing Prices Per Share
for the five consecutive Trading Days ending on and
including the third Trading Day immediately preceding the
Repurchase Date. Whenever in this Indenture there is a
reference, in any context, to the principal of any Security
as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such
Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Indenture shall
not be construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is
not made.
SECTION 14.02. Notices; Method of Exercising
Repurchase Right, Etc. (a) Unless the Company shall have
theretofore called for redemption all of the Outstanding
Securities, on or before the 30th day after the occurrence
of a Change in Control, the Company or, at the request and
expense of the Company, the Trustee, shall give to all
Holders of Securities, in the manner provided in
Section 1.05, notice (the "Company Notice") of the
occurrence of the Change in Control and of the repurchase
right set forth herein arising as a result thereof. The
Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be
exercised,
(iii) the Repurchase Price,
(iv) a description of the procedure which a Holder
must follow to exercise a repurchase right, and the
place or places where such Securities are to be
surrendered for payment of the Repurchase Price and
accrued interest, if any,
(v) that on the Repurchase Date the Repurchase
Price, and accrued interest, if any, will become due
and payable upon each such Security designated by the
Holder to be repurchased, and that interest thereon
shall cease to accrue on and after said date,
(vi) the Conversion Rate then in effect, the date
on which the right to convert the principal amount of
the Securities to be repurchased will terminate and the
place or places where such Securities may be
surrendered for conversion, and
(vii) the place or places that the certificate
required by Section 2.03 shall be delivered, and the
form of such certificate.
In addition, at least two Business Days preceding
the Repurchase Date, the Company shall give to all Holders
of the Securities, in the manner provided in Section 1.05,
notice specifying whether the Repurchase Price will be
payable in cash or Common Stock and shall deliver a copy of
such notice to the Trustee.
No failure of the Company to give the foregoing
notices or defect therein shall limit any Holder's right to
exercise a repurchase right or affect the validity of the
proceedings for the repurchase of Securities.
If any of the foregoing provisions or other
provisions of this Article are inconsistent with applicable
law, such law shall govern.
(b) To exercise a repurchase right, a Holder
shall deliver to the Trustee or any Paying Agent on or
before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal
amount of the Securities to be repurchased (and, if any
Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be
repurchased and the name of the Person in which the portion
thereof to remain Outstanding after such repurchase is to be
registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event
that the Repurchase Price shall be paid in Common Stock, the
name or names (with addresses) in which the certificate or
certificates for Common Stock shall be issued, and (ii) the
Securities with respect to which the repurchase right is
being exercised. Such written notice shall be irrevocable,
except that the right of the Holder to convert the
Securities with respect to which the repurchase right is
being exercised shall continue until the close of business
on the Repurchase Date.
(c) In the event a repurchase right shall be
exercised in accordance with the terms hereof, the Company
shall pay or cause to be paid to the Trustee or the Paying
Agent the Repurchase Price in cash or Common Stock, as
provided above, for payment to the Holder on the Repurchase
Date or, if Common Stock are to be paid, as promptly after
the Repurchase Date as practicable, together with accrued
and unpaid interest to the Repurchase Date payable with
respect to the Securities as to which the purchase right has
been exercised; provided, however, that installments of
interest that mature on or prior to the Repurchase Date
shall be payable in cash, in the case of Securities, to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on
the relevant Regular Record Date, in each case according to
the terms and provisions of Article III.
(d) If any Security (or portion thereof)
surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal amount of such Security (or
portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the
Repurchase Date at the rate of 5.25% per annum, and each
Security shall remain convertible into Common Stock until
the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) Any Security which is to be repurchased only
in part shall be surrendered to the Trustee (with, if the
Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Security
without service charge, a new Security or Securities,
containing identical terms and conditions, each in an
authorized denomination in aggregate principal amount equal
to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) Any issuance of Common Stock in respect of
the Repurchase Price shall be deemed to have been effected
immediately prior to the close of business on the Repurchase
Date and the Person or Persons in whose name or names any
certificate or certificates for Common Stock shall be
issuable upon such repurchase shall be deemed to have become
on the Repurchase Date the holder or holders of record of
the shares represented thereby; provided, however, that any
surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the
Person or Persons in whose name or names the certificate or
certificates for such shares are to be issued as the
recordholder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such
stock transfer books are open. No payment or adjustment
shall be made for dividends or distributions on any Common
Stock issued upon repurchase of any Security declared prior
to the Repurchase Date.
(g) No fractions of shares shall be issued upon
repurchase of Securities. If more than one Security shall
be repurchased from the same Holder and the Repurchase Price
shall be payable in Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be
computed on the basis of the aggregate principal amount of
the Securities so repurchased. Instead of any fractional
Common Share which would otherwise be issuable on the
repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current
market value of such fractional share. The current market
value of a fraction of a share is determined by multiplying
the current market price of a full share by the fraction,
and rounding the result to the nearest cent. For purposes
of this Section, the current market price of a Common Share
is the Closing Price Per Share of the Common Stock on the
last Trading Day prior to the Repurchase Date.
(h) Any issuance and delivery of certificates for
Common Stock on repurchase of Securities shall be made
without charge to the Holder of Securities being repurchased
for such certificates or for any tax or duty in respect of
the issuance or delivery of such certificates or the
securities represented thereby; provided, however, that the
Company shall not be required to pay any tax or duty which
may be payable in respect of (i) income of the Holder or
(ii) any transfer involved in the issuance or delivery of
certificates for Common Stock in a name other than that of
the Holder of the Securities being repurchased, and no such
issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has
established, to the satisfaction of the Company, that such
tax or duty has been paid.
(i) If any Common Stock to be issued upon
repurchase of Securities hereunder require registration with
or approval of any governmental authority under any federal
or state law before such shares may be validly issued or
delivered upon repurchase, the Company covenants that it
will in good faith and as expeditiously as possible endeavor
to secure such registration or approval, as the case may be;
provided, however, that nothing in this Section shall be
deemed to affect in any way the obligations of the Company
to repurchase Securities as provided in this Article and if
such registration is not completed or does not become
effective or such approval is not obtained prior to the
Repurchase Date, the Repurchase Price shall be paid in cash.
(j) The Company covenants that all Common Stock
which may be issued upon repurchase of Securities will upon
issue be duly and validly issued and fully paid and
nonassessable.
SECTION 14.03. Certain Definitions. For purposes
of this Article XIV:
(a) the term "beneficial owner" shall be
determined in accordance with Rule 13d-3, as in effect
on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to
the Exchange Act;
(b) a "Change in Control" shall be deemed to have
occurred at the time, after the original issuance of
the Securities, of:
(i) the acquisition by any Person of
beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition
transaction or series of transactions, of shares
of capital stock of the Company entitling such
Person to exercise 50% or more of the total voting
power of all shares of capital stock of the
Company entitled to vote generally in the
elections of directors (any shares of voting stock
of which such person or group is the beneficial
owner that are not then outstanding being deemed
outstanding for purposes of calculating such
percentage) other than any such acquisition by the
Company, any Subsidiary of the Company or any
employee benefit plan of the Company; or
(ii) any consolidation of the Company with, or
merger of the Company into, any other Person, any
merger of another Person into the Company, or any
sale or transfer of all or substantially all of
the assets of the Company to another Person (other
than (a) any such transaction (x) which does not
result in any reclassification, conversion,
exchange or cancelation of outstanding Common
Stock and (y) pursuant to which holders of Common
Stock immediately prior to such transaction have
the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power
of all shares of capital stock entitled to vote
generally in the election of directors of the
continuing or surviving person immediately after
such transaction and (b) any merger which is
effected solely to change the jurisdiction of
incorporation of the Company and results in a
reclassification, conversion or exchange of
outstanding shares of Common Stock into solely
shares of common stock);
provided, however, that a Change in Control shall not
be deemed to have occurred if either (x) the Closing
Price Per Share of the Common Stock for any five
Trading Days within the period of 10 consecutive
Trading Days ending immediately after the later of the
date of the Change in Control or the date of the public
announcement of the Change in Control (in the case of a
Change in Control under clause (i) above) or the period
of 10 consecutive Trading Days ending immediately prior
to the date of the Change in Control (in the case of a
Change in Control under clause (ii) above) shall equal
or exceed 105% of the Conversion Price in effect on
such trading day or (y) all of the consideration
(excluding cash payments for fractional shares) to be
paid for the Common Stock in a transaction or
transactions constituting the Change in Control as
described in clause (ii) above consists of shares of
common stock traded on a national securities exchange
or quoted on the Nasdaq National Market and as a result
of such transaction or transactions the Securities
become convertible solely into such common stock; and
(c) the term "Person" shall include any syndicate
or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on
the date of the original execution of this Indenture.
______________________
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to
be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as
of the day and year first above written.
RITE AID CORPORATION,
by /s/ Elliot S. Gerson
Name: Elliot S. Gerson
Title: Senior Vice President
and General Counsel
Attest:
/s/ Lawrence Gelman
Name: Lawrence Gelman
Title: Secretary
Harris Trust and Savings Bank,
not in its individual capacity
but solely as Trustee,
by /s/ J. Bartolini
Name: J. Bartolini
Title: Vice President
Attest:
/s/ Daniel G. Donovan
Name: Daniel G. Donovan
Title: Assistant Secretary
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1997, before me
personally came to me known, who, being
by me duly sworn, did depose and say that he is
of Rite Aid Corporation, one of the
corporations described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation;
that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he/she signed his
name thereto by like authority.
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1997, before me
personally came , to me known, who, being
by me duly sworn, did depose and say that he/she is
of Harris Trust and Savings Bank, one of
the corporations described in and which executed the
foregoing instrument; that he/she knows the seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he/she
signed his name thereto by like authority.
Notary Public
[Notarial Seal]
ANNEX A
FORM OF CONVERSION NOTICE
[Notice pursuant to Section 12.02 of the Indenture]
[ ],
as Conversion Agent
[ ]
New York, New York [ ]
Re Rite Aid Corporation
5.25% Convertible Subordinated Notes
due September 15, 2002 (the "Securities")
Reference is hereby made to the Indenture, dated
as of September 10, 1997 (the "Indenture"), between Rite Aid
Corporation, as Issuer, and Harris Trust and Savings Bank,
as Trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
This letter relates to the Securities specified
below, which are registered in the name of the undersigned
(the "Holder"). The Holder hereby irrevocably exercises its
right to convert such Securities, or the portion thereof, if
any, specified below, into Common Shares and, except to the
extent specified or required as described below, directs
that certificates representing such Common Shares, together
with any check in payment for a fractional share and any
Security representing any unconverted principal amount, be
issued and delivered through the facilities of the U.S.
Depository, for credit to the account(s) of the Person(s)
indicated below.
The Holder acknowledges and agrees that no Common
Stock will be delivered upon conversion of the specified
Securities during the Non-Conversion Period and no
Common Shares will be delivered on conversion until any
amount payable by the Holder on account of interest is paid,
any certificates evidencing specified Securities not held in
book-entry form are duly endorsed or assigned to the Company
or in blank and surrendered and any taxes or other charges
or documents required in connection with a transfer on
conversion, and any other required items, are delivered to
the Conversion Agent.
The Holder acknowledges and agrees that,
notwithstanding this request for conversion, the Company may
require that the Common Shares delivered on conversion of
the specified Securities be delivered in certificated form
subject to a restrictive legend, or that additional
certifications be delivered on behalf of the relevant
beneficial owner(s), if it determines that doing so is
necessary to comply with the requirements of the Securities
Act or otherwise, as provided in the Indenture.
Conversion of the specified Securities is subject
to the requirements established by the Company as well as to
the procedures of the U.S. Depository, all as in effect from
time to time. The specified Securities will be deemed to
have been converted as of the close of business on the first
day on which this conversion notice and all other required
items have been delivered to the Conversion Agent as
provided above and, upon such conversion, shall cease to
accrue interest or be Outstanding (subject to the Holder's
right to receive the Conversion Securities as provided in
the Indenture). Prior to such conversion, the Holder will
have no rights in the Conversion Securities.
Please provide the information requested below, as
applicable.
1. PLEASE SPECIFY THE SECURITIES HELD AND THE PORTION
THEREOF TO BE CONVERTED:
Principal amount held: U.S. $
CUSIP number(s):
U.S. Depository (DTC) account where held:
Principal amount being converted (if less than all):
U.S. $
2. UNLESS AND TO THE EXTENT OTHERWISE SPECIFIED BELOW, all
Securities (together with any unconverted Securities)
will be delivered in book-entry form to the DTC account
specified in Item 1 above.
3. IF OTHER ARRANGEMENTS ARE DESIRED, please specify the
type, number and form of securities to be delivered on
conversion and the name(s) of the account holder(s) or
registered owner(s), by checking the appropriate boxes
and providing the information requested:
( ) Common Shares
( ) Book-Entry
Number of Common Shares:
DTC Account:
( ) Certificates
Number of Common Shares:
Registered Owner:
( ) Unconverted Securities
( ) Certificates
Principal Amount: U.S. $ *
Registered Owner:
( ) Book-Entry
Principal Amount: U.S. $
* Aggregate principal amount of each certificate must
equal U.S. $1,000 or any amount in excess thereof in
integral multiples of U.S. $1,000.
DTC Account:
Please sign and date this notice in the space
provided below.
DATE:
Name of Holder
Signature(s) of Holder
Title(s):
(If the Holder is a corporation,
partnership or fiduciary, the title
of the Person signing on behalf of
the Holder must be stated.)
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Trustee, which requirements will include membership or
participation in the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP)
and the New York Stock Exchange Medallion Signature Program
(MSP) or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution
for, STAMP, SEMP or MSP, all in accordance with the
Securities Exchange Act of 1934.
Signature Guarantee
ANNEX B
FORM OF TRANSFER CERTIFICATE--
RESTRICTED GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
(Transfers pursuant to Section 3.05(b)(2)
of the Indenture)
Harris Trust and Savings Bank, as Trustee
311 West Monroe Street
Chicago, Illinois 60606
Re Rite Aid Corporation
5.25% Convertible Subordinated Notes
due September 15, 2002 (the "Securities")
Reference is hereby made to the Indenture, dated
as of September 10, 1997 (the "Indenture"), between Rite Aid
Corporation, as Issuer, and Harris Trust and Savings Bank,
as Trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
This letter relates to U.S. $ aggregate
principal amount of Securities which are evidenced by the
Restricted Global Security (CUSIP No. 767754AK0) and held
with the U.S. Depository in the name of [insert name of
transferor] (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the
form of an equal aggregate principal amount of Securities
evidenced by the Regulation S Global Security (CUSIP
No. ) which amount, in the case of transfers during
the Restricted Period, immediately after such transfer, is
to be held with the U.S. Depository through Euroclear or
CEDEL or both.
In connection with such request and in respect of
such Securities, the Transferor does hereby certify that
such transfer has been effected pursuant to and in
accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"),
and accordingly the Transferor does hereby further certify
that:
(a) the offer of the Securities was not made to a
person in the United States;
(b) either:
(i) at the time the buy order was originated,
the transferee was outside the United States or
the Transferor and any person acting on its behalf
reasonably believed that the transferee was
outside the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor
any person acting on its behalf knows that the
transaction was prearranged with a buyer in the
United States;
(c) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable;
(d) the transaction is not part of a plan or
scheme to evade the registration requirements of the
Securities Act; and
(e) upon completion of the transaction, the
beneficial interest being transferred as described
above was held with the U.S. Depository through
Euroclear or CEDEL or both.
This certificate and the statements contained
herein are made for the benefit of the Company and the
Initial Purchasers. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
Dated:
[INSERT NAME OF TRANSFERROR],
by
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of
such registered owner must be
stated.)
ANNEX C
FORM OF TRANSFER CERTIFICATE--
REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY DURING THE
RESTRICTED PERIOD
(Transfers pursuant to Section 3.05(b)(3)
of the Indenture)
Harris Trust and Savings Bank, as Trustee
311 West Monroe Street
Chicago, Illinois 60606
Re Rite Aid Corporation
5.25% Convertible Subordinated Notes
due September 15, 2002 (the
"Securities")
Reference is hereby made to the Indenture, dated
as of September 10, 1997 (the "Indenture"), between Rite Aid
Corporation, as Issuer, and Harris Trust and Savings Bank,
as Trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
This letter relates to U.S. $ aggregate
principal amount of Securities which are evidenced by the
Regulation S Global Security (CUSIP No. U76659AA6) and held
with the U.S. Depository through Euroclear or CEDEL or both
in the name of [insert name of transferor] (the
"Transferor") during the Restricted Period. The Transferor
has requested a transfer of such beneficial interest in the
Securities to a Person that will take delivery thereof in
the form of an equal principal amount of Securities
evidenced by the Restricted Global Security (CUSIP
No. ).
In connection with such request and in respect of
such Securities, the Transferor does hereby certify that
such transfer has been effected pursuant to and in
accordance with Rule 144A under the United States Securities
Act of 1933, as amended, and accordingly the Transferor does
hereby further certify that the Securities are being
transferred to a person that the Transferor reasonably
believes is purchasing the Securities for its own account,
or for one or more accounts with respect to which such
Person exercises sole investment discretion, and such Person
and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A.
This certificate and the statements contained
herein are made for the benefit of the Company and the
Initial Purchaser.
Dated:
[INSERT NAME OF TRANSFERROR],
by
Name:
Title:
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of
such registered owner must be
stated.)
EXECUTION COPY
RITE AID CORPORATION
5.25% CONVERTIBLE SUBORDINATED NOTES
DUE SEPTEMBER 15, 2002
REGISTRATION RIGHTS AGREEMENT
Dated as of
September 4, 1997
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004.
Ladies and Gentlemen:
Rite Aid Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the Purchasers (as
defined herein) upon the terms set forth in a purchase agreement
dated September 4, 1997 (the "Purchase Agreement") between the
Purchasers and the Company, its 5.25% Convertible Subordinated
Notes due September 15, 2002 (the "Securities"). As an
inducement to the Purchasers to enter into the Purchase Agreement
and in satisfaction of a condition to the obligations of the
Purchasers thereunder, the Company agrees with the Purchasers (i)
for the benefit of the Purchasers and (ii) for the benefit of the
holders from time to time of the Securities and the Common Stock,
par value $1.00 per share (the "Stock"), of the Company issuable
upon conversion of the Securities (collectively, the "Registrable
Securities"), including the Purchasers (each of the foregoing a
"Holder" and, together, the "Holders"), as follows:
1. DEFINITIONS. (a) Capitalized terms used herein without
definition shall have their respective meanings set forth in or
pursuant to the Purchase Agreement or the Offering Circular,
dated September 4, 1997 in respect of the Securities. As used in
this Agreement, the following capitalized defined terms shall
have the following meanings:
"Act" or "Securities Act" means the United States Securities
Act of 1933, as amended.
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled
by, or is under common control with such specified person. For
purposes of this definition, control of a person means the power,
direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Commission" means the United States Securities and Exchange
Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section
2 hereof.
"Electing Holder" has the meaning assigned thereto in
Section 3(a)(3) hereof.
"Exchange Act" means the United States Securities and
Exchange Act of 1934, as amended.
"Indenture" means the Indenture, dated as of September 10,
1997, between the Company and Harris Trust and Savings Bank, as
amended and supplemented from time to time in accordance with is
terms.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer
an underwritten offering, if any, as set forth in Section 6
hereof.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially
in the form of Exhibit A hereto.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency
or political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable
Securities.
"Purchasers" means the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" means all or any portion of the
Securities issued from time to time under the Indenture in
registered form and the shares of Stock issuable upon conversion
of such Securities, including any Securities initially issued in
bearer form and constituting the unsold allotment of a
distributor (within the meaning of Regulation S under the
Securities Act) of such Securities and later exchanged for
Securities in registered form; provided, however, that a security
ceases to be a Registrable Security when it is no longer a
Restricted Security.
"Restricted Security" means any Security or share of Stock
issuable upon conversion thereof except any such Security or
share of Stock which (i) has been effectively registered under
the Securities Act and sold in a manner contemplated by the Shelf
Registration Statement, (ii) has been transferred in compliance
with Rule 144 under the Securities Act (or any successor
provision thereto), (iii) has been sold in compliance with
Regulation S under the Securities Act (or any successor thereto)
and does not constitute the unsold allotment of a distributor
within the meaning of Regulation S under the Securities Act, or
(iv) has otherwise been transferred and a new Security or share
of Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company
in accordance with Section 3.05 of the Indenture.
"Shelf Registration" means a registration effected pursuant
to Section 2 hereof.
"Shelf Registration Statement" means a shelf registration
statement of the Company pursuant to the provisions of Section 2
hereof filed with the Commission which covers some or all of the
Registrable Securities, as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference
therein.
"underwriter" means any underwriter of Registrable
Securities in connection with an offering thereof under a Shelf
Registration Statement.
(b) Wherever there is a reference in this Agreement to a
percentage of the "principal amount" of Registrable Securities,
Common Stock shall be treated as representing the principal
amount of Securities which was surrendered for conversion or
exchange in order to receive such number of shares of Common
Stock.
2. SHELF REGISTRATION. (a) The Company shall, within 90
days following the date of original issuance (the "Issue Date")
of the Securities, file with the Commission a Shelf Registration
Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with
the methods of distribution elected by such Holders and set forth
in such Shelf Registration Statement and, thereafter, shall use
its best efforts to cause such Shelf Registration Statement to be
declared effective under the Act within 180 calendar days after
the Issue Date; provided, however, that no Holder shall be
entitled to have the Registrable Securities held by it covered by
such Shelf Registration unless such Holder is an Electing Holder.
(b) If (i) on or prior to 90 days following the date of
original issuance of the Securities, a Shelf Registration
Statement has not been filed with the Commission, or (ii) on
or prior to the 180th day following the date of original
issuance of the Securities, such Shelf Registration
Statement is not declared effective (each, a "Registration
Default"), additional interest ("Liquidated Damages") will
accrue on the Securities from and including the day
following such Registration Default to but excluding the day
on which such Registration Default has been cured.
Liquidated Damages will be paid semi-annually in arrears,
with the first semi-annual payment due on the first Interest
Payment Date in respect of the Securities following the date
on which such Liquidated Damages begin to accrue, and will
accrue at a rate per annum equal to an additional one-
quarter of one percent (0.25%) of the principal amount of
the Securities outstanding to and including the 90th day
following such Registration Default and at a rate per annum
equal to one-half of one percent (0.50%) thereof from and
after the 90th day following such Registration Default. In
the event that the Shelf Registration Statement ceases to be
effective prior to the second annual anniversary of the
initial effective date of the Shelf Registration Statement
or such earlier date as is provided in the this Agreement
for a period in excess of 60 days, whether or not
consecutive, during any 12-month period, then the interest
rate borne by the Securities shall increase by an additional
one-half of one percent (0.50%) per annum on the 61st day of
the applicable 12-month period such Shelf Registration
Statement ceases to be effective to but excluding the day on
which the Shelf Registration Statement again becomes
effective.
(c) The Company shall use its best efforts:
(i) To keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of
two years from the date the Shelf Registration Statement is
declared effective or such shorter period that will
terminate upon the earlier of the following: (A) when all
the Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement,
(B) when all shares of Stock issued upon conversion of any
such Securities that had not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement and (C) when, in the written opinion
of independent counsel to the Company, all outstanding
Registrable Securities held by persons that are not
affiliates of the Company may be resold without registration
under the Act pursuant to Rule 144(k) under the Act or any
successor provision thereto (in any such case, such period
being called the "Effectiveness Period"); and
(ii) After the date the Shelf Registration Statement
becomes effective, within 30 days after the request of any
holder of Registrable Securities that is not then an
Electing Holder, to take any action necessary and required
by law to enable such holder to use the Prospectus forming a
part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to
identify such holder as a selling securityholder in the
Shelf Registration Statement; provided, however, that
nothing in this subparagraph shall relieve such holder of
the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with
Section 3(a)(2) hereof; and
(iii) If at any time, the Securities, pursuant to
Article VIII of the Indenture, are convertible into
securities other than Common Stock, the Company shall, or
shall cause any successor under the Indenture to, cause such
securities to be included in the Shelf Registration
Statement no later than the date on which the Securities may
then be convertible into such securities.
The Company shall be deemed not to have used its best efforts to
keep the Shelf Registration Statement effective during the
requisite period if the Company voluntarily takes any action that
would result in Holders of Registrable Securities covered thereby
not being able to offer and sell any such Registrable Securities
during that period, unless (i) such action in required by
applicable law, or (ii) the continued effectiveness of the Shelf
Registration Statement would require the Company to disclose a
material financing, acquisition or other corporate transaction,
and the Board of Directors shall have determined in good faith
that such disclosure is not in the best interests of the Company
and its stockholders; provided that in the case of clause (i)
above, the Company thereafter must promptly comply with the
requirements of paragraph 3(i) below, if applicable and in the
case of clauses (i) and (ii) above, the Company shall be entitled
to suspend the use of any prospectus forming a part of an
effective Registration Statement under this Section 2 for a
reasonable period of time (a "Delay Period"), except that the
aggregate number of days included in all Delay Periods during any
consecutive 12 months shall not exceed the aggregate of 90 days
(whether or not consecutive).
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) (1) Not less than 30 calendar days prior to the
Effective Time of the Shelf Registration Statement, the
Company shall mail the Notice and Questionnaire to the
holders of Registrable Securities. No holder shall be
entitled to be named as a selling securityholder in the
Shelf Registration Statement as of the Effective Time, and
no holder shall be entitled to use the Prospectus forming a
part thereof for resales of Registrable Securities at any
time, unless such holder has returned a completed and signed
Notice and Questionnaire to the Company by the deadline for
response set forth therein; provided, however, holders of
Registrable Securities shall have at least 28 calendar days
from the date on which the Notice and Questionnaire is first
mailed to such holders to return a completed and signed
Notice and Questionnaire to the Company.
(2) After the Effective Time of the Shelf Registration
Statement, the Company shall, upon the request of any holder
of Registrable Securities that is not then an Electing
Holder, promptly send a Notice and Questionnaire to such
holder. The Company shall not be required to take any
action to name such holder as a selling securityholder in
the Shelf Registration Statement or to enable such holder to
use the Prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a
completed and signed Notice and Questionnaire to the
Company.
(3) The term "Electing Holder" shall mean any holder of
Registrable Securities that has returned a completed and
signed Notice and Questionnaire to the Company in accordance
with Section 3(a)(1) or 3(a)(2) hereof.
(b) The Company shall furnish to the Purchasers, prior
to the filing thereof with the Commission, a copy of any
Shelf Registration Statement, and each amendment thereof and
each amendment or supplement, if any, to the Prospectus
included therein.
(c) The Company shall promptly take such action as may
be necessary so that (i) any Shelf Registration Statement
and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto (and each
report or other document incorporated therein by reference
in each case) complies in all material respects with the
Securities Act and the Exchange Act and the respective rules
and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any
Shelf Registration Statement, and any amendment or
supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not
misleading.
(d) (1) The Company shall advise the Purchasers and,
in the case of clause (i), the Electing Holders, and, if
requested by the Purchasers or any such Electing Holder,
confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and
when the Shelf Registration Statement or any post-
effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional
information.
(2) The Company shall advise the Purchasers and the
Electing Holders and, if requested by the Purchasers or any
such Electing Holder, confirm such advice in writing of:
(i) the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) the receipt by the Company of any notification
with respect to the suspension of the qualification of
the securities included therein for sale in any
jurisdiction or the initiation of any proceeding for such
purpose; and
(iii) the happening of any event that requires the
making of any changes in the Shelf Registration Statement
or the Prospectus so that, as of such date, the Shelf
Registration Statement and the Prospectus do not contain
an untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or
necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which
they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(e) The Company shall use its best efforts to prevent
the issuance and, if issued, to obtain the withdrawal, of
any order suspending the effectiveness of any Shelf
Registration Statement at the earliest possible time.
(f) The Company shall furnish to each Electing Holder
included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and,
if the Electing Holder so requests in writing, all reports,
other documents and exhibits that are filed with or
incorporated by reference in the Shelf Registration
Statement.
(g) The Company shall, during the Effectiveness Period,
deliver to each Electing Holder of Registrable Securities
included within the coverage of any Shelf Registration
Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement
thereto as such Electing Holder may reasonably request; and
the Company consents (except during the continuance of any
event described in Section 3(c)(2)(iii)) to the use of the
Prospectus or any amendment or supplement thereto by each of
the Electing Holders of Registrable Securities in connection
with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement
thereto during the Shelf Registration Period.
(h) Prior to any offering of Registrable Securities
pursuant to any Shelf Registration Statement, the Company
shall register or qualify or cooperate with the Electing
Holders of Registrable Securities included therein and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such
jurisdictions in the United States as any such Electing
Holders reasonably request in writing and do any and all
other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Registrable
Securities covered by such Shelf Registration Statement;
provided, however, that in no event shall the Company be
obligated to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify but for this Section
3(h), (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then
so subject or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject.
(i) Unless any Registrable Securities shall be in book-
entry only form, the Company shall cooperate with the
Electing Holders of Registrable Securities to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and
in such permitted denominations and registered in such names
as Electing Holders may request in connection with the sale
of Registrable Securities pursuant to such Shelf
Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, the Company shall promptly
prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Registrable
Securities included therein, the Prospectus will not include
an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading (except, in each case, for an untrue
statement of a material fact or omission of a material fact
made in reliance on and in conformity with written
information furnished to the Company by or on behalf of
Electing Holders specifically for use therein); provided,
however, if the Company determines that it is advisable to
disclose in the Shelf Registration Statement a financing,
acquisition or other corporate transaction, and the Board of
Directors of the Company shall have determined in good faith
that such disclosure would not be in the best interests of
the Company and its stockholders, the Company shall not be
required to prepare and file such amendment, supplement or
document for such period as the Board of Directors of the
Company shall have determined in good faith is in the best
interests of the Company. If the Company notifies the
Electing Holders of the occurrence of any event contemplated
by paragraph 3(c)(2)(iii) above, the Electing Holders shall
suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made.
(k) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall provide
a CUSIP number for the Securities registered under such
Shelf Registration Statement.
(l) The Company shall use its best efforts to comply
with all applicable rules and regulations of the Commission,
and to make generally available to its securityholders as
soon as practicable, but in any event not later than
eighteen months after (i) the effective date (as defined in
Rule 158(c) under the Securities Act) of the Shelf
Registration Statement, (ii) the effective date of each
post-effective amendment to the Shelf Registration
Statement, and (iii) the date of each filing by the Company
with the Commission of an Annual Report on Form 10-K that is
incorporated by reference in the Shelf Registration
Statement, an earning statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities
Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule
158).
(m) Not later than the Effective Time of the Shelf
Registration Statement, the Company shall cause the
Indenture to be qualified under the Trust Indenture Act; in
connection with such qualification, the Company shall
cooperate with the Trustee under the Indenture and the
Electing Holders (as defined in the Indenture) to effect
such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act; and the Company shall execute, and
shall use all reasonable efforts to cause the Trustee to
execute, all documents that may be required to effect such
changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so
qualified in a timely manner. In the event that any such
amendment or modification referred to in this Section 3(m)
involves the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the
Indenture.
(n) The Company may require each Electing Holder of
Registrable Securities to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such
information regarding the Electing Holder and the
distribution of such Registrable Securities as may be
required by applicable law or regulation for inclusion in
such Shelf Registration Statement and the Company may
exclude from such registration the Registrable Securities of
any Electing Holder that fails to furnish such information
within a reasonable time after receiving such request.
(o) The Company shall, if requested, promptly include
or incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement, such
information as the Managing Underwriters reasonably agree
should be included therein and to which the Company does not
reasonably object and shall make all required filings of
such Prospectus supplement or post-effective amendment as
soon as practicable after they are notified of the matters
to be included or incorporated in such Prospectus supplement
or post-effective amendment.
(p) The Company shall enter into such customary
agreements (including underwriting agreements in customary
form) to take all other appropriate actions in order to
expedite or facilitate the registration or the disposition
of the Registrable Securities, and in connection therewith,
if an underwriting agreement is entered into, cause the same
to contain indemnification provisions and procedures
substantially identical to those set forth in Section 5 (or
such other provisions and procedures acceptable to the
Managing Underwriters, if any) with respect to all parties
to be indemnified pursuant to Section 5.
(q) The Company shall:
(i) make reasonably available for inspection by the
Electing Holders of Registrable Securities to be
registered thereunder, any underwriter participating in
any disposition pursuant to such Shelf Registration
Statement, and any attorney, accountant or other agent
retained by such Electing Holders or any such underwriter
all relevant financial and other records, pertinent
corporate documents and properties of the Company and its
subsidiaries;
(ii) cause the Company's officers, directors and
employees to make reasonably available for inspection all
relevant information reasonably requested by such
Electing Holders or any such underwriter, attorney,
accountant or agent in connection with any such Shelf
Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however,
that any information that is designated in writing by the
Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential
by such Electing Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by
law, or such information becomes available to the public
generally or through a third party without an
accompanying obligation of confidentiality; and provided
further that the foregoing inspection and information
gathering shall, to the greatest extent possible, be
coordinated on behalf of the Electing Holders and the
other parties entitled thereto by one counsel designated
by and on behalf of such Electing Holders and other
parties reasonably acceptable to the Company;
(iii) make such representations and warranties to the
Electing Holders of Registrable Securities registered
thereunder and the underwriters, if any, in form,
substance and scope as are customarily made by the
Company to underwriters in primary underwritten offerings
and covering matters including, but not limited to, those
set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to
the Managing Underwriters, if any) in customary form
addressed to each Electing Holder and the underwriters,
if any, covering such matters as are customarily covered
in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such
Electing Holders and underwriters (it being agreed that
the matters to be covered by such opinion or written
statement by such counsel delivered in connection with
such opinions shall include in customary form, without
limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or
most recent post-effective amendment thereto, as the case
may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then
amended or supplemented, including the documents
incorporated by reference therein, of an untrue statement
of a material fact or the omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading);
(v) obtain "cold comfort" letters and updates
thereof from the independent public accountants of the
Company (and, if necessary, any other independent public
accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed
to each such Electing Holder of Registrable Securities
registered thereunder and the underwriters, if any, in
customary form and covering matters of the type
customarily covered in "cold comfort" letters in
connection with primary underwritten offerings;
(vi) deliver such documents and certificates as may
be reasonably requested by any such Electing Holders and
the Managing Underwriters, if any, including those to
evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v)
and (vi) of this Section 3(q) shall be performed at each
closing under any underwritten offering to the extent
required thereunder.
(r) The Company will use its best efforts to cause the
Stock issuable upon conversion thereof to be listed for
quotation on the NYSE or other stock exchange or trading
system on which the Stock primarily trades on or prior to
the effective date of any Shelf Registration Statement
hereunder.
(s) In the event that any broker-dealer registered
under the Exchange Act shall underwrite any Registrable
Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules and the By-Laws of
the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as an Electing Holder of such
Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or
otherwise, assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without
limitation, by (A) such Rules or By-Laws, including Schedule
E thereto, shall so require, engaging a "qualified
independent underwriter" (as defined in Schedule E) to
participate in the preparation of the Shelf Registration
Statement relating to such Registrable Securities and to
exercise usual standards of due diligence in respect
thereto, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof and (C) providing
such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements
of the Rules of Fair Practice of the NASD.
(t) The Company shall use its best efforts to take all
other steps necessary to effect the registration, offering
and sale of the Registrable Securities covered by the Shelf
Registration Statement contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred
in connection with the performance of its obligations under
Sections 2, 3 and 6 hereof.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection
with any Shelf Registration Statement, the Company shall
indemnify and hold harmless the Purchasers, each Electing Holder,
each underwriter who participates in an offering of Registrable
Securities, each person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and each of their respective directors,
officers, employees, trustees and agents (each such person being
sometimes referred to as an "Indemnified Person"), against any
losses, claims, damages or liabilities, joint or several, to
which such Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration
Statement under which such Registrable Securities are to be
registered under the Securities Act, or any Prospectus contained
therein or furnished by the Company to any Indemnified Person, or
any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company hereby agrees
to reimburse such Indemnified Person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in such Shelf Registration Statement or
Prospectus in reliance upon and in conformity with written
information furnished to the Company by such Indemnified Person
expressly for use therein; and provided further that the Company
shall not be liable to any Indemnified Person under the indemnity
agreement in this subsection (a) with respect to any Shelf
Registration or Prospectus to the extent that any such loss,
claim, damage or liability of such Indemnified Person results
from the fact that such Indemnified Person sold Securities to a
person as to whom it shall be established that there was not sent
or given, at or prior to the written confirmation of such sale, a
copy of the Shelf Registration Statement or Prospectus in any
case if the Company had previously furnished copies thereof in
sufficient quantity to such Indemnified Person and to the extent
the loss, claim, damage or liability of such Indemnified Person
results from an untrue statement or omission of a material fact
contained in the Shelf Registration Statement or Prospectus which
was identified in writing to such Indemnified Person and
subsequently corrected in the Shelf Registration Statement or
Prospectus and such loss, claim, damage or liability would have
been eliminated by the delivery of such corrected Shelf
Registration Statement or Prospectus.
(b) Each Electing Holder agrees, severally and not
jointly, to indemnify and hold harmless the Company, the
Purchasers, each underwriter who participates in an offering of
Registrable Securities and the other Electing Holders and each of
their respective directors, officers (including each officer of
the Company who signed the Shelf Registration Statement),
employees, trustees and agents and each Person, if any, who
controls the Company, the Purchasers, any underwriter or any
other Electing Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 5(a)
hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in
the Shelf Registration Statement (or any amendment thereto) or
any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information
furnished to the Company by such Electing Holder expressly for
use in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement
thereto); provided, however, that, no such Electing Holder shall
be liable for any claims hereunder in excess of the amount of net
proceeds received by such Electing Holder from the sale of
Registrable Securities pursuant to the Shelf Registration
Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, enclosing a
copy of all papers served on such indemnified party, but failure
to so notify an indemnifying party shall not relieve it of any
liability which it may have to the indemnified party otherwise
than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any
such action. If an indemnifying party so elects within a
reasonable time after receipt of such notice, such indemnifying
party, jointly with any other indemnifying party, may assume the
defense of such action with counsel chosen by it and approved by
the indemnified party or parties defendant in such action,
provided that if any such indemnified party reasonably determines
that there may be legal defenses available to such indemnified
party which are different from or in addition to those available
to such indemnifying party or that representation of such
indemnifying party and any indemnified party by the same counsel
would present a conflict of interest, then such indemnifying
party or parties shall not be entitled to assume such defense.
If an indemnifying party is not entitled to assume the defense of
such action as a result of the proviso to the preceding sentence,
counsel for such indemnifying party shall be entitled to conduct
the defense of such indemnifying party and counsel for each
indemnified party or parties shall be entitled to conduct the
defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as
permitted by the provisions of this paragraph, such indemnifying
party shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection
with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from its own
counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances. In no event shall an indemnifying party be liable
with respect to any action or claim settled without its written
consent.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity provision
agreement provided for in this Section 5 is for any reason held
to be unavailable to the indemnified parties although applicable
in accordance with its terms, the Company, the Purchasers and the
Electing Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company,
the Purchasers and the Electing Holders, as incurred; provided
that no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company, the
Purchasers and the Electing Holders, such parties shall
contribute to such aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect
the relative fault of the Company, on the one hand, and the
Purchasers and the Electing Holders, on the other hand, with
respect to the statements or omissions which resulted in such
loss, liability, claim, damage or expense, or action in respect
thereof, as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the
Purchasers and the Electing Holders, on the other hand, shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on
behalf of the Purchasers or the Electing Holders, on the other,
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission; including with respect to any Purchaser or Electing
Holder, the extent to which such losses, claims, damages or
liabilities with respect to any Shelf Registration Statement or
Prospectus results from the fact that the Purchaser or Electing
Holder sold Securities to a person to whom there was not sent or
given a copy of the Shelf Registration Statement or Prospectus,
where the Company had previously furnished copies thereof in
sufficient quantity to such Purchaser or Electing Holder and to
the extent the loss, claim, damage or liability of such Purchaser
or Electing Holder results from an untrue statement or omission
of a material fact contained in the Shelf Registration Statement
or Prospectus which was identified in writing to such Purchaser
or Electing Holder and subsequently corrected in the Shelf
Registration Statement or Prospectus and such loss, claim, damage
or liability would have been eliminated by the delivery of such
corrected Shelf Registration Statement or Prospectus. The
Company, the Purchasers and the Electing Holders of the
Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 5 were to be
determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5(d), each
director, officer, employee, trustee, agent and Person, if any,
who controls the Purchasers or an Electing Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the
Purchasers or such Electing Holder, and each director, officer,
employee, trustee and agent of the Company, and each Person, if
any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company. No party shall
be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent.
(e) Notwithstanding any other provision of this Section 5,
in no event will any (i) Electing Holder be required to undertake
liability to any person under this Section 5 for any amounts in
excess of the dollar amount of the proceeds to be received by
such holder from the sale of such holder's Registrable Securities
(after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Shelf Registration Statement under which
such Registrable Securities are to be registered under the
Securities Act and (ii) underwriter, selling agent or other
securities professional be required to undertake liability to any
person hereunder for any amounts in excess of the discount,
commission or other compensation payable to such underwriter,
selling agent or other securities professional with respect to
the Registrable Securities underwritten by it and distributed to
the public.
(f) The obligations of the Company under this Section 5
shall be in addition to any liability which the Company may
otherwise have and shall extend, or not extend, as the case may
be, to any Indemnified Person and the obligations of any
Indemnified Person under this Section 5 shall be in addition to
any liability which such Indemnified Person may otherwise have
and shall extend, or not extend, as the case may be, to the
Company. The remedies provided in this Section 5 are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to an indemnified party at law or in
equity.
6. UNDERWRITTEN OFFERING. The Electing Holders of
Registrable Securities covered by the Shelf Registration
Statement who desire to do so may sell such Registrable
Securities in an underwritten offering in accordance with the
conditions set forth below. In any such underwritten offering,
the investment banker or bankers and manager or managers that
will administer the offering will be selected by, and the
underwriting arrangements with respect thereto will be approved
by the Electing Holders of a majority of the Registrable
Securities to be included in such offering; provided, however,
that (i) with respect to the investment bankers and managers,
such investment bankers and managers will be selected by the
Company from a list of nationally recognized firms to be provided
by the Electing Holders and (ii) the Company shall not be
obligated to arrange for more than one underwritten offering
during the Effectiveness Period. No Electing Holder may
participate in any underwritten offering contemplated hereby
unless such Electing Holder (a) agrees to sell such Electing
Holder's Registrable Securities in accordance with any approved
underwriting arrangements, (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting
arrangements and (c) at least 25% of the outstanding Registrable
Securities are included in such underwritten offering. The
Electing Holders participating in any underwritten offering shall
be responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions
and fees and expenses of counsel to the selling securityholders
and shall reimburse the Company for the fees and disbursements of
their counsel, their independent public accountants and any
printing expenses incurred in connection with such underwritten
offerings. Notwithstanding the foregoing or the provisions of
Section 3(n) hereof, upon receipt of a request from the Managing
Underwriter or a representative of Electing Holders of a majority
of the Registrable Securities outstanding to prepare and file an
amendment or supplement to the Shelf Registration Statement and
Prospectus in connection with an underwritten offering, the
Company may delay the filing of any such amendment or supplement
for up to 90 days if the Company in good faith has a valid
business reason for such delay.
7. MISCELLANEOUS.
(a) Other Registration Rights. From the date of this
Agreement, the Company may grant registration rights that would
permit any Person that is a third party the right to piggy-back
on any Shelf Registration Statement, provided that if the
Managing Underwriter, if any, of such offering delivers an
opinion to the Electing Holders that the total amount of
securities which they and the holders of such piggy-back rights
intend to include in any Shelf Registration Statement is so large
as to materially adversely affect the success of such offering
(including the price at which such securities can be sold), then
only the amount, the number or kind of securities to be offered
for the account of holders of such piggy-back rights granted
after the date of this agreement will be reduced to the extent
necessary to reduce the total amount of securities to be included
in such offering to the amount, number or kind recommended by the
Managing Underwriter prior to any reduction in the amount of
Registrable Securities to be included.
(b) Amendments and Waivers. This Agreement, including
this Section 7(b), may be amended, and waivers or consents to
departures from the provisions hereof may be given, only upon the
written consent of the Purchasers or by a written instrument duly
executed by the Company and the holders of a majority in
aggregate principal amount of Registrable Securities then
outstanding. Each holder of Registrable Securities outstanding
at the time of any such amendment, waiver or consent or
thereafter shall be bound by any amendment, waiver or consent
effected pursuant to this Section 7(b), whether or not any
notice, writing or marking indicating such amendment, waiver or
consent appears on the Registrable Securities or is delivered to
such holder.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be given as provided in
the Indenture.
(d) Parties in Interest. The parties to this Agreement
intend that all holders of Registrable Securities shall be
entitled to receive the benefits of this Agreement and that any
Electing Holder shall be bound by the terms and provisions of
this Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration
Statement. All the terms and provisions of this Agreement shall
be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the
parties hereto and any holder from time to time of the
Registrable Securities to the aforesaid extent. In the event
that any transferee of any holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee
shall, without any further writing or action of any kind, be
entitled to receive the benefits of and, if an Electing Holder,
be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement to the
aforesaid extent.
(e) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of New
York.
(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
impaired or affected thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the
fullest extent permitted by law.
(i) Survival. The respective indemnities, agreements,
representations, warranties and other provisions set forth in
this Agreement or made pursuant hereto shall remain in full force
and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Electing
Holder, any director, officer or partner of such holder, any
agent or underwriter, any director, officer or partner of such
agent or underwriter, or any controlling person of any of the
foregoing, and shall survive the transfer and registration of the
Registrable Securities of such holder.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
RITE AID CORPORATION
By /s/ Elliot S. Gerson
. . . . . . . . . . . . .
Name: Elliot S. Gerson
Title: Senior Vice President and
General Counsel
The foregoing Registration Rights Agreement is hereby confirmed
and accepted as of the date first above written:
Goldman Sachs & Co.
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
By: /s/ Goldman, Sachs & Co.
. . . . . . . . . . . . . . . . . . . . . .
(Goldman, Sachs & Co.)
Exhibit A
RITE AID CORPORATION
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]
The Depository Trust Company ("DTC") has identified you as a
DTC Participant through which beneficial interests in the Rite
Aid Corporation (the "Company") 5.25% Convertible Subordinated
Notes due September 15, 2002 (the "Securities") are held.
The Company is in the process of registering the Securities
under the Securities Act of 1933 for resale by the beneficial
owners thereof. In order to have their Securities included in
the registration statement, beneficial owners must complete and
return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It as important that beneficial owners of the Securities
receive a copy of the enclosed materials as soon as possible as
their rights to have the Securities included in the registration
statement depend upon their returning the Notice and
Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy
of the enclosed documents to each beneficial owner that holds
interests in the Securities through you. If you require more
copies of the enclosed materials or have any questions pertaining
to this matter, please contact [Name, address and telephone
number of contact at the Company).
Rite Aid Corporation
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Registration Rights
Agreement (the "Registration Rights Agreement") between Rite Aid
Corporation (the "Company") and the Purchasers named therein.
Pursuant to the Registration Rights Agreement, the Company has
filed with the United States Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the
"Shelf Registration Statement") for the registration and resale
under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's 5.25% Convertible
Subordinated Notes due September 15, 2002 (the "Securities") and
the shares of Common Stock, par value $1.00 per share (the
"Common Stock"), issuable upon conversion thereof. A copy of the
Registration Rights Agreement is attached hereto. All
capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined
below) is entitled to have the Registrable Securities
beneficially owned by it included in the Shelf Registration
Statement. In order to have Registrable Securities included in
the Shelf Registration Statement, this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the
Company's counsel at the address set forth herein for receipt ON
OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners of
Registrable Securities who do not complete, execute and return
this Notice and Questionnaire by such date (i) will not be named
as selling securityholders in the Shelf Registration Statement
and (ii) may not use the Prospectus forming a part thereof for
resales of Registrable Securities.
Certain legal consequences arise from being named as a
selling securityholder in the Shelf Registration Statement and
related Prospectus. Accordingly, holders and beneficial owners
of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named
or not being named as a selling securityholder in the Shelf
Registration Statement and related Prospectus.
The term "Registrable Securities" is defined in the
Registration Rights Agreement to mean all or any portion of the
Securities issued from time to time under the Indenture in
registered form and the shares of Common Stock issuable upon
conversion of such Securities, including any Securities initially
issued in bearer form and constituting the unsold allotment of a
distributor (within the meaning of Regulation S under the
Securities Act) of such Securities and later exchanged for
Securities in registered form; provided, however, that a security
ceases to be a Registrable Security when it is no longer a
Restricted Security.
The term "Restricted Security" is defined in the
Registration Rights Agreement to mean any Security or share of
Common Stock issuable upon conversion thereof except any such
Security or share of Common Stock which (i) has been effectively
registered under the Securities Act and sold in a manner
contemplated by the Shelf Registration Statement, (ii) has been
transferred in compliance with Rule 144 under the Securities Act
(or any successor provision thereto) or is transferable pursuant
to paragraph (k) of such Rule 144 (or any successor provision
thereto), (ii) has been sold in compliance with Regulation S
under the Securities Act (or any successor thereto) and does not
constitute the unsold allotment of a distributor within the
meaning of Regulation S under the Securities Act, or (iv) has
otherwise been transferred and a new Security or share of Common
Stock not subject to transfer restrictions under the Securities
Act has been delivered by or on behalf of the Company in
accordance with Section [ ] of the Indenture.
ELECTION
The undersigned holder (the "Selling Securityholder") of
Registrable Securities hereby elects to include in the Shelf
Registration Statement the Registrable Securities beneficially
owned by it and listed below in Item (3). The undersigned, by
signing and returning this Notice and Questionnaire, agrees to be
bound with respect to such Registrable Securities by the terms
and conditions of this Notice and Questionnaire and the
Registration Rights Agreement, including, without limitation,
Section 5 of the Registration Rights Agreement, as if the
undersigned Selling Securityholder were an original party
thereto.
Upon any sale of Registrable Securities pursuant to the
Shelf Registration Statement, the Selling Securityholder will be
required to deliver to the Company and Trustee the Notice of
Transfer set forth in Appendix A to the Prospectus. This Notice
of Transfer is set forth as Exhibit A to the Prospectus.
The Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such
information is accurate and complete. The Selling Securityholder
also agrees, severally and not jointly, with respect to the
information so provided, to indemnify and hold harmless the
Company, the Purchasers, each underwriter who participates in the
offering and the other Selling Securityholders and each of their
respective directors, officers (including each officer of the
Company who signed the Shelf Registration Statement), employees,
trustees and agents and each Person, if any, who controls the
Company, the Purchasers, any underwriter or any other Selling
Securityholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 5(a)
of the Registration Rights Agreement, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the
written information furnished below to the Company by such
Selling Securityholder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); provided,
however, that such Selling Securityholder shall not be liable for
any claims hereunder in excess of the amount of net proceeds
received by such Selling Securityholder from the sale of
Registrable Securities pursuant to the Shelf Registration
Statement.
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
(b) Full Legal Name of Registered Holder (if not the
same as in (a) above) of Registrable Securities
Listed in (3) below:
(c) Full Legal Name of DTC Participant (if applicable
and if not the same as (b) above) Through Which
Registrable Securities Listed in (3) below are
Held:
(2) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Beneficial Ownership of Securities and shares of Common
Stock issued upon conversion of Securities:
Except as set forth below in this Item (3), the undersigned
does not beneficially own any Securities or shares of Common
Stock issued upon conversion of any Securities.
(a) Principal amount of Registrable Securities (as
defined in the Registration Rights Agreement)
beneficially owned:
CUSIP No(s). of such Registrable Securities:
Number of shares of Common Stock (if any) issued upon
conversion of such Registrable Securities:
(b) Principal amount of Securities other than
Registrable Securities beneficially owned:
CUSIP No(s). of such other Securities:
Number of shares of Common Stock (if any) issued upon
conversion of such other Securities:
(c) Principal amount of Registrable Securities which
the undersigned wishes to be included in the Shelf
Registration Statement:
CUSIP No(s). of such Registrable Securities to be
included in the Shelf Registration Statement:
Number of shares of Common Stock (if any) issued upon
conversion of Registrable Securities which are to be
included in the Shelf Registration Statement:
(4) Beneficial ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned
Selling Securityholder is not the beneficial or registered owner
of any shares of Common Stock or any other securities of the
Company, other than the Securities and shares of Common Stock
listed above in Item (3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling
Securityholder nor any of its affiliates, officers, directors or
principal equity holders (5% or more) has held any position or
office or has had any other material relationship with the
Company (or its predecessors or affiliates) during the past three
years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling
Securityholder intends to distribute the Registrable Securities
listed above in Item (3) only as follows (if at all): Such
Registrable Securities may be sold from time to time directly by
the undersigned Selling Securityholder or, alternatively, through
underwriters, broker-dealers or agents. Such Registrable
Securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at
varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may
involve crosses or block transactions) (i) on any national
securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in
the over-the-counter market, (iii) in transactions otherwise than
on such exchanges or services or in the over-the-counter market,
or (iv) through the writing of options. In connection with sales
of the Registrable Securities or otherwise, the Selling
Securityholder may enter into hedging transactions with broker-
dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions
they assume. The Selling Securityholder may also sell
Registrable Securities short and deliver Registrable Securities
to close out such short positions, or loan or pledge Registrable
Securities to broker-dealers that in turn may sell such
securities.
State any exceptions here:
Note: In no event may such method(s) of distribution take
the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.
By signing below, the Selling Securityholder acknowledges
that it understands its obligation to comply, and agrees that it
will comply, with the provisions of the Exchange Act and the
rules and regulations thereunder, particularly Regulation M.
In the event that the Selling Securityholder transfers all
or any portion of the Registrable Securities listed in Item (3)
above after the date on which such information is provided to the
Company, the Selling Securityholder agrees to notify the
transferees at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the
disclosure of the information contained herein in its answers to
Items (1) through (6) above and the inclusion of such information
in the Shelf Registration Statement and related Prospectus. The
Selling Securityholder understands that such information will be
relied upon by the Company in connection with the preparation of
the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation
under Section 3(a) of the Registration Rights Agreement to
provide such information as may be required by law for inclusion
in the Shelf Registration Statement, the Selling Securityholder
agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf
Registration Statement remains in effect. All notices hereunder
and pursuant to the Registration Rights Agreement shall be made
in writing, by hand-delivery, first-class mail, or air courier
guaranteeing overnight delivery as follows:
(i) To the Company:
Rite Aid Corporation
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Attention: Chief Financial Officer
(ii) With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Stacey J. Kanter, Esq.
Once this Notice and Questionnaire is executed by the
Selling Securityholder and received by the Company's counsel, the
terms of this Notice and Questionnaire, and the representations
and warranties contained herein, shall be binding on, shall inure
to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the
Registrable Securities beneficially owned by such Selling
Securityholder and listed in Item (3) above. This Agreement
shall be governed in all respects by the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned, by authority duly
given, has caused this Notice and Questionnaire to be executed
and delivered either in person or by its duly authorized agent.
Dated:
Selling Securityholder
(Print/type full legal name of
beneficial owner of
Registrable Securities)
By:
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR
RESPONSE] TO THE COMPANY'S COUNSEL AT:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Stacey J. Kanter, Esq.
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Harris Trust and Savings Bank
Rite Aid Corporation
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Services
Re: Rite Aid Corporation (the "Company")
5.25% Convertible Subordinated Notes due
September 15, 2002 (the"Notes")
Dear Sirs:
Please be advised that_____________________ has
transferred $____________ aggregate principal amount of the
above-referenced Notes pursuant to an effective Registration
Statement on Form S-3 (File No. 333-____) filed by the
Company.
We hereby certify that the prospectus delivery
requirements, if any, of the Securities Act of 1933, as
amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder"
in the Prospectus dated _____________ 1996 or in supplements
thereto, and that the aggregate principal amount of the
Notes transferred are the Notes listed in such Prospectus
opposite such owner's name.
Dated:
Very truly yours,
(Name)
By:
(Authorized Signature)
EXHIBIT 12
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
TWENTY-SIX WEEKS ENDED
AUGUST 30, 1997 AND YEARS ENDED MARCH 1,
1997, MARCH 2, 1996, MARCH 4, 1995,
FEBRUARY 26, 1994 AND
FEBRUARY 27, 1993
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Twenty-Six Year Year Year Year Year
Weeks Ended Ended Ended Ended Ended Ended
August 30, March 1, March 2, March 4, February 26, February 27,
1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
Fixed Charges
<S> <C> <C> <C> <C> <C> <C>
Interest Expense $78,550 $96,473 $68,341 $42,300 $28,683 $29,387
Interest Portion(1) of Net
Rental Expense 51,953 66,067 52,080 40,424 40,427 37,659
------ ------ ------ ------ ------ ------
Fixed Charges Before
Capitalized Interest 130,503 162,540 120,421 82,724 69,110 67,046
Capitalized Interest 1,676 1,897 1,948 373 217 445
----- ----- ----- --- --- ---
Total Fixed Charges $132,179 $164,437 $122,369 $83,097 $69,327 $67,491
-------- -------- -------- ------- ------- -------
Earnings
Income Before Extraor-
dinary Loss and Income
Taxes $215,837 $258,927(3) $256,202 $231,464 $45,670(2) $200,569
Fixed Charges Before
Capitalized Interest 130,503 162,540 120,421 82,724 69,110 67,046
------- ------- ------- ------ ------ ------
Total Adjusted
Earnings $346,340 $421,467 $376,623 $314,188 $114,780 $267,615
-------- -------- -------- -------- -------- --------
Ratio of Earnings to 2.62 2.56 3.08 3.78 1.66 3.97
Fixed Charges ---- ---- ---- ---- ---- ----
</TABLE>
1 The interest portion of the net rental expense is estimated to be
equal to one-third of the minimum rental expense for the period.
2 Income before extraordinary loss and income taxes for fiscal year
1994 includes a $149,196,000 one-time, pre-tax provision for
corporate restructuring and other charges.
3 Income before extraordinary loss and income taxes for fiscal year
1997 includes a $68,057,000 one-time, pre-tax charge for non-
recurring and other charges.
EXHIBIT 15.1
Rite Aid Corporation
Camp Hill, Pennsylvania
Gentlemen:
Re: Registration Statement No. 333-
With respect to the subject registration statement,
we acknowledge our awareness of the use therein of our
reports dated July 1, 1997 and October 3, 1997 related to
our reviews of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of
1933, such reports are not considered part of a
registration statement prepared or certified by an
accountant or a report prepared or certified by an
accountant within the meaning of sections 7 and 11 of the
Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Harrisburg, Pennsylvania
November 6, 1997
EXHIBIT 23.3
Consent of Independent Certified Public Accountants
The Board of Directors
Rite Aid Corporation
We consent to the use of our audit reports dated
April 24, 1997 on the consolidated financial statements
and schedule of Rite Aid Corporation and subsidiaries as
of March 1, 1997 and March 2, 1996 and for each of the
years in the three-year period then ended incorporated
herein by reference and to the reference to our firm
under the heading "Experts" in the prospectus. Our
reports refer to a change in the method of accounting for
investments in fiscal year 1995.
/s/ KPMG Peat Marwick LLP
Harrisburg, Pennsylvania
November 6, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 23-1614034
(I.R.S. Employer
(State of Incorporation) Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
RITE AID CORPORATION
(Name of Obligor)
Delaware 64-0292638
(I.R.S. Employer
(State of Incorporation) Identification No.)
30 Hunter Lane
Camp Hill, PA 17011
(Address of principal executive offices)
5.25% Convertible Subordinated Notes, Due 2002
(Title of indenture securities)
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Commissioner of Banks and Trust Companies, State of
Illinois, Springfield, Illinois; Chicago Clearing House
Association, 164 West Jackson Boulevard, Chicago, Illinois;
Federal Deposit Insurance Corporation, Washington, D.C.; The
Board of Governors of the Federal Reserve System,Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise
corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the
Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in
effect which includes the authority of the trustee to commence
business and to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between
Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc.
which constitutes the articles of association of the Trustee as
now in effect and includes the authority of the Trustee to
commence business and to exercise corporate trust powers was filed
in connection with the Registration Statement of Louisville Gas
and Electric Company, File No. 2-44295, and is incorporated herein
by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in
connection with the Registration Statement of Commercial Federal
Corporation, File No. 333-20711, and is incorporated herein by
reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority.
(included as Exhibit B on page 3 of this statement)
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation organized and
existing under the laws of the State of Illinois, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago, and State of
Illinois, on the 4th day of November 1997.
HARRIS TRUST AND SAVINGS BANK
By: /s/ DGDonovan
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ DGDonovan
D. G. Donovan
Assistant Vice President
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1997, as published in accordance with
a call made by the State Banking Authority and by the Federal Reserve Bank
of the Seventh Reserve District.
HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close
of business on June 30, 1997, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the
Commissioner of Banks and Trust Companies of the State of Illinois and by
the Federal Reserve Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
ASSETS THOUSANDS
OF DOLLARS
Cash and balances due from depository institutions:
<S> <C>
Non-interest bearing balances and currency and coin..........................$1,707,824
Interest bearing balances......................................................$628,916
Securities........................................................................ $0
b. Available-for-sale securities $3,766,727
Federal funds sold and securities purchased under agreements to resell
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold....................................................... ..$275,425
Securities purchased under agreements to resell...................................$0
Loans and lease financing receivables:
Loans and leases, net of unearned income.....................................$8,346,198
LESS: Allowance for loan and lease losses.....................................$110,230
-----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b)........................................................ $8,235,968
Assets held in trading accounts.......................................................$164,281
Premises and fixed assets (including capitalized leases)..............................$199,292
Other real estate owned.................................................................. $524
Investments in unconsolidated subsidiaries and associated companies........................$69
Customer's liability to this bank on acceptances outstanding...........................$46,107
Intangible assets.....................................................................$287,575
Other assets...................................................................... $670,230
-----------
TOTAL ASSETS $15,982,938
===========
LIABILITIES
Deposits:
In domestic offices..........................................................$9,243,162
Non-interest bearing......................................................$3,411,145
Interest bearing..........................................................$5,832,017
In foreign offices, Edge and Agreement subsidiaries, and IBF's...............$1,738,871
Non-interest bearing.........................................................$34,386
Interest bearing..........................................................$1,704,485
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds purchased.& securites sold under agreements to repurchase......$2,985,911
Trading Liabilities................................................................. 62,083
Other borrowed money...............................................................
a. With remaining maturity of one year or less.......................................$244,781
b. With remaining maturity of more than one year...........................................$0
Bank's liability on acceptances executed and outstanding $46,107
Subordinated notes and debentures.................................................... $325,000
Other liabilities.................................................................. $119,695
TOTAL LIABILITIES..................................................................$14,765,610
EQUITY CAPITAL
Common stock..........................................................................$100,000
Surplus...............................................................................$600,715
a. Undivided profits and capital reserves............................................$534,395
b. Net unrealized holding gains (losses) on available-for-sale securities ($17,782)
----------
TOTAL EQUITY CAPITAL ............................................................. $1,217,328
==========
Total liabilities, limited-life preferred stock, and equity capital................$15,982,938
===========
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do
hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
STEVE NEUDECKER
7/30/97
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and, to the
best of our knowledge and belief, has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and the Commissioner of Banks and Trust Companies of the State of Illinois
and is true and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD JAFFEE Directors.
