<PAGE> 1
As filed with the Securities and Exchange Commission on December 20, 1999
Registration No. 333-77529
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OXFORD HEALTH PLANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 06-1118515
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
48 MONROE TURNPIKE
TRUMBULL, CT 06611
(203) 459-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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JON S. RICHARDSON, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND ASSISTANT SECRETARY
OXFORD HEALTH PLANS, INC.
48 MONROE TURNPIKE
TRUMBULL, CT 06611
(203) 459-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPY TO:
DANIEL DUNSON, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration 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, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF SECURITIES AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TO BE TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
Series D Cumulative Preferred Stock... 277,629.157 $525(2) $145,755,307.43(2) $40,519.98
Series E Cumulative Preferred Stock... 132,808.069 $1,000(2) $132,808,069(2) $36,920.64
Series D Junior Subordinated
Debentures due May 13, 2008(3)...... $277,629,157 -- -- 0(3)
Series E Junior Subordinated
Debentures due May 13, 2008(3)...... $132,808,069 -- -- 0(3)
Series A Warrants..................... 15,800,000 -- -- 0(4)
Series B Warrants..................... 6,730,000 -- -- 0(4)
Common Stock.......................... 22,530,000(5) $17.96875(6) $404,835,937.50(6) $112,544.39
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</TABLE>
(1) Previously paid.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act.
(3) Also being registered are $277,629,157 aggregate principal amount of Series
D Junior Subordinated Debentures due May 13, 2008 and $132,808,069 aggregate
principal amount of Series E Junior Subordinated Debentures due May 13, 2008
(the "Debentures") as may be issuable in connection with the exchange of the
Series D Cumulative Preferred Stock and the Series E Cumulative Preferred
Stock being registered. No additional consideration will be received upon
the issuance of the Debentures and, therefore, no registration fee payment
is required pursuant to Rule 457(i).
(4) Pursuant to Rule 457(g), no registration fee is required for the Series A
Warrants and the Series B Warrants because the shares of common stock, par
value $.01 per share, underlying such warrants are being registered hereby.
(5) In accordance with Rule 416 under the Securities Act of 1933, this
Registration Statement also covers an indeterminable number of shares of
common stock, par value $.01 per share, as may become issuable upon exercise
of the Series A Warrants or the Series B Warrants to prevent dilution
resulting from stock splits, stock dividends and similar transactions in
accordance with the terms of the Series A Warrants and the Series B
Warrants.
(6) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act based on the average high
and low sales price of Oxford Health Plans, Inc.'s common stock, par value
$.01 per share, on April 23, 1999, as reported on the Nasdaq National
Market.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, PROSPECTUS DATED DECEMBER 21, 1999
[OXFORD HEALTH PLANS LOGO]
277,629.157 Shares of Series D Cumulative Preferred Stock
132,808.069 Shares of Series E Cumulative Preferred Stock
$277,629,157 Series D Junior Subordinated Debentures due May 13, 2008
$132,808,069 Series E Junior Subordinated Debentures due May 13, 2008
15,800,000 Series A Warrants
6,730,000 Series B Warrants
22,530,000 Shares of Common Stock
The shares of preferred stock, the debentures issuable in exchange for shares of
preferred stock, the warrants and the shares of common stock issuable upon
exercise of the warrants are being offered under this prospectus by certain
selling securityholders. The warrants and the securities that were exchanged for
the preferred stock originally were issued in a private placement in May 1998.
The shares of preferred stock listed above include 14,022.606 additional shares
of Series D preferred stock and 16,908.793 additional shares of Series E
preferred stock that we expect to issue as payment on May 13, 2000 in respect of
dividends accrued on existing shares.
We will not receive any of the proceeds from the sale of the preferred stock,
the debentures or the warrants by the selling securityholders. However, we will
receive proceeds from any exercise of the warrants.
You should read this prospectus and the prospectus supplement, if any, relating
to the specific issue of preferred stock, debentures, warrants and shares of
common stock carefully before you invest.
Our common stock is listed on the Nasdaq National Market under the symbol
"OXHP." On December 20, 1999, the last reported sale price of our common stock
was $11 per share. We urge you to obtain a current sale price for our common
stock before you buy any of the securities offered under this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE DATE OF THIS PROSPECTUS IS DECEMBER , 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary.......................... 1
Ratio of Earnings to Combined
Fixed Charges and Preference
Dividends........................ 12
Business......................... 13
Description of the Offered
Preferred Stock................ 13
Description of the Debentures.... 28
Book-Entry; Delivery and Form.... 42
Description of the Warrants...... 44
Registration Rights Agreement.... 46
Use of Proceeds.................. 48
Material United States Federal
Income Tax Consequences........ 49
Description of Term Loan and
Senior Notes................... 62
Selling Securityholders.......... 66
Plan of Distribution............. 72
Validity of Securities........... 73
Experts.......................... 74
Where You Can Find More
Information.................... 74
Forward-Looking Statements....... 76
</TABLE>
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REFERENCES TO ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about us from documents that are not included in or delivered with this
document. You can obtain documents incorporated by reference in this prospectus,
other than certain exhibits to those documents, by requesting them in writing or
by telephone from us at the following address:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, CT 06611
Attention: Investor Relations
Telephone: (203) 459-6000
YOU WILL NOT BE CHARGED FOR ANY OF THE DOCUMENTS THAT YOU REQUEST.
See "Where You Can Find More Information" on page 74.
ii
<PAGE> 5
SUMMARY
This brief summary highlights selected information from this prospectus and
documents we have incorporated in this prospectus by reference. It does not
contain all of the information that is important to you. We urge you to read
carefully the entire prospectus, the documents incorporated in this prospectus
by reference and the other documents to which this prospectus refers, including
our consolidated financial statements and the notes to those consolidated
financial statements which are incorporated in this prospectus by reference.
OXFORD HEALTH PLANS, INC.
Oxford Health Plans, Inc. was incorporated under the laws of the State of
Delaware on September 17, 1984. We are a health care company currently providing
health care benefit plans primarily in New York, New Jersey and Connecticut. Our
product line includes:
- traditional health maintenance organizations which require the member to
choose a health care provider from the network of providers under
contract with us;
- health care benefit plans for Medicare beneficiaries;
- health care benefit plans, known as point-of-service plans, which provide
the member with the option of using a provider who is under contract with
us or one who is not under contract with us;
- health care benefit plans, known as preferred provider organizations,
which permit the member to choose any health care provider;
- health care benefit plans for individuals; and
- administrative services for groups that provide their own health care
insurance, known as self-funded plans.
We offer our products primarily through our health maintenance organization
subsidiaries, Oxford Health Plans (NY), Inc., Oxford Health Plans (NJ), Inc. and
Oxford Health Plans (CT), Inc., and through Oxford Health Insurance, Inc., our
health insurance subsidiary.
Our principal executive offices are located at 48 Monroe Turnpike,
Trumbull, CT 06611, and our main telephone number is (203) 459-6000.
SECURITIES BEING OFFERED
This prospectus covers the offer and sale of the following:
- 277,629.157 shares of Series D Cumulative Preferred Stock, par value $.01
per share, which we refer to as the "Series D preferred stock," and
132,808.069 shares of Series E Cumulative Preferred Stock, par value $.01
per share, which we refer to as the "Series E preferred stock." We
sometimes refer to the Series D preferred stock and the Series E
preferred stock together as the "offered preferred stock." The terms of
the Series D preferred stock and the Series E preferred stock are
substantially similar except for their dividend rates and their use as
consideration for exercise of the warrants.
- $277,629,157 aggregate principal amount of Series D Junior Subordinated
Debentures due May 13, 2008, which we refer to as the "Series D
debentures," and $132,808,069 aggregate principal amount of Series E
Junior Subordinated Debentures due May 13, 2008, which we refer to as the
"Series E debentures." We sometimes refer to the Series D debentures and
the Series E debentures together as the "debentures." The terms of the
Series D debentures are substantially similar to
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<PAGE> 6
the terms of the Series D preferred stock, and the terms of the Series E
debentures are substantially similar to the terms of the Series E
preferred stock.
- 15,800,000 Series A Warrants, which we refer to as the "Series A
warrants," and 6,730,000 Series B Warrants, which we refer to as the
"Series B warrants." We sometimes refer to the Series A warrants and the
Series B warrants together as the "warrants."
- 22,530,000 shares of common stock, par value $.01 per share, issuable
upon exercise of the Series A warrants and the Series B warrants.
We issued the warrants and the securities that were exchanged for the
offered preferred stock in May 1998 to the selling securityholders named on
pages 69 and 71 in a private placement. We made this private placement under an
investment agreement, dated as of February 23, 1998, between Oxford and TPG
Partners II, L.P., one of the selling securityholders. We have filed the
investment agreement as an exhibit to the registration statement of which this
prospectus is a part.
TERMS OF THE OFFERED PREFERRED STOCK
Stated Value.................... The stated value of each share of offered
preferred stock is $1,000.
Mandatory Redemption............ We must redeem all outstanding shares of
Series D preferred stock and Series E
preferred stock on May 13, 2008, at a
redemption price for each share equal to all
unpaid dividends accumulated to the date of
payment of the redemption price, plus the
stated value of the share, which is $1,000.
Series D Dividends.............. Holders of the Series D preferred stock are
entitled to receive dividends in the
following amounts and form:
BEFORE MAY 13, 2000:
- shares of Series D preferred stock
accumulate dividends at a rate of
5.319521% per year;
- we may choose to make payments of
dividends in cash or by the issuance
of additional shares of Series D
preferred stock; and
- an annual dividend payment in the
form of Series D preferred stock was
made on May 13, 1999.
ON OR AFTER MAY 13, 2000:
- shares of Series D preferred stock
accumulate dividends at a rate of
5.129810% per year;
- an annual dividend is payable on May
13, 2000 and, after that date,
dividends are payable in equal
quarterly installments on the last
day
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<PAGE> 7
of March, June, September and
December of each year, commencing
June 2000; and
- on May 13, 2000, we may choose to
make payments of dividends in cash or
by the issuance of additional shares
of Series D preferred stock; after
May 13, 2000, payments of dividends
must be in cash.
Series E Dividends.............. Holders of the Series E preferred stock are
entitled to receive dividends in the
following amounts and form:
BEFORE MAY 13, 2000:
- shares of Series E preferred stock
accumulate dividends at a rate of
14.589214% per year;
- we may choose to make payments of
dividends in cash or by the issuance
of additional shares of Series E
preferred stock; and
- an annual dividend payment in the
form of Series E preferred stock was
made on May 13, 1999.
ON OR AFTER MAY 13, 2000:
- shares of Series E preferred stock
accumulate dividends at a rate of 14%
per year;
- an annual dividend is payable on May
13, 2000, and, after that date,
dividends are payable in equal
quarterly installments on the last
day of March, June, September and
December of each year, commencing
June 2000; and
- on May 13, 2000, we may choose to
make payments of dividends in cash or
by the issuance of additional shares
of Series E preferred stock; after
May 13, 2000, payments of dividends
must be in cash.
Limitations on Payment of
Dividends....................... We may only pay dividends out of funds
legally available under Delaware law. In
addition, we are subject to restrictive
covenants that may limit our ability to pay
dividends. See "Description of Term Loan and
Senior Notes" beginning on page 62 for a
description of these covenants. If we fail
to pay dividends when due, we will not be
released from our obligation to make that
dividend payment and additional dividends
will accumulate on the missed payment.
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<PAGE> 8
Ranking......................... With respect to the right to receive
dividends and payments upon the liquidation,
dissolution or winding up of Oxford, the
offered preferred stock ranks:
- senior to our common stock and,
except as specified below, any other
class or series of capital stock that
we issue in the future;
- equally with each other class or
series of preferred stock which
provides that it ranks equally with
the offered preferred stock; and
- junior to each other class of
preferred stock which provides that
it ranks senior to the offered
preferred stock.
Currently, there are no classes of preferred
stock issued or outstanding that rank senior
to the Series D preferred stock or the
Series E preferred stock. The Series D
preferred stock and the Series E preferred
stock have the same ranking, and there are
currently no other classes of preferred
stock that have the same ranking as the
Series D preferred stock and Series E
preferred stock. The holders of each series
of offered preferred stock must consent for
Oxford to be able to create a class of
preferred stock that ranks the same or that
ranks senior to that class of offered
preferred stock.
Liquidation Preference.......... Upon liquidation, dissolution or winding up
of Oxford, each holder of shares of offered
preferred stock is entitled to receive the
following amount before we make any payment
on securities that rank junior to the
offered preferred stock:
- dividends, if any, accumulated or
deemed to have accumulated on each
share of offered preferred stock held
by the holder to the date we make
liquidation distributions, whether or
not declared, and
- the stated value of each share of
offered preferred stock held by the
holder, which is $1,000.
If the assets or proceeds from a
liquidation, dissolution or winding up of
Oxford are insufficient to make these
payments, then we will distribute the assets
and proceeds ratably among holders of
offered preferred stock and any securities
that have the same ranking as the offered
preferred stock.
Optional Redemption............. We have the right to redeem all outstanding
shares of a series of offered preferred
stock on or after May 13, 2003, at a
redemption price for each share
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<PAGE> 9
of that series equal to all unpaid dividends
accumulated to the date of payment of the
redemption price, plus the stated value of
the share, which is $1,000.
Change of Control Redemption.... If a "change of control" occurs with respect
to Oxford, holders of offered preferred
stock may require us to redeem any or all of
the shares of offered preferred stock that
they hold, at a redemption price for each
share equal to all unpaid dividends
accumulated to the date of payment of the
redemption price, plus the stated value of
the share, which is $1,000.
Generally, a change of control may occur
upon events such as:
- a merger or consolidation of Oxford;
- acquisition of majority control of
Oxford by a person;
- a sale, lease or other transfer of
substantially all of our assets;
- a substantial change in our board of
directors; or
- adoption of a plan of liquidation or
dissolution.
For a more complete definition of a "change
of control," please see the section of this
prospectus entitled "Description of the
Offered Preferred Stock -- Change of Control
Redemption" beginning on page 18.
Our ability to redeem offered preferred
stock upon a change of control may be
limited by the agreements that we have made
and the various restrictive covenants under
our term loan agreement and under the
indenture that governs our 11% Senior Notes
due 2005. For a description of these
limitations, see "Description of Term Loan
and Senior Notes" beginning on page 62. If
we are required to redeem offered preferred
stock and we fail to pay the redemption
price on the redemption date, we will not be
released from our obligation to pay the
redemption price, and dividends will
accumulate on the missed payment.
Exchange........................ On any dividend payment date, we have the
right to exchange Series D preferred stock
for Series D debentures or Series E
preferred stock for Series E debentures.
Each series of debentures will be issued
pursuant to an indenture. We will not
exchange offered preferred stock for
debentures before May 13, 2000.
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Unless all holders of shares of the series
of offered preferred stock to be exchanged
consent, we may effect an exchange only if:
- we have paid or set aside for payment
full cumulative dividends on all
outstanding shares of the series of
offered preferred stock to be
exchanged;
- we have amended our certificate of
incorporation to give holders of the
debentures the same power to vote
that they had as holders of offered
preferred stock; and
- the exchange could not result in any
materially adverse tax consequence to
TPG Partners II, one of the selling
securityholders, or any of its
affiliates.
The indentures that will govern the
debentures will have terms comparable to the
terms of the series of offered preferred
stock that is exchanged, including an
interest rate that is the same as the
dividend rate on the series of offered
preferred stock that is exchanged. These
terms are described in this prospectus under
"Description of the Debentures" beginning on
page 28.
Limited Voting Rights........... Holders of offered preferred stock, other
than TPG Partners II, one of the selling
securityholders, and its affiliates,
generally will not have the right to vote,
unless:
- dividends are in arrears and we have
not paid dividends in full on May 13,
2000;
- dividends are in arrears and we have
not paid dividends in full for four
consecutive quarters; or
- we fail to redeem shares of offered
preferred stock when required to do
so.
Generally, if any of the above events occur,
then the number of directors on our board of
directors automatically will be increased by
two, and the holders of a majority of the
outstanding shares of offered preferred
stock will have the exclusive right, voting
together as a single class, to elect the two
new directors. However, there are
limitations on this right, which are
described in the section of this prospectus
entitled "Description of the Offered
Preferred Stock -- Voting Rights" beginning
on page 24.
We cannot take certain actions without the
consent of holders of a majority of shares
of each series of
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offered preferred stock, including the
creation of any class of capital stock with
a ranking equal to or senior to the offered
preferred stock or that is redeemable on or
before May 13, 2008.
For detailed information regarding the offered preferred stock, you should
refer to the section of this prospectus entitled "Description of the Offered
Preferred Stock" beginning on page 13.
TERMS OF THE DEBENTURES
Principal....................... Upon an exchange of a series of offered
preferred stock for debentures, the holders
of the outstanding shares of the series of
offered preferred stock to be exchanged will
be entitled to receive debentures with a
principal amount equal to $1,000 in exchange
for each share of the offered preferred
stock exchanged.
Maturity........................ Each of the Series D debentures and the
Series E debentures will mature on May 13,
2008.
Interest........................ Series D debentures will bear interest at a
rate of 5.129810% per year. Series E
debentures will bear interest at a rate of
14% per year.
Interest Payment Dates.......... We will be required to pay interest on each
series of debentures in equal quarterly
installments on the last day of March, June,
September and December of each year.
Subordination................... The indebtedness evidenced by the debentures
will be subordinated in right of payment to
the prior payment in full of all "senior
indebtedness." Senior indebtedness generally
includes:
- our outstanding 11% Senior Notes due
2005;
- any indebtedness now or hereafter
issued or incurred by us under the
term loan agreement described in this
prospectus under "Description of Term
Loan and Senior Notes" beginning on
page 62; and
- any other indebtedness now or
hereafter incurred by us, unless the
instrument under which that
indebtedness is incurred expressly
provides that it is not superior in
right of payment to the debentures of
that series, excluding liability for
taxes, indebtedness to our
subsidiaries or other affiliates,
trade payables, or the debentures of
the other series.
Each series of debentures will rank equally
with or will be senior to all other
indebtedness of Oxford and will rank equally
with, and not senior to, each other.
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Upon certain bankruptcy and similar events
relating to Oxford, holders of senior
indebtedness will be entitled to receive
payment in full of the senior indebtedness
before the holders of the debentures will be
entitled to receive any payment of principal
or interest on the debentures, subject to
certain exceptions. In addition, no payment
may be made to holders of debentures when
certain defaults have occurred and are
continuing with respect to the senior
indebtedness, subject to certain exceptions.
As of the date of this prospectus, we had
approximately $150 million outstanding under
the term loan agreement and $200 million
aggregate principal amount of 11% Senior
Notes due 2005 outstanding.
The indentures relating to each series of
debentures do not contain restrictions on
our ability to incur additional
indebtedness.
Optional Redemption............. We have the right to redeem all outstanding
debentures of a series on or after May 13,
2003, at a redemption price for each
debenture of that series of 100% of the
principal amount of the debenture to be
redeemed, plus accrued and unpaid interest
on the debenture to the redemption date.
Change of Control Redemption.... If a "change of control" occurs with respect
to Oxford, holders of debentures may require
us to redeem any or all of the debentures
that they hold, at a redemption price for
each debenture equal to 100% of the
principal amount of the debenture to be
redeemed, plus accrued and unpaid interest
on the debenture to the redemption date.
Events that constitute a "change of control"
generally are described above in "-- Terms
of the Offered Preferred Stock" and a more
complete definition is contained in the
section of this prospectus entitled
"Description of the Offered Preferred
Stock -- Change of Control Redemption"
beginning on page 18.
Our ability to redeem debentures upon a
change of control may be limited by the
agreements that we have made and the various
restrictive covenants under our term loan
agreement and under the indenture that
governs our 11% Senior Notes due 2005. For a
description of these limitations, see
"Description of Term Loan and Senior Notes"
beginning on page 62. If we are required to
redeem debentures and we fail to pay the
redemption price
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on the redemption date, we will not be
released from our obligation to pay the
redemption price, and interest will accrue
on the missed payment.
Limited Voting Rights........... Holders of debentures will have voting
rights that are substantially similar to the
voting rights that the holders of offered
preferred stock have. Holders of debentures,
other than TPG Partners II, one of the
selling securityholders, and its affiliates,
generally will not have the right to vote,
unless:
- interest due and payable on either
series of debentures has not been
paid in full or, if one series of
offered preferred stock has not been
exchanged for debentures, the
dividends payable on that series of
offered preferred stock have been in
arrears and not paid in full, for
four consecutive quarterly periods;
or
- we fail to redeem or repay either
series of debentures when required to
do so or, if one series of offered
preferred stock has not been
exchanged for debentures, we fail to
redeem shares of that series of
offered preferred stock when required
to do so.
Generally, if any of the above events occur,
then the number of directors on our board of
directors automatically will be increased by
two, and the holders of a majority in
aggregate principal amount of outstanding
debentures of both series will have the
exclusive right, voting together as a single
class, to elect the two additional
directors. If one series of offered
preferred stock has not been exchanged for
debentures, then holders of debentures shall
vote with holders of the series of offered
preferred stock that has not been exchanged
as a single class to elect the two
additional directors. However, there are
limitations on this right, which are
described in "Description of the
Debentures -- Voting Rights" beginning on
page 36.
Restrictions on Dividends....... The indentures will contain limited
restrictions on our ability to pay dividends
or make any payment on our capital stock.
See "Description of the
Debentures -- Restrictions on Dividends" on
page 32 for more information about the
restrictions on dividends.
For detailed information regarding the debentures, you should refer to the
section of this prospectus entitled "Description of the Debentures" beginning on
page 28.
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TERMS OF THE WARRANTS
Exercise........................ Each Series A warrant and Series B warrant
entitles the holder to purchase one share of
our common stock, par value $.01 per share,
at an exercise price of $17.75 per share at
any time until the expiration date.
Expiration Date................. The expiration date for the Series A
warrants is the earlier of May 13, 2008 and
the date of redemption of all of the Series
D preferred stock.
The expiration date for the Series B
warrants is the earlier of May 13, 2008 and
the date of redemption of all of the Series
E preferred stock.
Adjustments..................... The warrants provide for adjustments to the
exercise price and the number of shares of
common stock that may be purchased upon
exercise to protect against dilution. The
warrants also provide for adjustments to the
exercise price and number of shares that may
be purchased upon exercise in the event of a
merger, consolidation, recapitalization or
other transaction that results in the
conversion of our common stock into the
right to receive other securities, property
or cash.
Warrant Agent................... ChaseMellon Shareholder Services, L.L.C.
For detailed information regarding the warrants, you should refer to the
section of this prospectus entitled "Description of the Warrants" beginning on
page 44.
OTHER
Use of Proceeds................. We will not receive any proceeds from the
sale of the offered preferred stock, the
debentures issuable in exchange for offered
preferred stock or the warrants covered by
this prospectus; the selling securityholders
will receive all proceeds from any such
sale. However, we will receive proceeds from
any exercise of the warrants and we intend
to use those proceeds for future capital
contributions to our regulated subsidiaries,
as necessary, for repayment of debt and for
general corporate purposes, or as otherwise
described in a prospectus supplement.
Shelf Registration Statement.... Under the registration rights agreement,
dated as of February 23, 1998, between us
and TPG Partners II, one of the selling
securityholders, we have agreed to use our
reasonable best efforts to keep effective a
shelf registration statement under which the
offered preferred stock, any debentures
issuable in exchange for offered preferred
stock, the warrants and the common stock
issuable upon exercise of the warrants,
which together we sometimes refer to as
"registrable securities," may
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<PAGE> 15
be sold. Generally, we are required to keep
the shelf registration statement effective
until:
- 10 years after the date it is first
declared effective; or
- if earlier, the date that all
registrable securities have been sold
under the shelf registration
statement or the date on which TPG
Partners II and its assigns are no
longer entitled to appoint directors
to our board of directors under the
investment agreement and are
permitted to sell their registrable
securities without registration under
Rule 144(k) under the Securities Act.
Generally, we intend the shelf registration
statement to permit the selling
securityholders named in this prospectus and
a limited group of their transferees to
resell the registrable securities from time
to time. Purchasers of the registrable
securities offered by means of this
prospectus will not have any rights under
the registration rights agreement, although,
once sold under the shelf registration
statement, the registrable securities should
be freely tradeable except by purchasers who
are our "affiliates" or are "underwriters"
of the registrable securities for purposes
of the Securities Act. We have filed the
shelf registration statement of which this
prospectus is a part with the Securities and
Exchange Commission in order to meet our
obligations under the registration rights
agreement.
Trading......................... Our common stock currently trades on the
Nasdaq National Market under the symbol
"OXHP."
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<PAGE> 16
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERENCE DIVIDENDS
The ratio of earnings to combined fixed charges and preference dividends
for each of the periods indicated is as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed
Charges and Preference
Dividends......................... 1.7 * * * 25.5 19.3 17.6
==== ==== ==== ==== ==== ==== ====
</TABLE>
- -------------------------
* Earnings were insufficient to cover fixed charges and preference dividends by
$642.9 million for the year ended December 31, 1998, $431.6 million for the
year ended December 31, 1997 and $622.2 million for the nine months ended
September 30, 1998.
For purposes of computing these ratios, we increased our combined earnings
before income taxes, as reported in our annual report on Form 10-K/A No. 2 for
the year ended December 31, 1998, as amended by our Form 10-K/A No. 3, and in
our quarterly report on Form 10-Q for the quarter ended September 30, 1999, by
the amount of our fixed charges. We then divided the amount of earnings by the
amount of fixed charges and preference dividends, resulting in the ratio of
earnings to combined fixed charges and preference dividends. Fixed charges
represent interest expense plus the estimated interest factor in rental expense.
We have not capitalized interest in any period.
See "Where You Can Find More Information" on page 74 for a description of
how to obtain these documents.
12
<PAGE> 17
BUSINESS
We provide health care benefit plans through our HMO and insurance
subsidiaries primarily in New York, New Jersey and Connecticut. Our product line
includes:
- traditional health maintenance organizations which require the member to
choose a health care provider from the network of providers under
contract with us;
- health care benefit plans for Medicare beneficiaries;
- health care benefit plans, known as point-of-service plans, which provide
the member with the option of using a provider who is under contract with
us or one who is not under contract with us;
- health care benefit plans, known as preferred provider organizations,
which permit the member to choose any health care provider;
- health care benefit plans for individuals; and
- administrative services for groups that provide their own health care
insurance, known as self-funded plans.
We distribute our products through several different internal channels,
including direct sales representatives, business representatives, inbound
telemarketing representatives and executive account representatives, as well as
through external insurance agents, brokers and consultants.
As of the date of this prospectus, we had a network of more than 50,000
providers under contract with us. The majority of the primary care physicians,
specialists and hospitals in our network have contracted directly with us. We
also have contracts with groups of providers such as physician hospital
organizations, individual practice associations and other physician groups. We
have entered into risk transfer agreements for the provision of health benefits
to some of our Medicare beneficiaries as well as for pharmacy benefits
management and laboratory and radiology services.
For a fuller description of our business, including the risks involved in
our business, refer to our most recently filed annual report which, as of the
date of this prospectus, is our Form 10-K/A No. 2 for the year ended December
31, 1998, as amended by our Form 10-K/A No. 3, which is incorporated into this
prospectus by reference.
DESCRIPTION OF THE OFFERED PREFERRED STOCK
The following summarizes certain terms and provisions of the Series D
preferred stock and the Series E preferred stock. This summary is not complete
and is subject to, and qualified in its entirety by reference to, applicable
Delaware law and to the provisions of our certificate of incorporation, by-laws
and the certificates of designations designating the Series D preferred stock
and the Series E preferred stock. These documents are filed as exhibits to the
registration statement of which this prospectus is a part.
AUTHORITY TO ISSUE PREFERRED STOCK
Our certificate of incorporation authorizes our board of directors to
issue, without the approval of the stockholders, up to 2,000,000 shares of
preferred stock, $.01 par value. As of the date of this prospectus, we:
- had designated 300,000 shares of Series D Cumulative Preferred Stock, par
value $.01 per share, which we refer to as the "Series D preferred
stock," and had issued 263,606.551 shares of Series D preferred stock;
and
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<PAGE> 18
- had designated 300,000 shares of Series E Cumulative Preferred Stock, par
value $.01 per share, which we refer to as the "Series E preferred
stock," and had issued 115,899.276 shares of Series E preferred stock.
We expect to issue an additional 14,022.606 shares of Series D preferred
stock and 16,908.793 shares of Series E preferred stock as dividends on the
existing shares of offered preferred stock through May 13, 2000.
Before issuing a series of preferred stock, our board of directors has the
right to designate, for that series of preferred stock:
- the serial designations;
- dividend rates;
- the offering price or prices;
- provisions for redemption or purchase;
- provisions for conversion;
- voting rights;
- special or relative rights in the event of a liquidation, distribution or
sale of assets or dissolution or winding up;
- provisions for a sinking fund; and
- any other rights, obligations or provisions which may be so determined to
the fullest extent permitted by Delaware law.
As described below, our board of directors cannot create any class of
capital stock with a ranking equal to or senior to the offered preferred stock
or that is redeemable on or before May 13, 2008 without the consent of the
holders of a majority of the shares of each series of the offered preferred
stock.
GENERAL
The stated value of the offered preferred stock is $1,000 per share. The
offered preferred stock does not provide holders with preemptive rights. The
terms of the Series D preferred stock and Series E preferred stock are
substantially similar except for their dividend rates and as noted specifically
below.
Under the investment agreement, the selling securityholders named in this
prospectus purchased 245,000 shares of our Series A Cumulative Preferred Stock,
which we refer to as the "Series A preferred stock," 105,000 shares of our
Series B Cumulative Preferred Stock, which we refer to as the "Series B
preferred stock," Series A Warrants to purchase 15,800,000 shares of our common
stock, par value $.01 per share, and Series B Warrants to purchase 6,730,000
shares of our common stock for a total purchase price of $350 million. On
February 13, 1999, we entered into a share exchange agreement with the selling
securityholders to redistribute the total amount of dividends payable among the
shares of Series A preferred stock and Series B preferred stock. Under the share
exchange agreement, the 245,000 shares of Series A preferred stock were
exchanged for 260,146.909 shares of Series D preferred stock, and the 105,000
shares of Series B preferred stock were exchanged for 111,820.831 shares of
Series E preferred stock. The additional amounts of Series D preferred stock and
Series E preferred stock issued in the exchange are attributable to dividends
accrued on the Series A preferred stock and the Series B preferred stock,
respectively, through February 13, 1999. As a result of the exchange, the
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<PAGE> 19
selling securityholders hold only Series D preferred stock and Series E
preferred stock and, following the exchange, all shares of the Series A
preferred stock and Series B preferred stock were canceled. The terms of the
Series D preferred stock are substantially similar to the terms of the Series A
preferred stock and the terms of the Series E preferred stock are substantially
similar to the terms of the Series B preferred stock, except, in each case, with
respect to applicable dividend rates and their use as consideration for the
exercise of the warrants. The exchange was effected primarily to facilitate the
potential sale of the offered preferred stock by the selling securityholders.
We conduct our operations primarily through our subsidiaries. Therefore,
our ability to make required dividend payments depends in part on the earnings
of our subsidiaries and on our ability to receive funds from our subsidiaries
through dividends or other payments. Because payments due on the offered
preferred stock are obligations of Oxford alone, our subsidiaries are not
obligated to pay any amount due under the offered preferred stock or to make
funds available for dividends on the offered preferred stock in the form of
dividends or advances to us. In addition, various insurance and health
regulations applicable to our subsidiaries restrict their ability to pay
dividends to us. If we incur operating losses, we may be required to make
additional capital contributions to our subsidiaries in order to comply with
statutory capital requirements and the payment of dividends by those
subsidiaries would likely not be permitted.
In addition, the offered preferred stock effectively is subordinated to all
outstanding indebtedness and other liabilities and commitments, including
accounts payable and other accrued liabilities, of our subsidiaries. Any right
we have to receive assets of one of our subsidiaries upon its liquidation or
reorganization, and the resulting right of holders of the offered preferred
stock to participate in those assets, effectively will be subordinated to the
claims of that subsidiary's creditors, except to the extent we are recognized as
a creditor of that subsidiary. If we are recognized as a creditor of that
subsidiary, our claims would still be subordinated to any security interest in
the assets of the subsidiary and any indebtedness of the subsidiary that is
senior to indebtedness held by us.
ChaseMellon Shareholder Services, L.L.C. will be the transfer agent,
dividend disbursing agent and registrar for the offered preferred stock unless
otherwise specified in a prospectus supplement.
RANKING
With respect to the right to receive dividends and payments upon the
liquidation, dissolution or winding up of Oxford, the offered preferred stock
ranks:
- senior to our common stock and, except as specified below, any other
class or series of our capital stock we issue in the future;
- equally with each other class or series of preferred stock which by its
terms provides that it ranks equally with the offered preferred stock;
and
- junior to each other class of preferred stock which by its terms provides
that it ranks senior to the offered preferred stock.
Currently, there are no classes of preferred stock issued or outstanding
that rank senior to the Series D preferred stock or the Series E preferred
stock. The Series D preferred stock and the Series E preferred stock have the
same ranking, and there are currently no other classes of preferred stock that
have the same ranking as the Series D preferred stock and Series E preferred
stock. The consent of holders of each series of
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<PAGE> 20
offered preferred stock is required for Oxford to be able to create a class of
preferred stock that has the same ranking or that is senior to that class of
offered preferred stock.
MANDATORY REDEMPTION
On May 13, 2008, we are required to redeem all outstanding shares of the
offered preferred stock. For a description of the redemption price and
redemption procedures, see "-- Redemption Price and Procedures" beginning on
page 19.
DIVIDENDS
Dividend payments on the shares of Series D preferred stock and shares of
Series E preferred stock are to be made in the following amounts and manner:
<TABLE>
<CAPTION>
SERIES D PREFERRED STOCK SERIES E PREFERRED STOCK
------------------------- -------------------------
<S> <C> <C>
BEFORE MAY 13, 2000:
Dividend Rate Shares of Series D Shares of Series E
preferred stock preferred stock
accumulate dividends at a accumulate dividends at a
rate of 5.319521% per rate of 14.589214% per
year. year.
Form of Payment We may choose to make We may choose to make
payments of dividends in payments of dividends in
cash or by the issuance cash or by the issuance
of additional shares of of additional shares of
Series D preferred stock. Series E preferred stock.
ON OR AFTER MAY 13, 2000:
Dividend Rate Shares of Series D Shares of Series E
preferred stock preferred stock
accumulate dividends at a accumulate dividends at a
rate of 5.129810% per rate of 14% per year.
year.
Dividend Payment Dates An annual dividend is An annual dividend is
payable on May 13, 2000 payable on May 13, 2000
and, after that date, and, after that date,
dividends are payable in dividends are payable in
equal quarterly equal quarterly
installments on the last installments on the last
day of March, June, day of March, June,
September and December of September and December of
each year, commencing in each year, commencing in
June 2000. June 2000.
Form of Payment On May 13, 2000, we may On May 13, 2000, we may
choose to make payments choose to make payments
of dividends in cash or of dividends in cash or
by the issuance of by the issuance of
additional shares of additional shares of
Series D preferred stock; Series E preferred stock;
after May 13, 2000, after May 13, 2000,
payments of dividends payments of dividends
must be in cash. must be in cash.
</TABLE>
If any date specified as a dividend payment date is not a business day, we
will pay the dividends due on the next business day, without interest. We will
pay dividends to holders of record as they appear on our stock record books 15
days prior to the relevant dividend payment date.
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<PAGE> 21
We will pay dividends only when, as and if declared by our board of
directors, out of funds at the time legally available for the payment of
dividends under the Delaware General Corporation Law. In addition, we are
subject to various restrictive covenants that may limit our ability to pay
dividends on the offered preferred stock. See "Description of Term Loan and
Senior Notes" beginning on page 62 of this prospectus. If we fail to pay
dividends when due, we will not be released from our obligation to make that
dividend payment and additional dividends will accumulate on the missed payment.
On May 13, 1999, we issued:
(a) a dividend in the amount of $13.29880250 per share of Series D preferred
stock in the form of 3,459.64236379 shares of Series D preferred stock to
the holders of record as of April 28, 1999; and
(b) a dividend in the amount of $36.47303500 per share of Series E preferred
stock in the form of 4,078.44508277 shares of Series E preferred stock to
the holders of record as of April 28, 1999.
These payments reflected dividends accumulated from February 13, 1999, the
date the offered preferred stock was issued in exchange for the Series A
preferred stock and the Series B preferred stock. Dividends that accumulated on
the Series A preferred stock and Series B preferred stock from May 13, 1998
through February 13, 1999 were satisfied by the issuance of additional shares of
Series D preferred stock and Series E preferred stock in the exchange. We have
paid all accrued dividends required to be paid on the offered preferred stock to
the date of this prospectus.
ACCUMULATION OF DIVIDENDS
Dividends began to accumulate on outstanding shares of the offered
preferred stock from the date of issuance, and accumulate day-to-day, whether or
not earned or declared, until the dividends are paid. Dividends accumulate on
the basis of a 360-day year consisting of twelve 30-day months and the actual
number of days elapsed in the period for which payable. Dividends payable at
more than one annual rate for any dividend period or partial dividend period
will be pro rated based on the number of days in the dividend period or partial
dividend period, and the actual number of days elapsed for which dividends are
payable, at the applicable annual rate.
ADDITIONAL DIVIDENDS
Whenever we do not pay in full any dividend that has accumulated through
any dividend payment date, or whenever we do not pay in full any redemption
payment on any payment date set for a redemption, additional dividends will
accumulate on the amount of the unpaid dividends or the unpaid redemption
payment. An unpaid amount is referred to as an "arrearage." Additional dividends
accumulate on an arrearage at the annual dividend rate then in effect or a
lesser rate as may be the maximum rate that is then permitted by applicable law.
Additional dividends in respect of any arrearage:
- will accumulate day-to-day, whether or not earned or declared, until the
arrearage is paid; and
- will be calculated as of each successive dividend payment date and will
constitute an additional arrearage from and after any dividend payment
date to the extent not paid on that dividend payment date.
We may declare and pay additional dividends in respect of any arrearage at
any time, in whole or in part, without reference to any regular dividend payment
date, to registered
17
<PAGE> 22
holders as they appear on our stock record books on the record date fixed by our
board of directors. The record date must be at least 10 days before the
corresponding payment date. Repayment of any arrearage must be made in cash.
METHOD OF PAYMENT
If we pay less than the total amount of accumulated dividends payable on
all outstanding shares of a series of offered preferred stock, then we will
allocate dividends pro rata on a share-by-share basis among all outstanding
shares of that series. Once dividends are payable in cash, dividends that we
declare and pay in an amount less than the full amount of dividends accumulated
on a series of the offered preferred stock and on any arrearage will be applied
first to the earliest dividend that has not yet been paid. We will make all cash
payments of dividends on the offered preferred stock in United States dollars.
LIQUIDATION PREFERENCES
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Oxford, a holder of offered preferred stock will be entitled to
receive out of the assets of Oxford, before we make any payment or distribute
any assets to the holders of any securities that rank junior to the offered
preferred stock, an amount per share equal to the sum of:
(1) the dividends, if any, accumulated on the offered preferred stock to
the date we make liquidation distributions, whether or not dividends
have been declared; and
(2) the stated value of the share of offered preferred stock, which is
$1,000.
If these assets or proceeds are insufficient to satisfy all claims with the
same priority of payment as the offered preferred stock, then we will distribute
the available assets and proceeds ratably among the holders of the offered
preferred stock and any securities that have the same priority of payment as the
offered preferred stock. After we pay holders the full amount of the liquidation
preference to which they are entitled, they will not be entitled to participate
in any further distribution of our assets. Neither a consolidation nor merger of
Oxford nor a sale, conveyance, lease, exchange or transfer of all or part of
Oxford's assets will be a liquidation, dissolution or winding up of Oxford.
OPTIONAL REDEMPTION
On and after May 13, 2003, we have the right to redeem all the outstanding
shares of a series of the offered preferred stock, in whole but not in part, in
accordance with the procedures described under "-- Redemption Price and
Procedures" beginning on page 19.
CHANGE OF CONTROL REDEMPTION
If a "change of control" occurs, then holders of offered preferred stock
may require us to redeem any or all of their shares of offered preferred stock.
A "change of control" means the time that any of the following occurs:
(1) any person or group other than TPG Partners II, its affiliates,
Oxford or any of our subsidiaries, or any group comprised of those
persons, becomes, directly or indirectly, the beneficial owner, by
way of merger, consolidation or otherwise, of a majority of the
then-outstanding securities of Oxford entitled to vote in an election
of directors. This determination will be made after giving effect to
the
18
<PAGE> 23
conversion and exercise of all outstanding warrants, options and
other securities of Oxford convertible into or exercisable for
securities of Oxford entitled to vote in an election of directors,
whether or not the securities are then convertible or exercisable;
(2) the sale, lease, transfer or other disposition of all or
substantially all of the assets of Oxford and our subsidiaries to any
person or group;
(3) during any period of two consecutive calender years, the following
individuals cease to constitute a majority of our directors then in
office:
(a) directors who constituted our board of directors at the
beginning of the two-year period; together with
(b) new directors whose election by our board of directors or whose
nomination by stockholders was approved by at least a majority
of the directors then still in office, which approving directors
were directors:
- at the beginning of the two-year period; or
- whose election or nomination was previously approved by our
board of directors; or
- who were approved under the provisions of the investment
agreement or the applicable certificate of designations;
(4) Oxford consolidates or merges with or into another person, or any
person consolidates or merges with or into Oxford, and immediately
after the consolidation or merger, the persons who owned the
outstanding voting securities of Oxford immediately before the
consolidation or merger do not own, by reason of their prior
ownership, a majority of the outstanding voting securities of Oxford
or the surviving corporation; or
(5) the adoption of a plan relating to the liquidation or dissolution of
Oxford.
The procedures for redemption are described below under "-- Redemption
Price and Procedures."
We may redeem the offered preferred stock only out of funds at the time of
redemption legally available for the redemption of capital stock under the
Delaware General Corporation Law. In addition, we are subject to obligations and
various restrictive covenants that may limit our ability to redeem the offered
preferred stock upon a change of control. See "Description of Term Loan and
Senior Notes" beginning on page 62 of this prospectus. If we are required to
redeem offered preferred stock and we fail to pay the redemption price on the
redemption date, we will not be released from our obligation to pay the
redemption price, and dividends will accumulate on the missed payment.
REDEMPTION PRICE AND PROCEDURES
REDEMPTION PRICE
We will pay the redemption price of the offered preferred stock to be
redeemed in cash out of funds legally available for the payment of the
redemption price. The redemption price will be an amount per share equal to the
sum of:
(1) the amount, if any, of all unpaid dividends accumulated on the offered
preferred stock to be redeemed to the date of actual payment of the
redemption price, whether or not these dividends have been declared;
and
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<PAGE> 24
(2) the stated value of the share of offered preferred stock to be
redeemed, which is $1,000.
OPTIONAL REDEMPTION AND MANDATORY REDEMPTION PROCEDURES
If we redeem shares of offered preferred stock, we are required to send
notice of the redemption, including the redemption date, to the holders of
record of the offered preferred stock to be redeemed by first class mail,
postage prepaid, at each holder's address as it appears on our stock record
books. We are required to send the notice not more than 120 days nor fewer than
90 days before the date fixed for redemption. If we irrevocably deposit funds
sufficient to pay the aggregate redemption price for the series of offered
preferred stock to be redeemed, as described under "-- Deposit of Funds" on page
22 at the same time or prior to the delivery of a notice of redemption, then we
are required to send the notice of redemption not more than 120 days nor fewer
than 30 days before the fixed redemption date. However, if requested by TPG
Partners II or any of its affiliates, we must delay the fixed redemption date
for a period of no more than 30 days, if:
- the notice of redemption is delivered less than 60 days before the
redemption date; and
- as of the date of the notice of redemption, TPG Partners II or any of its
affiliates beneficially owns offered preferred stock of the series to be
redeemed and has used its reasonable best efforts to complete a sale of
some or all of its shares of the series of offered preferred stock to be
redeemed prior to the stated redemption date but has not completed the
sale.
We are required to notify the holders of the offered preferred stock to be
redeemed about this delay within five days of receiving the request from TPG
Partners II or its affiliates. We will not delay the redemption date in this
manner more than once.
Our board of directors may fix a record date to determine the holders of
offered preferred stock to be redeemed. This record date will not be more than
30 days before the date that we mail the notice of redemption. On or after the
redemption date, each holder of the shares of offered preferred stock called for
redemption will be required to surrender the certificate evidencing those shares
to us at the place designated in the notice, and will be entitled to receive
payment of the redemption price when they surrender their certificate. No
dividends on the offered preferred stock called for redemption will accumulate
after the redemption date, and after that date, all rights of the holders of
shares of offered preferred stock that are redeemed will cease and terminate,
except to the extent we default in payment on the redemption date.
As long as TPG Partners II or its affiliates hold any shares of a series of
the offered preferred stock, we may not deliver a notice of redemption with
respect to that series unless:
- our preferred stock is rated Baa or better by Moody's Investors Service,
Inc., or BBB or better by Standard & Poor's Ratings Group or, if our
preferred stock is not rated by Moody's and Standard & Poor's, our
unsecured debt is rated Baa or better by Moody's or BBB or better by
Standard & Poor's; or
- we have sufficient funds reasonably available under committed lines of
credit or other similar sources of financing established with financially
sound financing providers to pay, on the redemption date, the aggregate
redemption price and have reserved funds or availability for payment of
the total redemption price.
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<PAGE> 25
We may deliver a notice of redemption without complying with these two
conditions if we irrevocably deposit funds sufficient to pay the total
redemption price for the offered preferred stock to be redeemed, as described
under "-- Deposit of Funds" on page 22, before or at the same time we deliver
the notice of redemption.
Prior to any redemption date, other than in a mandatory redemption, we will
take all measures reasonably requested by TPG Partners II or its affiliates to
facilitate their sale or other disposition of the offered preferred stock to be
redeemed before the redemption date, including:
- participation in due diligence sessions and provision of information
about our management, business and financial condition;
- preparation of offering memoranda, private placement memoranda and other
similar documents; and
- preparation and delivery of other certificates or documents that TPG
Partners II or any of its affiliates reasonably requests.
CHANGE OF CONTROL REDEMPTION PROCEDURES
We are required to send notice of any change of control to the holders of
record of the outstanding shares of offered preferred stock not more than five
days following a change of control. This notice will describe the transaction
constituting the change of control and will set forth:
- each holder's right to require us to redeem any or all shares of offered
preferred stock held by him or her out of legally available funds;
- the redemption date, which will not be more than 30 days from the date of
the notice of the change of control; and
- the procedures to be followed by holders in exercising his or her right
to have his or her shares of offered preferred stock redeemed.
If more than 50 holders or groups of affiliated holders own shares of a
series of offered preferred stock and if that series of offered preferred stock
is listed on any national securities exchange or quoted on any national
quotation system, we also are required to give notice of a change of control by
publication in a newspaper of general circulation in the Borough of Manhattan,
The City of New York, within 30 days following the change of control. Our
failure to give a notice of a change of control, or the formal insufficiency of
any notice, will not prejudice the rights of holders of offered preferred stock
to have us redeem their shares.
If a holder of offered preferred stock elects to require us to redeem any
or all of its shares of offered preferred stock following a change of control,
the holder must deliver a written notice to us, in the form specified by us if
we did in fact give notice of a change of control as required, stating that the
holder wants us to redeem the shares it holds, and specifying the number of
shares to be redeemed. This notice must be delivered prior to the redemption
date set forth in the notice of a change of control, or, if the notice of a
change of control is not given, at any time following the last day we were
required to give the notice of a change of control. If we do not give the
required notice, the redemption date for any holder that elects to redeem shares
of offered preferred stock will be the date that is the later of (x) 30 days
following the last day we were required to give the notice of change of control
and (y) 15 days following the delivery of a notice of election by that holder.
If 50 or fewer holders or groups of affiliated holders own all of the shares of
a
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<PAGE> 26
series of the offered preferred stock, the holders or groups of holders of that
series may deliver a notice or an election to redeem at any time within 90 days
following the occurrence of a change of control without awaiting receipt of a
notice of a change of control or the expiration of the time allowed for the
delivery of a notice of a change of control. We will redeem the shares of
offered preferred stock so specified on the redemption date fixed by us or as
provided in the preceding sentence.
We are required to comply with the requirements of Rules 13e-4 and 14e-1
under the Securities Exchange Act of 1934 and any other securities laws and
regulations to the extent such laws and regulations are applicable in connection
with the repurchase of the shares of the offered preferred stock as a result of
a change of control. To the extent that the provisions of any securities laws or
regulations conflict with the redemption procedures described above, we will
comply with the applicable securities laws and regulations and will not be
deemed to have breached our obligations to the holders of offered preferred
stock.
DEPOSIT OF FUNDS
On or prior to any redemption date, we are required to deposit with our
transfer agent or other redemption agent, as a trust fund for the benefit of the
holders of the shares of the offered preferred stock to be redeemed, an amount
of cash that is sufficient to redeem all offered preferred stock to be redeemed.
We also are required to provide irrevocable instructions and authority to the
transfer agent or other redemption agent to pay the redemption price to those
holders whose shares are to be redeemed. This deposit will constitute full
payment to the holders, and from and after the date of this deposit, all rights
of the holders with respect to the shares of the offered preferred stock that
are to be redeemed, except the right to receive the redemption price upon the
surrender of their respective certificates, will cease and terminate.
Dividends will not accumulate on any shares of offered preferred stock
after the redemption date for those shares unless we fail to deposit cash
sufficient to redeem those shares. If the holders of any shares of offered
preferred stock to be redeemed do not claim the cash deposited for redemption
within two years after the deposit, the transfer agent or other redemption agent
will pay the balance to us. Upon this payment, the transfer agent or other
redemption agent will be relieved of all responsibility to holders and the sole
right of holders, with respect to shares to be redeemed, will be to receive the
redemption price as our general creditors. Any interest accrued on the deposited
funds will belong to us and will be paid to us from time to time on demand.
EXCHANGE
We may exchange the Series D preferred stock for Series D Junior
Subordinated Debentures due May 13, 2008 and we may exchange the Series E
preferred stock for Series E Junior Subordinated Debentures due May 13, 2008 at
any time, in each case to the extent permitted by applicable law, in whole but
not in part. Each series of debentures will be issued pursuant to an indenture,
the form of which is attached as an exhibit to the registration statement of
which this prospectus is a part. We would issue a debenture in principal amount
of $1,000 in exchange for each share of the series of offered preferred stock
exchanged. The terms of the debentures are described under "Description of the
Debentures" beginning on page 28. The exchange may take place on any dividend
payment date at our offices or at any other place that our board of directors
designates.
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Unless we receive the prior written consent of the holders of all
outstanding shares of the series of offered preferred stock to be exchanged, we
may not exchange any shares if:
(a) full cumulative dividends, to the extent payable or deemed payable
through the date of exchange, have not been paid or set aside for
payment on all outstanding shares of the series of offered preferred
stock to be exchanged;
(b) we have failed to amend our certificate of incorporation pursuant to
Delaware law to give holders of the debentures the same power to vote
that they had as holders of offered preferred stock; or
(c) the exchange could result in any materially adverse tax consequence to
TPG Partners II or any of its affiliates.
In order to prevent an exchange of shares of offered preferred stock
because it could result in a material adverse tax consequence to TPG Partners II
or any of its affiliates, TPG Partners II or one of its affiliates must deliver
a written notice to us specifying in reasonable detail the nature of the tax
consequence, which must be a tax consequence other than the difference between
the tax treatment of distributions on the offered preferred stock and interest
payments on the debentures. TPG Partners II or one of its affiliates must
deliver that notice by the fifteenth day after it received the notice of
exchange. TPG Partners II and its affiliates have agreed not to deliver this
notice unless at the time TPG Partners II and its affiliates beneficially own a
total of at least 1,000 shares of the series of offered preferred stock to be
exchanged. If we receive an objection notice, then we will not exchange the
shares of offered preferred stock held by TPG Partners II and its affiliates,
and we will mail, within 15 days after receipt of the notice, written notice
that we are canceling the proposed exchange of shares of offered preferred stock
to each holder of record of shares of offered preferred stock to which we mailed
the notice of exchange.
Before giving notice of our intention to exchange, we will execute and
deliver the indenture to a bank or trust company selected by our board of
directors and will qualify the trustee under the Trust Indenture Act of 1939.
We are required to mail written notice of our intention to exchange the
offered preferred stock for debentures to each holder of record of shares of the
series of offered preferred stock to be exchanged not less than 90 days nor more
than 120 days prior to the date fixed for exchange.
Prior to effecting any exchange, we are required to deliver to each holder
of shares of the series of offered preferred stock to be exchanged an opinion of
nationally recognized legal counsel which states that:
(1) the applicable indenture and the debentures to be exchanged have been
duly authorized and executed by Oxford and, when delivered by Oxford in
exchange for shares of offered preferred stock, will constitute valid
and legally binding obligations of Oxford enforceable against Oxford in
accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
to general principles of equity;
(2) the exchange of debentures for the shares of offered preferred stock
will not violate the provisions of the applicable certificate of
designations that govern an exchange or of the Delaware General
Corporation Law; and
(3) the exchange of the debentures for the shares of offered preferred
stock is exempt from the registration requirements of the Securities
Act or, if no such exemption
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<PAGE> 28
is available, that the debentures have been duly registered for
exchange under the Securities Act.
Upon the exchange of a series of offered preferred stock for debentures,
the rights of the holders of that series of offered preferred stock as our
stockholders will terminate, and the shares of offered preferred stock will no
longer be outstanding.
Before any holder of offered preferred stock will be entitled to receive
debentures, a holder must surrender his or her certificates at our office or at
any other place that our board of directors may designate, and must state in
writing the name or names with addresses in which he or she wishes the
certificates for the debentures to be issued. After the surrender of
certificates, we will issue and deliver certificates for the debentures to the
holder, or to his or her nominee, at our office or other designated place. We
will exchange shares of offered preferred stock as of the close of business on
the date fixed for exchange as provided above, and the person entitled to
receive the debentures issuable upon exchange will be treated for all purposes,
including the accrual and payment of interest, as the record holder or holders
of debentures as of the close of business on that date.
VOTING RIGHTS
RIGHTS OF TPG PARTNERS II AND ITS AFFILIATES
Under the terms of the offered preferred stock, TPG Partners II and its
affiliates have certain voting rights as holders of shares of offered preferred
stock, which voting rights do not apply to other holders. In particular, only
TPG Partners II and its affiliates have the right to vote their shares of
offered preferred stock on all matters voted by holders of common stock. In
those circumstances, TPG Partners II and its affiliates vote together with the
holders of common stock as a single class. These voting rights are not
transferable to any subsequent holder of offered preferred stock. If the shares
of offered preferred stock are transferred to a person other than TPG Partners
II or its affiliates, and TPG Partners II or its affiliates subsequently
reacquire those shares, TPG Partners II and its affiliates would not reacquire
the right to vote those shares of offered preferred stock with holders of common
stock.
Under the investment agreement, TPG Partners II and its affiliates are
permitted to designate members of our board of directors. The number of
directors TPG Partners II and its affiliates are permitted to designate at any
time is dependent on the number of shares of common stock issued or issuable
upon exercise of warrants held by TPG Partners II and its affiliates. In
addition to the other voting rights described in this section, if at any time
the number of directors on our board of directors designated by TPG Partners II
and its affiliates is less than the number they are entitled to designate under
the investment agreement, TPG Partners II and its affiliates, voting separately
as a single class, are entitled to elect a number of additional directors to our
board of directors equal to the deficiency. This right terminates at the time
the requisite number of directors on our board of directors are designated by
TPG Partners II and its affiliates.
RIGHTS OF ALL HOLDERS
All holders of shares of offered preferred stock, including TPG Partners II
and its affiliates, have the voting rights described below.
If:
(1) dividends payable on either series of offered preferred stock have been
in arrears and not paid in full for four consecutive quarterly periods
or if dividends on either
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<PAGE> 29
series of offered preferred stock have been in arrears and not paid in
full on May 13, 2000; or
(2) we fail to satisfy our obligation to redeem shares of either series of
offered preferred stock under the relevant certificate of designations,
then the number of directors constituting our board of directors automatically
will be increased by two, and the holders of a majority of the outstanding
shares of offered preferred stock will have the exclusive right, voting together
as a single class, to elect the two additional directors, except under the
circumstances described below.
Under the investment agreement, TPG Partners II and its affiliates are
permitted to designate directors to our board of directors. However, TPG
Partners II and its affiliates are not permitted to elect and/or designate a
total of more than four directors to our board of directors. If at the time
holders of offered preferred stock have the right to elect additional directors,
(1) TPG Partners II and its affiliates together beneficially own a majority
of the outstanding shares of offered preferred stock; and
(2) TPG Partners II and its affiliates are not permitted to elect one or
both of the additional directors because of the restrictions described
above,
then the holders of offered preferred stock, other than TPG Partners II and its
affiliates, will have the right to elect, voting together as a single class,
only one additional director.
Any additional director will continue as a director, and these additional
voting rights will continue until:
(1) we pay all dividends accumulated on the offered preferred stock in
full; and
(2) we satisfy any obligation to redeem the offered preferred stock that
has become due, or we set aside all necessary funds for the redemption
payment.
Upon the occurrence of these events, any additional director will cease to be a
director and the additional voting rights of the holders of offered preferred
stock will terminate subject to revesting if any subsequent failure to pay
dividends or redeem shares as described above occurs and subject to any rights
to elect directors of holders of any other series of our preferred stock.
The holders of offered preferred stock may exercise their right to elect
additional directors at any annual meeting of stockholders, at a special meeting
of stockholders held for this purpose, or by the written consent of the holders
of the minimum number of shares required to take action. As long as this right
to vote continues, and unless this right has been exercised by written consent
of the minimum number of shares required to take action, the chairman of our
board of directors may call, and upon the written request of holders of record
of 20% of the outstanding shares of either the Series D preferred stock or the
Series E preferred stock, addressed to our secretary at our principal office,
will call a special meeting of the holders of shares entitled to vote as
described above. This meeting will be held within 60 days after delivery of a
request to the secretary, at the place and upon the notice provided by law and
in the by-laws for meetings of stockholders.
Each director elected as described above will serve until the next annual
meeting or until his or her successor is elected and qualified, unless the
director's term of office has terminated as described above. If any vacancy
occurs among the directors elected as described above, the vacancy may be filled
for the unexpired portion of the term by the remaining director or directors
elected by the holders entitled to vote for directors as
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described above, or their successor or successors in office, if any. If the
vacancy is not filled within 20 days after it is created or if all of the
remaining directors elected by the holders of offered preferred stock as
described in this section cease to serve as directors before their term expires,
the holders of the shares then outstanding and entitled to vote for the director
as described above may elect successors to hold office for the unexpired terms
of any vacant directorships. The holders of a majority of the shares entitled to
vote for directors as described above will have the right to remove with or
without cause at any time and replace any directors that they have elected, by
written consent or at a special meeting of the holders entitled to vote for
directors as described above.
We may not take the following actions without the consent or affirmative
vote of the holders of at least a majority of the outstanding shares of a series
of offered preferred stock, voting separately as a class:
- authorize, create or issue, or increase the authorized amount of any
securities that rank senior or equal to the offered preferred stock for
the purpose of receiving dividends or distributions upon the liquidation,
dissolution or winding-up of Oxford;
- authorize, create or issue, or increase the authorized amount of any
class or series of capital stock or any security convertible into or
exercisable for any class or series of capital stock, redeemable
mandatorily or redeemable at the option of the holder at any time on or
prior to May 13, 2008, whether or not redemption may occur only upon the
occurrence of a specified event;
- amend, alter or repeal any provision of our certificate of incorporation
or our by-laws if the amendment, alteration or repeal alters or changes
the powers, preferences or special rights of the applicable series of
offered preferred stock so as to affect them materially and adversely; or
- authorize or take any other action if such action alters or changes any
of the rights of the applicable series of offered preferred stock in any
respect or otherwise would be inconsistent with the provisions of the
applicable certificate of designations and the holders of any class or
series of our capital stock are entitled to vote on that action.
No consent or vote of the holders of the outstanding shares of offered preferred
stock is required:
- for the creation or issuance by a trust formed at our direction of any
series of preferred securities of such trust for financing purposes in an
aggregate amount not to exceed $250,000,000; or
- to authorize, create or issue, or increase the authorized amount of, any
class or series of securities that rank junior to the offered preferred
stock, or any security convertible into a stock of any class or series of
securities that rank junior to the offered preferred stock, except to the
extent such action would violate the relevant certificate of
designations.
RESTRICTIONS ON DIVIDENDS
As long as any shares of offered preferred stock are outstanding, our board
of directors:
- may not declare, and we may not pay or set apart for payment, any
dividend on any securities that rank junior to the offered preferred
stock;
- may not make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the repurchase, redemption or
other retirement of, any securities that rank junior or equal to the
offered preferred stock or any
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<PAGE> 31
warrants, rights or options exercisable for or convertible into any securities
that rank junior or equal to the offered preferred stock, other than the
repurchase, redemption or other retirement of debentures or other debt
securities that are convertible into or exchangeable for any securities
that rank junior or equal to the offered preferred stock;
- may not make any distribution in respect of the securities that rank
junior to the offered preferred stock, either directly or indirectly, and
whether in cash, obligations, shares or other property, other than
distributions or dividends in securities that rank junior to the offered
preferred stock to the holders of securities that rank junior to the
offered preferred stock; and
- may not permit any corporation or other entities directly or indirectly
controlled by us to purchase or redeem any securities that rank junior or
equal to the offered preferred stock or any warrants, rights, calls or
options exercisable for or convertible into any securities that rank
junior or equal to the offered preferred stock, other than the
repurchase, redemption or other retirement of debentures or other debt
securities that are convertible into or exchangeable for any securities
that rank junior or equal to the offered preferred stock;
unless before or at the same time we take action, all accumulated and unpaid
dividends on shares of offered preferred stock not paid on the applicable dates,
including arrearages and accumulated dividends, have been paid.
When dividends are not paid in full upon the offered preferred stock, all
dividends declared on the offered preferred stock and any other series of
securities that ranks equally with the offered preferred stock, with respect to
dividends, will be declared and paid pro rata so that the amount of dividends
declared and paid will bear to each other the same ratio that accumulated
dividends, including interest accrued in respect of such accumulated dividends,
on the shares of offered preferred stock and those other securities bear to each
other.
The following actions are not prohibited by the restrictions described
above:
(1) the acquisition, repurchase, exchange, conversion, redemption or other
retirement for value of shares of offered preferred stock or any
security that ranks equal to the offered preferred stock with respect
to dividends or of any shares of preferred securities of a trust as
referred to above; or
(2) the acquisition, repurchase, exchange, conversion, redemption or other
retirement for value by us of any securities that rank junior to the
offered preferred stock with respect to dividends in accordance with
any obligation in existence at the time of original issuance of the
offered preferred stock.
NO INCONSISTENT OBLIGATIONS
We are not permitted to enter into any agreement or issue any security that
prohibits, conflicts or is inconsistent with, or would be breached by, our
performance of our obligations with respect to the offered preferred stock.
USE OF THE OFFERED PREFERRED STOCK FOR EXERCISE OF WARRANTS
Shares of offered preferred stock may be used as consideration for exercise
of the Series A warrants and the Series B warrants. For limitations on the
ability to use shares of offered preferred stock in this manner, see
"Description of the Warrants -- Limitations on Use of the Offered Preferred
Stock for Exercise of Warrants" beginning on page 45.
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DESCRIPTION OF THE DEBENTURES
We may exchange the shares of Series D preferred stock, in whole but not in
part, for Series D Junior Subordinated Debentures due May 13, 2008, and we may
exchange the shares of Series E preferred stock, in whole but not in part, for
Series E Junior Subordinated Debentures due May 13, 2008. We sometimes refer to
the Series D Junior Subordinated Debentures due May 13, 2008 as the "Series D
debentures," the Series E Junior Subordinated Debentures due May 13, 2008 as the
"Series E debentures" and, together, as the "debentures."
We may exchange offered preferred stock for debentures only under certain
circumstances. For a description of these circumstances, see "Description of the
Offered Preferred Stock -- Exchange" beginning on page 22. We will not exchange
offered preferred stock for debentures before May 13, 2000.
If we elect to exchange either series of preferred stock for debentures, we
will issue the debentures pursuant to an indenture to be entered into between
Oxford and a trustee to be selected by Oxford prior to such exchange, which
trustee would qualify at the time of such designation as a trustee under the
Trust Indenture Act of 1939. The following summarizes certain terms and
provisions of the Series D debentures and the Series E debentures. This summary
is not complete and is subject to, and qualified in its entirety by reference
to, applicable Delaware and New York law, the Trust Indenture Act of 1939 and
the provisions of our certificate of incorporation, our by-laws and the
indentures for each series of debentures. The form of indenture for each series
of debentures, which indentures are governed by the Trust Indenture Act of 1939,
and the debentures are exhibits to the registration statement of which this
prospectus is a part.
PRINCIPAL, MATURITY AND INTEREST
Upon an exchange of a series of offered preferred stock for debentures, the
holders of the outstanding shares of the series of offered preferred stock to be
exchanged will be entitled to receive debentures with a principal amount equal
to $1,000 in exchange for each share of offered preferred stock exchanged.
Each of the Series D debentures and the Series E debentures will mature on
May 13, 2008.
We will be required to pay interest to holders of the Series D debentures
and Series E debentures in the following amounts and manner:
<TABLE>
<CAPTION>
SERIES D DEBENTURES SERIES E DEBENTURES
------------------- -------------------
<S> <C> <C>
Interest Rate Series D debentures will bear Series E debentures will bear
an interest rate of 5.129810% an interest rate of 14% per
per year. year.
Interest Payment Dates We will be required to pay We will be required to pay
interest in equal quarterly interest in equal quarterly
installments on the last day of installments on the last day of
March, June, September and March, June, September and
December of each year. December of each year.
</TABLE>
FORM OF DEBENTURES
We expect to issue the debentures as one or more global debentures. The
Depository Trust Company is expected to be the depositary. See "Book-Entry;
Delivery and Form" beginning on page 42 for a description of the procedures of
the depositary.
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REDEMPTION
OPTIONAL REDEMPTION
On and after May 13, 2003, we have the right to redeem all the outstanding
debentures of a series, in whole but not in part, at the price and in accordance
with the procedures described below.
CHANGE OF CONTROL REDEMPTION
If a "change of control" occurs, then holders of the debentures may require
us to redeem any or all of their debentures at the price and in accordance with
the procedures described below.
We are subject to obligations and various restrictive covenants that may
limit our ability to redeem the debentures upon a change of control. These
factors are discussed in "Description of Term Loan and Senior Notes" beginning
on page 62 of this prospectus. If we are required to redeem debentures and we
fail to pay the redemption price on the redemption date, we will not be released
from our obligation to pay the redemption price, and interest will accrue on the
missed payment.
For the definition of "change of control," see "Description of the Offered
Preferred Stock -- Change of Control Redemption" beginning on page 18.
REDEMPTION PRICE
Upon an optional redemption by us or a redemption upon a change of control,
we will pay the redemption price of the debentures to be redeemed in cash in an
amount per debenture equal to the sum of:
(1) 100% of the principal amount of the debenture to be redeemed, plus
(2) accrued and unpaid interest on the debenture to the redemption date.
OPTIONAL REDEMPTION PROCEDURES
If we redeem a series of debentures, we are required to send notice of the
redemption, including the redemption date, to the holders of record of the
debentures to be redeemed by first class mail, postage prepaid, at each holder's
address as it appears in the debenture register. We are required to send the
notice not more than 120 days nor fewer than 90 days before the date fixed for
redemption. If we irrevocably deposit funds sufficient to pay the aggregate
redemption price for the debentures to be redeemed, as described on page 31
under "-- Deposit of Funds," at the same time or prior to the delivery of a
notice of redemption, then we are required to send the notice of redemption not
more than 120 days nor fewer than 30 days before the fixed redemption date.
However, if requested by TPG Partners II or any of its affiliates, we must delay
the fixed redemption date for a period of no more than 30 days if:
- the notice of redemption is delivered less than 60 days before the
redemption date; and
- as of the date of the notice of redemption, TPG Partners II or any of its
affiliates beneficially owns debentures of the series to be redeemed and
has used its reasonable best efforts to complete a sale of some or all of
its debentures to be redeemed prior to the stated redemption date but has
not completed the sale.
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<PAGE> 34
We are required to notify the holders of the debentures to be redeemed about
this delay within five days of receiving the request from TPG Partners II or its
affiliates. We may not delay the redemption date in this manner more than once.
On or after the redemption date, each holder of the debentures called for
redemption will be required to surrender the debentures to us at the place
designated in the notice, and will be entitled to receive payment of the
redemption price when they surrender their debentures. From and after the
redemption date, all interest on debentures that have been redeemed will cease
to accrue and all rights of the holders as holders of debentures will cease and
terminate, except to the extent we default in a payment on the redemption date.
As long as TPG Partners II or its affiliates hold debentures, we may not
deliver a notice of redemption with respect to that series of debentures unless:
- our unsecured debt is rated Baa or better by Moody's Investors Service,
Inc. or BBB or better by Standard & Poor's Ratings Group; or
- we have sufficient funds reasonably available under committed lines of
credit or other similar sources of financing established with financially
sound financing providers to pay, on the redemption date, the aggregate
redemption price, and we have reserved such funds or availability for the
payment of the aggregate redemption price.
We may deliver a notice of redemption without complying with these two
conditions if we irrevocably deposit funds sufficient to pay the total
redemption price for the series of debentures to be redeemed, as described under
"-- Deposit of Funds" on page 31 before or at the same time we deliver the
notice of redemption.
Prior to any redemption date, we will take all measures reasonably
requested by TPG Partners II to facilitate a sale or other disposition of the
debentures to be redeemed by TPG Partners II or its affiliates before the
redemption date, including, without limitation:
- participation in due diligence sessions and provision of information
about our management, business and financial condition;
- preparation of offering memoranda, private placement memoranda and other
similar documents; and
- preparation and delivery of the other certificates or documents that TPG
Partners II reasonably requests.
CHANGE OF CONTROL REDEMPTION PROCEDURES
We are required to send a notice of any change of control to the holders of
debentures to be redeemed not more than five days following a change of control.
This notice will describe the transaction constituting such change of control
and will set forth:
- each holder's right to require us to redeem any or all debentures it
holds or any portion thereof;
- the redemption date, which will not be more than 30 days from the date of
the notice of the change of control; and
- the procedures to be followed by a holder in exercising its right to have
its debentures redeemed.
If more than 50 holders or groups of affiliated holders own debentures of a
series and if that series of debentures is listed on any national securities
exchange or quoted on any
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<PAGE> 35
national quotation system, we also are required to give notice of a change of
control by publication in a newspaper of general circulation in the Borough of
Manhattan, The City of New York, within 30 days following the change of control,
and to mail a similar notice to holders at the same time. Our failure to give a
notice of a change of control, or the formal insufficiency of any notice of a
change of control, will not prejudice the rights of holders of debentures to
cause us to redeem their debentures.
If a holder of debentures elects to require us to redeem any or all of the
debentures it holds following a change of control, the holder must deliver a
written notice to us, in the form specified by us, if we did in fact give notice
of a change of control as required, stating that the holder wants us to redeem
the debentures it holds and specifying the debentures or portions of debentures
to be redeemed. This notice must be delivered prior to the redemption date set
forth in the notice of a change of control or, if the notice of a change of
control is not given as required, at any time following the last day we were
required to give the notice of a change of control. If we do not give the
required notice, the redemption date for any holder that elects to redeem
debentures will be the date that is the later of (x) 30 days following the last
day we were required to give the notice of change of control and (y) 15 days
following the delivery of a notice of election to require us to redeem the
debentures it holds by that holder. If 50 or fewer holders or groups of
affiliated holders own all of the debentures of a series, the holders or groups
of affiliated holders may deliver a notice of an election to redeem the
debentures it holds at any time within 90 days following the occurrence of a
change of control without awaiting receipt of a notice of a change of control or
the expiration of the time allowed for the delivery of a notice of a change of
control. We will redeem the debentures or portions of debentures on the
redemption date fixed by us or as provided in the preceding sentence.
We are required to comply with the requirements of Rules 13e-4 and 14e-1
under the Securities Exchange Act of 1934 and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the debentures as a result of a change of
control. To the extent that the provisions of any securities laws or regulations
conflict with the redemption procedures described above, we will comply with the
applicable securities laws and regulations and will not be deemed to have
breached our obligations to the holders of debentures.
DEPOSIT OF FUNDS
On or before the relevant redemption date, we are required to deposit with
the trustee or with a paying agent, which may be Oxford, as a trust fund for the
benefit of the holders of the debentures to be redeemed, an amount of cash that
is sufficient to pay the redemption price of all debentures to be redeemed. If
we or any of our subsidiaries or affiliates acts as paying agent, we will
segregate and hold in a separate trust fund for the benefit of the holders of
debentures all money held by us as paying agent. We also are required to provide
irrevocable instructions and authority to the trustee or the paying agent to pay
the redemption price to those holders whose debentures are to be redeemed upon
surrender of the debentures. This deposit will be deemed to constitute full
payment of the debentures to be redeemed, and from and after the date of the
deposit, all rights of the holders of debentures that are to be redeemed, except
the right to receive the redemption price upon the surrender of their respective
debentures, will cease and terminate.
Interest will not accrue on any debentures to be redeemed after the
redemption date unless we fail to deposit cash sufficient to redeem those
debentures. If the holders of any debentures to be redeemed do not claim the
cash deposited for redemption within two
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<PAGE> 36
years after the deposit, the trustee or the paying agent will pay the balance so
deposited to us, or if held by us or any of our subsidiaries or affiliates, the
balance shall be discharged from the trust. Upon this payment, the trustee or
the paying agent will be relieved of all responsibility to holders, or if we or
any of our affiliates act as paying agent, we will be relieved of all
responsibility as trustee of the cash, and the sole right of holders of
debentures, with respect to debentures to be redeemed, will be to receive the
redemption price as our general creditors. Any interest accrued on the deposited
funds will belong to us and will be paid to us from time to time on demand.
RESTRICTIONS ON DIVIDENDS
As long as any debentures are outstanding, we:
- may not pay or set apart for payment any dividend on any Oxford capital
stock;
- may not make any payment on account of, or set apart for payment money
for a sinking fund for, the repurchase, redemption or other retirement
of, any Oxford capital stock or any warrants, rights or options
exercisable for or convertible into any Oxford capital stock, other than
the repurchase, redemption or other retirement of debentures or other
debt securities that are convertible into or exchangeable for any Oxford
capital stock;
- may not make any distribution in respect of Oxford capital stock, either
directly or indirectly, and whether in cash, obligations, shares or other
property, other than distributions or dividends in capital stock to the
holders of capital stock; and
- may not permit any corporation or other entities directly or indirectly
controlled by us to purchase or redeem any Oxford capital stock or any
warrants, rights, calls or options exercisable for or convertible into
any Oxford capital stock, other than the repurchase, redemption or other
retirement of debt securities that are convertible into or exchangeable
for any Oxford capital stock,
unless before or at the same time we take action, all interest that has become
due and payable on the debentures has been paid.
The acquisition, repurchase, exchange, conversion, redemption or other
retirement for value by Oxford of a series of debentures in accordance with the
applicable indenture or of any shares of preferred securities of a trust as
referred to under "-- Voting Rights -- Rights of All Holders" beginning on page
36 is not prohibited by the restrictions described above.
EVENTS OF DEFAULT
Set forth below are events of default with respect to debentures of either
series under the applicable indenture:
(a) we do not pay the principal of any debenture of that series of
debentures when due (upon maturity, required redemption or otherwise);
(b) we fail to perform or we breach any other covenant or agreement under
the applicable indenture or under the debentures of that series (other
than referred to in (a) above) and such default or breach continues for
60 days after we receive written notice of the default from the trustee
or holders of at least 25% in aggregate principal amount of outstanding
debentures of that series; or
(c) certain events of bankruptcy, insolvency or reorganization affecting us
occur.
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Within 30 days after the occurrence of a default or an event of default, we
will deliver to the trustee a written notice of a default or an event of default
referred to in (b) or (c) above, the status of the default or event of default
and what action we are taking or propose to take. The indentures require the
trustee to provide the holders of the debentures with notice of an event of
default within 30 days after it is known to the trustee or written notice of it
is received by the trustee, unless the event of default is cured or waived.
Except in the case of a default or event of default in payment of principal or
interest on any debenture, the trustee is not required to provide the holders of
debentures with notice of an event of default if the trustee determines in good
faith that withholding the notice is in the interests of the holders of the
debentures.
If an event of default (other than an event of default described in clause
(c) above) occurs and is continuing with respect to the debentures of a series
outstanding, either the trustee by written notice to us, or the holders of at
least 25% in aggregate principal amount of the outstanding debentures of that
series by written notice to us and the trustee, may, and the trustee at the
request of the holders will, declare the principal of and accrued and unpaid
interest on all debentures of that series to be due and payable. However, the
holders of a majority in aggregate principal amount of outstanding debentures of
that series, by written notice to the trustee, may rescind and annul such
acceleration and its consequences if the recission would not conflict with any
judgment or decree and if all existing events of default, other than the
non-payment of accelerated principal or interest, have been cured or waived.
If an event of default specified in clause (c) above occurs with respect to
the debentures of a series outstanding, the outstanding debentures of that
series will become immediately due and payable without any declaration or other
act on the part of the trustee or any holders.
In general, subject to certain rights of the trustee, TPG Partners II and
its affiliates, so long as they own at least 20% of the aggregate principal
amount of outstanding debentures, or the holders of not less than a majority in
aggregate principal amount of the outstanding debentures of any series, by their
consent, may waive by written notice to the trustee an existing default or event
of default, except a default in the payment of principal or interest on any
debentures of that series. However, a waiver by TPG Partners II and its
affiliates of an existing default or event of default will not be effective if
holders of a majority of the aggregate principal amount of outstanding
debentures:
(1) have delivered to us written notice of a default specified in clause
(b) above;
(2) have declared the principal of and accrued but unpaid interest on all
debentures to be due and payable by virtue of the event of default; or
(3) give written notice to the trustee that the holders do not consent to
the waiver of the default or event of default and its consequences.
Subject to the right of the trustee to be indemnified by holders of
debentures, the holders of a majority in aggregate principal amount of the
outstanding debentures of any series will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee or of exercising any trust or power conferred on the trustee with
respect to the debentures of that series.
No holder of any debenture of a series will have the right to pursue any
remedy with respect to the indenture or debentures, unless:
(1) the holder gives to the trustee written notice stating that an event of
default with respect to the debentures of that series is continuing;
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(2) holders of at least 25% in aggregate principal amount of the
outstanding debentures of that series, or TPG Partners II and its
affiliates, so long as TPG Partners II and its affiliates own at least
20% of the aggregate principal amount of outstanding debentures of that
series, make a written request to the trustee to pursue the remedy;
(3) such holder or holders offer to the trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the holders of a majority of the aggregate principal amount of
outstanding debentures of that series, or TPG Partners II and its
affiliates, so long as TPG Partners II and its affiliates own at least
20% of the aggregate principal amount of outstanding debentures of that
series, do not give the trustee a direction that, in the opinion of the
trustee, is inconsistent with such request during the 60-day period.
Any direction given by TPG Partners II and its affiliates will be
disregarded, for purposes of this clause (5), if:
(a) the request was made by holders of a majority of the aggregate
principal amount of outstanding debentures; or
(b) such holders give the trustee a direction that, in the opinion of
the trustee, is inconsistent with such direction given by TPG
Partners II and its affiliates.
However, such limitations may not impair or affect the right of a holder to
receive payment of principal of or interest on debentures held by such holder,
on or after the respective due dates (or, in the case of redemption, on the
redemption date) expressed in the debenture, or to bring suit for the
enforcement of any such payment, without the consent of the holder.
We will be required to furnish to the trustee, within 90 days after the end
of each fiscal year, a statement as to the knowledge of any default or event of
default. If a default or event of default has occurred, we will describe the
default or event of default, the status of it and what action we are taking or
propose to take. We will furnish evidence to the trustee, as required by the
Trust Indenture Act of 1939, that we are in compliance with the indenture and
the debentures.
AMENDMENTS AND SUPPLEMENTS
We may amend or supplement the indenture applicable to a series of
debentures with the written consent of the holders of a majority of the
aggregate principal amount of the outstanding debentures of that series.
However, no amendment or supplement may, without the consent of the holders of
each outstanding debenture of that series affected:
(a) reduce the percentage in principal amount of the outstanding debentures
of that series whose holders must consent to an amendment, supplement
or waiver;
(b) reduce the rate of or change or have the effect of changing the time
for payment of interest on any debentures of that series;
(c) reduce the principal of or change or have the effect of changing the
fixed maturity of any debentures of that series, or change the date on
which any such debentures may be subject to redemption, or reduce the
redemption price therefor;
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(d) make any debentures of that series payable in money other than that
stated in the debentures;
(e) make any change in provisions of the applicable indenture entitling a
holder to receive payment of principal and interest on such debentures
on or after the due date or to bring suit to enforce such payment, or
permitting the holders of a majority of the aggregate principal amount
of outstanding debentures of that series to waive defaults or events of
default; or
(f) modify, in a manner that would adversely affect the interests of the
holders of debentures of that series in any material respect, the
obligations of Oxford to repurchase the debentures of that series upon
a change of control.
We may also amend the indenture applicable to a series of debentures
without notice to or the consent of any holder of debentures:
(a) to cure any ambiguity or inconsistency;
(b) to comply with the provisions of the applicable indenture in respect of
the assumption by a successor of our obligations under the applicable
indenture;
(c) to provide for uncertificated debentures in addition to or in place of
certificated debentures;
(d) to add guarantees with respect to that series of debentures or to
secure the debentures;
(e) to add to our covenants in the indenture for the benefit of the holders
of that series of debentures or to surrender any right or power
conferred on us in the applicable indenture; or
(f) to comply with any requirements of the Securities and Exchange
Commission in connection with qualifying the applicable indenture under
the Trust Indenture Act of 1939 or to provide for the succession of a
successor trustee;
so long as any such change does not adversely affect the rights of any holder in
any material respect.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The indenture applicable to a series of debentures will be satisfied and
discharged and will cease to be of further effect as to all outstanding
debentures of that series, except as to surviving rights of registration of
transfer or exchange of that series of debentures and except as to compensation
and indemnity to the trustee under the applicable indenture, when:
(a) either:
(1) all debentures of that series (except lost, stolen or destroyed
debentures which have been replaced or paid, and debentures for
whose payment money has been deposited in trust or segregated and
held in trust by us and thereafter repaid to us or discharged from
such trust) have been delivered to the trustee for cancellation;
or
(2) all debentures of that series not delivered to the trustee for
cancellation have become due and payable and we have irrevocably
deposited or caused to be deposited with the trustee funds in an
amount sufficient to pay and discharge the entire indebtedness on
the debentures of that series not delivered to the
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trustee for cancellation, for principal and interest on the
debentures of that series to the date of deposit together with
irrevocable instructions from us directing the trustee to apply
such funds to the payment thereof;
(b) no default or event of default with respect to the applicable indenture
or the debentures of that series has occurred and is continuing on the
date of deposit or will occur as a result of the deposit and the
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which we are a party or by which
we are bound;
(c) we have paid all other sums payable by us under the applicable
indenture and the debentures of that series; and
(d) we have delivered to the trustee an officer's certificate and an
opinion of counsel as required by the applicable indenture.
VOTING RIGHTS
RIGHTS OF TPG PARTNERS II AND ITS AFFILIATES
Under the terms of the applicable indentures, TPG Partners II and its
affiliates have certain voting rights as holders of a series of debentures,
which voting rights do not apply to other holders. In particular, only TPG
Partners II and its affiliates have the right to vote their debentures of that
series on all matters voted on by holders of common stock. In those
circumstances, TPG Partners II and its affiliates vote together with the holders
of common stock (and any offered preferred stock entitled to vote) as a single
class. These voting rights:
(1) apply to debentures issued to TPG Partners II or any of its affiliates
in exchange for shares of a series of offered preferred stock that had
similar voting rights; and
(2) are not transferable to any subsequent holder of debentures.
If the debentures are transferred to a person other than TPG Partners II or its
affiliates, and TPG Partners II or its affiliates subsequently reacquire those
debentures, TPG Partners II or its affiliates would not reacquire the right to
vote those debentures with holders of common stock.
Under the investment agreement, TPG Partners II and its affiliates are
permitted to designate members of our board of directors. See "Description of
the Offered Preferred Stock -- Voting Rights -- Rights of TPG Partners II and
Its Affiliates" on page 24 for a description of this right to designate
directors.
RIGHTS OF ALL HOLDERS
All holders of debentures, including TPG Partners II and its affiliates,
have the voting rights described below.
If:
(1) interest due and payable on either series of debentures has not been
paid in full (or, if one series of offered preferred stock has not been
exchanged for debentures, the dividends payable on that series of
offered preferred stock have been in arrears and not paid in full) for
four consecutive quarterly periods; or
(2) we fail to satisfy our obligation to redeem or repay the principal of
either series of debentures under the applicable indenture (or, if one
series of offered preferred stock has not been exchanged for
debentures, we have failed to satisfy our
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obligation to redeem shares of that series of offered preferred stock
pursuant to its certificate of designations);
then the number of directors constituting our board of directors automatically
will be increased by two, and the holders of both series of debentures
representing at least a majority of the aggregate principal amount of
outstanding debentures will have the exclusive right, voting together as a
single class, to elect the two additional directors, except under the
circumstances described below. If the shares of one series of offered preferred
stock have not been exchanged for debentures, then the holders of the shares of
that series of offered preferred stock will vote together with the holders of
debentures as a single class, and, for the purposes of determining a majority of
the aggregate principal amount of debentures and the series of offered preferred
stock that was not exchanged, one share of the series of offered preferred stock
will be deemed to be equal to a principal amount of $1,000.
Under the investment agreement, TPG Partners II and its affiliates are
permitted to designate directors to our board of directors. However, TPG
Partners II and its affiliates are not permitted to elect and/or designate a
total of more than four directors to our board of directors. If at the time
holders of debentures or, if applicable, the holders of shares of a series of
offered preferred stock that has not been exchanged for debentures, have the
right to elect additional directors:
(1) TPG Partners II and its affiliates together beneficially own debentures
representing a majority of the aggregate principal amount of
outstanding debentures of both series (or, if the shares of one series
of offered preferred stock have not been exchanged for debentures, TPG
Partners II and its affiliates together beneficially own a majority of
the aggregate principal amount of the debentures and that series of
offered preferred stock), taken together as a single class; and
(2) TPG Partners II and its affiliates are not permitted to elect one or
both of the additional directors because of the restrictions described
above;
then the holders of debentures (and, if applicable, holders of shares of a
series of offered preferred stock that has not been exchanged), other than TPG
Partners II and its affiliates, will have the right to elect, voting together as
a single class, only one additional director. For the purposes of determining a
majority of the aggregate principal amount of debentures and a series of offered
preferred stock, if necessary, one share of the series of offered preferred
stock that has not been exchanged will be deemed to be equal to a principal
amount of $1,000.
Any additional director elected as described above will continue as a
director, and these additional voting rights will continue until:
(1) we pay all interest due and payable on the debentures of each series
and we pay in full all dividends accumulated on the series of offered
preferred stock that has not been exchanged; and
(2) we satisfy any obligation to redeem the debentures or the series of
offered preferred stock that has not been exchanged or any obligation
to repay the principal that has become due, or we set aside all
necessary funds for the redemption payment.
Upon the occurrence of these events, any additional director will cease to be a
director and the additional voting rights of the holders of debentures will
terminate subject to revesting if any subsequent failure to pay interest or
dividends or redeem debentures or shares as
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described above occurs and subject to any rights to elect directors of holders
of any other series of our preferred stock.
The holders of debentures may exercise their right to elect additional
directors at any annual meeting of stockholders, at a special meeting held for
this purpose, or by the written consent of the holders of the minimum principal
amount of debentures required to take action. As long as this right to vote
continues, and unless this right has been exercised by written consent of the
minimum principal amount of debentures required to take action, the chairman of
our board of directors may call, and upon the written request of holders of
record of debentures representing 20% of the aggregate principal amount of the
outstanding debentures, addressed to our secretary at our principal office, will
call, a special meeting of the holders entitled to vote as described above. This
meeting will be held within 60 days after delivery of a request to the
secretary, at the place and upon the notice provided by law and in the by-laws
for meetings of stockholders.
Each director elected as described above will serve until the next annual
meeting or until his or her successor is elected and qualified, unless the
director's term of office has terminated as described above. If any vacancy
occurs among the directors elected as described above, the vacancy may be filled
for the unexpired portion of the term by the remaining director or directors
elected by the holders of debentures (and, if applicable, holders of shares of a
series of offered preferred stock that has not been exchanged) entitled to vote
for directors as described above, or their successor or successors in office, if
any. If the vacancy is not filled within 20 days or if all of the remaining
directors elected as described in this section cease to serve as directors
before their term expires, the holders of debentures (and, if applicable,
holders of shares of a series of offered preferred stock that has not been
exchanged) entitled to vote for the director as described above may elect
successors to hold office for the unexpired terms of any vacant directorships by
written consent or at a special meeting. The holders of a majority of debentures
(and, if applicable, holders of shares of a series of offered preferred stock
that has not been exchanged) entitled to vote for directors as described above
will have the right to remove with or without cause at any time and replace any
directors that they have elected, by written consent or at a special meeting.
We may not take the following actions without the consent or vote of the
holders of at least a majority of the aggregate principal amount of outstanding
debentures of a series, voting separately as a class:
- authorize, create or issue, or increase the authorized amount of any
class or series of capital stock or any security convertible into or
exercisable for any class or series of capital stock, redeemable
mandatorily or redeemable at the option of the holder of debentures of
that series at any time on or prior to May 13, 2008, whether or not
thereof only upon the occurrence of a specified event;
- amend, alter or repeal any provision of our certificate of incorporation
or our by-laws if the amendment, alteration or repeal alters or changes
the rights of the holders of debentures of that series so as to affect
them materially and adversely; or
- authorize or take any other action if such action alters or changes any
of the rights of holders of debentures of that series in any respect or
otherwise would be inconsistent with the provisions of the applicable
indenture and the holders of any class or series of our capital stock are
entitled to vote on that action.
No consent or vote of the holders of debentures is required for the creation or
issuance by a trust formed at our direction of any series of preferred
securities of such trust for financing purposes in an aggregate amount not to
exceed $250,000,000.
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SUBORDINATION
The indebtedness evidenced by the debentures will be subordinated in right
of payment, as described below, to the prior payment in full of all "senior
indebtedness," as defined below. Each series of debentures will rank equally
with or will be senior to all other indebtedness of Oxford and will rank equally
with, and not senior to, each other. Accordingly, upon any payment or
distribution of assets to creditors upon a total or partial liquidation or a
total or partial dissolution of Oxford or in a winding up or bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
Oxford or its property:
(1) holders of senior indebtedness of Oxford will be entitled to receive
payment in full of the senior indebtedness before holders of the
debentures will be entitled to receive any payment of principal or
interest on the debentures; and
(2) until the senior indebtedness is paid in full, any distribution to
which holders of debentures would be entitled will be made to holders
of senior indebtedness as their interests may appear, except that
holders of debentures may receive:
(a) securities of a person that are subordinated to the senior
indebtedness to at least the same extent as the debentures are
subordinated to senior indebtedness and any indebtedness or
securities issued in exchange for senior indebtedness, and
(b) payments and other distributions made from any funds deposited by
us pursuant to the applicable indenture.
In addition, we may not pay the principal of or interest on a series of
debentures or make any deposit of money to satisfy and discharge our obligations
under the applicable indenture, and we may not repurchase, redeem or otherwise
retire any debentures of that series if:
(1) any senior indebtedness is not paid when due; or
(2) any other default on the senior indebtedness occurs and the maturity of
the senior indebtedness is accelerated in accordance with its terms;
unless, in either case:
(a) the default has been cured or waived and such acceleration has
been rescinded; or
(b) such senior indebtedness has been paid in full.
However, we may pay the debentures without regard to the above restrictions
if we and the trustee receive written notice approving the payment from the
representative of such senior indebtedness with respect to which either of the
events set forth in (1) or (2) above has occurred and is continuing.
During the continuance of any default (other than a default described in
(1) or (2) above) with respect to any senior indebtedness pursuant to which the
maturity of the senior indebtedness may be accelerated immediately without
further notice (except a notice as may be required to effect such acceleration)
or the expiration of any applicable grace period, we may not pay the debentures
for a period, which we refer to as the "Payment Blockage Period," commencing
upon the receipt by the trustee (with a copy to us) of written notice, which we
refer to as a "Blockage Notice," of such default from the representative of the
holders of the senior indebtedness specifying an election to effect a
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Payment Blockage Period and ending 179 days thereafter. A Payment Blockage
Period may end earlier than 179 days:
(1) if written notice is given to the trustee and us from such person or
persons who gave such Blockage Notice;
(2) if the default giving rise to the Blockage Notice is no longer
continuing; or
(3) if the senior indebtedness has been repaid in full.
Unless the holders of such senior indebtedness or their representative have
accelerated the maturity of such senior indebtedness, we may resume payments on
the debentures after such Payment Blockage Period.
No more than one Payment Blockage Period may be commenced during any
360-day period. Also, no default or event of default with respect to the senior
indebtedness which existed or was continuing on the date of the commencement of
any Payment Blockage Period and which initiated such Payment Blockage Period may
be or may be made the basis of the commencement of a subsequent Payment Blockage
Period by the representative of the senior indebtedness (whether or not within a
period of 360 consecutive days), unless such default or event of default is
cured or waived for a period of not less than 90 consecutive days.
By reason of this subordination, in the event of insolvency, our creditors
who are not holders of senior indebtedness or holders of debentures may recover
less, ratably, than holders of the senior indebtedness and may recover more,
ratably, than holders of debentures. A default under any senior indebtedness
would not constitute a default under the debentures unless payment of any amount
payable under the debentures is blocked by reason of such default.
"Senior indebtedness," as used in this summary, means:
(1) our outstanding 11% Senior Notes due 2005;
(2) any indebtedness now or hereafter issued or incurred by us pursuant to
the Term Loan Agreement, dated as of May 13, 1998, among Oxford, as
borrower, the Lenders listed therein, as Lenders, DLJ Capital Funding,
Inc., as Syndication Agent, and IBJ Schroeder Bank & Trust Company, as
Facility Manager; and
(3) any other indebtedness now or hereafter incurred by us, unless the
instrument under which that indebtedness is incurred expressly provides
that it is not superior in right of payment to the debentures of that
series.
Senior indebtedness does not include:
(1) any liability for federal, state, local or other taxes owed or owing by
us;
(2) any indebtedness of us to any of our subsidiaries or other affiliates;
(3) any trade payables; or
(4) any debentures of either series.
Senior indebtedness means, with respect to any guarantor, any guarantee by
the guarantor of senior indebtedness.
As of the date of this prospectus, we had approximately $150 million
outstanding under the term loan agreement and $200 million aggregate principal
amount of 11% Senior Notes due 2005 outstanding.
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The indentures relating to each series of debentures will not contain
restrictions on our ability to incur additional indebtedness.
CERTAIN DEFINITIONS
Set forth below are certain of the defined terms used in the indentures.
You should refer to the indentures for the definition of any other terms in this
prospectus for which no definition is provided.
The term "affiliate" has the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934.
The term "indebtedness" means, with respect to any person, whether recourse
is to all or a portion of the assets of such person, and whether or not
contingent, (i) any obligation of such person for money borrowed, (ii) any
obligation of such person evidenced by bonds, debentures, notes, guarantees or
other similar instruments, (iii) any reimbursement obligation of such person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such person, (iv) any obligation of such person issued
or assumed as the deferred purchase price of property, assets or services (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) any interest rate or currency swap or similar
hedging agreement and (vi) any capital lease obligation.
The term "subsidiary" means, with respect to any person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of voting stock is at the time owned or controlled,
directly or indirectly, by such person or one or more of the other subsidiaries
of that person (or a combination thereof) and (ii) any partnership (A) the sole
general partner of the managing general partner of which is such person or a
subsidiary of such person or (B) the only general partners of which are such
person or of one or more subsidiaries of such person (or any combination
thereof).
NOTICES
The trustee will cause all notices to the holders of the debentures to be
mailed by first class mail, postage prepaid, telecopier or overnight air
courier, to the address of each holder as it appears in the debenture register.
Any notice so mailed will be conclusively presumed to have been given to the
holders of the debentures.
GOVERNING LAW
The indentures and the debentures will be governed by the laws of the State
of New York.
THE TRUSTEE
Except during the continuance of an event of default, the trustee will
perform only such duties and responsibilities as are provided for by the Trust
Indenture Act of 1939 or specifically set forth in the applicable indenture. If
an event of default has occurred and is continuing, the trustee will exercise
the rights and powers vested in it under the applicable indenture and use the
same degree of care and skill as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs. However, the
trustee will be under no obligation to exercise any of its rights and powers
under the
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applicable indenture at the request or direction of holders of debentures unless
those holders offer the trustee reasonable indemnity or security against loss,
liability or expense.
The applicable indenture and provisions of the Trust Indenture Act of 1939
incorporated by reference in the indenture limit the rights of the trustee,
should it become our creditor, to obtain payment of claims in certain cases or
to realize on certain property received by it in respect of any such claim as
security or otherwise. The trustee is permitted to engage in other transactions
with us or any affiliate. However, if it acquires any conflicting interest, as
defined in the Trust Indenture Act of 1939, it must eliminate the conflict or
resign.
BOOK-ENTRY; DELIVERY AND FORM
The debentures initially will be represented by one or more debentures in
global form, which we refer to as "global debentures." It is expected that the
global debentures will be deposited upon issuance with The Depository Trust
Company, New York, New York, which we refer to as DTC, and registered in the
name of a nominee of DTC.
THE DEBENTURES
We expect that pursuant to procedures established by DTC:
(1) upon the issuance of the global debentures, DTC or its custodian will
credit, on its internal system, the principal amount of the individual
beneficial interests represented by the global debentures to the
respective accounts of persons who have accounts with such depositary;
and
(2) ownership of beneficial interests in the global debentures will be
shown on, and the transfer of ownership will be effected only through,
records maintained by DTC or its nominee, with respect to interests of
participants, and the records of participants, with respect to
interests of persons other than participants.
Ownership of beneficial interests in the global debentures will be limited to
persons who have accounts with DTC or persons who hold interests through
participants.
So long as DTC or its nominee is the registered owner or holder of the
global debentures, DTC or such nominee will be considered the sole owner or
holder of the debentures represented by the global debentures for all purposes
under the applicable indenture. No beneficial owner of an interest in the global
debentures will be able to transfer that interest except in accordance with
DTC's procedures.
Payments of principal and interest due on the debentures will be made to
DTC or its nominee as the registered owner. None of Oxford, the trustee or any
paying agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the global debentures or for maintaining, supervising or reviewing
any records relating to this beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest due on the debentures, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the global debentures as shown on the records of DTC or its nominee. We also
expect that payments by participants to owners of beneficial interests in the
global debentures held through these participants will be governed by standing
instructions and customary practice, as is now the case with
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<PAGE> 47
securities held for the accounts of customers registered in the names of
nominees for those customers. These payments will be the responsibility of the
participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's settlement system in accordance with DTC rules and will be settled
in same day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of debentures, including the representation of debentures for exchange as
described below, only at the direction of one or more participants to whose
account the DTC interests in the global debentures are credited. Further, DTC
will take action only as to such portion of the debentures as to which the
participant or participants have given such direction. However, if there is an
Event of Default under the applicable indenture, DTC will exchange the global
debentures for certificated debentures, which it will distribute to its
participants.
DTC has advised us 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 and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. 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 movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global debentures among participants of DTC, it is
under no obligation to perform those procedures, and those procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES
No global debenture may be exchanged for a debenture registered, and no
transfer of a global debenture may be registered, unless:
(1) the depositary (a) notifies us that it is unwilling or unable to
continue as depositary for the global debenture or (b) has ceased to be
a clearing agency registered under the Securities Exchange Act of 1934,
and in either case we fail to appoint a successor depositary within 90
days;
(2) we, at our option, notify the trustee in writing that we elect to issue
the debentures in certificated form; or
(3) an event of default or any event which after notice or lapse of time or
both would be an event of default with respect to the debentures has
occurred and is continuing.
In all cases, certificated debentures delivered in exchange for any global
debenture will be registered in the names as directed by the depositary. An
adjustment will be made
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<PAGE> 48
in the records of the registrar to reflect the decrease in the principal amount
of the relevant global debenture.
DESCRIPTION OF THE WARRANTS
The following summarizes certain terms and provisions of the Series A
warrants and the Series B warrants. This summary is not complete and is subject
to, and qualified in its entirety by reference to, the warrant certificates,
applicable Delaware law, the provisions of our certificate of incorporation, our
by-laws and the form of warrant agreement pursuant to which the warrants are
issued. These documents are filed as exhibits to the registration statement of
which this prospectus is a part.
GENERAL
The selling securityholders initially purchased the Series A warrants and
the Series B warrants in a private placement on May 13, 1998. As of the date of
this prospectus, 15,800,000 Series A warrants and 6,730,000 Series B warrants
were outstanding. The warrant agent for the Series A warrants and the Series B
warrants is ChaseMellon Shareholder Services, L.L.C.
Any warrants sold by selling securityholders under this prospectus will be
covered by a warrant agreement between Oxford and ChaseMellon Shareholder
Services, L.L.C., as warrant agent. The warrant agent will act solely as an
agent of Oxford in connection with the warrants and will not assume any
obligation or relationship of agency or trust for or with any holder of warrants
or beneficial owners of warrants. A copy of the form of warrant agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
EXERCISE
Each warrant entitles its holder to purchase one share of common stock at
an exercise price of $17.75 per share at any time until the expiration of the
warrants.
The exercise price of the warrants was determined by negotiation between us
and TPG Partners II and its affiliates and should not be construed as an
estimate of the value of our common stock or to imply that the price of our
common stock will increase or decrease.
We have reserved from our authorized but unissued shares a sufficient
number of shares of common stock for issuance upon the exercise of the warrants.
The warrants provide for adjustment of their exercise price and for a
change in the number of shares that may be purchased upon exercise to protect
holders against dilution in the event of a stock dividend, stock split or
reverse split, upon issuance of shares of common stock at prices lower than the
market price of the common stock, upon distribution of a special dividend, or
upon a tender or exchange offer. The warrants also provide for adjustments to
the exercise price and number of shares that may be purchased upon exercise in
the event of a merger, consolidation, recapitalization or other transaction that
results in the conversion of our common stock into the right to receive other
securities, property or cash.
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<PAGE> 49
EXPIRATION OF WARRANTS
The Series A warrants expire on the earlier of:
- May 13, 2008; and
- the redemption of all of the Series D preferred stock, which we can do
only after May 13, 2003.
The Series B warrants expire on the earlier of:
- May 13, 2008; and
- the redemption of all of the Series E preferred stock, which we can do
only after May 13, 2003.
PROCEDURES FOR EXERCISE
You may exercise a warrant by surrendering the warrant certificate on or
before its expiration date, with the form of "Election to Exercise" on the
reverse side of the warrant certificate completed and executed, accompanied by
payment of the full exercise price for the number of shares for which the
warrant is being exercised.
You may make payment of the exercise price:
- in cash;
- by certified or official bank check;
- by an exchange with us of a number of shares of offered preferred stock
having a total stated value plus accumulated and unpaid dividends equal
to the total exercise price (for limitations on the ability to use the
offered preferred stock in this manner, see below under "-- Limitations
on Use of the Offered Preferred Stock for Exercise of Warrants");
- by an exchange with us of a principal amount of debentures having an
aggregate principal amount plus accrued and unpaid interest equal to the
total exercise price;
- by an exchange with us of outstanding warrants, other than the warrants
being exercised, having an aggregate value equal to the aggregate
exercise price, which value per warrant will be determined by subtracting
the exercise price of the warrant being exchanged from the average
closing price of our common stock for the 10 trading days ending on the
trading day before the day the exercise occurs; or
- by any combination of the above.
Upon the surrender of the warrant certificate and payment of the exercise
price, we will promptly issue and cause to be delivered the appropriate number
of shares of common stock to the holder, or to the persons designated by the
holder in writing. If you exercise fewer than all of the warrants represented by
a certificate, we will issue a new certificate for the remaining number of
warrants.
LIMITATIONS ON USE OF THE OFFERED PREFERRED STOCK FOR EXERCISE OF WARRANTS
Holders of warrants may use shares of offered preferred stock as
consideration for the exercise of the warrants. However, before May 13, 2000,
holders of warrants may not use shares of Series D preferred stock as
consideration for the exercise of warrants unless they use a percentage of the
total number of shares of the Series D preferred stock issued by us
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<PAGE> 50
on February 13, 1999 that does not exceed the percentage of the total number of
shares of Series E preferred stock issued by us on February 13, 1999 that have
been:
- redeemed by us;
- repurchased by us as a result of a change of control or otherwise;
- used as consideration in connection with the exercise of the warrants; or
- otherwise retired by us.
NO FRACTIONAL SHARES
We are not required to issue fractional shares of common stock. If any
fractional share would be issuable upon the exercise of a warrant, instead of
issuing the fractional share, we will pay the holder an amount in cash equal to
the market value of the fractional share.
NO RIGHTS AS A STOCKHOLDER
Holders of warrants do not have rights as stockholders of Oxford. For
instance, they do not have the right to vote, to receive dividends or to receive
notices of stockholder meetings.
OTHER
The holders of warrants have the opportunity to profit from a rise in the
market value of the common stock, with a resulting dilution in the interest of
all other stockholders. As a result, so long as the warrants are outstanding,
the terms on which we can obtain additional capital may be adversely affected.
We expect the holders of the warrants to exercise them at a time when we would,
in all likelihood, be able to obtain any needed capital by a new offering of
securities on terms more favorable than those provided for by the warrants.
REGISTRATION RIGHTS AGREEMENT
The following summarizes certain provisions of the registration rights
agreement, dated as of February 23, 1998, between Oxford and TPG Partners II,
one of the selling securityholders. This summary is not complete and is subject
to, and qualified in its entirety by reference to, the registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
We are a party to a registration rights agreement with TPG Partners II, one
of the selling securityholders. Under the registration rights agreement, we have
agreed to use our reasonable best efforts to keep effective a shelf registration
statement at our expense, covering offers and sales of the offered preferred
stock, any debentures issued in exchange for the offered preferred stock, the
warrants and the common stock issuable upon exercise of the warrants. We
sometimes refer to the securities covered by the registration rights agreement
as the "registrable securities." We filed the shelf registration statement of
which this prospectus is a part with the SEC to comply with our obligations
under the registration rights agreement. Under the registration rights
agreement, we are required to keep the shelf registration statement effective
until 10 years after the date it is declared effective or, if earlier, the date
that all registrable securities have been sold under the shelf registration
statement or on which TPG Partners II and its affiliates are no longer entitled
to board representation under the investment agreement and are permitted to sell
their registrable securities without registration pursuant to Rule 144(k) under
the Securities Act.
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<PAGE> 51
We will provide each holder of the registrable securities with copies of
this prospectus, notify each holder when the shelf registration statement has
been declared effective and take other actions described in the registration
rights agreement as are required to permit unrestricted sales of the registrable
securities. A holder that sells registrable securities under the shelf
registration statement is required to be named as a selling securityholder in
this prospectus and to deliver this prospectus to purchasers. Those holders also
will be subject to certain civil liability provisions under the Securities Act
in connection with these sales and are bound by the provisions of the
registration rights agreement, including certain indemnification obligations.
If we file a registration statement under the Securities Act for an
underwritten offering of our securities for our own account or for the account
of holders, or if we offer securities convertible into or exchangeable for any
of our equity securities, the holders of registrable securities have agreed, if
requested, not to publicly sell or distribute any securities that are the same
as or similar to those being registered by us in connection with their sale, or
any securities convertible or exchangeable or exercisable for any such
securities, during the period beginning seven days before and ending no more
than 90 days after the effective date of the registration statement filed by us.
We have agreed, in the case of an underwritten offering of registrable
securities, if requested, not to effect any public sale or distribution of any
securities the same as or similar to those registrable securities being sold in
the underwritten offering, or any securities convertible into or exchangeable or
exercisable for securities that are the same as or similar to those registrable
securities being sold, during the period beginning seven days before and ending
no more than 90 days after the date of the related underwriting agreement.
Purchasers of the registrable securities offered by means of this
prospectus will not have any rights under the registration rights agreement.
Once sold under the registration statement, the registrable securities should be
freely tradeable except by purchasers that are our "affiliates" or are
"underwriters" of the registrable securities for purposes of the Securities Act.
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<PAGE> 52
USE OF PROCEEDS
We will not receive any of the proceeds from any sale of the shares of
offered preferred stock, the debentures issuable in exchange for offered
preferred stock or the warrants. All of the proceeds from the sale will be
received by the selling securityholders. The proceeds from the original sale of
the warrants and the securities that were exchanged for the offered preferred
stock on May 13, 1998 were utilized, in part, to retire outstanding bridge
notes, to make capital contributions to regulated subsidiaries and to pay fees
and expenses approximating $39 million related to the sale of the warrants and
the securities that were exchanged for the offered preferred stock. We have used
and will use the balance for subsidiary capital contributions, as necessary, and
for general corporate purposes, or as otherwise described in a prospectus
supplement.
We will receive proceeds upon exercise of the Series A warrants and the
Series B warrants. In the event that all of the outstanding Series A warrants to
purchase 15,800,000 shares of our common stock and outstanding Series B warrants
to purchase 6,730,000 shares of our common stock are exercised, we would receive
proceeds of approximately $399,907,500, excluding the expenses related to the
resale of the warrants under this prospectus. The exercise price of the Series A
warrants and the Series B warrants was determined by negotiation between us and
TPG Partners II and its affiliates based on the trading range of our common
stock during the negotiations.
<TABLE>
<CAPTION>
WARRANT
EXERCISE PROCEEDS TO
PRICE COMPANY(1)
-------- ------------
<S> <C> <C>
Per Series A Warrant........................... $17.75 $280,450,000
Per Series B Warrant........................... 17.75 119,457,500
------------
Total................................ $399,907,500
============
</TABLE>
- -------------------------
(1) Assumes the exercise of all outstanding Series A warrants and Series B
warrants. As of the date of this prospectus, no warrants have been
exercised.
Selling securityholders holding warrants are not obligated to exercise
their warrants. We cannot be certain that holders of the warrants will choose to
exercise all or any of their warrants.
We intend to use the net proceeds received upon exercise of the warrants,
if any, for future capital contributions to our regulated subsidiaries, as
necessary, for repayment of debt and for general corporate purposes, or as
otherwise described in a prospectus supplement.
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<PAGE> 53
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following describes the principal United States federal income tax
consequences of owning shares of offered preferred stock, warrants, shares of
common stock issuable upon exercise of the warrants, which we refer to as the
"warrant stock," and the junior subordinated debentures that you would receive
if we elected to exchange the offered preferred stock for debentures. It is the
opinion of Sullivan & Cromwell, our counsel. It applies to you only if you are
holding shares of offered preferred stock, warrants, shares of warrant stock and
the debentures as capital assets and you purchased shares of offered preferred
stock, warrants or shares of warrant stock in the offering at the offering
price. This discussion does not apply to you if you are a member of a class of
holders subject to special rules such as:
- a dealer in securities or currencies,
- a trader in securities that elects to mark to market,
- a bank,
- a tax-exempt organization,
- a life insurance company,
- a person that holds shares of offered preferred stock, warrants, shares
of warrant stock or the debentures as a hedge, or is hedged, against
currency or interest rate risks or that are part of a straddle or
conversion transaction, or
- a person whose functional currency is not the U.S. dollar.
This discussion is based on the Internal Revenue Code of 1986, its legislative
history, existing and proposed regulations thereunder, published rulings and
court decisions, all of which are subject to change, or changes in
interpretation, possibly with retroactive effect.
When we refer to a "United States holder," we mean a beneficial owner of
shares of offered preferred stock, warrants, shares of warrant stock or
debentures that is:
(1) a citizen or resident of the United States;
(2) a corporation organized under the laws of the United States or any
State;
(3) an estate the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.
You are a "non-United States holder" if you are a beneficial owner of
shares of offered preferred stock, warrants, shares of warrant stock or
debentures and are not a United States holder.
PROSPECTIVE PURCHASERS OF SHARES OF OFFERED PREFERRED STOCK, WARRANTS, SHARES OF
WARRANT STOCK OR DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
CONSEQUENCES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE INTERNAL REVENUE CODE
AND THE LAWS OF ANY OTHER TAXING JURISDICTION, OF THE OWNERSHIP OF SHARES OF
OFFERED PREFERRED STOCK, WARRANTS, SHARES OF WARRANT STOCK AND DEBENTURES.
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<PAGE> 54
TAXATION OF UNITED STATES HOLDERS
This section describes the tax consequences to a United States holder. If
you are not a United States holder, this section does not apply to you.
THE OFFERED PREFERRED STOCK
Distributions on the Offered Preferred Stock -- General
We do not have any accumulated earnings and profits as determined for
United States federal tax purposes, and there can be no assurance that we will
have earnings and profits in this or future tax years.
If we do not have any current or accumulated earnings and profits, as
determined for United States federal income tax purposes, in a given tax year,
any distribution on the offered preferred stock, including any distributions of
additional shares of offered preferred stock, generally would not be subject to
United States federal income taxation if your tax basis in the offered preferred
stock is greater than or equal to the amount of the distribution. However, the
distribution would reduce your tax basis in the offered preferred stock, but not
below zero. If any portion of the distribution exceeds your tax basis in the
offered preferred stock, that portion would be subject to United States federal
income taxation as capital gain that is recognized in the taxable year in which
you received the distribution. Until we have earnings and profits, no
distribution is eligible for the 70% dividends-received deduction allowable to
corporations.
If we have current or accumulated earnings and profits in a given tax year,
distributions on the offered preferred stock, including any distributions of
additional shares of offered preferred stock, would be taxable to you as
ordinary dividend income to the extent they are paid out of our current or
accumulated earnings and profits. Any portion of the distribution not paid out
of current or accumulated earnings and profits would be taxed as described in
the previous paragraph. Dividends would be eligible for the 70% dividends-
received deduction allowable to corporations, subject to the limitations
described below.
Distributions on the Offered Preferred Stock -- The Offered Preferred Stock
"Paid in Kind"
Until May 13, 2000, we may, at our option, pay dividends on the offered
preferred stock "in kind" through the issuance of additional offered preferred
stock. Dividends "paid in kind" will be treated as a distribution of an amount
equal to the fair market value of the additional offered preferred stock as of
the date of distribution, and will be taxed as described above under
"-- Distributions on the Offered Preferred Stock -- General." This amount will
also be the initial issue price and tax basis of the newly distributed offered
preferred stock for United States federal income tax purposes.
If the redemption price of the offered preferred stock exceeds its offering
price, or the redemption price of the offered preferred stock issued as an
"in-kind" distribution exceeds its fair market value at the time the dividend is
"paid in kind," which we refer to, in either case, as a "redemption premium," by
one-fourth of one percent of the offered preferred stock's mandatory redemption
price multiplied by the number of complete years to its mandatory redemption,
you will be considered to have constructively received the entire amount of such
excess as a distribution over the period between issuance and redemption under a
constant yield method. If you purchased shares of offered preferred stock as a
unit together with the warrants, you must allocate your purchase price between
the offered preferred stock and the warrants based on their relative fair market
values to determine the offering price of the offered preferred stock. The
constant yield method would result in
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<PAGE> 55
increasing accruals of income over the term of the offered preferred stock under
rules similar to those for accruing original issue discount on the debentures,
as described under "-- Debentures -- Original Issue Discount" beginning on page
54. The constructive distribution would be a dividend in the year such
distribution is considered to be received to the extent of our current and
accumulated earnings and profits. Your tax basis in the offered preferred stock
would be increased by the amount of any redemption premium included in income.
In addition, each issuance of the offered preferred stock with more than a de
minimis redemption premium might not be fungible with the other offered
preferred stock, which might adversely affect the liquidity of the offered
preferred stock.
Distributions on the Offered Preferred Stock -- Dividends-Received Deduction
If we have current or accumulated earnings and profits, amounts treated as
dividends would be eligible for the 70% dividends-received deduction allowable
to corporations, subject to the limitations described below.
If you are a corporation considering investing in the offered preferred
stock, you should consider the effect of:
(1) Section 246A of the Internal Revenue Code which reduces the dividends-
received deduction allowed to a corporate shareholder that has incurred
indebtedness that is "directly attributable" to an investment in
portfolio stock such as the offered preferred stock;
(2) Section 246(c) of the Internal Revenue Code which, among other things,
disallows the dividends-received deduction in respect of any dividend
on a share of stock that is held for less than the minimum holding
period (generally at least 46 days during the 90-day period beginning
on the date which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend); and
(3) Section 1059 of the Internal Revenue Code which, under certain
circumstances, reduces the basis of stock for purposes of calculating
gain or loss in a subsequent disposition by the portion of any
"extraordinary dividend" (as defined below) that is eligible for the
dividends-received deduction.
The President has currently proposed legislation that would eliminate the
70% dividends-received deduction for dividends on the offered preferred stock.
There can be no certainty whether, or in what form, such legislation will be
enacted or what its effective date would be.
Distributions on the Offered Preferred Stock -- Extraordinary Dividends
If you are a corporate United States holder, you are required to reduce
your tax basis, but not below zero, in the offered preferred stock by the
nontaxed portion of any "extraordinary dividend" if you did not hold the offered
preferred stock for more than two years before the earliest of the date the
dividend is declared, announced or agreed to. Generally, the nontaxed portion of
an extraordinary dividend is the amount excluded from income by operation of the
dividends-received deduction.
An extraordinary dividend on the offered preferred stock generally would be
a dividend that:
(1) equals or exceeds 5% of your adjusted tax basis in the offered
preferred stock, treating all dividends having ex-dividend dates within
an 85-day period as one dividend; or
(2) exceeds 20% of your adjusted tax basis in the offered preferred stock,
treating all dividends having ex-dividend dates within a 365-day period
as one dividend.
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<PAGE> 56
In determining whether a dividend paid on the offered preferred stock is an
extraordinary dividend, you may elect to substitute the fair market value of the
stock for your tax basis for purposes of applying these tests, provided that the
fair market value as of the day before the ex-dividend date is established to
the satisfaction of the Secretary of the Treasury. An extraordinary dividend
also includes any amount treated as a dividend in the case of a redemption that
is either non-pro rata as to all stockholders or in partial liquidation,
regardless of your holding period and regardless of the size of the dividend. If
any part of the nontaxed portion of an extraordinary dividend is not applied to
reduce your tax basis as a result of the limitation on reducing your basis below
zero, that part would be treated as capital gain and would be recognized in the
taxable year in which the extraordinary dividend is received. CORPORATE UNITED
STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
POSSIBLE APPLICATION OF SECTION 1059 TO THEIR OWNERSHIP OR DISPOSITION OF SHARES
OF OFFERED PREFERRED STOCK.
Sale or Exchange of the Offered Preferred Stock Other Than by Redemption
Upon the sale or other disposition of shares of offered preferred stock,
other than by redemption, you will generally recognize capital gain or loss
equal to the difference between the amount you realized upon the disposition and
your adjusted tax basis in the shares of offered preferred stock. This gain or
loss would be long-term capital gain or loss if at the time of sale, exchange or
other disposition you held the shares of offered preferred stock for more than
one year. Long-term capital gain of a non-corporate United States holder is
generally subject to a maximum tax rate of 20%. The deductibility of capital
losses is subject to limitations.
Redemption of the Offered Preferred Stock
A redemption of your shares of offered preferred stock generally would be a
taxable event and would be treated as if you sold the shares of offered
preferred stock if the redemption:
(1) results in a "complete termination" of your stock interest;
(2) is "substantially disproportionate"; or
(3) is "not essentially equivalent to a dividend."
In determining whether any of these tests has been met, you must take into
account the shares of offered preferred stock you actually own and the shares of
offered preferred stock you constructively own by reason of certain constructive
ownership rules set forth in Section 318 of the Internal Revenue Code.
If your shares of offered preferred stock are redeemed in a redemption that
meets one of the tests described above, you generally would recognize taxable
gain or loss equal to the difference between the amount of cash and the fair
market value of property, other than our stock or stock of our successor, you
received and your tax basis in the shares of offered preferred stock redeemed.
See below under "-- Special Rules Regarding the Redemption of the Offered
Preferred Stock for Debentures" for a description of the rules applicable to a
redemption in which you receive debentures. This gain or loss would be long-term
capital gain or capital loss if you held the shares of offered preferred stock
for more than one year.
If a redemption does not meet any of the tests described above, the cash
and the fair market value of property you receive generally would be taxed as a
dividend to the extent paid out of our current or accumulated earnings and
profits. Any amount in excess of our current or accumulated earnings and profits
would first reduce your tax basis in the shares
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<PAGE> 57
of offered preferred stock and thereafter would be treated as capital gain. If a
redemption of the offered preferred stock is treated as a distribution that is
taxable as a dividend, your basis in the redeemed shares of offered preferred
stock would be transferred to your remaining shares of offered preferred stock,
if any.
Special Rules Regarding the Redemption of the Offered Preferred Stock for
Debentures
Pursuant to the rules discussed above under "-- Redemption of the Offered
Preferred Stock," if we redeem the offered preferred stock for debentures, it
will be treated either as an exchange giving rise to capital gain or loss or as
a dividend. In the case of an exchange of the offered preferred stock for
debentures that would be treated as a redemption giving rise to capital gain or
loss, the amount realized on the exchange would be equal to the "issue price" of
the debentures plus any cash received on the exchange. The issue price of a
debenture will be:
(1) its fair market value as of the exchange date if the debentures are
traded on an established securities market at any time during the
60-day period ending 30 days after the exchange date; or
(2) the fair market value of the offered preferred stock as of the exchange
date if such offered preferred stock is traded on an established
securities market at any time during the 60-day period ending 30 days
after the exchange date, but the debentures are not.
If neither the offered preferred stock nor the debentures are so traded, the
issue price of the debentures will be determined under Section 1274 of the
Internal Revenue Code, in which case the issue price will be the stated
principal amount of the debentures, provided that the yield on the debentures is
equal to or greater than the "applicable federal rate" in effect at the time the
debentures are issued. If the yield on the debentures is less than the
applicable federal rate, its issue price under Section 1274 of the Internal
Revenue Code will be equal to the present value as of the issue date of all
payments to be made on the debentures, discounted at the applicable federal
rate. It cannot be determined at the present time whether the offered preferred
stock or the debentures will, at the relevant time, be traded on an established
securities market within the meaning of the Treasury regulations or whether the
yield on the debentures will equal or exceed the applicable federal rate, as
discussed above.
If a redemption of the offered preferred stock for cash or an exchange of
the offered preferred stock for debentures is treated as a dividend, you:
(1) would not recognize any loss on the exchange;
(2) (A) would recognize dividend income, rather than capital gain, in an
amount equal to the fair market value of the debentures received
without regard to your basis in the shares of offered preferred stock
surrendered in the exchange, but only to the extent of its
proportionate share of our current or accumulated earnings and profits
and (B) would first reduce your tax basis in the shares of offered
preferred stock and thereafter would recognize capital gain, to the
extent that the distribution is not made out of our current or
accumulated earnings or profits; and
(3) the holding period for the debentures would begin on the day after the
day on which you acquired the debentures.
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YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO WHETHER IN LIGHT OF YOUR OWN
PARTICULAR CIRCUMSTANCES THE EXCHANGE WOULD BE TREATED AS A DIVIDEND OR AS A
SALE OR EXCHANGE. ADDITIONALLY, CORPORATE UNITED STATES HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE AVAILABILITY OF THE CORPORATE
DIVIDENDS-RECEIVED DEDUCTION AND THE POSSIBLE APPLICATION OF THE EXTRAORDINARY
DIVIDEND RULES OF SECTION 1059 OF THE INTERNAL REVENUE CODE TO AN EXCHANGE IF
THE DISTRIBUTION IS TAXABLE AS A DIVIDEND.
Depending upon your particular circumstances, the tax consequences of
holding debentures may be less advantageous than the tax consequences of holding
shares of offered preferred stock because, for example, payments of interest on
the debentures would be taxable as ordinary income, regardless of whether we
have current or accumulated earnings and profits, while distributions on the
offered preferred stock would not be immediately subject to United States
federal taxation if we do not have current or accumulated earnings and profits
in a given year and such distribution does not reduce your basis in the shares
of offered preferred stock below zero, and because, as discussed below under
"-- Debentures -- Original Issue Discount," debentures may be issued with
greater amounts of OID than the Redemption Premium with respect to the offered
preferred stock.
DEBENTURES
Characterization of the Debentures
Although not entirely free from doubt, the debentures should be treated as
debt for United States federal income tax purposes. The discussion in this
section assumes this treatment.
Original Issue Discount
Unless the debentures have a term of one year or less, the debentures would
be treated as issued at an original issue discount if the excess of the
debentures' "stated redemption price at maturity" over their issue price is more
than a "de minimis amount," as defined below. The manner in which the issue
price of the debentures would be determined is discussed under "-- The Offered
Preferred Stock -- Special Rules Regarding the Redemption of the Offered
Preferred Stock for Debentures." The stated redemption price at maturity of the
debentures is the total of all payments provided by the debentures other than
the stated interest payments.
In general, if the excess of the debenture's stated redemption price at
maturity over its issue price is less than one-fourth of one percent of the
debenture's stated redemption price at maturity multiplied by the number of
complete years to its maturity (the "de minimis amount"), then such excess, if
any, constitutes "de minimis original issue discount" and the debenture is not
issued with original issue discount ("OID"). In general, the debentures would
have OID if:
(1) the debentures are traded on an established securities market at any
time during the 60-day period ending 30 days after the exchange date,
and the fair market value of the securities is less than the stated
redemption price at maturity by more than the applicable de minimis
amount;
(2) the offered preferred stock is traded on an established securities
market at any time during the 60-day period ending 30 days after the
exchange date, and the
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debentures are not, and the fair market value of the offered preferred
stock is, less than the debentures' stated redemption price at maturity
by more than the applicable de minimis amount; or
(3) neither the debentures nor the offered preferred stock are traded on an
established securities market at any time during the 60-day period
ending 30 days after the exchange date, the yield on the debentures is
less than the applicable federal rate by more than the applicable de
minimis amount and the present value as of the issue date of all
payments to be made on the debentures, discounted at the applicable
federal rate, is less than the debentures' stated redemption price at
maturity by more than the applicable de minimis amount.
Unless you elect to treat all interest as original issue discount as described
below under "-- Election to Treat All Interest as Original Issue Discount," you
must include the de minimis OID in income as stated principal payments on the
debentures are made.
Generally, if your debenture matures more than one year from its date of
issue, you must include OID in income calculated on a constant-yield method
without regard to the receipt of cash attributable to such income, and generally
you will have to include in income increasingly greater amounts of OID over the
life of the debenture. The amount of OID includible in income is the sum of the
daily portions of OID with respect to the debenture for each day during the
taxable year or portion of the taxable year on which you hold the debenture,
which we refer to as "accrued OID." The daily portion is determined by
allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. You may select an accrual period of any length
with respect to your debenture and you may vary the length of each accrual
period over the term of the debenture as long as:
(1) no accrual period is longer than one year; and
(2) each scheduled payment of interest or principal on the debenture occurs
on either the final or first day of an accrual period.
The amount of OID allocable to an accrual period equals the excess of:
(a) the product of the debenture's adjusted issue price at the beginning of
the accrual period and the debenture's yield to maturity (determined on
the basis of compounding at the close of each accrual period and
properly adjusted for the length of the accrual period), over
(b) the sum of the payments of qualified stated interest on the debenture
allocable to the accrual period.
The "adjusted issue price" of a debenture at the beginning of any accrual
period is the issue price of the debenture increased by:
(x) the amount of accrued OID for each prior accrual period, and decreased
by
(y) the amount of any payments previously made on the debenture that were
not qualified stated interest payments.
For purposes of determining the amount of OID allocable to an accrual period, if
an interval between payments of qualified stated interest on your debenture
contains more than one accrual period, the amount of qualified stated interest
payable at the end of the interval (including any qualified stated interest that
is payable on the first day of the accrual period immediately following the
interval) is allocated pro rata on the basis of relative lengths to each accrual
period in the interval, and the adjusted issue price at the
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beginning of each accrual period in the interval must be increased by the amount
of any qualified stated interest that has accrued prior to the first day of the
accrual period but that is not payable until the end of the interval. The amount
of OID allocable to an initial short accrual period may be computed using any
reasonable method if all other accrual periods other than a final short accrual
period are of equal length. The amount of OID allocable to the final accrual
period is the difference between:
(x) the amount payable at the maturity of the debenture (other than any
payment of qualified stated interest), and
(y) the debenture's adjusted issue price as of the beginning of the final
accrual period.
Election to Treat All Interest as Original Issue Discount
You may elect to include in gross income all interest that accrues on your
debenture using the constant-yield method described above under the heading
"-- Original Issue Discount," with the modifications described below. For
purposes of this election, interest includes stated interest, OID, de minimis
original issue discount and unstated interest.
If you make this election for your debenture, then, when you apply the
constant-yield method:
- the issue price of the debenture would equal the issue price as
determined under "-- The Offered Preferred Stock -- Special Rules
Regarding the Redemption of the Offered Preferred Stock for Debentures"
beginning on page 53,
- the issue date of the debenture would be the exchange date, and
- no payments on the debenture would be treated as payments of qualified
stated interest.
This election would generally apply only to the debenture with respect to which
it is made and may not be revoked without the consent of the Internal Revenue
Service.
Pursuant to section 163 of the Internal Revenue Code, the "disqualified
portion" of the OID accruing on certain debt instruments may be treated as a
dividend eligible for the dividends-received deduction. The corporation issuing
such debt instruments is not allowed to deduct the "disqualified portion" of the
OID accruing on the debt instrument and is allowed to deduct the remainder of
the OID only when paid.
This treatment will apply to "applicable high yield discount obligations,"
or "AHYDOs", which, generally, are debt instruments that have a term of more
than five years, have a yield to maturity that equals or exceeds five percentage
points above the "applicable federal rate" and have "significant" OID. A debt
instrument is treated as having "significant" OID if the aggregate amount that
would be includible in gross income with respect to such debt instrument for
periods before the close of any accrual period ending five years or more after
the date of issue exceeds the sum of:
(1) the aggregate amount of interest to be paid in cash under the debt
instrument before the close of such accrual period, and
(2) the product of the initial issue price of such debt instrument and its
yield to maturity.
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For purposes of determining whether a debenture is an AHYDO, holders are bound
by the issuer's determination of the appropriate accrual period. It is
impossible to determine at the present time whether a debenture will be treated
as an AHYDO.
If a debenture is treated as an AHYDO, a corporate United States holder
would be treated as receiving dividend income, to the extent of our current and
accumulated earnings and profits, solely for purposes of the dividends-received
deduction, in an amount equal to the "dividend equivalent portion" of the
"disqualified portion" of the OID. The "disqualified portion" of the OID is
equal to the lesser of:
(1) the amount of OID, or
(2) the portion of the "total return," that is, the excess of all payments
to be made with respect to such obligation over its issue price, on the
obligation that bears the same ratio to the obligation's total return
as the "disqualified yield," that is, the extent to which the yield
exceeds the applicable federal rate plus 6%, bears to the obligation's
yield to maturity.
The dividend equivalent portion of the disqualified portion is the amount that
would have been treated as a dividend if we had distributed it with respect to
our stock. Our deduction for OID will be substantially deferred with respect to
a debenture that is treated as an AHYDO. In addition, such deduction will be
disallowed if and to the extent that the yield on such AHYDO exceeds the
applicable federal rate by more than 6%.
Purchase, Sale, Retirement and Other Disposition of the Debentures
Your adjusted tax basis in the debentures you receive in exchange for
shares of offered preferred stock will, in general, be equal to the initial tax
basis of such debentures, that is, the issue price of the debentures, if the
exchange is treated as a redemption giving rise to capital gain or the fair
market value of the debentures on the exchange date, if the exchange is treated
as a dividend, increased by OID you previously included in your income. Upon the
sale, exchange or retirement of a debenture, you will generally recognize
capital gain or loss equal to the difference between the amount realized, not
including any amounts attributable to accrued and unpaid interest, and your tax
basis in the debenture.
Ownership and Disposition of Warrants
The warrants may be sold individually or as a unit. Each unit is comprised
of one or more shares of offered preferred stock and one or more warrants. If
you purchase a unit you must allocate your purchase price between the offered
preferred stock and the warrants based on their relative fair market values to
determine your tax basis in the shares of offered preferred stock and the
warrants and the amount of redemption premium, if any, on the offered preferred
stock. If the warrant is sold individually, your tax basis in a warrant will be
its purchase price.
Sale of a Warrant
Generally, you will recognize gain or loss upon the sale of a warrant in an
amount equal to the difference between the amount realized on the sale and your
adjusted tax basis in the warrant. Your adjusted tax basis in a warrant
purchased in the offering as a unit will be the portion of the initial offering
price allocable to a warrant, adjusted as described below under "-- Adjustments
Under the Warrants." Gain or loss attributable to the sale of the warrants will
constitute capital gain or loss if you would have held the
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warrant stock as a capital asset and will be long-term capital gain or loss if
you held the warrants for more than one year.
Exercise of a Warrant, Disposition of Common Shares and Dividends
In general, you will not recognize gain or loss upon the exercise of a
warrant, except with respect to cash, if any, paid in lieu of the issuance of
fractional shares. Upon exercise of a warrant with cash, your tax basis in the
shares of warrant stock acquired will be the sum of:
(a) your adjusted tax basis in the warrant, and
(b) the cash paid upon exercise of the warrant.
If you receive any cash in lieu of fractional shares of warrant stock, you
will recognize gain or loss, and the character and amount of gain or loss will
be determined as if you had received such fractional shares and then immediately
sold them for cash. Your holding period of the stock acquired upon exercise of a
warrant begins on the day following the day of exercise.
Expiration of the Warrants
Upon the expiration of an unexercised warrant, you will recognize a loss
equal to your adjusted tax basis of the warrant. A loss realized upon expiration
of the warrant will be capital loss if you would have held the warrant stock as
a capital asset and will be long-term capital loss if you held the warrant for
more than one year.
Adjustments Under the Warrants
Pursuant to the terms of the warrants, the number of shares of warrant
stock you may purchase upon exercise of the warrants is subject to adjustment
from time to time upon the occurrence of certain events. In certain
circumstances, a change in conversion ratio or any transaction having a similar
effect may be treated as a distribution if your proportionate interest in the
earnings and profits of the issuer is increased by such change or transaction.
Thus, under certain future circumstances which may or may not occur, an
adjustment pursuant to the terms of the warrants may be treated as a taxable
distribution to the extent of our current or accumulated earnings and profits,
without regard to whether you receive any cash or other property. If you receive
such a taxable distribution, your tax basis in the warrants will be increased by
an amount equal to the taxable distribution.
WARRANT STOCK
Any distributions you receive on the warrant stock will be taxable as
ordinary income to the extent of our current and accumulated earnings and
profits. If we do not have current or accumulated earnings or profits, the
payment will first offset your basis in the warrant stock and any amount that
exceeds your basis will be treated as capital gain. Any gain or loss upon the
sale or exchange of shares of warrant stock will be capital gain or loss, and
will be long-term capital gain or loss if you owned the shares of warrant stock
for more than one year.
TAXATION OF NON-UNITED STATES HOLDERS
This section describes the tax consequences to non-United States holders.
If you are a United States holder, this section does not apply to you.
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INTEREST PAYMENTS
Under present United States federal income tax law, and subject to the
discussion of backup withholding below, if you are the beneficial owner of a
debenture and we or our paying agents make payments to you of principal,
premium, if any, and interest, including OID, you will not be subject to United
States federal withholding tax if, in the case of interest or OID:
(a) you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote;
(b) you are not a controlled foreign corporation that is related to us
through stock ownership; and
(c) either:
(1) you certify to us or our agent, under penalties of perjury, that
you are not a United States holder and provide your name and
address; or
(2) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course
of its trade or business (a "financial institution") and holds the
debenture certifies to us or our agent under penalties of perjury
that it, or a financial institution between it and you, has
received such statement from you and furnishes the payor with a
copy thereof.
Recently finalized United States Treasury Regulations, which we refer to as the
"Final Withholding Regulations," would provide for alternative methods for
satisfying the certification requirement. The Final Withholding Regulations also
would require, in the case of debentures held by a foreign partnership, that:
(1) the certification be provided by the partners rather than by the
partnership; and
(2) the partnership provide certain information.
A look-through rule would apply in the case of tiered partnerships. The Final
Regulations are effective for payments made after December 31, 2000.
DIVIDEND INCOME
Dividends paid to you will be subject to withholding of United States
federal income tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty, unless the dividends are "effectively connected"
with your conduct of a trade or business within the United States, and they are
attributable to your United States permanent establishment, if an applicable
income tax treaty so requires as a condition for subjecting you to United States
income tax on a net income basis. Such "effectively connected" dividends,
generally, are not subject to withholding tax if you satisfy certain
certification requirements. Instead, "effectively connected" dividends are taxed
at rates applicable to United States citizens, resident aliens and domestic
United States corporations. In addition, if you are a non-United States
corporation, you may, under certain circumstances, be subject to an additional
"branch profits tax" on "effectively connected" dividends at a 30% rate or at a
lower rate if you are eligible for the benefits of an applicable income tax
treaty.
Under current United States Treasury Regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country, unless the payor has knowledge to the contrary, for purposes of the 30%
withholding discussed above. Under
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current interpretations of United States Treasury Regulations, this presumption
also applies for purposes of determining whether a lower withholding rate
applies under an income tax treaty.
Under the Final Withholding Regulations, you must satisfy certain
certification requirements in order to claim the benefit of a lower treaty rate.
See "-- Taxation of Non-United States Holders -- Interest Payments" on page 59.
If you are eligible for a reduced rate of United States withholding tax
under a tax treaty, you may obtain a refund of any amount withheld in excess of
that rate by filing a refund claim with the United States Internal Revenue
Service.
SALE OR DISPOSITION
You will not be subject to United States federal income tax in respect of a
sale or disposition of shares of offered preferred stock or shares of warrant
stock, or, to the extent of your basis in the shares of offered preferred stock
or shares of warrant stock, on distributions paid on the offered preferred stock
or warrant stock if we do not have current or accumulated earnings and profits,
warrants or debentures unless:
(1) the gain is effectively connected with your trade or business in the
United States and is attributable to your permanent establishment
maintained in the United States, if an applicable income tax treaty so
requires as a condition for you to be subject to United States taxation
on a net income basis in respect of capital gain;
(2) if you are an individual, you are present in the United States for 183
or more days in the taxable year of the sale and certain other
conditions apply; or
(3) we are or have been a "United States real property holding corporation"
for federal income tax purposes.
We have not been, are not and do not anticipate becoming a "United States real
property holding corporation" for federal income tax purposes. If you are a
corporation, your "effectively connected" gains may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty.
ESTATE TAXES
If you are an individual who at death is not a citizen or resident of the
United States, your debenture will not be includible in your gross estate for
purposes of the United States federal estate tax as a result of your death if:
(a) you did not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote; and
(b) the income on the debenture would not have been effectively connected
with your United States trade or business at your death.
If you are a non-United States holder of shares of offered preferred stock,
warrants or shares of warrant stock at the time of your death, they will be
included in your gross estate for United States federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, if you are a United States holder, other than certain exempt
recipients, such as corporations, information reporting requirements will apply
to dividends paid in respect of your shares of offered preferred stock and
warrant stock, including the accrual of the redemption premium, to principal and
interest paid in respect of your debentures, and to the proceeds received on the
sale, exchange or redemption of your shares of offered preferred stock,
debentures, warrants or warrant stock, and "backup withholding" at a rate of 31%
will apply to the payments if you fail to provide an accurate taxpayer
identification number or you are notified by the Internal Revenue Service that
you have failed to report all interest and dividends required to be shown on
your federal income tax returns. You should consult your own tax advisor
concerning the application of information reporting and backup withholding to
the preferred stock, debentures, warrants or warrant stock.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your United States federal income tax liability
provided the required information is furnished to the IRS.
NON-UNITED STATES HOLDERS
Under current law, if you are a non-United States holder of a debenture,
information reporting on Internal Revenue Service Form 1099 and backup
withholding will not apply to payments of principal, premium, if any, and
interest, including OID, made by us or a paying agent; provided, that you
certify to us or our agent, under penalties of perjury, that you are not a
United States holder and provide your name and address, or a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the debenture, certifies to us or our agent, under
penalties of perjury, that such statement has been received from you or by a
financial institution between it and you and furnishes as the payor with a copy
thereof; and provided further that the payor does not have actual knowledge that
you are a United States person. We or a paying agent, however, may report, on
Internal Revenue Service Form 1042-S, payments of interest, including OID, on
the debentures. See "-- Taxation of Non-United States Holders -- Interest
Payments" on page 59 with respect to the rules under the Final Withholding
Regulations.
In general, if you are a non-United States holder, dividends paid to you
are not subject to United States information reporting requirements and backup
withholding tax if you are either subject to the 30% withholding tax, discussed
above, or are not subject to the 30% withholding tax because you are eligible
for the benefits of an income tax treaty. However, dividend payments will be
reported for purposes of the 30% withholding tax discussed above. If you do not
meet any of the requirements listed above to exempt you from backup withholding
tax and fail to provide certain information, including a United States taxpayer
identification number, or otherwise establish a status as an "exempt recipient,"
you may be subject to backup withholding of United States federal income tax at
a rate of 31% on dividends paid.
Under current law, dividends paid to an address in a foreign country are
generally treated as exempt from backup withholding and information reporting
unless the person making the payment has definite knowledge that the recipient
is a United States person. However, under the Final Withholding Regulations
discussed above, dividend payments generally will be subject to information
reporting and backup withholding unless certain certification requirements are
met.
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In general, United States information reporting and backup withholding
requirements also will not apply to a payment made outside the United States of
the proceeds of a sale of shares of offered preferred stock or warrant stock
through an office outside the United States of a non-United States broker.
However, United States information reporting, but not backup withholding,
requirements will apply to a payment made outside the United States of the
proceeds of a sale of shares of offered preferred stock or warrant stock through
an office outside the United States of a broker:
(1) that is a United States person;
(2) that derives 50% or more of its gross income for certain periods from
the conduct of a trade or business in the United States;
(3) that is a "controlled foreign corporation" as to the United States; or
(4) with respect to payments made after December 31, 2000, that is a
foreign partnership, if at any time during its tax year, one or more of
its partners are U.S. persons, as defined in U.S. Treasury regulations,
who in the aggregate hold more than 50% of the income or capital
interest in the partnership or if, at any time during its tax year, the
foreign partnership is engaged in a United States trade or business,
unless the broker has documentary evidence in its records that the holder or
beneficial owner is a non-United States person or the holder or beneficial owner
otherwise establishes an exemption.
Payment of the proceeds of the sale of shares of offered preferred stock and
shares of warrant stock to or through a United States office of a broker is
currently subject to both United States backup withholding and information
reporting unless the holder certifies its non-United States status under
penalties of perjury or otherwise establishes an exemption.
A non-United States holder generally may obtain a refund of any excess
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the United States Internal Revenue Service.
DESCRIPTION OF TERM LOAN AND SENIOR NOTES
The following summarizes the principal terms and conditions of the term
loan agreement and the indenture relating to our 11% Senior Notes due 2005. The
description below does not purport to be complete and is qualified in its
entirety by reference to the term loan agreement and the indenture relating to
the senior notes.
THE TERM LOAN
The term loan agreement, dated as of May 13, 1998, by and among the
financial institutions listed in the term loan agreement, as lenders, DLJ
Capital Funding, Inc., as syndication agent, and IBJ Schroeder Bank & Trust
Company, as facility manager, provides for a $150 million senior secured term
loan with a final maturity on May 13, 2003, at which time all outstanding
amounts will be due and payable. We currently have borrowed $150 million under
the term loan. Prior to the final maturity of the term loan, there are no
scheduled principal payments. The term loan agreement provides for mandatory
prepayments of:
(1) all net proceeds from the sale of assets, subject to certain
exceptions, and to the receipt of any required regulatory approvals;
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(2) all net proceeds from the issuance of debt securities;
(3) 50% of the net proceeds from certain equity issuances; and
(4) the entire aggregate principal amount plus a premium equal to 1.00% of
the aggregate principal amount of the loan prepaid upon a "change of
control" as that term is defined in the term loan agreement.
The term loan bears interest at a rate per annum equal to the
administrative agent's reserve-adjusted LIBOR rate plus 4.25%.
THE SENIOR NOTES
We issued the 11% Senior Notes due 2005, which we refer to as the "senior
notes," under an indenture, dated as of May 13, 1998, between us and The Chase
Manhattan Bank, as trustee. We refer to this indenture as the "senior note
indenture." The senior notes are senior unsecured obligations of Oxford and:
- rank senior in right of payment to all our subordinated indebtedness;
- rank equally in right of payment with all existing and future senior
indebtedness, including borrowings under the term loan agreement
described above; and
- are effectively subordinated to all our existing and future secured
indebtedness, including indebtedness under the term loan agreement, to
the extent of the value of the assets securing indebtedness, and the
senior notes are structurally subordinated to indebtedness and other
liabilities of our subsidiaries, including any guarantees of our
subsidiaries of indebtedness under the term loan agreement.
As of the date of this prospectus, we had $200 million of senior notes
outstanding.
The senior notes mature on May 15, 2005. Interest on the senior notes is
payable semi-annually at the rate of 11% per annum.
On and after May 15, 2002, we will have the right to redeem any or all of
the senior notes at the following redemption prices plus accrued and unpaid
interest on the senior notes to the date of redemption:
<TABLE>
<CAPTION>
PERCENTAGE OF
12-MONTH PERIOD BEGINNING MAY 15, PRINCIPAL AMOUNT
--------------------------------- ----------------
<S> <C>
2002................................................... 105.500%
2003................................................... 102.750
2004 and afterwards.................................... 100.000
</TABLE>
On and before May 15, 2001, we have the right to use the net cash proceeds
of one or more equity offerings to redeem up to 33 1/3% of the aggregate
principal amount of senior notes originally outstanding at 111% of the principal
amount, plus accrued and unpaid interest to the redemption date. However, at
least 66 2/3% of the original aggregate principal amount of senior notes must
remain outstanding immediately after the redemption of the senior notes and the
redemption must occur within 60 days of the closing of the equity offering.
If an event treated as a "change of control" as such term is used in the
senior note indenture of Oxford occurs, each holder of senior notes will have
the right to require us to make an offer to purchase from it all or any part of
the senior notes it holds then outstanding at a purchase price in cash equal to
101% of their aggregate principal amount, plus accrued and unpaid interest on
the senior notes.
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COVENANTS
The term loan agreement and the senior note indenture contain substantially
similar covenants which, among other things, and subject to important
exceptions, restrict our ability and the ability of our subsidiaries to:
- pay dividends or make payments or distributions;
- incur additional indebtedness;
- make investments, loans or advances;
- make acquisitions;
- incur liens;
- enter into sale and leaseback transactions;
- engage in mergers or consolidations;
- sell stock or assets of our principal subsidiaries;
- change the business conducted by us or our subsidiaries; and
- enter into transactions with affiliates and otherwise restrict certain
corporate activities.
EVENTS OF DEFAULT
The term loan agreement and the senior note indenture provide that certain
events will constitute events of default, which include but are not limited to:
- failure to make payments when due;
- a default by us or by our restricted subsidiaries under other agreements
governing indebtedness;
- our failure to observe or perform the covenants set forth in the term
loan agreement or in the senior note indenture;
- the imposition of certain judgments against us or our restricted
subsidiaries; and
- the incurrence of certain bankruptcy or insolvency proceedings or events
with respect to us or our restricted subsidiaries.
RESTRICTED PAYMENTS
The term loan agreement and the senior note indenture contain covenants
that restrict our ability to make certain "restricted payments," including our
ability:
- to declare or pay dividends or make payments or distributions on the
capital stock of Oxford or its restricted subsidiaries or warrants,
options or other rights to purchase the capital stock of Oxford or its
restricted subsidiaries;
- to purchase, redeem or otherwise acquire or retire for value equity
interests of Oxford or its restricted subsidiaries; or
- to prepay, purchase, redeem, defease or otherwise acquire or retire for
value prior to its stated maturity indebtedness that is subordinated to
the term loan, in the case of the term loan agreement, or indebtedness
that is subordinated to the senior notes, in the case of the senior note
indenture;
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<PAGE> 69
UNLESS:
(1) no default or event of default has occurred and is continuing or would
occur as a consequence thereof; and
(2) after giving effect to the restricted payment, Oxford has a fixed
charge coverage ratio -- that is, a ratio of consolidated net income,
plus, to the extent deducted from consolidated net income, fixed
charges and non-cash dividends on Oxford's preferred stock, plus taxes,
depreciation, amortization, depletion and other non-cash charges
required to be reflected as expenses, minus cash payments with respect
to non-recurring, non-cash charges previously added back as described
above, to consolidated fixed charges -- of at least 2.25 to 1 for the
most recent four quarters, and such restricted payment when taken
together with all other restricted payments relating to such period
shall not exceed 50% of consolidated net income of Oxford for that
period.
These restrictions are subject to certain exceptions, including the ability
to pay dividends payable in offered preferred stock on shares of offered
preferred stock. We are only able to make payments of dividends on offered
preferred stock in shares of offered preferred stock until May 13, 2000. After
that date, dividend payments on the offered preferred stock must be in cash.
Unless we comply with the restricted payment covenant described above, we may be
prohibited from making a payment of cash dividends on our offered preferred
stock.
These restrictions do not relieve us from our obligations to pay dividends
on the offered preferred stock when due.
We are also prohibited from redeeming the offered preferred stock or the
debentures unless we comply with the restricted payment covenant described
above. These restrictions do not relieve us from our obligations to redeem the
offered preferred stock or the debentures upon a change in control. If we fail
to make dividend payments on the offered preferred stock when due, additional
dividends will accumulate on any unpaid dividends.
CHANGE OF CONTROL
A number of factors may limit our ability to redeem the offered preferred
stock or debentures upon a change of control. The term loan agreement provides
that certain change of control events with respect to Oxford require us to
prepay amounts outstanding under the term loan agreement at 101% of the
aggregate principal amount of the term loan plus accrued and unpaid interest,
although each lender has the right to waive its entitlement to prepayment. In
addition, certain events that may obligate us to prepay outstanding obligations
under the term loan agreement do not constitute a change of control under the
certificates of designations relating to the offered preferred stock or under
the indentures relating to the debentures.
In addition, the senior note indenture provides that certain change of
control events with respect to Oxford give the holders of senior notes the right
to require us to repurchase all or any part of the holders' senior notes, in a
"change of control offer." The offer price will be in cash equal to 101% of the
aggregate principal amount of the notes plus accrued and unpaid interest to the
date of purchase.
If a change of control occurs, we may not have sufficient resources to
repay indebtedness under the term loan agreement, and we may not have sufficient
resources to repurchase the senior notes tendered in a change of control offer
or redeem offered preferred stock or the debentures upon a change of control.
Furthermore, any future credit
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<PAGE> 70
agreements or other agreements relating to senior indebtedness to which we
become a party may contain similar restrictions and provisions. In the event a
change of control occurs at a time when we are directly or indirectly prohibited
from repurchasing the senior notes or redeeming offered preferred stock or the
debentures, we could seek the consent of our lenders to the redemption of
offered preferred stock or debentures or could attempt to refinance the
borrowings that contain this prohibition. If we do not obtain the consent or
repay the borrowings, the repurchase of the senior notes tendered in a change of
control offer or redemption of offered preferred stock or the debentures will
remain prohibited. Our failure to repurchase the senior notes tendered in a
change of control offer or redeem the debentures when required may constitute a
breach of the relevant indentures, which would, in turn, constitute a default
under the term loan agreement or the senior note indenture and could lead to the
acceleration of the indebtedness under the term loan agreement or the senior
note indenture.
The obligations described above do not relieve us from our obligation to
redeem shares of offered preferred stock or to redeem debentures upon a change
of control. If we are required to redeem the offered preferred stock or the
debentures and we fail to pay the redemption price on the redemption date,
additional dividends will accrue on the redemption price, in the case of the
offered preferred stock, or interest will accrue on the redemption price, in the
case of the debentures.
SELLING SECURITYHOLDERS
This section sets forth information with respect to each selling
securityholder for whom we are registering securities for offer and sale to the
public under the registration statement of which this prospectus is a part. The
securities offered hereby are comprised of:
- 277,629.157 shares of Series D preferred stock, including 14,022.606
additional shares of Series D preferred stock that we expect to issue as
dividends on existing shares through May 13, 2000;
- 132,808.069 shares of Series E preferred stock, including 16,908.793
additional shares of Series E preferred stock that we expect to issue as
dividends on existing shares through May 13, 2000;
- $277,629,157 aggregate principal amount of Series D junior subordinated
debentures issuable in exchange for shares of Series D preferred stock;
- $132,808,069 aggregate principal amount of Series E junior subordinated
debentures issuable in exchange for shares of Series E preferred stock;
- 15,800,000 Series A warrants;
- 6,730,000 Series B warrants;
- 15,800,000 shares of common stock issuable upon exercise of the Series A
warrants; and
- 6,730,000 shares of common stock issuable upon exercise of the Series B
warrants.
In addition to the information included in this section, if shares of
offered preferred stock, debentures, warrants or shares of common stock are
offered by a selling securityholder under this prospectus, a prospectus
supplement, if required, will include the following information:
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<PAGE> 71
- the amount of shares of offered preferred stock, debentures, warrants or
shares of common stock to be offered for the selling securityholder's
account;
- the amount of shares of offered preferred stock, debentures, warrants or
shares of common stock to be owned by the selling securityholder after
completion of the offering; and
- the percentage of the series of offered preferred stock, debentures,
warrants or common stock, if one percent or more, to be owned by the
selling securityholder after completion of the offering.
Under the investment agreement, the selling securityholders named in this
prospectus purchased 245,000 shares of our Series A preferred stock, 105,000
shares of our Series B preferred stock and the warrants for a total sum of $350
million. On February 13, 1999, we entered into a share exchange agreement with
the selling securityholders to redistribute the total amount of the dividends
payable among the shares of Series A preferred stock and Series B preferred
stock. Under the share exchange agreement, the 245,000 shares of Series A
preferred stock were exchanged for 260,146.909 shares of Series D preferred
stock, and the 105,000 shares of Series B preferred stock were exchanged for
111,820.831 shares of Series E preferred stock. The additional amounts of Series
D preferred stock and Series E preferred stock issued in the exchange are
attributable to dividends accrued on the offered preferred stock through
February 13, 1999. As a result of the exchange, the selling securityholders hold
only shares of Series D preferred stock and shares of Series E preferred stock
and following the exchange all shares of the Series A preferred stock and all
shares of the Series B preferred stock were cancelled. The terms of the Series D
preferred stock are substantially similar to the terms of the Series A preferred
stock and the terms of the Series E preferred stock are substantially similar to
the terms of the Series B preferred stock, except with respect to applicable
dividend rates and the use of Series D preferred stock as consideration for
exercise of the warrants. The exchange was effected primarily to facilitate the
potential sale of shares of offered preferred stock by the selling
securityholders.
As of the date of this prospectus, the selling securityholders held a total
of 263,606.551 shares of Series D preferred stock and 115,899.276 shares of
Series E preferred stock. Through May 13, 2000, we expect to issue an additional
14,022.606 shares of Series D preferred stock and 16,908.793 shares of Series E
preferred stock to satisfy our obligation to pay dividends on the outstanding
shares of offered preferred stock.
Under the investment agreement, we agreed to increase the number of our
directors to a minimum of 11 directors and a maximum of 13 directors and to
appoint Norman C. Payson, M.D., as our chief executive officer and as a
director. We also agreed that TPG Partners II and its affiliates would be
entitled to nominate four directors to our board of directors, subject to
adjustment based on the number of warrants and warrant stock beneficially owned
by TPG Partners II and its affiliates. Dr. Payson was elected chief executive
officer and joined our board of directors in May 1998. David Bonderman, Jonathan
J. Coslet and James G. Coulter were nominated by TPG Partners II and its
affiliates pursuant to the investment agreement and joined our board of
directors in May 1998. Kent J. Thiry was also nominated by TPG Partners II and
its affiliates pursuant to the investment agreement and joined our board of
directors in August 1998.
Mr. Bonderman is a director and president of TPG Advisors II, Inc., Mr.
Coulter is a director and vice president of TPG Advisors II, Inc., and Mr.
Coslet is an executive of TPG Advisors II, Inc. TPG Advisors II, Inc. is the
general partner of TPG GenPar II,
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<PAGE> 72
L.P., which is the general partner of each of TPG Partners II, L.P., TPG
Parallel II, L.P. and TPG Investors II, L.P., each a selling securityholder.
The investment agreement also contains covenants which restrict our ability
to take significant actions without the consent of TPG Partners II and its
affiliates, including mergers, consolidations and certain issuances of equity
securities. In connection with the investment agreement, we also entered into a
registration rights agreement in which we agreed to register the offered
preferred stock, the debentures, the warrants and the common stock issuable upon
exercise of the warrants under the Securities Act for offer and sale by the
selling securityholders and certain holders to whom they may transfer those
securities. For a summary of certain provisions of the registration rights
agreement, see "Registration Rights Agreement" on page 46.
We have filed with the SEC under the Securities Act a shelf registration
statement on Form S-3, of which this prospectus is a part, with respect to the
offer and sale of the securities described in this prospectus. We have agreed,
among other things, to bear certain expenses in connection with the registration
and sale of the securities being offered by the selling securityholders. For
more information regarding these expenses, see "Plan of Distribution" beginning
on page 72.
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<PAGE> 73
The following table provides the name of each selling securityholder and
the number of shares of offered preferred stock and warrants held by each
selling securityholder as of the date of this prospectus. All of these
securities have been registered for offer and sale under the shelf registration
statement of which this prospectus is a part. As noted in the table, we expect
to issue additional shares of offered preferred stock as dividends on existing
shares of offered preferred stock on May 13, 2000. Those additional shares have
been registered for offer and sale by the selling securityholders under the
shelf registration statement of which this prospectus is a part.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
OFFERED PREFERRED STOCK HELD
-----------------------------------
NAME OF BENEFICIAL OWNER SERIES D SERIES E
- ------------------------ ---------------- ---------------
<S> <C> <C>
TPG Partners II, L.P.(1)....................... 179,851.36901207 79,074.83089156
TPG Parallel II, L.P.(2)....................... 12,273.52103150 5,396.27029441
TPG Investors II, L.P.(3)...................... 18,760.35104746 8,248.31968026
Chase Equity Associates, L.P.(4)............... 11,297.42362988 4,967.11183212
Oxford Acquisition Corp.(5).................... 3,765.80787663 1,655.70394404
DLJ Merchant Banking Partners II, L.P.(6)...... 18,977.51980797 8,343.64407533
DLJ Merchant Banking Partners II-A, L.P.(7).... 755.31346554 332.24459144
DLJ Offshore Partners II, C.V.(8).............. 932.84440829 410.61457812
DLJ Diversified Partners, L.P.(9).............. 1,109.29940595 487.88076218
DLJ Diversified Partners-A, L.P.(10)........... 412.08697621 181.02363122
DLJMB Funding II, Inc.(11)..................... 3,369.86007703 1,481.30312860
DLJ Millennium Partners, L.P.(12).............. 306.64435566 134.66392078
DLJ Millennium Partners-A, L.P.(13)............ 60.25292603 26.49126311
DLJ EAB Partners, L.P.(14)..................... 84.99966350 37.52928940
UK Investment Plan 1997 Partners(15)........... 502.46636526 220.76052587
DLJ ESC II L.P.(16)............................ 4,124.09759745 1,813.54772003
DLJ First ESC, L.P.(17)........................ 36.58213365 16.55703944
DLJ Capital Corporation(18).................... 100.06289501 44.15210517
Sprout Growth II, L.P.(19)..................... 4,617.95640185 2,030.99683802
The Sprout CEO Fund, L.P.(20).................. 76.39210264 34.21788151
Sprout Capital VIII, L.P.(21).................. 2,066.89055171 907.32576134
Sprout Venture Capital, L.P.(22)............... 124.80963248 54.08632884
</TABLE>
- ---------------
(1) We expect to issue 9,567.23134338 additional shares of Series D preferred
stock and 11,536.39629891 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(2) We expect to issue 652.89252871 additional shares of Series D preferred
stock and 787.27342127 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(3) We expect to issue 997.96081364 additional shares of Series D preferred
stock and 1,203.36500956 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
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<PAGE> 74
(4) We expect to issue 600.96882245 additional shares of Series D preferred
stock and 724.66257481 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(5) We expect to issue 200.32294082 additional shares of Series D preferred
stock and 241.55419160 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(6) We expect to issue 1,009.51315146 additional shares of Series D preferred
stock and 1,217.27208955 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(7) We expect to issue 40.17905842 additional shares of Series D preferred
stock and 48.47187445 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(8) We expect to issue 49.62285420 additional shares of Series D preferred
stock and 59.90543952 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(9) We expect to issue 59.00941485 additional shares of Series D preferred
stock and 71.17796846 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(10) We expect to issue 21.92105324 additional shares of Series D preferred
stock and 26.40992495 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(11) We expect to issue 179.26041447 additional shares of Series D preferred
stock and 216.11048342 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(12) We expect to issue 16.31201089 additional shares of Series D preferred
stock and 19.64640758 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(13) We expect to issue 3.20516705 additional shares of Series D preferred stock
and 3.86486707 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
(14) We expect to issue 4.52157495 additional shares of Series D preferred stock
and 5.47522834 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
(15) We expect to issue 26.72880382 additional shares of Series D preferred
stock and 32.20722555 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(16) We expect to issue 219.38223776 additional shares of Series D preferred
stock and 264.58235787 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(17) We expect to issue 1.94599428 additional shares of Series D preferred stock
and 2.41554192 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
(18) We expect to issue 5.32286671 additional shares of Series D preferred stock
and 6.44144511 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
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(19) We expect to issue 245.65316057 additional shares of Series D preferred
stock and 296.30647503 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(20) We expect to issue 4.06369394 additional shares of Series D preferred stock
and 4.99211996 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
(21) We expect to issue 109.94867695 additional shares of Series D preferred
stock and 132.37169700 additional shares of Series E preferred stock as
dividends on the existing shares on May 13, 2000.
(22) We expect to issue 6.63927461 additional shares of Series D preferred stock
and 7.89077026 additional shares of Series E preferred stock as dividends
on the existing shares on May 13, 2000.
<TABLE>
<CAPTION>
NUMBER OF WARRANTS HELD
--------------------------------------
NAME OF BENEFICIAL OWNER SERIES A WARRANTS SERIES B WARRANTS
- ------------------------ ----------------- -----------------
<S> <C> <C>
TPG Partners II, L.P. ............................. 10,779,898 4,591,691
TPG Parallel II, L.P. ............................. 735,648 313,349
TPG Investors II, L.P. ............................ 1,124,455 478,961
Chase Equity Associates, L.P. ..................... 677,142 288,428
Oxford Acquisition Corp. .......................... 225,714 96,142
DLJ Merchant Banking Partners II, L.P. ............ 1,137,465 484,503
DLJ Merchant Banking Partners II-A, L.P. .......... 45,299 19,295
DLJ Offshore Partners II, C.V. .................... 55,935 23,825
DLJ Diversified Partners, L.P. .................... 66,501 28,326
DLJ Diversified Partners-A, L.P. .................. 24,696 10,519
DLJMB Funding II, Inc. ............................ 201,951 86,022
DLJ Millennium Partners, L.P. ..................... 18,392 7,834
DLJ Millennium Partners-A, L.P. ................... 3,587 1,528
DLJ EAB Partners, L.P. ............................ 5,107 2,175
UK Investment Plan 1997 Partners................... 30,095 12,819
DLJ ESC II L.P. ................................... 247,193 105,292
DLJ First ESC, L.P. ............................... 2,189 932
DLJ Capital Corporation............................ 5,998 2,555
Sprout Growth II, L.P. ............................ 276,790 117,899
The Sprout CEO Fund, L.P. ......................... 4,579 1,950
Sprout Capital VIII, L.P. ......................... 123,885 52,769
Sprout Venture Capital, L.P. ...................... 7,481 3,186
</TABLE>
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PLAN OF DISTRIBUTION
The selling securityholders now hold shares of offered preferred stock and
warrants covered by this prospectus. As used in the rest of this section of this
prospectus, the term "selling securityholders" includes the selling
securityholders named in the table under "Selling Securityholders" beginning on
page 66 of this prospectus and some of their pledgees, donees, transferees or
other successors in interest selling securities received from a named selling
securityholder after the date of this prospectus. The shares of offered
preferred stock, the debentures issuable upon an exchange of offered preferred
stock, the warrants and the shares of common stock issuable upon exercise of the
warrants covered by this prospectus are referred to in this section as the
"registrable securities." The selling securityholders may offer and sell, from
time to time, some or all of the registrable securities under this prospectus.
We have registered the registrable securities for offer and sale by the selling
securityholders so that the registrable securities will be freely tradeable by
them. Registration of the registrable securities does not mean, however, that
the registrable securities necessarily will be offered or sold. We will not
receive any proceeds from any sale by the selling securityholders of the
registrable securities. See "Use of Proceeds" on page 48 for information about
the use of proceeds from the original sale of the offered preferred stock and
the warrants. We will pay all costs, expenses and fees in connection with the
registration of the registrable securities, including fees of our counsel and
accountants, fees payable to the SEC, listing fees and the reasonable fees and
disbursements of one law firm selected as counsel for the selling
securityholders in connection with the registration. The selling securityholders
will pay all underwriting discounts and commissions and similar selling
expenses, if any, attributable to the sale of the registrable securities.
The selling securityholders may sell the registrable securities from time
to time, at market prices prevailing at the time of sale, at prices related to
market prices, at a fixed price, at prices subject to change or at negotiated
prices, by a variety of methods, including the following:
- on markets where our securities are traded or on an exchange in
accordance with the rules of the exchange;
- in privately negotiated transactions;
- through broker-dealers, which may act as agents or principals;
- in a block trade in which a broker-dealer will attempt to sell a block of
registrable securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- through one or more underwriters on a firm commitment or best-efforts
basis;
- directly to one or more purchasers;
- through agents;
- through option transactions, forward contracts, equity swaps or other
derivative transactions relating to the registrable securities;
- through short sales of the registrable securities;
- in any combination of the above; or
- by any other legally available means.
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<PAGE> 77
In effecting sales, brokers or dealers engaged by the selling
securityholders may arrange for other brokers or dealers to participate.
Broker-dealer transactions may include:
- purchases of the registrable securities by a broker-dealer as principal
and resales of the registrable securities by the broker-dealer for its
account pursuant to this prospectus;
- ordinary brokerage transactions; or
- transactions in which the broker-dealer solicits purchasers.
If we or the selling securityholders enter into a material arrangement with
any underwriter, broker, dealer or other agent for the sale of any registrable
securities through a secondary distribution or a purchase by a broker or dealer,
or if we or the selling securityholders make other material changes in the plan
of distribution of the registrable securities, we will file a prospectus
supplement, if necessary, under the Securities Act disclosing the material terms
and conditions of such arrangement. If we or the selling securityholders use an
underwriter or underwriters in the sale of registrable securities, we and the
selling securityholders expect to execute an underwriting agreement with the
underwriter or underwriters at the time an agreement for the sale is reached. We
will set forth the underwriter or underwriters with respect to an underwritten
offering of registrable securities and the other material terms and conditions
of the underwriting in a prospectus supplement relating to such offering and, if
we or the selling securityholders use an underwriting syndicate, we will set
forth the managing underwriter or underwriters on the cover of the prospectus
supplement. In connection with the sale of registrable securities, underwriters
will receive compensation in the form of underwriting discounts or commissions
and may also receive commissions from purchasers of registrable securities for
whom they may act as agent. Underwriters may sell to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
The selling securityholders and any underwriters, broker-dealers or agents
participating in the distribution of the registrable securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profit on
the sale of the registrable securities by the selling securityholders and any
commissions received by any such underwriters, broker-dealers or agents may be
deemed to be underwriting commissions under the Securities Act. We have agreed
to indemnify the selling securityholders and each person or entity which
participates as or may be deemed to be an underwriter in the offering or sale of
the selling securityholders' registrable securities against certain liabilities
(and to contribute to payments in respect of those liabilities), including
liabilities arising under the Securities Act. The selling securityholders may
agree to indemnify any agent or broker-dealer that participates in transactions
involving offers or sales of the registrable securities against certain
liabilities, including liabilities arising under the Securities Act.
VALIDITY OF SECURITIES
The validity of the shares of offered preferred stock, the debentures, the
warrants and the shares of common stock offered hereby will be passed upon for
us by Sullivan & Cromwell, New York, New York.
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EXPERTS
The consolidated financial statements of Oxford Health Plans, Inc. at
December 31, 1998, and for the year then ended, included in Oxford Health Plans,
Inc.'s annual report on Form 10-K/A No. 2 for the year ended December 31, 1998,
as amended by our Form 10-K/A No. 3, which is incorporated in this prospectus by
reference, have been audited by Ernst & Young LLP, independent auditors, and at
December 31, 1997, and for each of the years in the two-year period ended
December 31, 1997, by KPMG LLP, independent auditors, as set forth in their
respective reports thereon included therein and incorporated in this prospectus
by reference. These consolidated financial statements are incorporated in this
prospectus by reference in reliance upon such reports given on the authority of
these firms as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the three-month period ended March 31, 1999, the three-month and
six-month periods ended June 30, 1999 and 1998 and the three-month and
nine-month periods ended September 30, 1999 and 1998 incorporated by reference
in this prospectus, Ernst & Young LLP has reported that it has applied limited
procedures in accordance with professional standards for a review of such
information. Ernst & Young LLP's separate reports, included in Oxford Health
Plans, Inc.'s quarterly report on Form 10-Q/A No. 2 for the quarter ended March
31, 1999 with respect to the unaudited financial information as of March 31,
1999 and the three month periods ended March 31, 1999 and 1998 and Oxford Health
Plans, Inc.'s quarterly reports on Form 10-Q for the quarters ended June 30,
1999 and September 30, 1999 with respect to the unaudited financial information
as of June 30 and September 30, 1999 and the three month periods ended June 30,
and September 30, 1999 and 1998 and the six month periods ended June 30, 1999
and 1998 and the nine month periods ended September 30, 1999 and 1998 and
incorporated in this prospectus by reference, state that it did not audit and it
does not express an opinion on that interim financial information. Accordingly,
the degree of reliance on its reports on such information should be restricted
considering the limited nature of the review procedures applied. The independent
auditors are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for its reports on the unaudited interim financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by the auditors within the meaning
of Sections 7 and 11 of the Securities Act of 1933.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. We have also filed with the SEC a registration
statement on Form S-3 to register the offered preferred stock, the debentures,
the warrants and the common stock. This prospectus, which forms part of the
registration statement, does not contain all of the information included in that
registration statement. For further information about Oxford and the securities
offered in this prospectus, you should refer to the registration statement and
its exhibits.
You may read and copy any document we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. We file our SEC materials electronically with the SEC, so you
can also review our filings by accessing the web site maintained by the SEC at
http://www.sec.gov. This site
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contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC.
Our principal executive offices are located at 48 Monroe Turnpike,
Trumbull, CT 06611, and our main telephone number is (203) 459-6000.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes more dated information. We have previously filed the following
documents with the SEC and are incorporating them by reference into this
prospectus:
- Our annual report on Form 10-K/A No. 2 for the fiscal year ended
December 31, 1998, filed on August 26, 1999, as amended by our Form
10-K/A No. 3, filed on August 30, 1999 (File No. 0-19442);
- Our quarterly report on Form 10-Q/A No. 2 for the quarter ended March
31, 1999, filed on August 26, 1999 (File No. 0-19442);
- Our quarterly reports on Form 10 -Q for the quarters ended June 30,
1999, filed on August 16, 1999, and September 30, 1999, filed on
November 15, 1999 (file No. 0-19442);
- Our current reports on Form 8-K dated January 8, 1999 (filed on January
8, 1999), January 29, 1999 (filed on January 29, 1999), February 25,
1999 (filed on February 25, 1999 and amended on March 19, 1999), April
29, 1999 (filed on April 29, 1999), May 12, 1999 (filed on May 13,
1999), June 30, 1999 (filed on July 1, 1999), July 20, 1999 (filed on
July 22, 1999), July 29, 1999 (filed on August 2, 1999) and October 29,
1999 (filed on November 3, 1999) (File No. 0-19442); and
- The description of our common stock contained in the registration
statement on Form 8-A dated August 1, 1991, filed pursuant to Section 12
of the Securities Exchange Act of 1934 (File No. 0-19442).
We also are incorporating into this prospectus all documents subsequently
filed by us pursuant to Section 13(a), 13(c) 14 or 15(d) of the Securities
Exchange Act of 1934.
We will provide without charge to each person, including any person having
a control relationship with that person, to whom a prospectus is delivered, a
copy of any or all of the information that has been incorporated by reference in
this prospectus but not delivered with this prospectus. If you would like to
obtain this information from us, please direct your request, either in writing
or by telephone, to:
Investor Relations
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, CT 06611
(203) 459-6000
75
<PAGE> 80
FORWARD-LOOKING STATEMENTS
Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements," as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events or
results may differ materially as a result of risks that we face, including those
risks set forth in our annual report on Form 10-K/A No. 2 for the year ended
December 31, 1998, as amended by our Form 10-K/A No. 3, under the heading
"Cautionary Statement Regarding Forward-Looking Statements", and any risks set
forth in any prospectus supplement. These forward-looking statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "plans," "may," "will," "would," "could," "should," or "anticipates"
or the negative of these words or other variations of these words or other
comparable words, or by discussions of strategy that involve risks and
uncertainties. Such forward-looking statements include, but are not limited to,
statements concerning:
- future results of operations or financial position;
- future ability to make required payments on the offered preferred stock;
and
- future tax treatment of the offered preferred stock, warrants and
debentures.
76
<PAGE> 81
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY US OR THE SELLING SECURITYHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES OF OFFERED PREFERRED
STOCK, DEBENTURES, WARRANTS AND/OR SHARES OF COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN OUR AFFAIRS
SINCE THE DATE HEREOF.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Ratio of Earnings to Combined Fixed
Charges and Preference Dividends...... 12
Business.............................. 13
Description of the Offered Preferred
Stock............................... 13
Description of the Debentures......... 28
Book-Entry; Delivery and Form......... 42
Description of the Warrants........... 44
Registration Rights Agreement......... 46
Use of Proceeds....................... 48
Material United States Federal Income
Tax Consequences.................... 49
Description of Term Loan and Senior
Notes............................... 62
Selling Securityholders............... 66
Plan of Distribution.................. 72
Validity of Securities................ 73
Experts............................... 74
Where You Can Find More Information... 74
Forward-Looking Statements............ 76
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[OXFORD HEALTH PLANS LOGO]
277,629.157 Shares of Series D
Cumulative Preferred Stock
132,808.069 Shares of Series E Cumulative Preferred Stock
$277,629,157 Series D Junior Subordinated Debentures
due May 13, 2008
$132,808,069 Series E Junior Subordinated Debentures
due May 13, 2008
15,800,000 Series A Warrants
6,730,000 Series B Warrants
22,530,000 Shares of
Common Stock
-------------
Prospectus
-------------
December , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities being registered are:
<TABLE>
<S> <C>
Registration Fee.......................................... $189,985.01
Fees and Expenses of Accountants.......................... 92,000.00
Fees and Expenses of Counsel.............................. 200,000.00
Blue Sky Fees and Expenses................................ 0
Printing and Engraving Expenses........................... 150,000.00
Rating Agency Fees........................................ 0
Agent's Fees.............................................. 0
Miscellaneous............................................. 0
-----------
Total........................................... $631,985.01
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits indemnification
against expenses, fines, judgments and settlements incurred by any director,
officer or employee of Oxford in the event of pending or threatened civil,
criminal, administrative or investigative proceedings, if such person was, or
was threatened to be made, a party by reason of the fact that he is or was a
director, officer or employee of Oxford. Section 145 also provides that the
indemnification provided for therein shall not be deemed exclusive of any other
rights to which those seeking indemnification may otherwise be entitled.
Article Eighth of the Second Amended and Restated Certificate of
Incorporation, as amended, of Oxford provides that Oxford shall indemnify its
officers and directors to the fullest extent permitted by law. Article Ninth of
the Second Amended and Restated Certification of Incorporation, as amended, of
Oxford provides that to the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
Oxford shall not be liable to Oxford or its stockholders for monetary damages
for breach of fiduciary duty as a director.
Section 6.4 of the Amended and Restated By-laws of Oxford states:
Section 6.4. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The
Corporation shall indemnify to the fullest extent permitted by law any person
made or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, including any action
instituted by or on behalf of the Corporation, by reason of the fact that such
person or such person's testator or intestate is or was a director or officer of
the Corporation or serves or served at the request of the Corporation any other
enterprise as a director or officer. Expenses incurred by any such person in
defending any such actions, suit or proceeding shall be paid or reimbursed by
the Corporation promptly upon receipt by it of an undertaking of such person to
repay such expense if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this by-law shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this
II-1
<PAGE> 83
by-law shall impair the rights of any person arising at any time with respect to
events occurring prior to such amendment. To the extent permitted by Delaware
law, the Board may cause the Corporation to indemnify and reimburse other
employees of the Corporation as it deems appropriate. For purposes of this
by-law, the term "Corporation" shall include any predecessor of the Corporation
and any constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the term "other
enterprise" shall include any corporation, partnership, joint venture, trust or
employee benefit plan; service "at the request of the Corporation" shall include
service as a director or officer of the Corporation, which imposes duties on, or
involves services by, such director or officer with respect to any other
enterprise or any employee benefit plan, its participants or beneficiaries; any
excise taxes assessed on a person with respect to an employee benefit plan,
shall be deemed to be indemnifiable expenses; and action by a person with
respect to any employee benefit plan which such person reasonably believes to be
in the interest of the participants and beneficiaries of such plan shall be
deemed to be action not opposed to the best interests of the Corporation.
Section 145 of the Delaware General Corporation Law permits the
indemnification provided for by the above by-law provision. The statute further
permits Oxford to insure itself for such indemnification.
Oxford maintains insurance coverage for its directors and officers with
respect to certain liabilities incurred in their capacities as such and for
Oxford with respect to any payments which it becomes obligated to make to such
persons under the foregoing by-law and statutory provisions.
II-2
<PAGE> 84
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
2 Investment Agreement, dated February 23, 1998, between
Oxford Health Plans, Inc. and TPG Oxford LLC, incorporated
by reference to Exhibit 10(r) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1 Second Amended and Restated Certificate of Incorporation, as
amended, of Oxford Health Plans, Inc., incorporated by
reference to Exhibit 3(a) of Oxford's Annual Report on Form
10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1(a) Certificate of Designations for the Series D Cumulative
Preferred Stock of Oxford Health Plans, Inc., incorporated
by reference to Exhibit 3(a) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1(b) Certificate of Designations for the Series E Cumulative
Preferred Stock of Oxford Health Plans, Inc., incorporated
by reference to Exhibit 3(a) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.2 Form of Indenture relating to the Series D Junior
Subordinated Debentures due May 13, 2008*
4.3 Form of Indenture relating to the Series E Junior
Subordinated Debentures due May 13, 2008*
4.4 Form of Series A Warrant Certificate, included in the form
of Warrant Agreement filed as Exhibit 4.7 to this
Registration Statement
4.5 Form of Series B Warrant Certificate, included in the form
of Warrant Agreement filed as Exhibit 4.7 to this
Registration Statement
4.6 Amended and Restated By-laws of Oxford Health Plans, Inc.,
incorporated by reference to Exhibit 3(b) of Oxford's Annual
Report on Form 10-K/A for the period ended December 31, 1998
(File No. 0-19442)
4.7 Form of Warrant Agreement*
5 Opinion of Sullivan & Cromwell as to legality*
8 Opinion of Sullivan & Cromwell as to tax matters*
10 Registration Rights Agreement, dated as of February 23,
1998, between Oxford Health Plans, Inc. and TPG Oxford LLC,
incorporated by reference to Exhibit 10(s) of Oxford's
Annual Report on Form 10-K/A for the period ended December
31, 1998 (File No. 0-19442)
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preference Dividends*
15 Letter of Ernst & Young LLP re: unaudited condensed
consolidated interim financial information*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of KPMG LLP*
23.3 Consent of Sullivan & Cromwell (included in their opinion
filed as Exhibit 5)
</TABLE>
- -------------------------
* Filed herewith
II-3
<PAGE> 85
ITEM 17. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high and of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(b) 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.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
2. 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 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.
3. 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 provisions referred to in Item 15 of this
Registration Statement, 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 by the
registrant 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
II-4
<PAGE> 86
connection with the securities being registered, the registrant will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
4. The undersigned registrant hereby undertakes that:
(a) 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 registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
5. 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 of 1939 in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act of 1939.
II-5
<PAGE> 87
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Norwalk, State of Connecticut, on December 20, 1999.
Oxford Health Plans, Inc.
By: /s/ NORMAN C. PAYSON, M.D.
-----------------------------------
Norman C. Payson, M.D.
Chief Executive Officer
II-6
<PAGE> 88
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ NORMAN C. PAYSON, M.D. Principal Executive December 20, 1999
- ------------------------------------------------ Officer and
Norman C. Payson, M.D. Chairman of the
Board
/s/ YON Y. JORDEN Principal Financial December 20, 1999
- ------------------------------------------------ Officer
Yon Y. Jorden
/s/ KURT B. THOMPSON Principal Accounting December 20, 1999
- ------------------------------------------------ Officer
Kurt B. Thompson
/s/ FRED F. NAZEM Director December 20, 1999
- ------------------------------------------------
Fred F. Nazem
/s/ DAVID BONDERMAN Director December 20, 1999
- ------------------------------------------------
David Bonderman
/s/ JONATHAN J. COSLET Director December 20, 1999
- ------------------------------------------------
Jonathan J. Coslet
/s/ JAMES G. COULTER Director December 20, 1999
- ------------------------------------------------
James G. Coulter
/s/ ROBERT B. MILLIGAN, JR. Director December 20, 1999
- ------------------------------------------------
Robert B. Milligan, Jr.
/s/ MARCIA J. RADOSEVICH, PH.D. Director December 20, 1999
- ------------------------------------------------
Marcia J. Radosevich, Ph.D.
/s/ BENJAMIN H. SAFIRSTEIN, M.D. Director December 20, 1999
- ------------------------------------------------
Benjamin H. Safirstein, M.D.
/s/ THOMAS A. SCULLY Director December 20, 1999
- ------------------------------------------------
Thomas A. Scully
/s/ KENT J. THIRY Director December 20, 1999
- ------------------------------------------------
Kent J. Thiry
/s/ STEPHEN F. WIGGINS Director December 20, 1999
- ------------------------------------------------
Stephen F. Wiggins
</TABLE>
II-7
<PAGE> 89
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2 Investment Agreement, dated February 23, 1998, between
Oxford Health Plans, Inc. and TPG Oxford LLC, incorporated
by reference to Exhibit 10(r) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1 Second Amended and Restated Certificate of Incorporation, as
amended, of Oxford Health Plans, Inc., incorporated by
reference to Exhibit 3(a) of Oxford's Annual Report on Form
10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1(a) Certificate of Designations for the Series D Cumulative
Preferred Stock of Oxford Health Plans, Inc., incorporated
by reference to Exhibit 3(a) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.1(b) Certificate of Designations for the Series E Cumulative
Preferred Stock of Oxford Health Plans, Inc., incorporated
by reference to Exhibit 3(a) of Oxford's Annual Report on
Form 10-K/A for the period ended December 31, 1998 (File No.
0-19442)
4.2 Form of Indenture relating to the Series D Junior
Subordinated Debentures due May 13, 2008*
4.3 Form of Indenture relating to the Series E Junior
Subordinated Debentures due May 13, 2008*
4.4 Form of Series A Warrant Certificate, included in the form
of Warrant Agreement filed as Exhibit 4.7 to this
Registration Statement
4.5 Form of Series B Warrant Certificate, included in the form
of Warrant Agreement filed as Exhibit 4.7 to this
Registration Statement
4.6 Amended and Restated By-laws of Oxford Health Plans, Inc.,
incorporated by reference to Exhibit 3(b) of Oxford's Annual
Report on Form 10-K/A for the period ended December 31, 1998
(File No. 0-19442)
4.7 Form of Warrant Agreement*
5 Opinion of Sullivan & Cromwell as to legality*
8 Opinion of Sullivan & Cromwell as to tax matters*
10 Registration Rights Agreement, dated as of February 23,
1998, between Oxford Health Plans, Inc. and TPG Oxford LLC,
incorporated by reference to Exhibit 10(s) of Oxford's
Annual Report on Form 10-K/A for the period ended December
31, 1998 (File No. 0-19442)
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preference Dividends*
15 Letter of Ernst & Young LLP re: unaudited condensed
consolidated interim financial information*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of KPMG LLP*
23.3 Consent of Sullivan & Cromwell (included in their opinion
filed as Exhibit 5)
</TABLE>
- -------------------------
* Filed herewith
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
OXFORD HEALTH PLANS, INC.
AND
[-----------],
AS TRUSTEE
SERIES D JUNIOR SUBORDINATED DEBENTURES
DUE MAY 13, 2008
INDENTURE
Dated as of [ ]
---------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.........................................................................................1
Section 1.2. Other Definitions...................................................................................7
Section 1.3. Incorporation by Reference of Trust Indenture Act...................................................7
Section 1.4. Rules of Construction...............................................................................8
ARTICLE II
THE DEBENTURES
Section 2.1. Form and Dating.....................................................................................8
Section 2.2. Global Debentures...................................................................................9
Section 2.3. Execution and Authentication.......................................................................10
Section 2.4. Registrar and Paying Agent.........................................................................11
Section 2.5. Deposit of Monies; Paying Agent to Hold Money in Trust.............................................12
Section 2.6. Holder Lists.......................................................................................12
Section 2.7. Legends; Transfers and Exchanges; Etc..............................................................12
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures....................................................14
Section 2.9. Temporary Debentures...............................................................................15
Section 2.10. Cancellation......................................................................................15
Section 2.11. Payment of Interest; Defaulted Interest...........................................................16
Section 2.12. Record Date.......................................................................................17
Section 2.13. Computation of Interest...........................................................................17
Section 2.16. CUSIP Number......................................................................................17
ARTICLE III
COVENANTS
Section 3.1. Payment of Debentures..............................................................................17
Section 3.2. Maintenance of Office or Agency....................................................................17
Section 3.3. Corporate Existence................................................................................18
Section 3.4. Compliance Certificate.............................................................................18
Section 3.5. Further Instruments and Acts.......................................................................18
Section 3.6. Waiver of Stay, Extension or Usury Laws.............................................................18
Section 3.7. Restrictions on Dividends...........................................................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
VOTING RIGHTS
Section 4.1. Voting Rights and Certain Restrictions............................................................19
ARTICLE V
SUCCESSOR COMPANY
Section 5.1. Merger, Consolidation and Sale of Assets...........................................................23
ARTICLE VI
REDEMPTION OF DEBENTURES
Section 6.1. Redemption.........................................................................................24
Section 6.2. Applicability of Article...........................................................................24
Section 6.3. Notice of Redemption...............................................................................24
Section 6.4. Change of Control Notice and Redemption Procedures.................................................25
Section 6.5. Deposit of Redemption Price........................................................................26
Section 6.6. Debentures Payable on Redemption Date..............................................................27
Section 6.7. Debentures Redeemed in Part........................................................................27
Section 6.8. Rating Conditions..................................................................................27
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1. Events of Default..................................................................................27
Section 7.2. Acceleration of Maturity; Rescission and Annulment.................................................28
Section 7.3. Other Remedies.....................................................................................29
Section 7.4. Waiver.............................................................................................29
Section 7.5. Undertaking for Costs..............................................................................29
Section 7.6. Control............................................................................................30
Section 7.7. Limitation on Suits................................................................................30
Section 7.8. Rights of Holders to Receive Payment...............................................................30
Section 7.9. Collection Suit by Trustee.........................................................................31
Section 7.10. Trustee May File Proofs of Claim..................................................................31
Section 7.11. Priorities........................................................................................31
ARTICLE VIII
TRUSTEE
Section 8.1. Duties of Trustee..................................................................................32
Section 8.2. Rights of Trustee..................................................................................33
Section 8.3. Individual Rights of Trustee.......................................................................33
Section 8.4. Trustee's Disclaimer...............................................................................34
Section 8.5. Notice of Defaults.................................................................................34
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.6. Reports by Trustee to Holders......................................................................34
Section 8.7. Compensation and Indemnity.........................................................................34
Section 8.8. Replacement of Trustee.............................................................................35
Section 8.9. Successor Trustee by Merger........................................................................36
Section 8.10. Eligibility; Disqualification.....................................................................36
Section 8.11. Preferential Collection of Claims Against Company.................................................36
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.1. Termination of the Company's Obligations...........................................................37
ARTICLE X
AMENDMENTS AND SUPPLEMENTS
Section 10.1. Without Consent of Holders........................................................................38
Section 10.2. With Consent of Holders...........................................................................38
Section 10.3. Compliance with Trust Indenture Act...............................................................39
Section 10.4. Amended or Supplemental Indenture.................................................................39
Section 10.5. Revocation and Effect of Consents and Waivers.....................................................40
Section 10.6. Notation on or Exchange of Debentures.............................................................40
ARTICLE XI
SUBORDINATION OF THE DEBENTURES
Section 11.1. Agreement to Subordinate..........................................................................40
Section 11.2. Liquidation, Dissolution, Bankruptcy..............................................................40
Section 11.3. Default on Senior Indebtedness of the Company.....................................................41
Section 11.4. Acceleration of Payment of Debentures.............................................................42
Section 11.5. When Distribution Must Be Paid Over...............................................................42
Section 11.6. Subrogation.......................................................................................42
Section 11.7. Relative Rights...................................................................................42
Section 11.8. Subordination May Not Be Impaired by Company......................................................42
Section 11.9. Rights of Trustee and Paying Agent................................................................42
Section 11.10. Distribution or Notice to Representative.........................................................43
Section 11.11. Article XI Not to Prevent Events of Default or Limit Right to Accelerate.........................43
Section 11.12. Trust Moneys Not Subordinated....................................................................43
Section 11.13. Trustee Entitled to Rely.........................................................................43
Section 11.14. Trustee to Effectuate Subordination..............................................................44
Section 11.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.........................................44
Section 11.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions...........................44
ARTICLE XII
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls......................................................................44
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 12.2. Notices...........................................................................................44
Section 12.3. Communication by Holders with Other Holders.......................................................45
Section 12.4. Certificate and Opinion as to Conditions Precedent................................................45
Section 12.5. Statements Required in Certificate or Opinion.....................................................46
Section 12.6. Rules by Trustee, Paying Agent and Registrar......................................................46
Section 12.7. Legal Holidays....................................................................................46
Section 12.8. Governing Law, Etc................................................................................46
Section 12.9. No Recourse Against Others........................................................................47
Section 12.10. Successors.......................................................................................47
Section 12.11. Multiple Originals...............................................................................47
Section 12.12. Severability.....................................................................................47
Section 12.13. Table of Contents; Headings......................................................................47
Section 12.13. Investment Agreement; Headings...................................................................47
EXHIBIT A FORM OF THE DEBENTURE
</TABLE>
iv
<PAGE> 6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- -------------------------- ---------
<S> <C>
310(a)(1) .................................................................... 8.10
(a)(2) .................................................................... 8.10
(a)(3) .................................................................... N.A.
(a)(4) .................................................................... N.A.
(b) .................................................................... 8.8; 8.10
(c) .................................................................... N.A.
311(a) .................................................................... 8.11
(b) .................................................................... 8.11
(c) .................................................................... N.A.
312(a) .................................................................... 2.6
(b) .................................................................... 12.3
(c) .................................................................... 12.3
313(a) .................................................................... 8.6
(b)(1) .................................................................... N.A.
(b)(2) .................................................................... 8.6; 8.7
(c) .................................................................... 8.6
(d) .................................................................... 8.6
314(a) .................................................................... 3.4
(b) .................................................................... N.A.
(c)(1) .................................................................... 12.4
(c)(2) .................................................................... 12.4
(c)(3) .................................................................... N.A.
(d) .................................................................... N.A.
(e) .................................................................... 12.5
315(a) .................................................................... 8.1(b)
(b) .................................................................... 8.5
(c) .................................................................... 8.1(a)
(d) .................................................................... 8.1(c)
(e) .................................................................... 7.5
316(a)(last sentence) .................................................................... 1.1
(a)(1)(A) .................................................................... 7.6
(a)(1)(B) .................................................................... 7.4
(a)(2) .................................................................... N.A.
(b) .................................................................... 7.8
(c) .................................................................... 2.12
317(a)(1) .................................................................... 7.9
(a)(2) .................................................................... 7.10
(b) .................................................................... 2.5(b)
318(a) .................................................................... 12.1
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
v
<PAGE> 7
INDENTURE dated as of [_________], among OXFORD HEALTH PLANS,
INC., a Delaware corporation (the "Company"), and [_________], a [_________]
(the "Trustee"), as Trustee.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
Series D Junior Subordinated Debentures Due May 13, 2008 (the "Debentures"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act. The term "Affiliated" has a correlative meaning. Notwithstanding
the foregoing, for all purposes hereof, the Investor, and each Person controlled
by, controlling or under common control with the Investor (each, a "TPG
Person"), shall not be deemed an "Affiliate" of any Designated Purchaser Person
(as defined below), and no Designated Purchaser, and no Person controlled by,
controlling or under common control with such Designated Purchaser (each, a
"Designated Purchaser Person"), shall be deemed an "Affiliate" of any TPG Person
or any other Designated Purchaser Person, in any such case solely as a
consequence of the Investment Agreement and the transactions contemplated
thereby.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interest in any Global Debenture, the rules and
procedures of DTC or any successor Depositary that apply to such transfer and
exchange.
"Bankruptcy Law" means Title 11, United States Code or any
similar federal or state law for the relief of debtors.
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act as in effect on the date hereof, except that a Person
shall be deemed to Beneficially Own all such securities that such Person has the
right to acquire whether such right is exercisable immediately or after the
passage of time). The terms "Beneficial Ownership" and "Beneficial Owner" have
correlative meanings. Notwithstanding the foregoing, for all purposes hereof, no
TPG Person shall be deemed to Beneficially Own any securities that are held by
any Designated Purchaser Person, and no Designated Purchaser Person shall be
deemed to Beneficially Own any securities that are held by any TPG Person or
other Designated Purchaser Person, in any such case solely as a consequence of
the Investment Agreement or the transactions contemplated thereby.
"Board of Directors" means the Board of Directors of the
Company, or any duly and validly authorized committee of the Board of Directors.
"Business Day" means a day other than a Legal Holiday.
<PAGE> 8
"Certificated Debenture" means a certificated Debenture in the
form of Exhibit A, not bearing the legend for Global Notes set forth on Exhibit
A and registered in the name of the Holder thereof and issued in accordance with
this Indenture.
"Certificate of Designations" means, with respect to the
Series D Cumulative Preferred Stock, the Certificate of Designations of Series D
Cumulative Preferred Stock of the Company, and with respect to the Series E
Cumulative Preferred Stock, the Certificate of Designations of Series E
Cumulative Preferred Stock of the Company.
"Change of Control" means such time as:
(i) any Person or Group (other than the Investor, its
Affiliates, the Company or any Subsidiaries of the
Company, or any Group composed of such Persons) has
become, directly or indirectly, the Beneficial Owner,
by way of merger, consolidation or otherwise, of a
majority of the then-outstanding Voting Securities of
the Company on a fully-diluted basis, after giving
effect to the conversion and exercise of all
outstanding warrants, options and other securities of
the Company convertible into or exercisable for
Voting Securities of the Company (whether or not such
securities are then currently convertible or
exercisable); or
(ii) the sale, lease, transfer or other disposition
of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to any
Person or Group; or
(iii) during any period of two consecutive calendar
years, individuals who at the beginning of such
period constituted the Board of Directors, together
with any new members of such Board of Directors,
whose election by such Board of Directors or whose
nomination for election by the stockholders of the
Company was approved by a vote of at least a majority
of the members of such Board of Directors then still
in office who either were directors at the beginning
of such period or whose election or nomination for
election was previously so approved or who were
approved pursuant to Section 5.02 of the Investment
Agreement or pursuant to the terms of the Series D
Cumulative Preferred Stock of the Company or the
Series E Cumulative Preferred Stock of the Company,
cease for any reason to constitute a majority of the
directors of the Company then in office; or
(iv) the Company consolidates with or merges with or
into another Person or any Person consolidates with,
or merges with or into, the Company, in any such
event pursuant to a transaction in which immediately
after the consummation thereof the Persons owning the
then-outstanding Voting Securities of the Company
immediately prior to such consummation shall not own
a majority in the aggregate (by reason of such prior
ownership) of the then-outstanding Voting Securities
of the Company or the surviving entity if other than
the Company; or
2
<PAGE> 9
(v) the adoption of a plan relating to the
liquidation or dissolution of the Company, whether or
not otherwise in compliance with the provisions of
this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Oxford Health Plans, Inc., a Delaware
corporation.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Depositary" means, with respect to the Debentures issuable
or issued in whole or in part in global form, DTC, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Designated Purchaser" has the meaning assigned to such term
in the Investment Agreement.
"Designated Purchaser Person" has the meaning set forth in the
definition of "Affiliate."
"DTC" means The Depository Trust Company, a New York
corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"GAAP" means U.S. generally accepted accounting principles as
in effect at the relevant time or for the relevant period.
"Global Debenture" means the global debenture in the form of
Exhibit A bearing the legend for Global Debentures set forth on Exhibit A and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee and issued in accordance with this Indenture.
"Group" has the meaning set forth in Rule 13d-5 under the
Exchange Act.
"Guarantee" means any direct or indirect obligation,
contingent or otherwise, to guarantee (or having the economic effect of
guaranteeing) Indebtedness in any manner, including, without limitation, any
monetary obligation to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of another Person
(whether arising by agreement to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions or otherwise).
"Holder" means the Person in whose name a Debenture is
registered in the Debenture Register.
3
<PAGE> 10
"Indebtedness" means, with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) any obligation of such Person for money borrowed, (ii) any
obligation of such Person evidenced by bonds, debentures, notes, Guarantees or
other similar instruments, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of property, assets or services (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) any interest rate or currency swap or similar
hedging agreement, and (vi) any capital lease obligation of such Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Investment Agreement" means the Investment Agreement, dated
as of February 23, 1998, by and between the Investor and the Company, as
amended, supplemented or modified from time to time.
"Investor" means TPG Partners II, L.P. a Delaware limited
partnership.
"Investor Group" means, collectively, the Investor, the
Designated Purchasers and the respective Affiliates of such Persons.
"Investor Nominee" means a person designated for election to
the Board of Directors by the Investor pursuant to the Investment Agreement.
"Issue Date" means [__________].
"Moody's" means Moody's Investors Service and its successors.
"Officer" means, with respect to a Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
any Vice President, the Treasurer, the Controller or the Secretary of such
Person.
"Officers' Certificate" means, with respect to a Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person which certificate shall
comply with the provisions of Section 12.5.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee, which opinion shall comply with the
provisions of Section 12.5.
"Outstanding" means, as of the date of determination, all
Debentures theretofore authenticated and delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust or set aside and
segregated in trust by the Company for the Holders of such
4
<PAGE> 11
Debentures in accordance with Section 6.5; provided, that, if the
Debentures are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and
(iii) Debentures which have been paid in full pursuant to the
terms hereof or in exchange for or in lieu of which other Debentures
have been authenticated and delivered pursuant to this Indenture, other
than any such Debentures in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Debentures
are held by a bona fide purchaser in whose hands such Debentures are
valid obligations of the Company.
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debentures which a Trust Officer of the Trustee knows to
be so owned shall be so disregarded. Debentures 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
Debentures and that the pledgee is not the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor.
"Person" means any individual, corporation, company,
association, partnership, joint venture, trust or unincorporated organization,
or a government or any agency or political subdivision thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, from time to time.
"Senior Indebtedness" means, with respect to the Company, (i)
the Company's outstanding 11% Senior Notes due 2005, (ii) any Indebtedness now
or hereafter issued or incurred by the Company pursuant to the Term Loan
Agreement and (iii) any other Indebtedness now or hereafter incurred by the
Company, unless the instrument under which such Indebtedness is incurred
expressly provides that it is not superior in right of payment to the
Debentures. Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include (a) any liability for federal, state, local or
other taxes owed or owing by the Company, (b) any Indebtedness of the Company to
any of its Subsidiaries or other Affiliates, (c) any trade payables or (d) any
Series E Debentures. "Senior Indebtedness" means, with respect to any guarantor,
any Guarantee by such guarantor of Senior Indebtedness of the Company.
"Series D Cumulative Preferred Stock" means the Series D
Cumulative Preferred Stock par value $0.01 per share, of the Company.
"Series E Cumulative Preferred Stock" means the Series E
Cumulative Preferred Stock, par value $0.01 per share, of the Company.
5
<PAGE> 12
"Series E Debentures" means the Series E Junior Subordinated
Debentures Due May 13, 2008 of the Company issued in exchange for the Series E
Cumulative Preferred Stock.
"Series E Indenture" means the Indenture relating to the
Series E Debentures.
"S&P" means Standard and Poor's Ratings Group, a division of
the McGraw-Hill Companies, and its successors.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of voting stock is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or combination thereof) and (ii) any partnership (A) the sole
general partner of the managing general partner of which is such Person or a
Subsidiary of such Person or (B) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Term Loan Agreement" means the Term Loan Agreement, dated as
of May 13, 1998, among the Company, as Borrower, the Lenders listed therein, as
Lenders, DLJ Capital Funding, Inc., as Syndication Agent and IBJ Schroeder Bank
& Trust Company as Facility Manager, as such agreement may be amended,
supplemented, renewed, extended, substituted, replaced, refinanced, restructured
or otherwise modified from time to time.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of
this Indenture (except as otherwise provided in this Indenture).
"TPG Person" has the meaning assigned to such term in the
definition of "Affiliate."
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the applicable provisions of
this Indenture and, thereafter, means the successor serving hereunder.
"Trust Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Voting Securities" means shares of Common Stock or any other
securities of the Company entitled to vote generally for the election of
directors.
"Warrants" means the Series A Warrants issued by the Company
issued by the Company pursuant to the Investment Agreement.
6
<PAGE> 13
"Warrant Shares" means the shares of Common Stock issued, or
issuable upon, exercise of the Warrants.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Additional Directors"................................................................ 4.1(c)
"Authenticating Agent"................................................................ 2.3(d)
"Change of Control Notice"............................................................ 6.4(b)
"Company Order"....................................................................... 2.3(c)
"Corporate Trust Office".............................................................. 2.4(c)
"Debenture Register".................................................................. 2.4(a)
"Debentures" ......................................................................... Introduction
"Defaulted Interest" ................................................................. 2.11(b)
"Event of Default".................................................................... 7.1
"Investor Aggregate Vote Number"...................................................... 4.1(b)
"Legal Holiday"....................................................................... 12.7
"Notice of Default"................................................................... 7.1
"Notice of Redemption"................................................................ 6.3(b)
"Original Debentures"................................................................. 4.1(b)
"Original Warrants"................................................................... 4.1(b)
"Paying Agent"........................................................................ 2.4(a)
"Private Placement Legend"............................................................ 2.7(a)
"Redemption Date"..................................................................... 6.3(b)
"Registrar"........................................................................... 2.4(a)
"Special Interest Payment Date"....................................................... 2.11(b)
"Special Record Date"................................................................. 2.11(b)
"Subordinated Reorganization Securities".............................................. 11.2
"Successor Company"................................................................... 5.1
"Trust Preferred Stock"............................................................... 4.1(f)
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Debentures.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
7
<PAGE> 14
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined in the TIA by reference to another statute or defined by SEC
rule have the meanings assigned to them by such definitions.
Section 1.4. Rules of Construction. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) provisions apply to successive events and transactions;
(7) references to sections of or rules under the Securities
Act or the Exchange Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the SEC from time
to time; and
(8) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP.
ARTICLE II
THE DEBENTURES
Section 2.1. Form and Dating. (a) The Debentures are being
issued by the Company in exchange for the Company's Series D Cumulative
Preferred Stock pursuant to the Certificate of Designations thereof. The
Debentures and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required by law or
permitted by this Indenture.
(b) The terms and provisions contained in the Debentures, the
form of which is annexed hereto as Exhibit A, shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. The
Debentures may have such other notations, legends or endorsements as are
required by law,
8
<PAGE> 15
stock exchange rule or usage. The Company and the Trustee shall approve the form
of the Debentures and any notation, legend or endorsement on them. Each
Debenture shall be dated the date of its authentication.
(c) The Debentures shall be issuable only in fully registered
form, without coupons. The Debentures may be issued in any denomination;
provided, however, to the extent possible Debentures will be issued in
denominations of $1,000 and integral multiples thereof.
(d) The Debentures are transferable only in denominations of
$1,000 and integral multiples of $1,000; provided, however, that, if the
aggregate amount of Debentures that a Holder wishes to transfer is not equal to
$1,000 or an integral multiple thereof, such Holder may transfer one Debenture
in a denomination less than $1,000.
Section 2.2. Global Debentures. This section shall apply only
to Global Debentures deposited with or on behalf of the Depositary.
(a) Each Global Debenture authenticated under this Indenture
shall be registered in the name of the Depositary designated by the Company for
such Global Debenture or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Debenture shall
constitute a single Debenture for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Debenture may be exchanged in whole or in part for Debentures registered,
and no transfer of a Global Debenture in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Debentures or a
nominee thereof unless (i) such Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Debentures or
(B) has ceased to be a clearing agency registered as such under the Exchange
Act, and in either case the Company fails to appoint a successor Depositary
within 90 days, (ii) the Company executes and delivers to the Trustee a Company
Order (as defined below) stating that it elects to cause the issuance of the
Debentures in certificated form and that all Global Debentures shall be
exchanged in whole for Debentures that are not Global Debentures (in which case
such exchange shall be effected by the Trustee) or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default with respect to the
Debentures.
(c) If any Global Debenture is to be exchanged for other
Debentures or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Registrar, for exchange or
cancellation as provided in this Article. If any Global Debenture is to be
exchanged for other Debentures or canceled in part, or if another Debenture is
to be exchanged in whole or in part for a beneficial interest in any Global
Debenture, then either (i) such Global Debenture shall be so surrendered for
exchange or cancellation as provided in this Article or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or canceled, or equal to the principal amount of such
other Debenture to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Trustee, as Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its
9
<PAGE> 16
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Debenture, the Trustee shall,
as otherwise provided in this Article, authenticate and deliver any Debentures
issuable in exchange for such Global Debenture (or any portion thereof) to or
upon the order of the Company, and registered in such names as may be directed
by, the Depositary or its authorized representative. Upon the request of the
Trustee in connection with the occurrence of any of the events specified in the
preceding paragraph, the Company shall promptly make available to the Trustee a
reasonable supply of Debentures that are not in the form of Global Debentures.
The Trustee shall be entitled to rely upon any order, direction or request of
the Depositary or its authorized representative which is given or made pursuant
to this Article if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(d) Every Debenture authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Debenture or any portion thereof, whether pursuant to this Article or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Debenture, unless such Debenture is registered in the name of a Person other
than the Depositary for such Global Debenture or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a
Global Debenture, shall be the Holder of such Global Debenture for all purposes
under this Indenture and the Debentures, and owners of beneficial interests in a
Global Debenture shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Debenture will be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its Agent Members.
Section 2.3. Execution and Authentication. (a) Two Officers,
one of whom shall be the Chairman of the Board, the President, the Chief
Executive Officer or the Chief Financial Officer of the Company, shall sign the
Debentures for the Company by manual or facsimile signature. If an Officer whose
signature is on a Debenture no longer holds that office at the time the Trustee
authenticates the Debenture, the Debenture shall be valid nevertheless.
(b) A Debenture shall not be valid until an authorized
signatory of the Trustee authenticates the Debenture. The signature of the
Trustee on a Debenture shall be conclusive evidence that such Debenture has been
duly and validly authenticated and issued under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Debentures shall be
substantially as set forth in Exhibit A hereto.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery Debentures for original issue on the Issue Date in an aggregate
principal amount not to exceed $[ ], upon a written order of the Company signed
by two Officers of the Company (a "Company Order"). Such Company Order shall
specify the amount of the Debentures to be authenticated and the date on which
the original issue of Debentures is to be authenticated. Except as expressly set
forth in Article IV, all Debentures issued under this Indenture shall vote and
consent together on all matters as one class.
10
<PAGE> 17
(d) The Trustee may appoint an agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate the Debentures.
Unless limited by the terms of such appointment, any such Authenticating Agent
may authenticate Debentures whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.
(e) In case the Company, pursuant to Article V, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article V, any of the
Debentures authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Debentures executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Debentures
surrendered for such exchange and of like principal amount, and the Trustee,
upon Company Order of the successor Person, shall authenticate and deliver
Debentures as specified in such order for the purpose of such exchange. If
Debentures shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Debentures, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Debentures at the time Outstanding for Debentures authenticated
and delivered in such new name.
Section 2.4. Registrar and Paying Agent. (a) The Company shall
maintain an office or agency in the Borough of Manhattan, City of New York,
where Debentures may be presented for registration of transfer or for exchange
(the "Registrar"), where Debentures may be presented for payment (the "Paying
Agent") and for the service of notices and demands to or upon the Company in
respect of the Debentures and this Indenture. The Registrar shall keep a
register of the Debentures and of their transfer and exchange (the "Debenture
Register"). The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
(b) The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-registrar not a party to this
Indenture, which shall incorporate the terms of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of each such agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant to
Section 8.7. The Company may act as Registrar, Paying Agent, co-registrar or
transfer agent.
(c) The Company initially appoints the Trustee at its
principal corporate trust office in the Borough of Manhattan, City of New York
(the "Corporate Trust Office") as Registrar, Paying Agent and agent for service
of demands and notices in connection with the Debentures and this Indenture, and
as Custodian with respect to the Global Debentures, until such time as the
Trustee has resigned or a successor Trustee has been appointed.
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(d) The Company initially appoints DTC to act as Depositary
with respect to the Global Debentures.
Section 2.5. Deposit of Monies; Paying Agent to Hold Money in
Trust. (a) By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Debenture is due and payable, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient to
pay such principal or interest when due.
(b) The Company shall require each Paying Agent (other than
the Trustee) to agree in writing that such Paying Agent shall hold in trust for
the benefit of Holders or the Trustee all money held by such Paying Agent for
the payment of principal of or interest on the Debentures and shall notify the
Trustee in writing of any default by the Company in making any such payment. The
Company at any time may require a Paying Agent (other than the Trustee) to pay
all money held by it to the Trustee and to account for any funds disbursed by
such Paying Agent. Upon complying with the previous sentence, the Paying Agent
(if other than the Company or a Subsidiary) shall have no further liability for
the money delivered to the Trustee. If the Company, or any of its Subsidiaries
or Affiliates, acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy, reorganization or similar proceeding with respect to the
Company, the Trustee shall serve as Paying Agent for the Debentures.
In case Holders of any Debentures shall not, within two years
after such deposit, claim the cash so deposited, the Trustee or Paying Agent (as
applicable) shall, upon demand, pay over to the Company the balance so
deposited, or (if then held by the Company or any of its Subsidiaries or
Affiliates) such balance shall be discharged from such trust. Thereupon, the
Trustee or Paying Agent (as applicable) shall be relieved of all responsibility
to the Holders thereof, or if the Company or any of its Subsidiaries or
Affiliates acts as Paying Agent, such Paying Agent shall be relieved of all
responsibility as trustee of the cash so deposited; and the sole right of such
Holders shall be as a general creditor thereof. Any interest accrued on any
funds so deposited shall belong to the Company, and shall be paid to it from
time to time on demand.
Section 2.6. Holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, or to the extent otherwise
required under the TIA, the Company shall furnish or cause to be furnished to
the Trustee, in writing at least seven Business Days before each interest
payment date and at such other times as the Trustee may request in writing, a
list, in such form and as of such date as the Trustee may reasonably require, of
the names and addresses of Holders and the Company shall otherwise comply with
TIA Section 312(a).
Section 2.7. Legends; Transfers and Exchanges; Etc.
(a) Each Debenture shall bear a legend (the "Private Placement
Legend") substantially as set forth below:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND WERE NOT REGISTERED UNDER ANY
STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS."
(b) The Private Placement Legend shall be removed from a
Debenture if such Debenture is sold pursuant to an effective registration
statement under the Securities Act or there is delivered by the Company to the
Trustee such satisfactory evidence, which may include an opinion of independent
counsel, as reasonably may be requested by the Trustee, to confirm that neither
such legend nor the restrictions on transfer set forth therein are required to
ensure that transfer of such Debenture will not violate the registration and
prospectus delivery requirements of the Securities Act.
(c) Restricted Debentures Legend. Upon the transfer, exchange
or replacement of Debentures not bearing a Private Placement Legend, the
Registrar shall deliver Debentures that do not bear a Private Placement Legend.
Upon the transfer, exchange or replacement of Debentures bearing a Private
Placement Legend, the Registrar shall deliver only Debentures that bear a
Private Placement Legend unless:
(i) such Debentures are transferred pursuant to an
effective registration statement under the Securities Act, or
(ii) in connection with such transfer, the Registrar
shall have received an Opinion of Counsel satisfactory to it
to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act.
The Company shall deliver to the Trustee an Officer's Certificate promptly upon
effectiveness, withdrawal or suspension of any registration statement applicable
to any Debentures.
(d) The Registrar shall retain copies of all letters, notices
and other written communications received pursuant to this Article. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.
(e) Transfer and Exchange of Certificated Debentures. When
Certificated Debentures are presented by a Holder to the Registrar with a
request to register the transfer of the Certificated Debentures or to exchange
such Certificated Debentures for an equal principal amount of Certificated
Debentures of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested only if the Certificated Debentures
(i) are presented or surrendered for registration of transfer or exchange, (ii)
are endorsed and contain a
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signature guarantee or are accompanied by a written instrument of transfer in
form satisfactory to the Registrar duly executed by such Holder or by his
attorney and (iii) contain a signature guarantee, duly authorized in writing.
(f) Obligations with Respect to Transfers and Exchanges of
Debentures.
(i) To permit registrations of transfers and
exchanges, the Company shall, subject to the other terms and conditions
of this Article, execute and the Trustee shall authenticate Debentures
at the Registrar's or co-registrar's request in accordance with the
provisions of Section 2.3.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any stamp or transfer tax,
assessments, or similar governmental charge payable in connection
therewith (other than any such stamp or transfer taxes, assessments or
similar governmental charges payable upon exchange pursuant to Section
5.1, Article VI or Section 10.5 not involving any transfer).
(iii) Prior to the due presentation for registration
of transfer of any Debenture, the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the Person
in whose name a Debenture is registered as the absolute owner of such
Debenture for the purpose of receiving payment of principal of and
interest on such Debenture and for all other purposes whatsoever,
whether or not such Debenture is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(iv) All Debentures issued upon any transfer or
exchange pursuant to the terms of this Indenture shall be valid
obligations of the Company; shall evidence the same debt; and shall be
entitled to the same benefits under this Indenture as the Debentures
surrendered upon such transfer or exchange.
(v) The Registrar shall not be required to register
the transfer of or exchange any Debenture to be redeemed, in whole or
in part, upon a change of control, except the unredeemed portion of any
Debenture being redeemed in part.
(g) No Obligation of the Trustee. The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Debenture other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures.
If a mutilated Debenture is surrendered to the Registrar, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Debenture of like tenor and principal amount and bearing a number not
outstanding. If the Holder of a Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, and if there shall be delivered to the
Company and
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the Trustee (i) evidence to their reasonable satisfaction of the loss,
destruction or theft of such Debenture and (ii) an indemnity bond sufficient in
the reasonable judgment of the Company and the Trustee to protect the Company,
the Trustee, the Paying Agent and the Registrar and any co-registrar from any
loss any of them may suffer if such Debenture is replaced, then, the Company, in
the absence of notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of like tenor and principal amount, bearing a number
not contemporaneously Outstanding if the requirements of Section 8-405 of the
Uniform Commercial Code as in effect in the State of New York are met.
In case any such mutilated, destroyed, lost or stolen
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Debenture issued pursuant to this Section in lieu of
any mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company and any other obligor upon the
Debentures, whether or not the mutilated, destroyed, lost or stolen Debenture
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Debentures 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 Debentures.
Section 2.9. Temporary Debentures. Until definitive Debentures
are ready for delivery, the Company may execute and the Trustee shall
authenticate and deliver temporary Debentures. Temporary Debentures shall be
substantially in the form of definitive Debentures but may have variations that
the Company reasonably considers appropriate for temporary Debentures. Without
unreasonable delay, the Company shall prepare definitive Debentures. After the
preparation of definitive Debentures, the temporary Debentures shall be
exchangeable for definitive Debentures upon surrender of the temporary
Debentures at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more definitive Debentures representing an equal principal
amount of Debentures. Until so exchanged, the Holder of temporary Debentures
shall in all respects be entitled to the same benefits under this Indenture as a
Holder of definitive Debentures.
Section 2.10. Cancellation. The Company at any time may
deliver Debentures to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee
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any Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel and return to the Company all
Debentures surrendered for registration of transfer, exchange, payment,
redemption or cancellation. The Company may not issue new Debentures to replace
Debentures it has paid or delivered to the Trustee for cancellation except as
expressly permitted by this Indenture.
Section 2.11. Payment of Interest; Defaulted Interest. (a)
Interest on any Debenture 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 such Debenture (or one or more predecessor Debentures) is registered at the
close of business on the regular record date for such interest as provided in
the Debenture at the office or agency of the Company maintained for such purpose
pursuant to Section 2.4.
(b) Any interest on any Debenture which is payable, but is not
paid when the same becomes due and payable and such nonpayment continues for a
period of 30 days shall forthwith cease to be payable to the Holder on the
regular record date by virtue of having been such Holder, and such defaulted
interest and (to the extent lawful) interest on such defaulted interest at the
rate borne by the Debentures (such defaulted interest and interest thereon
herein collectively called "Defaulted Interest") shall be paid by the Company,
to the Persons in whose names the Debentures (or their respective predecessor
Debentures) are registered at the close of business on a Special Record Date (as
hereinafter defined) 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 Debenture and
the date (not less than 30 days after such notice) of the proposed payment (the
"Special Interest Payment Date"), 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 provided in this clause.
Thereupon the Trustee shall fix a record date (the "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 Special Interest Payment Date. 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 and Special Interest Payment
Date therefor to be given in the manner provided for in Section 12.2 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 and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be
paid on the Special Interest Payment Date to the Persons in whose names the
Debentures (or their respective predecessor Debentures) are registered at the
close of business on such Special Record Date.
(c) Subject to the foregoing provisions of this Section, each
Debenture delivered under this Indenture upon registration of, transfer of, or
in exchange for or in lieu of, any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
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(d) All references in this Indenture and in the Debenture
annexed hereto as Exhibit A to "interest" payable in respect of the Debentures
shall include Defaulted Interest, where applicable.
Section 2.12. Record Date. The record date for purposes of
determining the identity of Holders of the Debentures entitled to vote or
consent to any action by vote or consent authorized or permitted under this
Indenture shall be determined as provided for in TIA Section 316(c).
Section 2.13. Computation of Interest. Interest on the
Debentures shall be computed on the basis of a 360-day year consisting of twelve
30-day months (four 90-day quarters) and the actual number of days elapsed in
the period for which payable.
Section 2.14. CUSIP Number. The Company in issuing the
Debentures may use a "CUSIP" number, and if it does so, the Trustee shall use
the CUSIP number in notices of redemption or exchange as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Debentures and that reliance may be placed only on the other
identification numbers printed on the Debentures. The Company shall promptly
notify the Trustee of any change in the CUSIP number.
ARTICLE III
COVENANTS
Section 3.1. Payment of Debentures. (a) The Company shall pay
or cause to be paid the principal of and interest on the Debentures on the dates
and in the manner provided in the Debentures and in this Indenture.
(b) The Company shall pay, to the extent such payments are
lawful, interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal (including if due as a result of a
redemption) at the rate specified therefor in the Debentures, and on overdue
installments of interest (without regard to applicable grace periods) at the
rate specified therefor in the Debentures.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
Section 3.2. Maintenance of Office or Agency. (a) The Company
shall maintain each office or agency required under Section 2.4. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee. The Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
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(b) The Company may also from time to time designate one or
more other offices or agencies (in or outside of The City of New York) where the
Debentures may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, City of
New York for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and any change in the location of
any such other office or agency.
Section 3.3. Corporate Existence. Subject to Section 5.1, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate rights (charter
and statutory), licenses and franchises of the Company; provided, however, that
the Company shall not be required to preserve any such right, license 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, and will not be, disadvantageous
in any material respect to the Holders.
Section 3.4. Compliance Certificate. (a) The Company shall
file with the Trustee and the SEC, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required by
the TIA at the times and in the manner provided pursuant to the TIA.
(b) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company, an Officers' Certificate
stating that in the course of the performance of their duties as Officers of the
Company, the signers would normally have knowledge of any default or Event of
Default and whether or not, to the best of such signer's knowledge (after due
inquiry), any default or Event of Default has occurred during such period. If
such signers state that a default or Event of Default has occurred, the
certificate shall describe the default or Event of Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA Section 314(a).
Section 3.5. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.6. Waiver of Stay, Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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Section 3.7. Restrictions on Dividends. So long as any
Debentures are Outstanding, the Board of Directors shall not declare, and the
Company shall not pay or set apart for payment any dividend on any capital stock
of the Company or make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the repurchase, redemption or other
retirement of, any capital stock of the Company or any warrants, rights or
options exercisable for or convertible into any capital stock of the Company
(other than the repurchase, redemption or other retirement of debentures or
other debt securities that are convertible into or exchangeable for any capital
stock of the Company), or make any distribution in respect of capital stock of
the Company, either directly or indirectly, and whether in cash, obligations or
shares of the Company or other property (other than distributions or dividends
in capital stock to the holders of capital stock), and shall not permit any
corporation or other entity directly or indirectly controlled by the Company to
purchase or redeem any capital stock of the Company or any warrants, rights,
calls or options exercisable for or convertible into any capital stock of the
Company (other than the repurchase, redemption or other retirement of debentures
or other debt securities that are convertible into or exchangeable for any
capital stock of the Company) unless prior to or concurrently with such
declaration, payment, setting apart for payment, repurchase, redemption or other
retirement or distribution, as the case may be, all interest that has become due
and payable on the Debentures shall have been paid. Notwithstanding the
foregoing, this Section shall not prohibit the acquisition, repurchase,
exchange, conversion, redemption or other retirement for value by the Company of
Debentures in accordance with this Indenture or of any shares of Trust Preferred
Stock.
ARTICLE IV
VOTING RIGHTS
Section 4.1. Voting Rights and Certain Restrictions. (a) The
Investor and its Affiliates, in their capacity as Holders of Debentures, shall
be entitled to vote on all matters voted on by holders of Common Stock, and
shall vote together with shares of Common Stock (and any shares of Series E
Cumulative Preferred Stock or Series E Debentures entitled to vote) as a single
class; provided, however, that (i) such voting rights shall apply to such
Debentures issued to the Investor or any Affiliate of the Investor in exchange
for shares of Series D Cumulative Preferred Stock that had similar voting rights
and (ii) upon transfer of a Debenture or any portion thereof to any Person other
than the Investor or an Affiliate of the Investor, such Person, and any
subsequent transferee, shall not be entitled to such voting rights with respect
to such Debenture or the transferred portion thereof, regardless of whether any
such Debentures are subsequently acquired by the Investor or its Affiliates.
(b) With respect to any such vote provided for in subsection
(a), the Investor (together with its Affiliates) shall be entitled with respect
to its Debentures to an aggregate number of votes equal to the Investor
Aggregate Vote Number (as hereinafter defined).
The "Investor Aggregate Vote Number" shall equal the number of
Warrant Shares that would be issuable upon the exercise of the Original Warrants
(as hereinafter defined) by the holders thereof (assuming all conditions
precedent to such exercise have been satisfied and that such exercise occurs as
of the record date for such vote), multiplied by the lesser of (x) the quotient
of the number of Original Warrants that are Beneficially Owned by members of the
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Investor Group, in the aggregate, as of the record date for such vote (excluding
for purposes of this calculation, however, any Original Warrants that have been
transferred on the books of the Company by any member of the Investor Group to
any Person other than a member of the Investor Group, regardless of whether any
such Original Warrants are subsequently acquired by any member of the Investor
Group), divided by the number of Original Warrants, and (y) the quotient of the
aggregate principal amount of Original Debentures (as hereinafter defined) that
are Beneficially Owned by members of the Investor Group, in the aggregate, as of
the record date for such vote (excluding for purposes of this calculation,
however, any Original Debentures transferred by any member of the Investor Group
to any Person other than a member of the Investor Group, regardless of whether
any such Original Debentures are subsequently acquired by any member of the
Investor Group), divided by the aggregate principal amount of the Original
Debentures. The term "Original Warrants" means those Warrants Beneficially Owned
by members of the Investor Group, in the aggregate, as of May 13, 1998. The term
"Original Debentures" means those Debentures Beneficially Owned by members of
the Investor Group, in the aggregate, as of the Issue Date; provided, however,
that "Original Debentures" shall not include any Debentures issued in respect of
Series D Cumulative Preferred Stock previously issued as a dividend on Series D
Cumulative Preferred Stock.
(c) If on any date (i) interest due and payable on either the
Debentures or the Series E Debentures shall not have been paid in full (or, if
the Series E Cumulative Preferred Stock has not been exchanged for Series E
Debentures, dividends payable on the Series E Cumulative Preferred Stock shall
have been in arrears and not paid in full) for four consecutive quarterly
periods or (ii) the Company shall have failed to satisfy its obligation to
redeem or repay the principal of either Debentures in accordance with this
Indenture or Series E Debentures in accordance with the Series E Indenture (or,
if the Series E Cumulative Preferred Stock has not been exchanged for Series E
Debentures, the Company shall have failed to satisfy its obligation to redeem
shares of Series E Cumulative Preferred Stock pursuant to the Certificate of
Designations thereof), then the number of directors constituting the Board of
Directors shall, without further action, be increased by two, and the holders of
Debentures and Series E Debentures representing at least a majority of the
aggregate principal amount of Outstanding Debentures and Series E Debentures
shall have, in addition to the other voting rights set forth herein, the
exclusive right, voting together as a single class without regard to series, to
elect the two directors (the "Additional Directors") of the Company to fill such
newly-created directorships (provided, that, if the shares of Series E
Cumulative Preferred Stock have not been exchanged for Series E Debentures, then
the holders of the shares of Series E Cumulative Preferred Stock shall vote
together with the holders of Debentures as a single class, and, for the purposes
of determining a majority of the aggregate principal amount of Debentures and
Series E Cumulative Preferred Stock, one share of Series E Cumulative Preferred
Stock shall be deemed to be equal to a principal amount of $1,000).
Notwithstanding the foregoing, the Investor and its Affiliates shall not be
permitted to elect, pursuant to the preceding sentence, more than the number of
directors that would result in four directors designated for nomination or
elected by the Investor and its Affiliates then being on the Board of Directors
(including directors that the Investor has a right to designate for nomination
to the Board of Directors pursuant to the Investment Agreement); provided, that,
if at the time Holders of Debentures and holders of Series E Debentures (or, if
applicable, holders of shares of Series E Cumulative Preferred Stock) have the
right to elect Additional Directors and (i) the Investor and its Affiliates
Beneficially Own, in the aggregate, Debentures and Series E Debentures
representing a majority of the
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aggregate principal amount of Outstanding Debentures and Series E Debentures
(or, if the shares of Series E Cumulative Preferred Stock have not been
exchanged for Series E Debentures, a majority of the aggregate principal amount
of the Debentures and Series E Cumulative Preferred Stock), taken together as a
single class, and (ii) the Investor and its Affiliates are not permitted to
elect one or both of the Additional Directors as aforesaid, then the Holders of
Debentures and holders of Series E Debentures (or, if applicable, holders of
shares of Series E Cumulative Preferred Stock) (other than the Investor and its
Affiliates) shall have the right to elect, voting together as a single class,
one Additional Director pursuant to this subsection (c). For the purposes of
determining a majority of the aggregate principal amount of Debentures and
Series E Cumulative Preferred Stock if necessary pursuant to the preceding
sentence, one share of Series E Cumulative Preferred Stock shall be deemed to be
equal to a principal amount of $1,000. Additional Directors shall continue as
directors and such additional voting right shall continue until such time as (a)
all interest due and payable on the Debentures and Series E Debentures and all
dividends accumulated on the Series E Cumulative Preferred Stock, as the case
may be, shall have been paid in full and (b) any redemption obligation with
respect to, or any obligation to repay the principal of, the Debentures, the
Series E Debentures and the Series E Cumulative Preferred Stock, as the case may
be, that has become due shall have been satisfied or all necessary funds shall
have been set aside for payment, as the case may be, at which time such
Additional Directors shall cease to be directors and such additional voting
right of the Holders shall terminate subject to revesting in the event of each
and every subsequent event of the character indicated above and subject to any
rights as to the election of directors provided for the holders of any series of
preferred stock of the Company.
(d) In the event that one or more of the Investor Nominees (as
such term is defined in the Investment Agreement) required to be designated for
election to the Board of Directors pursuant to the Investment Agreement are not
so designated or are not elected to the Board of Directors and the Investor or
any of its Affiliates Beneficially Owns Debentures, then the number of directors
constituting the Board of Directors shall, without further action, be increased
by the number of such Investor Nominees not elected to the Board of Directors
pursuant to the Investment Agreement, and such Holder or Holders shall have, in
addition to the other voting rights set forth herein, the exclusive right,
voting separately as a single class, to elect a number of directors to the Board
of Directors equal to the number of such Investor Nominees not elected to the
Board of Directors. Directors elected pursuant to this subsection shall continue
as directors and such additional voting right shall continue until such time as
the requisite number of Investor Nominees are elected to the Board of Directors
pursuant to the Investment Agreement, at which time the directors elected by the
Investor and its Affiliates pursuant to this subsection shall cease to be
directors (unless elected as Investor Nominees), and such additional voting
rights shall terminate subject to revesting in the event of each and every
subsequent event of the character indicated above.
(e) (i) The foregoing rights of Holders to take any action as
provided in this Section may be exercised at any annual meeting of stockholders
or at a special meeting of Holders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Company, of the Holders of Debentures representing the minimum
principal amount of
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Outstanding Debentures required to take such action. So long as such right to
vote continues (and unless such right has been exercised by written consent of
the Holders of Debentures representing the minimum principal amount of
Outstanding Debentures required to take such action), the Chairman of the Board
of Directors may call, and upon the written request of Holders of Debentures
representing 20% of the aggregate principal amount of the Outstanding
Debentures, addressed to the Secretary of the Company at the principal office of
the Company, shall call, a special meeting of the Holders entitled to vote as
provided herein. Such meeting shall be held within 60 days after delivery of
such request to the Secretary, at the place and upon the notice provided by law
and in the By-laws of the Company for the holding of meetings of stockholders.
(ii) Each director elected pursuant to subsection (c) or (d)
of this Section shall serve until the next annual meeting or until his or her
successor shall be elected and shall qualify, unless the director's term of
office shall have terminated pursuant to the provisions of subsection (c) or (d)
of this Section, as the case may be. In case any vacancy shall occur among the
directors elected pursuant to subsection (c) or (d) of this Section, such
vacancy may be filled for the unexpired portion of the term by vote of the
remaining director or directors theretofore elected by such Holders (and, if
applicable, holders of the Series E Debentures or holders of shares of Series E
Cumulative Preferred Stock) (or such director's or directors' successor in
office), if any. If any such vacancy is not so filled within 20 days after the
creation thereof or if all of the directors so elected shall cease to serve as
directors before their term shall expire, the Holders (and, if applicable,
holders of the Series E Debentures or holders of shares of Series E Cumulative
Preferred Stock) entitled to vote for such director pursuant to the provisions
of subsection (c) or (d) of this Section, as the case may be, may elect
successors to hold office for the unexpired terms of any vacant directorships,
by written consent as herein provided, or at a special meeting of such Holders
called as provided herein. The Holders of Debentures (and, if applicable,
holders of the Series E Debentures or holders of shares of Series E Cumulative
Preferred Stock) representing a majority of the principal amount of Debentures
entitled to vote for directors pursuant to subsection (c) or (d) of this
Section, as the case may be, shall have the right to remove with or without
cause at any time and replace any directors such Holders (and, if applicable,
holders of the Series E Debentures or holders of shares of Series E Cumulative
Preferred Stock) have elected pursuant to such section, by written consent as
herein provided, or at a special meeting of such Holders (and, if applicable,
holders of the Series E Debentures or holders of shares of Series E Cumulative
Preferred Stock) called as provided herein.
(f) Without the consent or affirmative vote of the Holders of
Debentures, voting separately as a class, representing at least a majority of
the aggregate principal amount of Outstanding Debentures, the Company shall not
authorize, create or issue, or increase the authorized amount of any class or
series of capital stock or any security convertible into or exercisable for any
class or series of capital stock, redeemable mandatorily or redeemable at the
option of the holder thereof at any time on or prior to May 13, 2008 (whether or
not only upon the occurrence of a specified event); provided, however, that no
consent or vote of the Holders shall be required for the creation or issuance by
a trust formed at the direction of the Company of any series of preferred
securities of such trust for financing purposes in an aggregate amount not to
exceed $250,000,000 ("Trust Preferred Stock").
(g) Without the consent or affirmative vote of the Holders of
Debentures, voting separately as a class, representing at least a majority of
the aggregate principal amount of Outstanding Debentures, the Company shall not
(i) amend, alter or repeal any provision of the Certificate of Incorporation or
the By-laws of the Company, if the amendment, alteration or
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repeal alters or changes the rights of the Holders of the Debentures so as to
affect them materially and adversely, or (ii) authorize or take any other action
if such action alters or changes any of the rights of Holders of the Debentures
in any respect or otherwise would be inconsistent with the provisions of this
Indenture and the holders of any class or series of the capital stock of the
Company are entitled to vote thereon.
(h) The Company shall not enter into any agreement or issue
any security that prohibits, conflicts or is inconsistent with, or would be
breached by, the Company's performance of its obligations hereunder.
ARTICLE V
SUCCESSOR COMPANY
Section 5.1. Merger, Consolidation and Sale of Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust,
limited liability company or other similar entity organized and
existing under the laws of the United States of America, any State
thereof or the District of Columbia and the Successor Company (if not
the Company) shall expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Debentures and
this Indenture;
(ii) immediately after giving effect to such transaction, no
default or Event of Default shall have occurred and be continuing;
(iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture, if
any, comply with this Indenture.
For purposes of this Section the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company will succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but, in the case of a lease of all or substantially all its assets, the Company
will not be released from the obligation to pay the principal of and interest on
the Debentures.
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ARTICLE VI
REDEMPTION OF DEBENTURES
Section 6.1. Redemption. The Debentures may or shall (as
applicable) be redeemed, subject to the conditions and at the Redemption Prices
specified in the form of Debentures set forth in Exhibit A hereto.
Section 6.2. Applicability of Article. Redemption of
Debentures, as permitted or required by any provision of this Indenture, shall
be made in accordance with this Article.
Section 6.3. Notice of Redemption. (a) Notwithstanding the
provisions of Section 12.2, notice of redemption shall be given in the manner
provided for in this Section.
(b) Notice of the redemption of Debentures (a "Notice of
Redemption") shall be sent to each Holder to be redeemed by first class mail,
postage prepaid, at each such Holder's address as it is registered in the
Debenture Register, not more than 120 days nor fewer than 90 days prior to the
date fixed for redemption, which date shall be set forth in such notice (the
"Redemption Date"); provided, that failure to give such Notice of Redemption to
any Holder, or any defect in such Notice of Redemption to any Holder shall not
affect the validity of the proceedings for the redemption of Debentures held by
any other Holder. Notwithstanding the foregoing, in the event that
contemporaneously with or prior to the delivery of a Notice of Redemption, the
Company irrevocably deposits, in accordance with Section 6.5, funds sufficient
to pay the aggregate Redemption Price (as defined in Exhibit A hereto) for the
Debentures, such Notice of Redemption shall be delivered not more than 120 days
nor fewer than 30 days prior to the Redemption Date; provided, however, that, if
such Notice of Redemption is delivered fewer than 60 days prior to the
Redemption Date and the Investor or any of its Affiliates Beneficially Owns
Debentures as of the date of the Notice of Redemption and uses its reasonable
best efforts to consummate the sale of all or a portion of its Debentures prior
to the stated Redemption Date but has not completed such sale, the Company
shall, at the option of the Investor (or any such Affiliate), delay such
Redemption Date for a period not to exceed 30 days as requested by the Investor
(or any such Affiliate) in order to complete such sale or sales, and shall
notify the Holders of such delay within five days of receiving the request
therefor. Any delay of the Redemption Date pursuant to the proviso to the
preceding sentence shall be requested by the Investor (or any such Affiliate) in
writing no later than the tenth day preceding the then-scheduled Redemption Date
stated in the Notice of Redemption. The Redemption Date stated in a Notice of
Redemption shall not be delayed pursuant to this subsection more than once in
connection with the redemption of Debentures pursuant to such Notice of
Redemption.
(c) All Notices of Redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price
will become due and payable upon each such Debenture, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on
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Debentures called for redemption (or the portion thereof) will cease to
accrue on and after said date,
(4) the place or places where such Debentures are to
be surrendered for payment of the Redemption Price,
(5) the name and address of the Paying Agent,
(6) that Debentures called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price, and
(7) the CUSIP number of the Debentures.
(d) From and after the Redemption Date, all interest on
Debentures shall cease to accrue and all rights of the Holders thereof as
Holders of Debentures shall cease and terminate, except to the extent the
Company shall default in payment thereof on the Redemption Date.
(e) Prior to any Redemption Date that has been fixed by the
Company in accordance with this Section, the Company shall take all measures
reasonably requested by the Investor to facilitate a sale or other disposition
of Debentures by the Investor or its Affiliates prior to such Redemption Date,
including, without limitation, participation in due diligence sessions and
provision of information about the management, business and financial condition
of the Company, preparation of offering memoranda, private placement memoranda
and other similar documents and preparation and delivery of such other
certificates or documents reasonably requested by the Investor.
Section 6.4. Change of Control Notice and Redemption
Procedures. (a) In the event there occurs a Change of Control, any Holder, in
accordance with the procedures set forth below, may require the Company to
redeem any or all of the Debentures held by such Holder at the Redemption Price
therefor. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption in the event of a Change of
Control pursuant to this Section shall relate, in the case of any Debenture
redeemed only in part, to the portion of the principal amount of such Debenture
which has been or is to be redeemed.
(b) Notice of any Change of Control shall be sent to the
Holders not more than five days following a Change of Control, which notice (a
"Change of Control Notice") shall describe the transaction or transactions
constituting such Change of Control and set forth each Holder's right to require
the Company to redeem any or all Debentures held by him or her or any portion
thereof, the Redemption Date (which date shall be not more than 30 days from the
date of such Change of Control Notice) and the procedures to be followed by such
Holder in exercising its right to cause such redemption; provided, however, that
if Debentures are owned by more than 50 Holders or groups of Affiliated Holders
and if the Debentures are listed on any national securities exchange or quoted
on any national quotation system, the Company shall give such Change of Control
Notice by publication in a newspaper of general circulation in the Borough of
Manhattan, The City of New York, within 30 days following such Change of Control
and, in any case, a similar notice shall be mailed concurrently to each Holder.
Failure by the Company to give the Change of Control Notice as prescribed by the
preceding sentence, or the
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formal insufficiency of any such Change of Control Notice, shall not prejudice
the rights of any Holder to cause the Company to redeem any such Debentures held
by him or her.
(c) In the event a Holder shall elect to require the Company
to redeem any or all such Debentures or any portion thereof pursuant to Section
6.4(a), such Holder shall deliver, prior to the Redemption Date as set forth in
the Change of Control Notice, or, if the Change of Control Notice is not given
as required by Section 6.4(b) at any time following the last day the Company was
required to give the Change of Control Notice in accordance with Section 6.4(b)
(in which case the Redemption Date shall be the date which is the later of (x)
30 days following the last day the Company was required to give the Change of
Control Notice in accordance with Section 6.4(b) and (y) 15 days following the
delivery of such election by such Holder), a written notice, in the form
specified by the Company (if the Company did in fact give the notice required by
Section 6.4(b)), to the Company so stating, and specifying the Debentures or
portions thereof to be redeemed pursuant to Section 6.4(a); provided, however,
that if all of the Debentures are owned by 50 or fewer Holders or groups of
Affiliated Holders, such Holders or groups may deliver a notice of an election
to redeem at any time within 90 days following the occurrence of a Change of
Control without awaiting receipt of a Change of Control Notice or the expiration
of the time allowed for the delivery of a Change of Control Notice hereunder.
The Company shall redeem the Debentures or portions thereof so specified on the
Redemption Date fixed by the Company or as provided in the preceding sentence.
The Company shall comply with the requirements of Rules 13e-4 and 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures as a result of a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations hereunder by virtue thereof.
Section 6.5. Deposit of Redemption Price. On or prior to the
relevant Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent, as a trust fund for the benefit of the Holders of Debentures to be
redeemed, an amount of cash sufficient to pay the Redemption Price of all the
Debentures which are to be redeemed in accordance with the Notice of Redemption
or Change of Control Notice, with irrevocable instructions and authority to the
Trustee or Paying Agent (as applicable) to pay to the respective Holders, as
evidenced by a list of such Holders certified by an officer of the Company, the
Redemption Price upon surrender of their respective Debentures. Such deposit
shall be deemed to constitute full payment of such Debentures, and from and
after the date of such deposit, all rights of the Holders of Debentures that are
to be redeemed, except the right to receive the Redemption Price upon the
surrender of their respective Debentures, shall cease and terminate. After the
Redemption Date, no interest shall accrue on any Debentures to be redeemed
(unless the Company shall fail to deposit cash sufficient to redeem all such
Debentures). In case Holders of any Debentures called for redemption shall not,
within two years after such deposit, claim the cash deposited for redemption
thereof, the Trustee or Paying Agent (as applicable) shall, upon demand, pay
over to the Company the balance so deposited, or (if then held by the Company or
any of its Subsidiaries or Affiliates) such balance shall be discharged from
such trust. Thereupon, the Trustee or Paying Agent (as applicable) shall be
relieved of all responsibility to the Holders thereof, or if the Company or any
of its Subsidiaries or Affiliates acts as Paying Agent, such Paying Agent shall
be relieved of all responsibility as trustee of the cash so deposited, and the
sole right of such Holders, with respect to Debentures to be redeemed, shall be
to receive the Redemption Price as general creditors of the Company. Any
interest accrued on any funds so deposited shall belong to the Company, and
shall be paid to it from time to time on demand.
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Section 6.6. Debentures Payable on Redemption Date. On or
after the Redemption Date, each Holder of Debentures called for redemption shall
surrender its Debenture to the Company at the place designated in the Notice of
Redemption or Change of Control Notice and shall thereupon be entitled to
receive payment of the Redemption Price.
Section 6.7. Debentures Redeemed in Part. Upon surrender of a
Debenture which is to be redeemed in part in accordance with the provisions of
this Article, the Company shall execute, and the Trustee shall authenticate and
make available for delivery to the Holder of such Debenture (or to any other
Person as directed by the Holder of such Debenture) at the expense of the
Company, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Debenture so
surrendered.
Section 6.8. Rating Conditions. For so long as the Investor or
an Affiliate of the Investor holds any Debentures, no Notice of Redemption in
connection with a redemption pursuant to Section 6.1 shall be delivered unless
(i) the Company's unsecured debt is rated Baa or better by Moody's or BBB or
better by S&P or (ii) the Company has sufficient funds reasonably available
under committed lines of credit or other similar sources of financing
established with financially sound financing providers to pay, on the Redemption
Date, the aggregate Redemption Price in connection with such redemption (and
shall reserve such funds or availability for the payment of the aggregate
Redemption Price); provided, that the Company may deliver a Notice of Redemption
without complying with the foregoing conditions if prior to, or
contemporaneously with, the delivery of such notice the Company irrevocably
deposits in accordance with Section 6.5 funds sufficient to pay the aggregate
Redemption Price for the Debentures.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1. Events of Default. An "Event of Default"
shall occur if:
(1) the Company defaults in the payment of the principal of
any Debenture when the same becomes due and payable at its maturity,
upon redemption, upon required repurchase, upon declaration or
otherwise;
(2) the Company defaults in the performance of or breaches any
other covenant or agreement in this Indenture or under the Debentures
(other than referred to in (1) above) and such default or breach
continues for 60 days after the notice specified below;
(3) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
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(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating
to insolvency;
(4) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or for any
substantial part of its property; or
(C) orders the winding up or liquidation of the
Company;
and the order, decree or relief remains unstayed and in effect
for 60 days.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
Notwithstanding the foregoing, a default under clause (2) of
this Section will not constitute an Event of Default until the Trustee or the
Holders of more than 25% in aggregate principal amount of the Outstanding
Debentures deliver to the Company written notice of the default and the Company
does not cure such default within the time specified in said clause (2) after
receipt of such notice. Such notice must specify the default, demand that it be
remedied and state that such notice is a "Notice of Default."
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any default or Event of Default under clauses (2), (3) and (4) of this
Section, their status and what action the Company is taking or proposes to take
in respect thereof.
Section 7.2. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
Section 7.1(3) or Section 7.1(4)) occurs and is continuing, the Trustee by
written notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Outstanding Debentures by written notice to the Company
and the Trustee, may, and the Trustee at the request of such Holders shall,
declare the principal of and accrued but unpaid interest on all the Debentures
to be due and payable. Upon such a declaration, such principal and accrued and
unpaid interest shall be immediately due and payable. If an Event of Default
specified in Section 7.1(3) or Section 7.1(4) occurs, the principal of and
accrued and unpaid interest on all the Debentures will become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holders. Holders of a majority in aggregate principal amount of the then
Outstanding Debentures by written notice to the Trustee may rescind and annul an
acceleration and its consequences if the
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rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal or interest that has become
due solely because of the acceleration) have been cured or waived.
Section 7.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Debentures or to enforce the
performance of any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Debentures or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 7.4. Waiver. The Investor and its Affiliates, so long
as such Persons own at least 20% of the aggregate principal amount of
Outstanding Debentures and subject to the TIA, or the Holders of not less than a
majority of the aggregate principal amount of Outstanding Debentures, by their
consent (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for Debentures), may waive by
written notice to the Trustee an existing default or Event of Default and its
consequences except (i) a default or Event of Default under Section 7.1(1) or an
Event of Default under Section 7.1(2) in respect of a default in the payment of
interest on the Debentures or (ii) a default or Event of Default in respect of a
provision that under Section 10.2 cannot be amended without the consent of each
Holder. Notwithstanding the preceding sentence, a waiver by the Investor and its
Affiliates of an existing default or Event of Default shall not be effective if
Holders of a majority of the aggregate principal amount of Outstanding
Debentures (i) have delivered to the Company pursuant to Section 7.1 written
notice of a default under Section 7.1(2) in respect of such default, (ii)
pursuant to Section 7.2, have declared the principal of and accrued but unpaid
interest on all Debentures to be due and payable by virtue of such Event of
Default, or (iii) give written notice to the Trustee that such Holders do not
consent to the waiver of such default or Event of Default and its consequences.
When a default or Event of Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any consequent right.
Section 7.5. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the TIA; provided, that neither this
Section nor the TIA shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company,
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 principal amount of
the Debentures, or to any suit by a Holder for the enforcement of the payment of
the principal of or interest on any Debenture, on or after the respective due
dates expressed in such Debenture.
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Section 7.6. Control. The Holders of a majority of the
aggregate principal amount of the Outstanding Debentures may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. Subject to
Section 8.1 and Section 8.2, however, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines is unduly prejudicial to the rights of other Holders; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction.
Section 7.7. Limitation on Suits. Subject to Section
7.8, a Holder may not pursue any remedy with respect to this Indenture or the
Debentures unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Investor and its Affiliates, so long as such Persons
own at least 20% of the aggregate principal amount of Outstanding
Debentures and subject to the TIA, or the Holders of at least 25% of
the aggregate principal amount of Outstanding Debentures make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Investor and its Affiliates, so long as such Persons
own at least 20% of the aggregate principal amount of Outstanding
Debentures and subject to the TIA, or the Holders of a majority of the
aggregate principal amount of Outstanding Debentures do not give the
Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request during such 60-day period, provided,
however, that any such direction given by the Investor and its
Affiliates shall be disregarded for all purposes of this clause (5) if
(i) such request was made by Holders of a majority of the aggregate
principal amount of Outstanding Debentures or (ii) such Holders give
the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such direction given by the Investor and its
Affiliates;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 7.8. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture (including, without
limitation, Sections 7.6 and 7.7) or the Debentures, the right of any Holder to
receive payment of principal of or interest on the Debentures held by such
Holder, on or after the respective due dates expressed in the Debentures (or, in
the case of redemption, on the Redemption Date), or to bring suit for the
enforcement of
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any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 7.9. Collection Suit by Trustee. If an Event of
Default specified in Section 7.1(1) or an Event of Default specified in Section
7.1(2) in respect of a default in the payment of interest on the Debentures
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount then due
and owing (together with applicable interest, to the extent lawful) and the
amounts provided for in Section 8.7.
Section 7.10. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Holders allowed
in any judicial proceedings relative to the Company, its Subsidiaries or its or
their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
Custodian and shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the TIA in
order to have claims of the Holders and the Trustee allowed in any such
proceeding. Without limiting the generality of the foregoing, the Trustee shall
be authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same, and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 8.7.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Debentures or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 7.11. Priorities. If the Trustee collects any money or property
pursuant to this Article, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 8.7;
SECOND: if the Holders proceed against the Company directly
without the Trustee in accordance with this Indenture, to Holders for
their collection costs;
THIRD: to Holders for amounts due and unpaid on the Debentures
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Debentures
for principal and interest, respectively; and
FOURTH: to the Company.
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The Trustee may fix a record date and payment date for any payment to Holders
pursuant to this Section. At least 15 days before such record date, the Company
shall mail to each Holder and the Trustee a notice that states the record date,
the payment date and amount to be paid.
ARTICLE VIII
TRUSTEE
Section 8.1. Duties of Trustee. (a) If a default or an Event
of Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; provided, that if an
Event of Default occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under this Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee reasonable indemnity or security against loss, liability or expense.
(b) Except during the continuance of a default or an Event of
Default:
(1) the Trustee undertakes to perform such duties and
responsibilities and only such duties and responsibilities as are
provided by the TIA or specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not such certificates or opinions
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.2, Section 7.4 or Section 7.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) 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 and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) 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 unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses (including
reasonable attorneys' fees and expenses) and liabilities that might be incurred
by it in compliance with such request or direction.
Section 8.2. Rights of Trustee. (a) Subject to Section 8.1,
the Trustee may rely on any document reasonably believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
an Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or Opinion of Counsel with respect to legal matters relating to this
Indenture and the Debentures shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 8.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Debentures
and may otherwise deal with the
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Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Trustee must comply with Section 8.10 and
Section 8.11.
Section 8.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Debentures, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Debentures or in the Debentures other than the
Trustee's certificate of authentication.
Section 8.5. Notice of Defaults. If a default or Event of
Default occurs and is continuing and if a Trust Officer has knowledge thereof,
the Trustee shall mail to each Holder notice of the default or Event of Default
as and to the extent provided by the TIA within 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a default or Event of Default in payment of principal of or interest on
any Debenture (including payments pursuant to the optional redemption or
required repurchase provisions of such Debenture, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is not opposed to the interests of
the Holders.
Section 8.6. Reports by Trustee to Holders. The Trustee shall
comply with TIA Section 313. The Company agrees to notify promptly the Trustee
whenever the Debentures become listed on any stock exchange and of any delisting
thereof.
Section 8.7. Compensation and Indemnity. (a) The Company shall
pay to the Trustee from time to time reasonable compensation for its acceptance
of this Indenture and services hereunder as the Company and the Trustee shall
from time to time agree in writing. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices to
Holders and reasonable costs of counsel retained by the Trustee in connection
with the delivery of an Opinion of Counsel or otherwise, in addition to the
compensation for its services, except any such expense as may be attributable to
its negligence or bad faith. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts.
(b) The Company shall jointly and severally indemnify the
Trustee against any and all losses, liabilities or expenses (including
reasonable attorneys' fees and expenses) incurred by it, without negligence or
bad faith on its part, in connection with the administration of this trust and
the performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section) and of defending itself
against any claims (whether asserted by any Holder, the Company or otherwise).
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel
provided that the Company shall not be required to pay such fees and expenses if
it assumes the Trustee's defense,
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and, in the reasonable judgment of outside counsel to the Trustee, there is no
conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
willful misconduct, negligence or bad faith. The Company need not pay for any
settlement made without its consent.
(c) To secure the Company's payment obligations in this
Section, the Trustee shall have a lien prior to the Debentures on all money or
property held or collected by the Trustee other than money or property held in
trust to pay principal of and interest on particular Debentures. The Trustee's
right to receive payment of any amounts due under this Section shall not be
subordinate to any other liability or Indebtedness of the Company.
(d) The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a default specified in Section 7.1(3) or Section 7.1(4)
with respect to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in this Section or Section 7.10.
Section 8.8. Replacement of Trustee. (a) A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. The Investor and its Affiliates, so long as such
Persons own at least 20% of the aggregate principal amount of the Outstanding
Debentures, or the Holders of a majority of the aggregate principal amount of
the Outstanding Debentures may remove the Trustee by giving written notice
thereof to the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order
for relief is entered with respect to the Trustee under any
Bankruptcy law;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
(c) If the Trustee resigns or is removed by the Company, by
the Investor and its Affiliates or by Holders of Debentures in accordance with
this Indenture, and the Investor and its Affiliates or such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
(d) A successor Trustee shall execute, acknowledge and deliver
a written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee
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shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
8.7.
(e) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Investor and its Affiliates, so long as such Persons own at least 20% of the
aggregate principal amount of the Outstanding Debentures, or the Holders of 10%
of the aggregate principal amount of the Outstanding Debentures may petition, at
the Company's expense, any court of competent jurisdiction for the appointment
of a successor Trustee.
(f) If the Trustee fails to comply with Section 8.10, any
Holder who has been a Holder of a Debenture for at least six months may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 8.7 shall continue for the
benefit of the retiring Trustee.
Section 8.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors shall succeed
to the trusts created by this Indenture, any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Debentures so authenticated; and in case at that time any of the Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures either in the name of any predecessor hereunder or in the name
of the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Debentures or in this Indenture
provided that the certificate of the Trustee shall have.
Section 8.10. Eligibility; Disqualification. There shall at
all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof
that is authorized under such laws to exercise corporate trust powers, and that
is subject to supervision or examination by federal or state authorities. The
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $500 million as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Company are Outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 8.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A
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Trustee who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.1. Termination of the Company's Obligations.
This Indenture will be satisfied and discharged and will cease
to be of further effect (except as to surviving rights of registration of
transfer or exchange of the Debentures and except as to compensation and
indemnity to the Trustee, as expressly provided for below) as to all Outstanding
Debentures when:
(a) either (i) all the Debentures theretofore authenticated
and delivered (except lost, stolen or destroyed Debentures which have
been replaced or paid as provided in Section 2.8 and Debentures 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 2.5)
have been delivered to the Trustee for cancellation or (ii) all
Debentures not theretofore delivered to the Trustee for cancellation
have become due and payable and the Company thereafter has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the
Debentures not theretofore delivered to the Trustee for cancellation,
for principal of and interest on the Debentures to the date of deposit
together with irrevocable instructions from the Company directing the
Trustee to apply such funds to the payment thereof;
(b) no default or Event of Default with respect to this
Indenture or the Debentures shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute
a default under, any other instrument to which the Company is a party
or by which it is bound;
(c) the Company shall have paid all other sums payable by it
hereunder or under the Debentures; and
(d) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of the Company's
obligations under the Debentures and this Indenture have been complied
with. Such Opinion of Counsel shall also state that such satisfaction
and discharge does not result in a default under any instrument
evidencing debt senior to the Debentures or any other agreement or
instrument then known to such counsel that binds or affects the
Company.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.6, 2.7, 2.9, 2.10 and 8.7 shall survive until the
Debentures are no longer Outstanding. After the Debentures are no longer
Outstanding, the Company's obligations in Section 8.7 shall survive.
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After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the satisfaction and discharge of the
Company's obligations under the Debentures and this Indenture except for those
surviving obligations specified above.
ARTICLE X
AMENDMENTS AND SUPPLEMENTS
Section 10.1. Without Consent of Holders. (a) Notwithstanding
Section 10.2, the Company and the Trustee, in accordance with this Article, may
amend or supplement this Indenture or the Debentures without notice to or
consent of any Holder:
(1) to cure any ambiguity or inconsistency;
(2) to comply with Article V in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
(3) to provide for uncertificated Debentures in addition to or
in place of certificated Debentures; provided, however, that the
uncertificated Debentures are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Debentures are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Debentures or to
secure the Debentures;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company; or
(6) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA or to provide for the
succession of a successor Trustee in accordance with the terms hereof
prior to such amendment or supplement;
provided, that any such change does not adversely affect the rights of any
Holder in any material respect.
Section 10.2. With Consent of Holders. The Company, and the
Trustee may amend or supplement this Indenture or the Debentures without notice
to any Holder but with the written consent of the Holders of at least a majority
of the aggregate principal amount of the Outstanding Debentures (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Debentures). However, without the consent of
each Holder affected, an amendment or supplemental Indenture may not:
(1) reduce the percentage in principal amount of the
Outstanding Debentures whose Holders must consent to an amendment,
supplement or waiver;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest on any Debentures;
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(3) reduce the principal of or change or have the effect of
changing the fixed maturity of any Debentures, or change the date on
which any Debentures may be subject to redemption, or reduce the
Redemption Price therefor;
(4) make any Debentures payable in money other than that
stated in the Debentures;
(5) make any change in the provisions of this Indenture
entitling each Holder to receive payment of principal of and interest
on such Debentures on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority of the
aggregate principal amount of Outstanding Debentures as set forth
herein on the Issue Date to waive defaults or Events of Default; or
(6) amend, change or modify in a manner that would adversely
affect the interests of the Holders in any respect, the obligation of
the Company to redeem Debentures if a Change of Control occurs.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
Section 10.3. Compliance with Trust Indenture Act. Every
amendment or supplement to this Indenture or the Debentures shall comply with
the TIA as then in effect.
Section 10.4. Amended or Supplemental Indenture. (a) Upon the
request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental Indenture pursuant
to Section 10.1 or Section 10.2, upon receipt by the Trustee of an Officer's
Certificate or an Opinion of Counsel, which it reasonably believes to be genuine
and to have been signed or presented by the proper Person, and, in the case of
an amendment of supplement pursuant to Section 10.2, upon the filing with the
Trustee of the consent of Holders of Debentures as described in Section 10.2,
the Trustee shall join with the Company in the execution of such amended or
supplemental Indenture, unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or otherwise
in a manner adverse to it, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture. In
signing such amended or supplemental Indenture the Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and to receive, and (subject to
Section 8.1 and Section 8.2) shall be fully protected in relying upon, such
evidence as it deems appropriate, including, without limitation, solely on an
Opinion of Counsel stating that such amendment or supplemental Indenture is
authorized or permitted by this Indenture.
(b) After an amended or supplemental Indenture under this
Section becomes effective, the Company shall mail to Holders a notice briefly
describing such amended or supplemental Indenture. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amended or supplemental Indenture under this Section.
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Section 10.5. Revocation and Effect of Consents and Waivers. A
consent to an amendment, supplement or a waiver by a Holder of a Debenture shall
bind the Holder and every subsequent Holder of that Debenture or portion of the
Debenture that evidences the same debt as the consenting Holder's Debenture,
even if notation of the consent or waiver is not made on the Debenture. However,
any such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Debenture or portion of the Debenture if the Trustee receives the
written notice of revocation before the date the amendment, supplement or waiver
becomes effective. After an amendment, supplement or waiver becomes effective,
it shall bind every Holder. An amendment, supplement or waiver shall become
effective upon receipt by the Trustee of the requisite number of written
consents under Section 10.2.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 90
days after such record date.
Section 10.6. Notation on or Exchange of Debentures. If an
amendment or supplement changes the terms of a Debenture, the Trustee may
require the Holder of the Debenture to deliver it to the Trustee. The Trustee
may place an appropriate notation on the Debenture regarding the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Debenture shall issue and the
Trustee shall authenticate a new Debenture that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Debenture shall not
affect the validity of such amendment or supplement.
ARTICLE XI
SUBORDINATION OF THE DEBENTURES
Section 11.1. Agreement to Subordinate. The Company agrees,
and each Holder by accepting a Debenture agrees, that the Indebtedness evidenced
by the Debentures is subordinated in right of payment, to the extent and in the
manner provided in this Article, to the prior payment in full of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. Only Senior Indebtedness
of the Company shall rank senior to the Debentures in accordance with the
provisions set forth herein, and the Debentures shall in all respects rank pari
passu with, or be senior to, all other Indebtedness of the Company. The
Debentures shall in all respects rank pari passu with, and not senior to, any
Series E Debentures. All provisions of this Article shall be subject to Section
11.12.
Section 11.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
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or partial liquidation or a total or partial dissolution of the Company or in a
winding up or bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Senior Indebtedness before Holders
of the Debentures shall be entitled to receive any payment of principal of or
interest on the Debentures; and
(2) until such Senior Indebtedness is paid in full, any
distribution to which Holders would be entitled but for this Article shall be
made to holders of such Senior Indebtedness as their interests may appear,
except that Holders may receive (a) securities of a Person that are subordinated
("Subordinated Reorganization Securities") to such Senior Indebtedness to at
least the same extent as the Debentures are subordinated to (A) Senior
Indebtedness of the Company and (B) any Indebtedness or securities issued in
exchange for Senior Indebtedness, and (b) payments and other distributions made
from any funds deposited by the Company pursuant to Section 9.1.
Section 11.3. Default on Senior Indebtedness of the Company.
The Company may not pay the principal of or interest on the Debentures or make
any deposit pursuant to Section 9.1 and may not repurchase, redeem or otherwise
retire any Debentures (collectively, "pay the Debentures") (other than in the
form of Subordinated Reorganization Securities and payments and other
distributions made from any funds deposited by the Company pursuant to Section
9.1) if (i) any Senior Indebtedness of the Company is not paid when due or (ii)
any other default on such Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, (x) the default has been cured or waived and any such acceleration
has been rescinded or (y) such Senior Indebtedness has been paid in full;
provided, however, that the Company may pay the Debentures without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the representative of such Senior Indebtedness with respect to
which either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Senior Indebtedness of the Company pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as may
be required to effect such acceleration) or the expiration of any applicable
grace periods, the Company may not pay the Debentures for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
representative of the holders of such Senior Indebtedness specifying an election
to effect a Payment Blockage Period and ending 179 days thereafter (or earlier
if such Payment Blockage Period is terminated (i) by written notice to the
Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Senior Indebtedness has been repaid in
full). Notwithstanding the provisions of the immediately preceding sentence (but
subject to the provisions of the first sentence of this Section), unless the
holders of such Senior Indebtedness or the representative of such holders have
accelerated the maturity of such Senior Indebtedness, the Company may resume
payments on the Debentures after such Payment Blockage Period. The Debentures
shall not be subject to more than one Payment Blockage Period in any consecutive
360-day period, irrespective of the number of defaults with respect to Senior
Indebtedness during such period. For purposes of this Section, no default or
event of
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<PAGE> 48
default with respect to the Senior Indebtedness and which existed or was
continuing on the date of the commencement of any Payment Blockage Period and
which initiated such Payment Blockage Period shall be, or be made, the basis of
the commencement of a subsequent Payment Blockage Period by the representative
of such Senior Indebtedness, whether or not within a period of 360 consecutive
days, unless such default or event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
Section 11.4. Acceleration of Payment of Debentures. If
payment of the Debentures is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Senior
Indebtedness of the Company (or their representative) of the acceleration.
Section 11.5. When Distribution Must Be Paid Over. If a
distribution is made to Holders that because of this Article should not have
been made to them, the Holders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Company and pay it over to them
as their interests may appear.
Section 11.6. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Debentures are paid in full, Holders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to such Senior Indebtedness. A distribution
made under this Article to holders of such Senior Indebtedness which otherwise
would have been made to Holders is not, as between the Company and Holders, a
payment by the Company on such Senior Indebtedness.
Section 11.7. Relative Rights. This Article defines the
relative rights of Holders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on the Debentures in accordance with their terms; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a default in respect of the Debentures (including,
without limitation, the remedies set forth in Article IV), subject to the
rights, if any, of holders of Senior Indebtedness of the Company to receive
distributions otherwise payable to Holders.
Section 11.8. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Debentures shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
Section 11.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 11.3, the Trustee or Paying Agent may continue to make
payments on the Debentures and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article. The Company, the Registrar or co-registrar,
the Paying Agent, a representative or a holder of Senior Indebtedness may give
such notice; provided, however, that,
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<PAGE> 49
if the holders of an issue of Senior Indebtedness of the Company have a
representative, only the representative may give such notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article with respect to any Senior Indebtedness of the Company which may at
any time be held by it, to the same extent as any other holder of such Senior
Indebtedness, and nothing in Article VII 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 8.7.
Section 11.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their representative (if any).
Section 11.11. Article XI Not to Prevent Events of Default or
Limit Right to Accelerate. The failure to make a payment pursuant to the
Debentures by reason of any provision in this Article shall not be construed as
preventing the occurrence of a default in respect of the Debentures. Nothing in
this Article shall have any effect on the right of the Holders or the Trustee to
accelerate the maturity of the Debentures.
Section 11.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money held in trust
under Article IX by the Trustee for the payment of principal of and interest on
the Debentures shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article, and none
of the Holders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness of the Company or any other creditor of the
Company.
Section 11.13. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the representative for the holders of Senior Indebtedness
of the Company for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company 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 such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
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
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<PAGE> 50
payment. The provisions of Section 8.1 and Section 8.2 shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article.
Section 11.14. Trustee to Effectuate Subordination. Each
Holder by accepting a Debenture authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holders and the holders
of Senior Indebtedness of the Company as provided in this Article and appoints
the Trustee as attorney-in-fact for any and all such purposes.
Section 11.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Company or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article or otherwise.
Section 11.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Debenture acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Debentures, to acquire and continue to hold such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold such Senior Indebtedness.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. If any provision of this Indenture modifies or excludes
any provision of the TIA that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first class mail, postage prepaid,
telecopier or overnight air courier guaranteeing next day delivery addressed as
follows:
if to the Company:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, Connecticut 06611
Attention: General Counsel
Telephone: 203-459-7000
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<PAGE> 51
Telecopier: 203-[ ]
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Daniel Dunson, Esq.
Telephone: 212-558-4000
Telecopier: 212-558-3588
if to the Trustee:
[ ]
with a copy to:
The Company or the Trustee by notice to the other may
designate in writing additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five days after transmittal, if by first class mail,
postage prepaid when receipt acknowledged, if telecopied; and the next Business
Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication mailed to a Holder shall be mailed
by first class mail or by overnight air courier guaranteeing next day delivery
to the Holder at the Holder's address as it appears in the Debenture Register
and shall be sufficiently given if so mailed within the time prescribed. Any
notice or communication shall also be so mailed to any Person described in TIA
Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 12.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Debentures. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c) as to the disclosure of information as to the names and addresses of
Holders made pursuant to the TIA.
Section 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company, upon
request, shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any,
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<PAGE> 52
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each such certificate or opinion shall comply with the requirements of the TIA.
Section 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to
enable the expression of an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving an Opinion of Counsel, counsel may rely as to
factual matters on an Officers' Certificate or on certificates of public
officials.
Section 12.6. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by, or a meeting of, Holders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
Section 12.7. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close. Unless otherwise
provided in this Indenture, if a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.8. GOVERNING LAW, ETC. (A) THIS INDENTURE AND THE
DEBENTURES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
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<PAGE> 53
(b) The Company hereby (i) agrees that any suit, action or
proceeding against it arising out of or relating to this Indenture or the
Debentures, as the case may be, may be instituted in any Federal or state court
sitting in the Borough of Manhattan, The City of New York, (ii) waives to the
extent permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and any
claim that any suit, action or proceeding in such a court has been brought in an
inconvenient forum, (iii) irrevocably submits or will submit, as the case may
be, to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding, (iv) agrees that final judgment in any such suit, action or
proceeding, no longer subject to any appeal, brought in such a court shall be
conclusive and binding may be enforced in the courts of the jurisdiction of
which it is subject by a suit upon judgment, (v) agrees that service of process
by mail to the address specified herein, or such other address as the Company
may designate for such purpose in writing to the Trustee, shall constitute
personal service of such process on it in any such suit, action or proceeding.
Section 12.9. No Recourse Against Others. An incorporator,
director, officer, employee, stockholder or controlling person, as such, of the
Company shall not have any liability for any obligations of the Company under
the Debentures, this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Debenture, each
Holder shall waive and release all such liability. The waiver and release shall
be part of the consideration for the issue of the Debentures.
Section 12.10. Successors. All agreements of the Company in
this Indenture and the Debentures shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
Section 12.11. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
Section 12.12. Severability. In case any provision in this
Indenture or in the Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
Section 12.14. Investment Agreement. Nothing contained herein
or in the Debentures shall be construed to limit the rights of the Investor and
its Affiliates or the obligations of the Company under the Investment Agreement.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
OXFORD HEALTH PLANS, INC.
By:
--------------------------------------
Name:
Title:
[Corporate Seal]
Attest:
- ------------------------------
[ ], as Trustee
By:
--------------------------------------
Name:
Title:
[Corporate Seal]
Attest:
- ------------------------------
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<PAGE> 55
EXHIBIT A
FORM OF FACE OF DEBENTURE
[If a Global Debenture, then insert -- THIS DEBENTURE IS A
GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS DEBENTURE
MAY NOT BE EXCHANGEABLE IN WHOLE OR IN PART FOR A DEBENTURE REGISTERED, AND NO
TRANSFER OF THIS DEBENTURE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If a Global Debenture to be held by The Depository Trust
Company, then insert -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER 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 DTC (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 HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[Insert any legend required by the Internal Revenue Code and
the regulations thereunder.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION
5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND WERE NOT REGISTERED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
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<PAGE> 56
No. [___]
CUSIP NO. ____________
Series D Junior Subordinated Debentures Due May 13, 2008
Oxford Health Plans, Inc., a Delaware corporation for value
received, promises to pay to [___________], or registered assigns, the principal
sum of [__________________] Dollars [if the Debenture is a Global Debenture,
then insert--, or such other principal amount as may be set forth in the records
of the Trustee hereinafter referred to in accordance with the Indenture,] on May
13, 2008.
Interest Payment Dates: May 13, 2000 and, thereafter, each
March 31, June 30, September 30 and December 31.
Record Dates: Fifteen days prior to any interest payment date.
Additional provisions of this Debenture are set forth on the
other side of this Debenture.
OXFORD HEALTH PLANS, INC.
By:________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[______________]
as Trustee, certifies
that this is one of
the Debentures referred
to in the Indenture.
By _____________________________
Authorized Signatory
Date:______________, 1999
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<PAGE> 57
FORM OF REVERSE SIDE OF DEBENTURE
Series D Junior Subordinated Debentures Due May 13, 2008
1. Interest
Oxford Health Plans, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), for value received promises to
pay interest on the principal amount of this Debenture quarterly on the last day
of March, June, September and December (and, if such date is a Legal Holiday,
the Business Day next succeeding such day) at a rate of 5.129810% per annum.
Interest on the Debentures will accrue from the most recent date to which
interest has been paid on the Debentures or, if no interest has been paid, from
the Issue Date. The Company shall pay interest on overdue principal (plus
interest on such interest to the extent lawful), at the rate borne by the
Debentures to the extent lawful.
2. Method of Payment
By at latest 10:00 a.m. (New York City time) on the date on
which any principal of or interest on any Debenture is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Debentures at the close of business on the fifteenth day preceding the relevant
interest payment date (the "Record Date") even if Debentures are canceled,
repurchased or redeemed after the Record Date and on or before the interest
payment date. Holders must surrender Debentures to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. The Company will make all payments in respect of a Debenture
(including principal and interest) by mailing a check to the registered address
of each Holder thereof; provided, however, that payments on the Debentures may
also be made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Debentures, by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States if such Holder elects payment by wire
transfer by giving written notice to the Trustee or the Paying Agent to such
effect designating such account no later than 2 Business Days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. Paying Agent and Registrar
Initially, [___] (the "Trustee," which term includes any
successor trustee under the Indenture), will act as Trustee, Paying Agent and
Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice to any Holder. The Company may act as Registrar or
co-registrar or Paying Agent.
4. Indenture
The Company issued the Debentures under an Indenture, dated as
of [____] (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), among the Company and the Trustee. The
terms of the Debentures include those
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<PAGE> 58
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Debentures are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of those terms. Each Holder by accepting a
Debenture agrees to be bound by all of the terms and provisions of the
Indenture, as amended or supplemented from time to time.
The Debentures are general unsecured senior obligations of the
Company limited to $[ ] in aggregate principal amount (subject to Section 2.7,
Section 2.8, Section 2.9, Section 6.7 and Section 10.6 of the Indenture).
5. Change of Control and Optional Redemption
In the event of a Change of Control, any Holder may require
the Company to redeem any or all of the Debentures held by such Holder, in
accordance with the redemption procedures set forth in Article VI of the
Indenture, at 100% of principal amount, plus accrued and unpaid interest
(including Defaulted Interest) to the redemption date (the "Redemption Price")
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant interest payment date). In the event of any
redemption of Debentures in part, a new Debenture or Debentures for the
unredeemed portion of the principal of the Debenture redeemed in part will be
issued upon cancellation of the Debenture surrendered.
On and after May 13, 2003, the Debentures are redeemable by
the Company, in accordance with the redemption procedures set forth in Article
VI of the Indenture, in whole but not in part, at the Redemption Price.
6. Denominations; Transfer; Exchange
The Debentures are in registered form without coupons in
denominations of principal amount of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Debentures in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar shall not be required to register
the transfer of or exchange any Debenture to be redeemed, in whole or in part,
upon a change of control, except the unredeemed portion of any Debenture being
redeemed in part.
7. Subordination
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
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8. Persons Deemed Owners
The registered holder of this Debenture may be treated as the
owner of it for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
10. Discharge Prior to Redemption
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Debentures and the Indenture if the Company deposits with the Trustee money for
the payment of principal and interest on the Debentures to redemption or
maturity, as the case may be.
11. Amendment, Supplement or Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Debentures may be amended or supplemented with the written
consent of the Holders of at least a majority of the aggregate principal amount
of the Outstanding Debentures and (ii) any existing default or Event of Default
and its consequence (other than with respect to nonpayment or in respect of a
provision that cannot be amended without the written consent of each Holder
affected) may be waived with the written consent of the Investor and its
Affiliates (so long as such Persons own at least 20% of the aggregate principal
amount of Outstanding Debentures and subject to the TIA) or Holders of a
majority of the aggregate principal amount of the Outstanding Debentures.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Debentures to, among other things, cure any ambiguity or inconsistency, or
to comply with Article V of the Indenture, or to provide for uncertificated
Debentures in addition to or in place of certificated Debentures, or to add
guarantees with respect to the Debentures or to secure the Debentures, or to add
additional covenants of, or surrender rights and powers conferred on, the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to provide for the succession of a successor
trustee in accordance with the terms of the Indenture prior to such amendment or
supplements, provided that any such change that does not adversely affect the
rights of any Holder in any material respect.
12. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Debentures may declare
all the Debentures to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Debentures being due and payable immediately upon the occurrence of such Events
of Default.
A-5
<PAGE> 60
Holders may not enforce the Indenture or the Debentures except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Debentures unless it receives reasonable indemnity or security. The Trustee
may withhold from Holders notice of any continuing default or Event of Default
(except a default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Debentures and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of the Company shall not have any liability for any
obligations of the Company under the Debentures, the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Debenture, each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Debentures.
15. Authentication
This Debenture shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent acting on its behalf)
manually signs the certificate of authentication on the other side of this
Debenture.
16. Abbreviations
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Debentures and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
18. Governing Law
This Debenture shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-6
<PAGE> 61
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Debenture in larger type. Requests may be made to:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, Connecticut 06611
Attention: General Counsel
A-7
<PAGE> 62
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Debenture on the books of the
Company. The agent may substitute another to act for him.
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Debenture.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-8
<PAGE> 63
OPTION OF HOLDER TO ELECT REDEMPTION
If you want to elect to have this Debenture redeemed by the
Company pursuant to Section 6.4 of the Indenture, check the box below:
If you want to elect to have only part of this Debenture
redeemed by the Company pursuant to Section 6.4 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Debenture)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-9
<PAGE> 1
EXHIBIT 4.3
OXFORD HEALTH PLANS, INC.
AND
[ ],
AS TRUSTEE
SERIES E JUNIOR SUBORDINATED DEBENTURES
DUE MAY 13, 2008
INDENTURE
Dated as of [ ]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.1. Definitions.................................................................. 1
Section 1.2. Other Definitions............................................................ 7
Section 1.3. Incorporation by Reference of Trust Indenture Act............................ 7
Section 1.4. Rules of Construction........................................................ 8
ARTICLE II
THE DEBENTURES
Section 2.1. Form and Dating.............................................................. 8
Section 2.2. Global Debentures............................................................ 9
Section 2.3. Execution and Authentication................................................. 10
Section 2.4. Registrar and Paying Agent................................................... 11
Section 2.5. Deposit of Monies; Paying Agent to Hold Money in Trust....................... 12
Section 2.6. Holder Lists................................................................. 12
Section 2.7. Legends; Transfers and Exchanges; Etc........................................ 12
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures.............................. 14
Section 2.9. Temporary Debentures......................................................... 15
Section 2.10. Cancellation................................................................ 15
Section 2.11. Payment of Interest; Defaulted Interest..................................... 16
Section 2.12. Record Date................................................................. 17
Section 2.13. Computation of Interest..................................................... 17
Section 2.16. CUSIP Number................................................................ 17
ARTICLE III
COVENANTS
Section 3.1. Payment of Debentures........................................................ 17
Section 3.2. Maintenance of Office or Agency.............................................. 17
Section 3.3. Corporate Existence.......................................................... 18
Section 3.4. Compliance Certificate....................................................... 18
Section 3.5. Further Instruments and Acts................................................. 18
Section 3.6. Waiver of Stay, Extension or Usury Laws....................................... 18
Section 3.7. Restrictions on Dividends..................................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
ARTICLE IV
VOTING RIGHTS
<S> <C>
Section 4.1. Voting Rights and Certain Restrictions...................................... 19
ARTICLE V
SUCCESSOR COMPANY
Section 5.1. Merger, Consolidation and Sale of Assets..................................... 23
ARTICLE VI
REDEMPTION OF DEBENTURES
Section 6.1. Redemption................................................................... 24
Section 6.2. Applicability of Article..................................................... 24
Section 6.3. Notice of Redemption......................................................... 24
Section 6.4. Change of Control Notice and Redemption Procedures........................... 25
Section 6.5. Deposit of Redemption Price.................................................. 26
Section 6.6. Debentures Payable on Redemption Date........................................ 27
Section 6.7. Debentures Redeemed in Part.................................................. 27
Section 6.8. Rating Conditions............................................................ 27
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1. Events of Default............................................................ 27
Section 7.2. Acceleration of Maturity; Rescission and Annulment........................... 28
Section 7.3. Other Remedies............................................................... 29
Section 7.4. Waiver....................................................................... 29
Section 7.5. Undertaking for Costs........................................................ 29
Section 7.6. Control...................................................................... 30
Section 7.7. Limitation on Suits.......................................................... 30
Section 7.8. Rights of Holders to Receive Payment......................................... 30
Section 7.9. Collection Suit by Trustee................................................... 31
Section 7.10. Trustee May File Proofs of Claim............................................ 31
Section 7.11. Priorities.................................................................. 31
ARTICLE VIII
TRUSTEE
Section 8.1. Duties of Trustee............................................................ 32
Section 8.2. Rights of Trustee............................................................ 33
Section 8.3. Individual Rights of Trustee................................................. 33
Section 8.4. Trustee's Disclaimer......................................................... 34
Section 8.5. Notice of Defaults........................................................... 34
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.6. Reports by Trustee to Holders................................................ 34
Section 8.7. Compensation and Indemnity................................................... 34
Section 8.8. Replacement of Trustee....................................................... 35
Section 8.9. Successor Trustee by Merger.................................................. 36
Section 8.10. Eligibility; Disqualification............................................... 36
Section 8.11. Preferential Collection of Claims Against Company........................... 36
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.1. Termination of the Company's Obligations..................................... 37
ARTICLE X
AMENDMENTS AND SUPPLEMENTS
Section 10.1. Without Consent of Holders.................................................. 38
Section 10.2. With Consent of Holders..................................................... 38
Section 10.3. Compliance with Trust Indenture Act......................................... 39
Section 10.4. Amended or Supplemental Indenture........................................... 39
Section 10.5. Revocation and Effect of Consents and Waivers............................... 40
Section 10.6. Notation on or Exchange of Debentures....................................... 40
ARTICLE XI
SUBORDINATION OF THE DEBENTURES
Section 11.1. Agreement to Subordinate.................................................... 40
Section 11.2. Liquidation, Dissolution, Bankruptcy........................................ 40
Section 11.3. Default on Senior Indebtedness of the Company............................... 41
Section 11.4. Acceleration of Payment of Debentures....................................... 42
Section 11.5. When Distribution Must Be Paid Over......................................... 42
Section 11.6. Subrogation................................................................. 42
Section 11.7. Relative Rights............................................................. 42
Section 11.8. Subordination May Not Be Impaired by Company................................ 42
Section 11.9. Rights of Trustee and Paying Agent.......................................... 42
Section 11.10. Distribution or Notice to Representative................................... 43
Section 11.11. Article XI Not to Prevent Events of Default or Limit Right to Accelerate... 43
Section 11.12. Trust Moneys Not Subordinated.............................................. 43
Section 11.13. Trustee Entitled to Rely................................................... 43
Section 11.14. Trustee to Effectuate Subordination........................................ 44
Section 11.15. Trustee Not Fiduciary for Holders of Senior Indebtedness................... 44
Section 11.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions..... 44
ARTICLE XII
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls................................................ 44
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 12.2. Notices..................................................................... 44
Section 12.3. Communication by Holders with Other Holders................................. 45
Section 12.4. Certificate and Opinion as to Conditions Precedent.......................... 45
Section 12.5. Statements Required in Certificate or Opinion............................... 46
Section 12.6. Rules by Trustee, Paying Agent and Registrar................................ 46
Section 12.7. Legal Holidays.............................................................. 46
Section 12.8. Governing Law, Etc.......................................................... 46
Section 12.9. No Recourse Against Others.................................................. 47
Section 12.10. Successors................................................................. 47
Section 12.11. Multiple Originals......................................................... 47
Section 12.12. Severability............................................................... 47
Section 12.13. Table of Contents; Headings................................................ 47
Section 12.13. Investment Agreement; Headings............................................. 47
</TABLE>
EXHIBIT A FORM OF THE DEBENTURE
iv
<PAGE> 6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- -------
<S> <C>
310(a)(1) ........................................ 8.10
(a)(2) ........................................ 8.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(b) ........................................ 8.8; 8.10
(c) ........................................ N.A.
311(a) ........................................ 8.11
(b) ........................................ 8.11
(c) ........................................ N.A.
312(a) ........................................ 2.6
(b) ........................................ 12.3
(c) ........................................ 12.3
313(a) ........................................ 8.6
(b)(1) ........................................ N.A.
(b)(2) ........................................ 8.6; 8.7
(c) ........................................ 8.6
(d) ........................................ 8.6
314(a) ........................................ 3.4
(b) ........................................ N.A.
(c)(1) ........................................ 12.4
(c)(2) ........................................ 12.4
(c)(3) ........................................ N.A.
(d) ........................................ N.A.
(e) ........................................ 12.5
315(a) ........................................ 8.1(b)
(b) ........................................ 8.5
(c) ........................................ 8.1(a)
(d) ........................................ 8.1(c)
(e) ........................................ 7.5
316(a)(last sentence) ........................................ 1.1
(a)(1)(A) ........................................ 7.6
(a)(1)(B) ........................................ 7.4
(a)(2) ........................................ N.A.
(b) ........................................ 7.8
(c) ........................................ 2.12
317(a)(1) ........................................ 7.9
(a)(2) ........................................ 7.10
(b) ........................................ 2.5(b)
318(a) ........................................ 12.1
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
v
<PAGE> 7
INDENTURE dated as of [_________], among OXFORD HEALTH PLANS,
INC., a Delaware corporation (the "Company"), and [_________], a [_________]
(the "Trustee"), as Trustee.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
Series E Junior Subordinated Debentures Due May 13, 2008 (the "Debentures"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act. The term "Affiliated" has a correlative meaning. Notwithstanding
the foregoing, for all purposes hereof, the Investor, and each Person controlled
by, controlling or under common control with the Investor (each, a "TPG
Person"), shall not be deemed an "Affiliate" of any Designated Purchaser Person
(as defined below), and no Designated Purchaser, and no Person controlled by,
controlling or under common control with such Designated Purchaser (each, a
"Designated Purchaser Person"), shall be deemed an "Affiliate" of any TPG Person
or any other Designated Purchaser Person, in any such case solely as a
consequence of the Investment Agreement and the transactions contemplated
thereby.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interest in any Global Debenture, the rules and
procedures of DTC or any successor Depositary that apply to such transfer and
exchange.
"Bankruptcy Law" means Title 11, United States Code or any
similar federal or state law for the relief of debtors.
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act as in effect on the date hereof, except that a Person
shall be deemed to Beneficially Own all such securities that such Person has the
right to acquire whether such right is exercisable immediately or after the
passage of time). The terms "Beneficial Ownership" and "Beneficial Owner" have
correlative meanings. Notwithstanding the foregoing, for all purposes hereof, no
TPG Person shall be deemed to Beneficially Own any securities that are held by
any Designated Purchaser Person, and no Designated Purchaser Person shall be
deemed to Beneficially Own any securities that are held by any TPG Person or
other Designated Purchaser Person, in any such case solely as a consequence of
the Investment Agreement or the transactions contemplated thereby.
"Board of Directors" means the Board of Directors of the
Company, or any duly and validly authorized committee of the Board of Directors.
"Business Day" means a day other than a Legal Holiday.
<PAGE> 8
"Certificated Debenture" means a certificated Debenture in the
form of Exhibit A, not bearing the legend for Global Notes set forth on Exhibit
A and registered in the name of the Holder thereof and issued in accordance with
this Indenture.
"Certificate of Designations" means, with respect to the
Series D Cumulative Preferred Stock, the Certificate of Designations of Series D
Cumulative Preferred Stock of the Company, and with respect to the Series E
Cumulative Preferred Stock, the Certificate of Designations of Series E
Cumulative Preferred Stock of the Company.
"Change of Control" means such time as:
(i) any Person or Group (other than the Investor, its
Affiliates, the Company or any Subsidiaries of the
Company, or any Group composed of such Persons) has
become, directly or indirectly, the Beneficial Owner,
by way of merger, consolidation or otherwise, of a
majority of the then-outstanding Voting Securities of
the Company on a fully-diluted basis, after giving
effect to the conversion and exercise of all
outstanding warrants, options and other securities of
the Company convertible into or exercisable for
Voting Securities of the Company (whether or not such
securities are then currently convertible or
exercisable); or
(ii) the sale, lease, transfer or other disposition
of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to any
Person or Group; or
(iii) during any period of two consecutive calendar
years, individuals who at the beginning of such
period constituted the Board of Directors, together
with any new members of such Board of Directors,
whose election by such Board of Directors or whose
nomination for election by the stockholders of the
Company was approved by a vote of at least a majority
of the members of such Board of Directors then still
in office who either were directors at the beginning
of such period or whose election or nomination for
election was previously so approved or who were
approved pursuant to Section 5.02 of the Investment
Agreement or pursuant to the terms of the Series D
Cumulative Preferred Stock of the Company or the
Series E Cumulative Preferred Stock of the Company,
cease for any reason to constitute a majority of the
directors of the Company then in office; or
(iv) the Company consolidates with or merges with or
into another Person or any Person consolidates with,
or merges with or into, the Company, in any such
event pursuant to a transaction in which immediately
after the consummation thereof the Persons owning the
then-outstanding Voting Securities of the Company
immediately prior to such consummation shall not own
a majority in the aggregate (by reason of such prior
ownership) of the then-outstanding Voting Securities
of the Company or the surviving entity if other than
the Company; or
2
<PAGE> 9
(v) the adoption of a plan relating to the
liquidation or dissolution of the Company, whether or
not otherwise in compliance with the provisions of
this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Oxford Health Plans, Inc., a Delaware
corporation.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Depositary" means, with respect to the Debentures issuable
or issued in whole or in part in global form, DTC, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Designated Purchaser" has the meaning assigned to such term
in the Investment Agreement.
"Designated Purchaser Person" has the meaning set forth in the
definition of "Affiliate."
"DTC" means The Depository Trust Company, a New York
corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"GAAP" means U.S. generally accepted accounting principles as
in effect at the relevant time or for the relevant period.
"Global Debenture" means the global debenture in the form of
Exhibit A bearing the legend for Global Debentures set forth on Exhibit A and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee and issued in accordance with this Indenture.
"Group" has the meaning set forth in Rule 13d-5 under the
Exchange Act.
"Guarantee" means any direct or indirect obligation,
contingent or otherwise, to guarantee (or having the economic effect of
guaranteeing) Indebtedness in any manner, including, without limitation, any
monetary obligation to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of another Person
(whether arising by agreement to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions or otherwise).
"Holder" means the Person in whose name a Debenture is
registered in the Debenture Register.
3
<PAGE> 10
"Indebtedness" means, with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) any obligation of such Person for money borrowed, (ii) any
obligation of such Person evidenced by bonds, debentures, notes, Guarantees or
other similar instruments, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of property, assets or services (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business), (v) any interest rate or currency swap or similar
hedging agreement, and (vi) any capital lease obligation of such Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Investment Agreement" means the Investment Agreement, dated
as of February 23, 1998, by and between the Investor and the Company, as
amended, supplemented or modified from time to time.
"Investor" means TPG Partners II, L.P. a Delaware limited
partnership.
"Investor Group" means, collectively, the Investor, the
Designated Purchasers and the respective Affiliates of such Persons.
"Investor Nominee" means a person designated for election to
the Board of Directors by the Investor pursuant to the Investment Agreement.
"Issue Date" means [__________].
"Moody's" means Moody's Investors Service and its successors.
"Officer" means, with respect to a Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
any Vice President, the Treasurer, the Controller or the Secretary of such
Person.
"Officers' Certificate" means, with respect to a Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person which certificate shall
comply with the provisions of Section 12.5.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee, which opinion shall comply with the
provisions of Section 12.5.
"Outstanding" means, as of the date of determination, all
Debentures theretofore authenticated and delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust or set aside and
segregated in trust by the Company for the Holders of such
4
<PAGE> 11
Debentures in accordance with Section 6.5; provided, that, if the
Debentures are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and
(iii) Debentures which have been paid in full pursuant to the
terms hereof or in exchange for or in lieu of which other Debentures
have been authenticated and delivered pursuant to this Indenture, other
than any such Debentures in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Debentures
are held by a bona fide purchaser in whose hands such Debentures are
valid obligations of the Company.
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debentures which a Trust Officer of the Trustee knows to
be so owned shall be so disregarded. Debentures 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
Debentures and that the pledgee is not the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor.
"Person" means any individual, corporation, company,
association, partnership, joint venture, trust or unincorporated organization,
or a government or any agency or political subdivision thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, from time to time.
"Senior Indebtedness" means, with respect to the Company, (i)
the Company's outstanding 11% Senior Notes due 2005, (ii) any Indebtedness now
or hereafter issued or incurred by the Company pursuant to the Term Loan
Agreement and (iii) any other Indebtedness now or hereafter incurred by the
Company, unless the instrument under which such Indebtedness is incurred
expressly provides that it is not superior in right of payment to the
Debentures. Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include (a) any liability for federal, state, local or
other taxes owed or owing by the Company, (b) any Indebtedness of the Company to
any of its Subsidiaries or other Affiliates, (c) any trade payables or (d) any
Series D Debentures. "Senior Indebtedness" means, with respect to any guarantor,
any Guarantee by such guarantor of Senior Indebtedness of the Company.
"Series D Cumulative Preferred Stock" means the Series D
Cumulative Preferred Stock par value $0.01 per share, of the Company.
"Series D Debentures" means the Series D Junior Subordinated
Debentures Due May 13, 2008 of the Company issued in exchange for the Series D
Cumulative Preferred Stock.
5
<PAGE> 12
"Series D Indenture" means the Indenture relating to the
Series D Debentures.
"Series E Cumulative Preferred Stock" means the Series E
Cumulative Preferred Stock, par value $0.01 per share, of the Company.
"S&P" means Standard and Poor's Ratings Group, a division of
the McGraw-Hill Companies, and its successors.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of voting stock is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or combination thereof) and (ii) any partnership (A) the sole
general partner of the managing general partner of which is such Person or a
Subsidiary of such Person or (B) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Term Loan Agreement" means the Term Loan Agreement, dated as
of May 13, 1998, among the Company, as Borrower, the Lenders listed therein, as
Lenders, DLJ Capital Funding, Inc., as Syndication Agent and IBJ Schroeder Bank
& Trust Company as Facility Manager, as such agreement may be amended,
supplemented, renewed, extended, substituted, replaced, refinanced, restructured
or otherwise modified from time to time.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of
this Indenture (except as otherwise provided in this Indenture).
"TPG Person" has the meaning assigned to such term in the
definition of "Affiliate."
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the applicable provisions of
this Indenture and, thereafter, means the successor serving hereunder.
"Trust Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Voting Securities" means shares of Common Stock or any other
securities of the Company entitled to vote generally for the election of
directors.
"Warrants" means the Series A Warrants issued by the Company
issued by the Company pursuant to the Investment Agreement.
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"Warrant Shares" means the shares of Common Stock issued, or
issuable upon, exercise of the Warrants.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Additional Directors"........................ 4.1(c)
"Authenticating Agent"........................ 2.3(d)
"Change of Control Notice".................... 6.4(b)
"Company Order"............................... 2.3(c)
"Corporate Trust Office"...................... 2.4(c)
"Debenture Register".......................... 2.4(a)
"Debentures" ................................. Introduction
"Defaulted Interest" ......................... 2.11(b)
"Event of Default"............................ 7.1
"Investor Aggregate Vote Number".............. 4.1(b)
"Legal Holiday"............................... 12.7
"Notice of Default"........................... 7.1
"Notice of Redemption"........................ 6.3(b)
"Original Debentures"......................... 4.1(b)
"Original Warrants"........................... 4.1(b)
"Paying Agent"................................ 2.4(a)
"Private Placement Legend..................... 2.7(a)
"redemption Date"............................. 6.3(b)
"Registrar"................................... 2.4(a)
"Special Interest Payment Date"............... 2.11(b)
"Special Record Date"......................... 2.11(b)
"Subordinated Reorganization Securities"...... 11.2
"Successor Company"........................... 5.1
"Trust Preferred Stock"....................... 4.1(f)
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Debentures.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
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"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined in the TIA by reference to another statute or defined by SEC
rule have the meanings assigned to them by such definitions.
Section 1.4. Rules of Construction. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) provisions apply to successive events and transactions;
(7) references to sections of or rules under the Securities
Act or the Exchange Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the SEC from time
to time; and
(8) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP.
ARTICLE II
THE DEBENTURES
Section 2.1. Form and Dating . (a) The Debentures are being
issued by the Company in exchange for the Company's Series E Cumulative
Preferred Stock pursuant to the Certificate of Designations thereof. The
Debentures and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required by law or
permitted by this Indenture.
(b) The terms and provisions contained in the Debentures, the
form of which is annexed hereto as Exhibit A, shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. The
Debentures may have such other notations, legends or endorsements as are
required by law,
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<PAGE> 15
stock exchange rule or usage. The Company and the Trustee shall approve the form
of the Debentures and any notation, legend or endorsement on them. Each
Debenture shall be dated the date of its authentication.
(c) The Debentures shall be issuable only in fully registered
form, without coupons. The Debentures may be issued in any denomination;
provided, however, to the extent possible Debentures will be issued in
denominations of $1,000 and integral multiples thereof.
(d) The Debentures are transferable only in denominations of
$1,000 and integral multiples of $1,000; provided, however, that, if the
aggregate amount of Debentures that a Holder wishes to transfer is not equal to
$1,000 or an integral multiple thereof, such Holder may transfer one Debenture
in a denomination less than $1,000.
Section 2.2. Global Debentures. This section shall apply only
to Global Debentures deposited with or on behalf of the Depositary.
(a) Each Global Debenture authenticated under this Indenture
shall be registered in the name of the Depositary designated by the Company for
such Global Debenture or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Debenture shall
constitute a single Debenture for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Debenture may be exchanged in whole or in part for Debentures registered,
and no transfer of a Global Debenture in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Debentures or a
nominee thereof unless (i) such Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Debentures or
(B) has ceased to be a clearing agency registered as such under the Exchange
Act, and in either case the Company fails to appoint a successor Depositary
within 90 days, (ii) the Company executes and delivers to the Trustee a Company
Order (as defined below) stating that it elects to cause the issuance of the
Debentures in certificated form and that all Global Debentures shall be
exchanged in whole for Debentures that are not Global Debentures (in which case
such exchange shall be effected by the Trustee) or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default with respect to the
Debentures.
(c) If any Global Debenture is to be exchanged for other
Debentures or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Registrar, for exchange or
cancellation as provided in this Article. If any Global Debenture is to be
exchanged for other Debentures or canceled in part, or if another Debenture is
to be exchanged in whole or in part for a beneficial interest in any Global
Debenture, then either (i) such Global Debenture shall be so surrendered for
exchange or cancellation as provided in this Article or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or canceled, or equal to the principal amount of such
other Debenture to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Trustee, as Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its
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<PAGE> 16
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Debenture, the Trustee shall,
as otherwise provided in this Article, authenticate and deliver any Debentures
issuable in exchange for such Global Debenture (or any portion thereof) to or
upon the order of the Company, and registered in such names as may be directed
by, the Depositary or its authorized representative. Upon the request of the
Trustee in connection with the occurrence of any of the events specified in the
preceding paragraph, the Company shall promptly make available to the Trustee a
reasonable supply of Debentures that are not in the form of Global Debentures.
The Trustee shall be entitled to rely upon any order, direction or request of
the Depositary or its authorized representative which is given or made pursuant
to this Article if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(d) Every Debenture authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Debenture or any portion thereof, whether pursuant to this Article or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Debenture, unless such Debenture is registered in the name of a Person other
than the Depositary for such Global Debenture or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a
Global Debenture, shall be the Holder of such Global Debenture for all purposes
under this Indenture and the Debentures, and owners of beneficial interests in a
Global Debenture shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Debenture will be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its Agent Members.
Section 2.3. Execution and Authentication. (a) Two Officers,
one of whom shall be the Chairman of the Board, the President, the Chief
Executive Officer or the Chief Financial Officer of the Company, shall sign the
Debentures for the Company by manual or facsimile signature. If an Officer whose
signature is on a Debenture no longer holds that office at the time the Trustee
authenticates the Debenture, the Debenture shall be valid nevertheless.
(b) A Debenture shall not be valid until an authorized
signatory of the Trustee authenticates the Debenture. The signature of the
Trustee on a Debenture shall be conclusive evidence that such Debenture has been
duly and validly authenticated and issued under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Debentures shall be
substantially as set forth in Exhibit A hereto.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery Debentures for original issue on the Issue Date in an aggregate
principal amount not to exceed $[ ], upon a written order of the Company signed
by two Officers of the Company (a "Company Order"). Such Company Order shall
specify the amount of the Debentures to be authenticated and the date on which
the original issue of Debentures is to be authenticated. Except as expressly set
forth in Article IV, all Debentures issued under this Indenture shall vote and
consent together on all matters as one class.
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<PAGE> 17
(d) The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Debentures. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Debentures whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.
(e) In case the Company, pursuant to Article V, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article V, any of the
Debentures authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Debentures executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Debentures
surrendered for such exchange and of like principal amount, and the Trustee,
upon Company Order of the successor Person, shall authenticate and deliver
Debentures as specified in such order for the purpose of such exchange. If
Debentures shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Debentures, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Debentures at the time Outstanding for Debentures authenticated
and delivered in such new name.
Section 2.4. Registrar and Paying Agent. (a) The Company shall
maintain an office or agency in the Borough of Manhattan, City of New York,
where Debentures may be presented for registration of transfer or for exchange
(the "Registrar"), where Debentures may be presented for payment (the "Paying
Agent") and for the service of notices and demands to or upon the Company in
respect of the Debentures and this Indenture. The Registrar shall keep a
register of the Debentures and of their transfer and exchange (the "Debenture
Register"). The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
(b) The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 8.7. The
Company may act as Registrar, Paying Agent, co-registrar or transfer agent.
(c) The Company initially appoints the Trustee at its principal
corporate trust office in the Borough of Manhattan, City of New York (the
"Corporate Trust Office") as Registrar, Paying Agent and agent for service of
demands and notices in connection with the Debentures and this Indenture, and as
Custodian with respect to the Global Debentures, until such time as the Trustee
has resigned or a successor Trustee has been appointed.
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<PAGE> 18
(d) The Company initially appoints DTC to act as Depositary with
respect to the Global Debentures.
Section 2.5. Deposit of Monies; Paying Agent to Hold Money in Trust.
(a) By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Debenture is due and payable, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient to
pay such principal or interest when due.
(b) The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that such Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on the Debentures and shall notify the
Trustee in writing of any default by the Company in making any such payment. The
Company at any time may require a Paying Agent (other than the Trustee) to pay
all money held by it to the Trustee and to account for any funds disbursed by
such Paying Agent. Upon complying with the previous sentence, the Paying Agent
(if other than the Company or a Subsidiary) shall have no further liability for
the money delivered to the Trustee. If the Company, or any of its Subsidiaries
or Affiliates, acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy, reorganization or similar proceeding with respect to the
Company, the Trustee shall serve as Paying Agent for the Debentures.
In case Holders of any Debentures shall not, within two years after
such deposit, claim the cash so deposited, the Trustee or Paying Agent (as
applicable) shall, upon demand, pay over to the Company the balance so
deposited, or (if then held by the Company or any of its Subsidiaries or
Affiliates) such balance shall be discharged from such trust. Thereupon, the
Trustee or Paying Agent (as applicable) shall be relieved of all responsibility
to the Holders thereof, or if the Company or any of its Subsidiaries or
Affiliates acts as Paying Agent, such Paying Agent shall be relieved of all
responsibility as trustee of the cash so deposited; and the sole right of such
Holders shall be as a general creditor thereof. Any interest accrued on any
funds so deposited shall belong to the Company, and shall be paid to it from
time to time on demand.
Section 2.6. Holder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar, or to the extent otherwise required
under the TIA, the Company shall furnish or cause to be furnished to the
Trustee, in writing at least seven Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list, in
such form and as of such date as the Trustee may reasonably require, of the
names and addresses of Holders and the Company shall otherwise comply with TIA
Section 312(a).
Section 2.7. Legends; Transfers and Exchanges; Etc.
(a) Each Debenture shall bear a legend (the "Private Placement
Legend") substantially as set forth below:
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<PAGE> 19
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND WERE NOT REGISTERED UNDER ANY STATE SECURITIES LAW, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS."
(b) The Private Placement Legend shall be removed from a Debenture
if such Debenture is sold pursuant to an effective registration statement under
the Securities Act or there is delivered by the Company to the Trustee such
satisfactory evidence, which may include an opinion of independent counsel, as
reasonably may be requested by the Trustee, to confirm that neither such legend
nor the restrictions on transfer set forth therein are required to ensure that
transfer of such Debenture will not violate the registration and prospectus
delivery requirements of the Securities Act.
(c) Restricted Debentures Legend. Upon the transfer, exchange or
replacement of Debentures not bearing a Private Placement Legend, the Registrar
shall deliver Debentures that do not bear a Private Placement Legend. Upon the
transfer, exchange or replacement of Debentures bearing a Private Placement
Legend, the Registrar shall deliver only Debentures that bear a Private
Placement Legend unless:
(i) such Debentures are transferred pursuant to an effective
registration statement under the Securities Act, or
(ii) in connection with such transfer, the Registrar shall
have received an Opinion of Counsel satisfactory to it to the effect
that neither such legend nor the related restrictions on transfer
are required in order to maintain compliance with the provisions of
the Securities Act.
The Company shall deliver to the Trustee an Officer's Certificate promptly upon
effectiveness, withdrawal or suspension of any registration statement applicable
to any Debentures.
(d) The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to this Article. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.
(e) Transfer and Exchange of Certificated Debentures. When
Certificated Debentures are presented by a Holder to the Registrar with a
request to register the transfer of the Certificated Debentures or to exchange
such Certificated Debentures for an equal principal amount of Certificated
Debentures of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested only if the Certificated Debentures
(i) are presented or surrendered for registration of transfer or exchange, (ii)
are endorsed and contain a
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signature guarantee or are accompanied by a written instrument of transfer in
form satisfactory to the Registrar duly executed by such Holder or by his
attorney and (iii) contain a signature guarantee, duly authorized in writing.
(f) Obligations with Respect to Transfers and Exchanges of
Debentures.
(i) To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this Article,
execute and the Trustee shall authenticate Debentures at the Registrar's
or co-registrar's request in accordance with the provisions of Section
2.3.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any stamp or transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such stamp or transfer taxes, assessments or similar governmental
charges payable upon exchange pursuant to Section 5.1, Article VI or
Section 10.5 not involving any transfer).
(iii) Prior to the due presentation for registration of
transfer of any Debenture, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the Person in whose name
a Debenture is registered as the absolute owner of such Debenture for the
purpose of receiving payment of principal of and interest on such
Debenture and for all other purposes whatsoever, whether or not such
Debenture is overdue, and none of the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(iv) All Debentures issued upon any transfer or exchange
pursuant to the terms of this Indenture shall be valid obligations of the
Company; shall evidence the same debt; and shall be entitled to the same
benefits under this Indenture as the Debentures surrendered upon such
transfer or exchange.
(v) The Registrar shall not be required to register the
transfer of or exchange any Debenture to be redeemed, in whole or in part,
upon a change of control, except the unredeemed portion of any Debenture
being redeemed in part.
(g) No Obligation of the Trustee. The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Debenture other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Section 2.8. Mutilated, Destroyed, Lost or Stolen Debentures. If a
mutilated Debenture is surrendered to the Registrar, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Debenture of like tenor and principal amount and bearing a number not
outstanding. If the Holder of a Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, and if there shall be delivered to the
Company and
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<PAGE> 21
the Trustee (i) evidence to their reasonable satisfaction of the loss,
destruction or theft of such Debenture and (ii) an indemnity bond sufficient in
the reasonable judgment of the Company and the Trustee to protect the Company,
the Trustee, the Paying Agent and the Registrar and any co-registrar from any
loss any of them may suffer if such Debenture is replaced, then, the Company, in
the absence of notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of like tenor and principal amount, bearing a number
not contemporaneously Outstanding if the requirements of Section 8-405 of the
Uniform Commercial Code as in effect in the State of New York are met.
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Debenture issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company and any other obligor upon the
Debentures, whether or not the mutilated, destroyed, lost or stolen Debenture
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Debentures 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 Debentures.
Section 2.9. Temporary Debentures. Until definitive Debentures are
ready for delivery, the Company may execute and the Trustee shall authenticate
and deliver temporary Debentures. Temporary Debentures shall be substantially in
the form of definitive Debentures but may have variations that the Company
reasonably considers appropriate for temporary Debentures. Without unreasonable
delay, the Company shall prepare definitive Debentures. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at any office
or agency maintained by the Company for that purpose and such exchange shall be
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Debentures, the Company shall execute, and the Trustee shall
authenticate and make available for delivery in exchange therefor, one or more
definitive Debentures representing an equal principal amount of Debentures.
Until so exchanged, the Holder of temporary Debentures shall in all respects be
entitled to the same benefits under this Indenture as a Holder of definitive
Debentures.
Section 2.10. Cancellation. The Company at any time may deliver
Debentures to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee
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<PAGE> 22
any Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel and return to the Company all
Debentures surrendered for registration of transfer, exchange, payment,
redemption or cancellation. The Company may not issue new Debentures to replace
Debentures it has paid or delivered to the Trustee for cancellation except as
expressly permitted by this Indenture.
Section 2.11. Payment of Interest; Defaulted Interest. (a) Interest
on any Debenture 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 such
Debenture (or one or more predecessor Debentures) is registered at the close of
business on the regular record date for such interest as provided in the
Debenture at the office or agency of the Company maintained for such purpose
pursuant to Section 2.4.
(b) Any interest on any Debenture which is payable, but is not paid
when the same becomes due and payable and such nonpayment continues for a period
of 30 days shall forthwith cease to be payable to the Holder on the regular
record date by virtue of having been such Holder, and such defaulted interest
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Debentures (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall be paid by the Company, to the
Persons in whose names the Debentures (or their respective predecessor
Debentures) are registered at the close of business on a Special Record Date (as
hereinafter defined) 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 Debenture and
the date (not less than 30 days after such notice) of the proposed payment (the
"Special Interest Payment Date"), 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 provided in this clause.
Thereupon the Trustee shall fix a record date (the "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 Special Interest Payment Date. 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 and Special Interest Payment
Date therefor to be given in the manner provided for in Section 12.2 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 and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be
paid on the Special Interest Payment Date to the Persons in whose names the
Debentures (or their respective predecessor Debentures) are registered at the
close of business on such Special Record Date.
(c) Subject to the foregoing provisions of this Section, each
Debenture delivered under this Indenture upon registration of, transfer of, or
in exchange for or in lieu of, any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
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(d) All references in this Indenture and in the Debenture annexed
hereto as Exhibit A to "interest" payable in respect of the Debentures shall
include Defaulted Interest, where applicable.
Section 2.12. Record Date. The record date for purposes of
determining the identity of Holders of the Debentures entitled to vote or
consent to any action by vote or consent authorized or permitted under this
Indenture shall be determined as provided for in TIA Section 316(c).
Section 2.13. Computation of Interest. Interest on the Debentures
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months (four 90-day quarters) and the actual number of days elapsed in the
period for which payable.
Section 2.14. CUSIP Number. The Company in issuing the Debentures
may use a "CUSIP" number, and if it does so, the Trustee shall use the CUSIP
number in notices of redemption or exchange as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Debentures and that reliance may be placed only on the other identification
numbers printed on the Debentures. The Company shall promptly notify the Trustee
of any change in the CUSIP number.
ARTICLE III
COVENANTS
Section 3.1. Payment of Debentures. (a) The Company shall pay
or cause to be paid the principal of and interest on the Debentures on the
dates and in the manner provided in the Debentures and in this Indenture.
(b) The Company shall pay, to the extent such payments are lawful,
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal (including if due as a result of a
redemption) at the rate specified therefor in the Debentures, and on overdue
installments of interest (without regard to applicable grace periods) at the
rate specified therefor in the Debentures.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
Section 3.2. Maintenance of Office or Agency. (a) The Company shall
maintain each office or agency required under Section 2.4. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee. The Company hereby appoints
the Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
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(b) The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Debentures may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, City of
New York for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and any change in the location of
any such other office or agency.
Section 3.3. Corporate Existence. Subject to Section 5.1, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate rights (charter
and statutory), licenses and franchises of the Company; provided, however, that
the Company shall not be required to preserve any such right, license 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, and will not be, disadvantageous
in any material respect to the Holders.
Section 3.4. Compliance Certificate. (a) The Company shall file with
the Trustee and the SEC, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required by the TIA at
the times and in the manner provided pursuant to the TIA.
(b) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that in the course of the performance of their duties as Officers of the
Company, the signers would normally have knowledge of any default or Event of
Default and whether or not, to the best of such signer's knowledge (after due
inquiry), any default or Event of Default has occurred during such period. If
such signers state that a default or Event of Default has occurred, the
certificate shall describe the default or Event of Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA Section 314(a).
Section 3.5. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.6. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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Section 3.7. Restrictions on Dividends. So long as any Debentures
are Outstanding, the Board of Directors shall not declare, and the Company shall
not pay or set apart for payment any dividend on any capital stock of the
Company or make any payment on account of, or set apart for payment money for a
sinking or other similar fund for, the repurchase, redemption or other
retirement of, any capital stock of the Company or any warrants, rights or
options exercisable for or convertible into any capital stock of the Company
(other than the repurchase, redemption or other retirement of debentures or
other debt securities that are convertible into or exchangeable for any capital
stock of the Company), or make any distribution in respect of capital stock of
the Company, either directly or indirectly, and whether in cash, obligations or
shares of the Company or other property (other than distributions or dividends
in capital stock to the holders of capital stock), and shall not permit any
corporation or other entity directly or indirectly controlled by the Company to
purchase or redeem any capital stock of the Company or any warrants, rights,
calls or options exercisable for or convertible into any capital stock of the
Company (other than the repurchase, redemption or other retirement of debentures
or other debt securities that are convertible into or exchangeable for any
capital stock of the Company) unless prior to or concurrently with such
declaration, payment, setting apart for payment, repurchase, redemption or other
retirement or distribution, as the case may be, all interest that has become due
and payable on the Debentures shall have been paid. Notwithstanding the
foregoing, this Section shall not prohibit the acquisition, repurchase,
exchange, conversion, redemption or other retirement for value by the Company of
Debentures in accordance with this Indenture or of any shares of Trust Preferred
Stock.
ARTICLE IV
VOTING RIGHTS
Section 4.1. Voting Rights and Certain Restrictions. (a) The
Investor and its Affiliates, in their capacity as Holders of Debentures, shall
be entitled to vote on all matters voted on by holders of Common Stock, and
shall vote together with shares of Common Stock (and any shares of Series D
Cumulative Preferred Stock or Series D Debentures entitled to vote) as a single
class; provided, however, that (i) such voting rights shall apply to such
Debentures issued to the Investor or any Affiliate of the Investor in exchange
for shares of Series E Cumulative Preferred Stock that had similar voting rights
and (ii) upon transfer of a Debenture or any portion thereof to any Person other
than the Investor or an Affiliate of the Investor, such Person, and any
subsequent transferee, shall not be entitled to such voting rights with respect
to such Debenture or the transferred portion thereof, regardless of whether any
such Debentures are subsequently acquired by the Investor or its Affiliates.
(b) With respect to any such vote provided for in subsection (a),
the Investor (together with its Affiliates) shall be entitled with respect to
its Debentures to an aggregate number of votes equal to the Investor Aggregate
Vote Number (as hereinafter defined).
The "Investor Aggregate Vote Number" shall equal the number of
Warrant Shares that would be issuable upon the exercise of the Original Warrants
(as hereinafter defined) by the holders thereof (assuming all conditions
precedent to such exercise have been satisfied and that such exercise occurs as
of the record date for such vote), multiplied by the lesser of (x) the quotient
of the number of Original Warrants that are Beneficially Owned by members of the
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Investor Group, in the aggregate, as of the record date for such vote (excluding
for purposes of this calculation, however, any Original Warrants that have been
transferred on the books of the Company by any member of the Investor Group to
any Person other than a member of the Investor Group, regardless of whether any
such Original Warrants are subsequently acquired by any member of the Investor
Group), divided by the number of Original Warrants, and (y) the quotient of the
aggregate principal amount of Original Debentures (as hereinafter defined) that
are Beneficially Owned by members of the Investor Group, in the aggregate, as of
the record date for such vote (excluding for purposes of this calculation,
however, any Original Debentures transferred by any member of the Investor Group
to any Person other than a member of the Investor Group, regardless of whether
any such Original Debentures are subsequently acquired by any member of the
Investor Group), divided by the aggregate principal amount of the Original
Debentures. The term "Original Warrants" means those Warrants Beneficially Owned
by members of the Investor Group, in the aggregate, as of May 13, 1998. The term
"Original Debentures" means those Debentures Beneficially Owned by members of
the Investor Group, in the aggregate, as of the Issue Date; provided, however,
that "Original Debentures" shall not include any Debentures issued in respect of
Series E Cumulative Preferred Stock previously issued as a dividend on Series E
Cumulative Preferred Stock.
(c) If on any date (i) interest due and payable on either the
Debentures or the Series D Debentures shall not have been paid in full (or, if
the Series D Cumulative Preferred Stock has not been exchanged for Series D
Debentures, dividends payable on the Series D Cumulative Preferred Stock shall
have been in arrears and not paid in full) for four consecutive quarterly
periods or (ii) the Company shall have failed to satisfy its obligation to
redeem or repay the principal of either Debentures in accordance with this
Indenture or Series D Debentures in accordance with the Series D Indenture (or,
if the Series D Cumulative Preferred Stock has not been exchanged for Series D
Debentures, the Company shall have failed to satisfy its obligation to redeem
shares of Series D Cumulative Preferred Stock pursuant to the Certificate of
Designations thereof), then the number of directors constituting the Board of
Directors shall, without further action, be increased by two, and the holders of
Debentures and Series D Debentures representing at least a majority of the
aggregate principal amount of Outstanding Debentures and Series D Debentures
shall have, in addition to the other voting rights set forth herein, the
exclusive right, voting together as a single class without regard to series, to
elect the two directors (the "Additional Directors") of the Company to fill such
newly-created directorships (provided, that, if the shares of Series D
Cumulative Preferred Stock have not been exchanged for Series D Debentures, then
the holders of the shares of Series D Cumulative Preferred Stock shall vote
together with the holders of Debentures as a single class, and, for the purposes
of determining a majority of the aggregate principal amount of Debentures and
Series D Cumulative Preferred Stock, one share of Series D Cumulative Preferred
Stock shall be deemed to be equal to a principal amount of $1,000).
Notwithstanding the foregoing, the Investor and its Affiliates shall not be
permitted to elect, pursuant to the preceding sentence, more than the number of
directors that would result in four directors designated for nomination or
elected by the Investor and its Affiliates then being on the Board of Directors
(including directors that the Investor has a right to designate for nomination
to the Board of Directors pursuant to the Investment Agreement); provided, that,
if at the time Holders of Debentures and holders of Series D Debentures (or, if
applicable, holders of shares of Series D Cumulative Preferred Stock) have the
right to elect Additional Directors and (i) the Investor and its Affiliates
Beneficially Own, in the aggregate, Debentures and Series D Debentures
representing a majority
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of the aggregate principal amount of Outstanding Debentures and Series D
Debentures (or, if the shares of Series D Cumulative Preferred Stock have not
been exchanged for Series D Debentures, a majority of the aggregate principal
amount of the Debentures and Series D Cumulative Preferred Stock), taken
together as a single class, and (ii) the Investor and its Affiliates are not
permitted to elect one or both of the Additional Directors as aforesaid, then
the Holders of Debentures and holders of Series D Debentures (or, if applicable,
holders of shares of Series D Cumulative Preferred Stock) (other than the
Investor and its Affiliates) shall have the right to elect, voting together as a
single class, one Additional Director pursuant to this subsection (c). For the
purposes of determining a majority of the aggregate principal amount of
Debentures and Series D Cumulative Preferred Stock if necessary pursuant to the
preceding sentence, one share of Series D Cumulative Preferred Stock shall be
deemed to be equal to a principal amount of $1,000. Additional Directors shall
continue as directors and such additional voting right shall continue until such
time as (a) all interest due and payable on the Debentures and Series D
Debentures and all dividends accumulated on the Series D Cumulative Preferred
Stock, as the case may be, shall have been paid in full and (b) any redemption
obligation with respect to, or any obligation to repay the principal of, the
Debentures, the Series D Debentures and the Series D Cumulative Preferred Stock,
as the case may be, that has become due shall have been satisfied or all
necessary funds shall have been set aside for payment, as the case may be, at
which time such Additional Directors shall cease to be directors and such
additional voting right of the Holders shall terminate subject to revesting in
the event of each and every subsequent event of the character indicated above
and subject to any rights as to the election of directors provided for the
holders of any series of preferred stock of the Company.
(d) In the event that one or more of the Investor Nominees (as such
term is defined in the Investment Agreement) required to be designated for
election to the Board of Directors pursuant to the Investment Agreement are not
so designated or are not elected to the Board of Directors and the Investor or
any of its Affiliates Beneficially Owns Debentures, then the number of directors
constituting the Board of Directors shall, without further action, be increased
by the number of such Investor Nominees not elected to the Board of Directors
pursuant to the Investment Agreement, and such Holder or Holders shall have, in
addition to the other voting rights set forth herein, the exclusive right,
voting separately as a single class, to elect a number of directors to the Board
of Directors equal to the number of such Investor Nominees not elected to the
Board of Directors. Directors elected pursuant to this subsection shall continue
as directors and such additional voting right shall continue until such time as
the requisite number of Investor Nominees are elected to the Board of Directors
pursuant to the Investment Agreement, at which time the directors elected by the
Investor and its Affiliates pursuant to this subsection shall cease to be
directors (unless elected as Investor Nominees), and such additional voting
rights shall terminate subject to revesting in the event of each and every
subsequent event of the character indicated above.
(e) (i) The foregoing rights of Holders to take any action as
provided in this Section may be exercised at any annual meeting of stockholders
or at a special meeting of Holders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Company, of the Holders of Debentures representing the minimum
principal amount of Outstanding Debentures required to take such action. So long
as such right to vote continues (and unless such right has been exercised by
written consent of the Holders of Debentures representing the minimum principal
amount of
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Outstanding Debentures required to take such action), the Chairman of
the Board of Directors may call, and upon the written request of Holders of
Debentures representing 20% of the aggregate principal amount of the Outstanding
Debentures, addressed to the Secretary of the Company at the principal office of
the Company, shall call, a special meeting of the Holders entitled to vote as
provided herein. Such meeting shall be held within 60 days after delivery of
such request to the Secretary, at the place and upon the notice provided by law
and in the By-laws of the Company for the holding of meetings of stockholders.
(ii) Each director elected pursuant to subsection (c) or (d) of this
Section shall serve until the next annual meeting or until his or her successor
shall be elected and shall qualify, unless the director's term of office shall
have terminated pursuant to the provisions of subsection (c) or (d) of this
Section, as the case may be. In case any vacancy shall occur among the directors
elected pursuant to subsection (c) or (d) of this Section, such vacancy may be
filled for the unexpired portion of the term by vote of the remaining director
or directors theretofore elected by such Holders (and, if applicable, holders of
the Series D Debentures or holders of shares of Series D Cumulative Preferred
Stock) (or such director's or directors' successor in office), if any. If any
such vacancy is not so filled within 20 days after the creation thereof or if
all of the directors so elected shall cease to serve as directors before their
term shall expire, the Holders (and, if applicable, holders of the Series D
Debentures or holders of shares of Series D Cumulative Preferred Stock) entitled
to vote for such director pursuant to the provisions of subsection (c) or (d) of
this Section, as the case may be, may elect successors to hold office for the
unexpired terms of any vacant directorships, by written consent as herein
provided, or at a special meeting of such Holders called as provided herein. The
Holders of Debentures (and, if applicable, holders of the Series D Debentures or
holders of shares of Series D Cumulative Preferred Stock) representing a
majority of the principal amount of Debentures entitled to vote for directors
pursuant to subsection (c) or (d) of this Section, as the case may be, shall
have the right to remove with or without cause at any time and replace any
directors such Holders (and, if applicable, holders of the Series D Debentures
or holders of shares of Series D Cumulative Preferred Stock) have elected
pursuant to such section, by written consent as herein provided, or at a special
meeting of such Holders (and, if applicable, holders of the Series D Debentures
or holders of shares of Series D Cumulative Preferred Stock) called as provided
herein.
(f) Without the consent or affirmative vote of the Holders of
Debentures, voting separately as a class, representing at least a majority of
the aggregate principal amount of Outstanding Debentures, the Company shall not
authorize, create or issue, or increase the authorized amount of any class or
series of capital stock or any security convertible into or exercisable for any
class or series of capital stock, redeemable mandatorily or redeemable at the
option of the holder thereof at any time on or prior to May 13, 2008 (whether or
not only upon the occurrence of a specified event); provided, however, that no
consent or vote of the Holders shall be required for the creation or issuance by
a trust formed at the direction of the Company of any series of preferred
securities of such trust for financing purposes in an aggregate amount not to
exceed $250,000,000 ("Trust Preferred Stock").
(g) Without the consent or affirmative vote of the Holders of
Debentures, voting separately as a class, representing at least a majority of
the aggregate principal amount of Outstanding Debentures, the Company shall not
(i) amend, alter or repeal any provision of the Certificate of Incorporation or
the By-laws of the Company, if the amendment, alteration or
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repeal alters or changes the rights of the Holders of the Debentures so as to
affect them materially and adversely, or (ii) authorize or take any other action
if such action alters or changes any of the rights of Holders of the Debentures
in any respect or otherwise would be inconsistent with the provisions of this
Indenture and the holders of any class or series of the capital stock of the
Company are entitled to vote thereon.
(h) The Company shall not enter into any agreement or issue any
security that prohibits, conflicts or is inconsistent with, or would be breached
by, the Company's performance of its obligations hereunder.
ARTICLE V
SUCCESSOR COMPANY
Section 5.1. Merger, Consolidation and Sale of Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation, partnership, trust, limited liability
company or other similar entity organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly
assume, by supplemental indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, all the obligations of the Company
under the Debentures and this Indenture;
(ii) immediately after giving effect to such transaction, no default
or Event of Default shall have occurred and be continuing;
(iii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture, if any,
comply with this Indenture.
For purposes of this Section the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company will succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but, in
the case of a lease of all or substantially all its assets, the Company will not
be released from the obligation to pay the principal of and interest on the
Debentures.
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ARTICLE VI
REDEMPTION OF DEBENTURES
Section 6.1. Redemption. The Debentures may or shall (as
applicable) be redeemed, subject to the conditions and at the Redemption
Prices specified in the form of Debentures set forth in Exhibit A hereto.
Section 6.2. Applicability of Article. Redemption of
Debentures, as permitted or required by any provision of this Indenture,
shall be made in accordance with this Article.
Section 6.3. Notice of Redemption. (a) Notwithstanding the
provisions of Section 12.2, notice of redemption shall be given in the manner
provided for in this Section.
(b) Notice of the redemption of Debentures (a "Notice of
Redemption") shall be sent to each Holder to be redeemed by first class mail,
postage prepaid, at each such Holder's address as it is registered in the
Debenture Register, not more than 120 days nor fewer than 90 days prior to the
date fixed for redemption, which date shall be set forth in such notice (the
"Redemption Date"); provided, that failure to give such Notice of Redemption to
any Holder, or any defect in such Notice of Redemption to any Holder shall not
affect the validity of the proceedings for the redemption of Debentures held by
any other Holder. Notwithstanding the foregoing, in the event that
contemporaneously with or prior to the delivery of a Notice of Redemption, the
Company irrevocably deposits, in accordance with Section 6.5, funds sufficient
to pay the aggregate Redemption Price (as defined in Exhibit A hereto) for the
Debentures, such Notice of Redemption shall be delivered not more than 120 days
nor fewer than 30 days prior to the Redemption Date; provided, however, that, if
such Notice of Redemption is delivered fewer than 60 days prior to the
Redemption Date and the Investor or any of its Affiliates Beneficially Owns
Debentures as of the date of the Notice of Redemption and uses its reasonable
best efforts to consummate the sale of all or a portion of its Debentures prior
to the stated Redemption Date but has not completed such sale, the Company
shall, at the option of the Investor (or any such Affiliate), delay such
Redemption Date for a period not to exceed 30 days as requested by the Investor
(or any such Affiliate) in order to complete such sale or sales, and shall
notify the Holders of such delay within five days of receiving the request
therefor. Any delay of the Redemption Date pursuant to the proviso to the
preceding sentence shall be requested by the Investor (or any such Affiliate) in
writing no later than the tenth day preceding the then-scheduled Redemption Date
stated in the Notice of Redemption. The Redemption Date stated in a Notice of
Redemption shall not be delayed pursuant to this subsection more than once in
connection with the redemption of Debentures pursuant to such Notice of
Redemption.
(c) All Notices of Redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debenture, or the portion thereof,
to be redeemed, and, unless the Company defaults in making the redemption
payment, that interest on
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Debentures called for redemption (or the portion thereof) will cease to
accrue on and after said date,
(4) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price,
(5) the name and address of the Paying Agent,
(6) that Debentures called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price, and
(7) the CUSIP number of the Debentures.
(d) From and after the Redemption Date, all interest on Debentures
shall cease to accrue and all rights of the Holders thereof as Holders of
Debentures shall cease and terminate, except to the extent the Company shall
default in payment thereof on the Redemption Date.
(e) Prior to any Redemption Date that has been fixed by the Company
in accordance with this Section, the Company shall take all measures reasonably
requested by the Investor to facilitate a sale or other disposition of
Debentures by the Investor or its Affiliates prior to such Redemption Date,
including, without limitation, participation in due diligence sessions and
provision of information about the management, business and financial condition
of the Company, preparation of offering memoranda, private placement memoranda
and other similar documents and preparation and delivery of such other
certificates or documents reasonably requested by the Investor.
Section 6.4. Change of Control Notice and Redemption Procedures. (a)
In the event there occurs a Change of Control, any Holder, in accordance with
the procedures set forth below, may require the Company to redeem any or all of
the Debentures held by such Holder at the Redemption Price therefor. For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to redemption in the event of a Change of Control pursuant
to this Section shall relate, in the case of any Debenture redeemed only in
part, to the portion of the principal amount of such Debenture which has been or
is to be redeemed.
(b) Notice of any Change of Control shall be sent to the Holders not
more than five days following a Change of Control, which notice (a "Change of
Control Notice") shall describe the transaction or transactions constituting
such Change of Control and set forth each Holder's right to require the Company
to redeem any or all Debentures held by him or her or any portion thereof, the
Redemption Date (which date shall be not more than 30 days from the date of such
Change of Control Notice) and the procedures to be followed by such Holder in
exercising its right to cause such redemption; provided, however, that if
Debentures are owned by more than 50 Holders or groups of Affiliated Holders and
if the Debentures are listed on any national securities exchange or quoted on
any national quotation system, the Company shall give such Change of Control
Notice by publication in a newspaper of general circulation in the Borough of
Manhattan, The City of New York, within 30 days following such Change of Control
and, in any case, a similar notice shall be mailed concurrently to each Holder.
Failure by the Company to give the Change of Control Notice as prescribed by the
preceding sentence, or the
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Exhibits 4.3 and 4.2
formal insufficiency of any such Change of Control Notice, shall not prejudice
the rights of any Holder to cause the Company to redeem any such Debentures held
by him or her.
(c) In the event a Holder shall elect to require the Company to
redeem any or all such Debentures or any portion thereof pursuant to Section
6.4(a), such Holder shall deliver, prior to the Redemption Date as set forth in
the Change of Control Notice, or, if the Change of Control Notice is not given
as required by Section 6.4(b) at any time following the last day the Company was
required to give the Change of Control Notice in accordance with Section 6.4(b)
(in which case the Redemption Date shall be the date which is the later of (x)
30 days following the last day the Company was required to give the Change of
Control Notice in accordance with Section 6.4(b) and (y) 15 days following the
delivery of such election by such Holder), a written notice, in the form
specified by the Company (if the Company did in fact give the notice required by
Section 6.4(b)), to the Company so stating, and specifying the Debentures or
portions thereof to be redeemed pursuant to Section 6.4(a); provided, however,
that if all of the Debentures are owned by 50 or fewer Holders or groups of
Affiliated Holders, such Holders or groups may deliver a notice of an election
to redeem at any time within 90 days following the occurrence of a Change of
Control without awaiting receipt of a Change of Control Notice or the expiration
of the time allowed for the delivery of a Change of Control Notice hereunder.
The Company shall redeem the Debentures or portions thereof so specified on the
Redemption Date fixed by the Company or as provided in the preceding sentence.
The Company shall comply with the requirements of Rules 13e-4 and 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures as a result of a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations hereunder by virtue thereof.
Section 6.5. Deposit of Redemption Price. On or prior to the
relevant Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent, as a trust fund for the benefit of the Holders of Debentures to be
redeemed, an amount of cash sufficient to pay the Redemption Price of all the
Debentures which are to be redeemed in accordance with the Notice of Redemption
or Change of Control Notice, with irrevocable instructions and authority to the
Trustee or Paying Agent (as applicable) to pay to the respective Holders, as
evidenced by a list of such Holders certified by an officer of the Company, the
Redemption Price upon surrender of their respective Debentures. Such deposit
shall be deemed to constitute full payment of such Debentures, and from and
after the date of such deposit, all rights of the Holders of Debentures that are
to be redeemed, except the right to receive the Redemption Price upon the
surrender of their respective Debentures, shall cease and terminate. After the
Redemption Date, no interest shall accrue on any Debentures to be redeemed
(unless the Company shall fail to deposit cash sufficient to redeem all such
Debentures). In case Holders of any Debentures called for redemption shall not,
within two years after such deposit, claim the cash deposited for redemption
thereof, the Trustee or Paying Agent (as applicable) shall, upon demand, pay
over to the Company the balance so deposited, or (if then held by the Company
or any of its Subsidiaries or Affiliates) such balance shall be discharged from
such trust. Thereupon, the Trustee or Paying Agent (as applicable) shall be
relieved of all responsibility to the Holders thereof, or if the Company or any
of its Subsidiaries or Affiliates acts as Paying Agent, such Paying Agent shall
be relieved of all responsibility as trustee of the cash so deposited; and the
sole right of such Holders, with respect to Debentures to be redeemed, shall be
to receive the Redemption Price as general creditors of the Company. Any
interest accrued on any funds so deposited shall belong to the Company, and
shall be paid to it from time to time on demand.
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Section 6.6. Debentures Payable on Redemption Date. On or after the
Redemption Date, each Holder of Debentures called for redemption shall surrender
its Debenture to the Company at the place designated in the Notice of Redemption
or Change of Control Notice and shall thereupon be entitled to receive payment
of the Redemption Price.
Section 6.7. Debentures Redeemed in Part. Upon surrender of a
Debenture which is to be redeemed in part in accordance with the provisions of
this Article, the Company shall execute, and the Trustee shall authenticate and
make available for delivery to the Holder of such Debenture (or to any other
Person as directed by the Holder of such Debenture) at the expense of the
Company, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Debenture so
surrendered.
Section 6.8. Rating Conditions. For so long as the Investor or an
Affiliate of the Investor holds any Debentures, no Notice of Redemption in
connection with a redemption pursuant to Section 6.1 shall be delivered unless
(i) the Company's unsecured debt is rated Baa or better by Moody's or BBB or
better by S&P or (ii) the Company has sufficient funds reasonably available
under committed lines of credit or other similar sources of financing
established with financially sound financing providers to pay, on the Redemption
Date, the aggregate Redemption Price in connection with such redemption (and
shall reserve such funds or availability for the payment of the aggregate
Redemption Price); provided, that the Company may deliver a Notice of Redemption
without complying with the foregoing conditions if prior to, or
contemporaneously with, the delivery of such notice the Company irrevocably
deposits in accordance with Section 6.5 funds sufficient to pay the aggregate
Redemption Price for the Debentures.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1. Events of Default. An "Event of Default" shall
occur if:
(1) the Company defaults in the payment of the principal of any
Debenture when the same becomes due and payable at its maturity, upon
redemption, upon required repurchase, upon declaration or otherwise;
(2) the Company defaults in the performance of or breaches any other
covenant or agreement in this Indenture or under the Debentures (other
than referred to in (1) above) and such default or breach continues for 60
days after the notice specified below;
(3) the Company, pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
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(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(4) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case;
(B) appoints a Custodian of the Company or for any substantial
part of its property; or
(C) orders the winding up or liquidation of the Company;
and the order, decree or relief remains unstayed and in effect
for 60 days.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
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.
Notwithstanding the foregoing, a default under clause (2) of this
Section will not constitute an Event of Default until the Trustee or the Holders
of more than 25% in aggregate principal amount of the Outstanding Debentures
deliver to the Company written notice of the default and the Company does not
cure such default within the time specified in said clause (2) after receipt of
such notice. Such notice must specify the default, demand that it be remedied
and state that such notice is a "Notice of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any default or Event of Default under clauses (2), (3) and (4) of this Section,
their status and what action the Company is taking or proposes to take in
respect thereof.
Section 7.2. Acceleration of Maturity; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section 7.1(3)
or Section 7.1(4)) occurs and is continuing, the Trustee by written notice to
the Company, or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debentures by written notice to the Company and the Trustee, may,
and the Trustee at the request of such Holders shall, declare the principal of
and accrued but unpaid interest on all the Debentures to be due and payable.
Upon such a declaration, such principal and accrued and unpaid interest shall be
immediately due and payable. If an Event of Default specified in Section 7.1(3)
or Section 7.1(4) occurs, the principal of and accrued and unpaid interest on
all the Debentures will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. Holders of a
majority in aggregate principal amount of the then Outstanding Debentures by
written notice to the Trustee may rescind and annul an acceleration and its
consequences if the
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rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal or interest that has become
due solely because of the acceleration) have been cured or waived.
Section 7.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Debentures or to enforce the performance of
any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Debentures or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 7.4. Waiver. The Investor and its Affiliates, so long as
such Persons own at least 20% of the aggregate principal amount of Outstanding
Debentures and subject to the TIA, or the Holders of not less than a majority of
the aggregate principal amount of Outstanding Debentures, by their consent
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for Debentures), may waive by written
notice to the Trustee an existing default or Event of Default and its
consequences except (i) a default or Event of Default under Section 7.1(1) or an
Event of Default under Section 7.1(2) in respect of a default in the payment of
interest on the Debentures or (ii) a default or Event of Default in respect of a
provision that under Section 10.2 cannot be amended without the consent of each
Holder. Notwithstanding the preceding sentence, a waiver by the Investor and its
Affiliates of an existing default or Event of Default shall not be effective if
Holders of a majority of the aggregate principal amount of Outstanding
Debentures (i) have delivered to the Company pursuant to Section 7.1 written
notice of a default under Section 7.1(2) in respect of such default, (ii)
pursuant to Section 7.2, have declared the principal of and accrued but unpaid
interest on all Debentures to be due and payable by virtue of such Event of
Default, or (iii) give written notice to the Trustee that such Holders do not
consent to the waiver of such default or Event of Default and its consequences.
When a default or Event of Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any consequent right.
Section 7.5. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the TIA; provided, that neither this Section nor the TIA
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company, 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 principal amount of the Debentures, or
to any suit by a Holder for the enforcement of the payment of the principal of
or interest on any Debenture, on or after the respective due dates expressed in
such Debenture.
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Section 7.6. Control. The Holders of a majority of the aggregate
principal amount of the Outstanding Debentures may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. Subject to Section 8.1
and Section 8.2, however, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines is unduly
prejudicial to the rights of other Holders; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction.
Section 7.7. Limitation on Suits. Subject to Section 7.8, a
Holder may not pursue any remedy with respect to this Indenture or the
Debentures unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Investor and its Affiliates, so long as such Persons own at
least 20% of the aggregate principal amount of Outstanding Debentures and
subject to the TIA, or the Holders of at least 25% of the aggregate
principal amount of Outstanding Debentures make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Investor and its Affiliates, so long as such Persons own at
least 20% of the aggregate principal amount of Outstanding Debentures and
subject to the TIA, or the Holders of a majority of the aggregate
principal amount of Outstanding Debentures do not give the Trustee a
direction that, in the opinion of the Trustee, is inconsistent with such
request during such 60-day period, provided, however, that any such
direction given by the Investor and its Affiliates shall be disregarded
for all purposes of this clause (5) if (i) such request was made by
Holders of a majority of the aggregate principal amount of Outstanding
Debentures or (ii) such Holders give the Trustee a direction that, in the
opinion of the Trustee, is inconsistent with such direction given by the
Investor and its Affiliates;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 7.8. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture (including, without limitation, Sections
7.6 and 7.7) or the Debentures, the right of any Holder to receive payment of
principal of or interest on the Debentures held by such Holder, on or after the
respective due dates expressed in the Debentures (or, in the case of redemption,
on the Redemption Date), or to bring suit for the enforcement of
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any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 7.9. Collection Suit by Trustee. If an Event of Default
specified in Section 7.1(1) or an Event of Default specified in Section 7.1(2)
in respect of a default in the payment of interest on the Debentures occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount then due and owing
(together with applicable interest, to the extent lawful) and the amounts
provided for in Section 8.7.
Section 7.10. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its Subsidiaries or its or
their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
Custodian and shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the TIA in
order to have claims of the Holders and the Trustee allowed in any such
proceeding. Without limiting the generality of the foregoing, the Trustee shall
be authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same, and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 8.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 7.11. Priorities. If the Trustee collects any money or
property pursuant to this Article, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 8.7;
SECOND: if the Holders proceed against the Company directly
without the Trustee in accordance with this Indenture, to Holders for
their collection costs;
THIRD: to Holders for amounts due and unpaid on the Debentures
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Debentures
for principal and interest, respectively; and
FOURTH: to the Company.
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The Trustee may fix a record date and payment date for any payment to Holders
pursuant to this Section. At least 15 days before such record date, the Company
shall mail to each Holder and the Trustee a notice that states the record date,
the payment date and amount to be paid.
ARTICLE VIII
TRUSTEE
Section 8.1. Duties of Trustee. (a) If a default or an Event of
Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; provided, that if an
Event of Default occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under this Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee reasonable indemnity or security against loss, liability or expense.
(b) Except during the continuance of a default or an Event of
Default:
(1) the Trustee undertakes to perform such duties and
responsibilities and only such duties and responsibilities as are provided
by the TIA or specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not such certificates or opinions conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.2, Section 7.4 or Section 7.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) 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 and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) 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 unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses (including
reasonable attorneys' fees and expenses) and liabilities that might be incurred
by it in compliance with such request or direction.
Section 8.2. Rights of Trustee. (a) Subject to Section 8.1, the
Trustee may rely on any document reasonably believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or Opinion of Counsel with respect to legal matters relating to this
Indenture and the Debentures shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 8.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Debentures
and may otherwise deal with the
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Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Trustee must comply with Section 8.10 and
Section 8.11.
Section 8.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Debentures, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Debentures or in the Debentures other than the
Trustee's certificate of authentication.
Section 8.5. Notice of Defaults. If a default or Event of Default
occurs and is continuing and if a Trust Officer has knowledge thereof, the
Trustee shall mail to each Holder notice of the default or Event of Default as
and to the extent provided by the TIA within 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a default or Event of Default in payment of principal of or interest on
any Debenture (including payments pursuant to the optional redemption or
required repurchase provisions of such Debenture, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is not opposed to the interests of
the Holders.
Section 8.6. Reports by Trustee to Holders. The Trustee shall comply
with TIA Section 313. The Company agrees to notify promptly the Trustee whenever
the Debentures become listed on any stock exchange and of any delisting thereof.
Section 8.7. Compensation and Indemnity. (a) The Company shall pay
to the Trustee from time to time reasonable compensation for its acceptance of
this Indenture and services hereunder as the Company and the Trustee shall from
time to time agree in writing. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices to
Holders and reasonable costs of counsel retained by the Trustee in connection
with the delivery of an Opinion of Counsel or otherwise, in addition to the
compensation for its services, except any such expense as may be attributable to
its negligence or bad faith. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts.
(b) The Company shall jointly and severally indemnify the Trustee
against any and all losses, liabilities or expenses (including reasonable
attorneys' fees and expenses) incurred by it, without negligence or bad faith on
its part, in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section) and of defending itself
against any claims (whether asserted by any Holder, the Company or otherwise).
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel
provided that the Company shall not be required to pay such fees and expenses if
it assumes the Trustee's defense,
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and, in the reasonable judgment of outside counsel to the Trustee, there is no
conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
willful misconduct, negligence or bad faith. The Company need not pay for any
settlement made without its consent.
(c) To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Debentures on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Debentures. The Trustee's right to
receive payment of any amounts due under this Section shall not be subordinate
to any other liability or Indebtedness of the Company.
(d) The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a default specified in Section 7.1(3) or Section 7.1(4) with
respect to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in this Section or Section 7.10.
Section 8.8. Replacement of Trustee. (a) A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. The Investor and its Affiliates, so long as such Persons
own at least 20% of the aggregate principal amount of the Outstanding
Debentures, or the Holders of a majority of the aggregate principal amount of
the Outstanding Debentures may remove the Trustee by giving written notice
thereof to the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
law;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
(c) If the Trustee resigns or is removed by the Company, by the
Investor and its Affiliates or by Holders of Debentures in accordance with this
Indenture, and the Investor and its Affiliates or such Holders do not reasonably
promptly appoint a successor Trustee, or if a vacancy exists in the office of
the Trustee for any reason (the Trustee in such event being referred to herein
as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
(d) A successor Trustee shall execute, acknowledge and deliver a
written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee
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shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
8.7.
(e) If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Investor
and its Affiliates, so long as such Persons own at least 20% of the aggregate
principal amount of the Outstanding Debentures, or the Holders of 10% of the
aggregate principal amount of the Outstanding Debentures may petition, at the
Company's expense, any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) If the Trustee fails to comply with Section 8.10, any Holder who
has been a Holder of a Debenture for at least six months may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 8.7 shall continue for the
benefit of the retiring Trustee.
Section 8.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors shall succeed to
the trusts created by this Indenture, any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Debentures so authenticated; and in case at that time any of the Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures either in the name of any predecessor hereunder or in the name
of the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Debentures or in this Indenture
provided that the certificate of the Trustee shall have.
Section 8.10. Eligibility; Disqualification. There shall at all
times be a Trustee hereunder that is a corporation organized and doing business
under the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trust powers, and that is
subject to supervision or examination by federal or state authorities. The
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $500 million as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Company are Outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 8.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A
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Trustee who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.1. Termination of the Company's Obligations.
This Indenture will be satisfied and discharged and will cease to be
of further effect (except as to surviving rights of registration of transfer or
exchange of the Debentures and except as to compensation and indemnity to the
Trustee, as expressly provided for below) as to all Outstanding Debentures when:
(a) either (i) all the Debentures theretofore authenticated and
delivered (except lost, stolen or destroyed Debentures which have been
replaced or paid as provided in Section 2.8 and Debentures 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 2.5) have been delivered
to the Trustee for cancellation or (ii) all Debentures not theretofore
delivered to the Trustee for cancellation have become due and payable and
the Company thereafter has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the
entire Indebtedness on the Debentures not theretofore delivered to the
Trustee for cancellation, for principal of and interest on the Debentures
to the date of deposit together with irrevocable instructions from the
Company directing the Trustee to apply such funds to the payment thereof;
(b) no default or Event of Default with respect to this Indenture or
the Debentures shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;
(c) the Company shall have paid all other sums payable by it
hereunder or under the Debentures; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's obligations under
the Debentures and this Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and discharge does not
result in a default under any instrument evidencing debt senior to the
Debentures or any other agreement or instrument then known to such counsel
that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations
in Sections 2.6, 2.7, 2.9, 2.10 and 8.7 shall survive until the Debentures are
no longer Outstanding. After the Debentures are no longer Outstanding, the
Company's obligations in Section 8.7 shall survive.
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After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the satisfaction and discharge of the Company's
obligations under the Debentures and this Indenture except for those surviving
obligations specified above.
ARTICLE X
AMENDMENTS AND SUPPLEMENTS
Section 10.1. Without Consent of Holders. (a) Notwithstanding
Section 10.2, the Company and the Trustee, in accordance with this Article,
may amend or supplement this Indenture or the Debentures without notice to or
consent of any Holder:
(1) to cure any ambiguity or inconsistency;
(2) to comply with Article V in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
(3) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures; provided, however, that the
uncertificated Debentures are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Debentures are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Debentures or to secure
the Debentures;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA or to provide for the succession
of a successor Trustee in accordance with the terms hereof prior to such
amendment or supplement;
provided, that any such change does not adversely affect the rights of any
Holder in any material respect.
Section 10.2. With Consent of Holders. The Company, and the Trustee
may amend or supplement this Indenture or the Debentures without notice to any
Holder but with the written consent of the Holders of at least a majority of the
aggregate principal amount of the Outstanding Debentures (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Debentures). However, without the consent of each Holder
affected, an amendment or supplemental Indenture may not:
(1) reduce the percentage in principal amount of the Outstanding
Debentures whose Holders must consent to an amendment, supplement or
waiver;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest on any Debentures;
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(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Debentures, or change the date on which any
Debentures may be subject to redemption, or reduce the Redemption Price
therefor;
(4) make any Debentures payable in money other than that stated in
the Debentures;
(5) make any change in the provisions of this Indenture entitling
each Holder to receive payment of principal of and interest on such
Debentures on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority of the aggregate
principal amount of Outstanding Debentures as set forth herein on the
Issue Date to waive defaults or Events of Default; or
(6) amend, change or modify in a manner that would adversely affect
the interests of the Holders in any respect, the obligation of the Company
to redeem Debentures if a Change of Control occurs.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
Section 10.3. Compliance with Trust Indenture Act. Every
amendment or supplement to this Indenture or the Debentures shall comply with
the TIA as then in effect.
Section 10.4. Amended or Supplemental Indenture. (a) Upon the
request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental Indenture pursuant
to Section 10.1 or Section 10.2, upon receipt by the Trustee of an Officer's
Certificate or an Opinion of Counsel, which it reasonably believes to be genuine
and to have been signed or presented by the proper Person, and, in the case of
an amendment of supplement pursuant to Section 10.2, upon the filing with the
Trustee of the consent of Holders of Debentures as described in Section 10.2,
the Trustee shall join with the Company in the execution of such amended or
supplemental Indenture, unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or otherwise
in a manner adverse to it, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture. In
signing such amended or supplemental Indenture the Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and to receive, and (subject to
Section 8.1 and Section 8.2) shall be fully protected in relying upon, such
evidence as it deems appropriate, including, without limitation, solely on an
Opinion of Counsel stating that such amendment or supplemental Indenture is
authorized or permitted by this Indenture.
(b) After an amended or supplemental Indenture under this Section
becomes effective, the Company shall mail to Holders a notice briefly describing
such amended or supplemental Indenture. The failure to give such notice to all
Holders, or any defect therein, shall not impair or affect the validity of an
amended or supplemental Indenture under this Section.
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Section 10.5. Revocation and Effect of Consents and Waivers. A
consent to an amendment, supplement or a waiver by a Holder of a Debenture shall
bind the Holder and every subsequent Holder of that Debenture or portion of the
Debenture that evidences the same debt as the consenting Holder's Debenture,
even if notation of the consent or waiver is not made on the Debenture. However,
any such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Debenture or portion of the Debenture if the Trustee receives the
written notice of revocation before the date the amendment, supplement or waiver
becomes effective. After an amendment, supplement or waiver becomes effective,
it shall bind every Holder. An amendment, supplement or waiver shall become
effective upon receipt by the Trustee of the requisite number of written
consents under Section 10.2.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 90
days after such record date.
Section 10.6. Notation on or Exchange of Debentures. If an amendment
or supplement changes the terms of a Debenture, the Trustee may require the
Holder of the Debenture to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Debenture regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Debenture shall issue and the Trustee shall
authenticate a new Debenture that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Debenture shall not affect the
validity of such amendment or supplement.
ARTICLE XI
SUBORDINATION OF THE DEBENTURES
Section 11.1. Agreement to Subordinate. The Company agrees, and each
Holder by accepting a Debenture agrees, that the Indebtedness evidenced by the
Debentures is subordinated in right of payment, to the extent and in the manner
provided in this Article, to the prior payment in full of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. Only Senior Indebtedness
of the Company shall rank senior to the Debentures in accordance with the
provisions set forth herein, and the Debentures shall in all respects rank pari
passu with, or be senior to, all other Indebtedness of the Company. The
Debentures shall in all respects rank pari passu with, and not senior to, any
Series D Debentures. All provisions of this Article shall be subject to Section
11.12.
Section 11.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total
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or partial dissolution of the Company or in a winding up or bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full of such Senior Indebtedness before Holders of the
Debentures shall be entitled to receive any payment of principal of or interest
on the Debentures; and
(2) until such Senior Indebtedness is paid in full, any distribution
to which Holders would be entitled but for this Article shall be made to holders
of such Senior Indebtedness as their interests may appear, except that Holders
may receive (a) securities of a Person that are subordinated ("Subordinated
Reorganization Securities") to such Senior Indebtedness to at least the same
extent as the Debentures are subordinated to (A) Senior Indebtedness of the
Company and (B) any Indebtedness or securities issued in exchange for Senior
Indebtedness, and (b) payments and other distributions made from any funds
deposited by the Company pursuant to Section 9.1.
Section 11.3. Default on Senior Indebtedness of the Company. The
Company may not pay the principal of or interest on the Debentures or make any
deposit pursuant to Section 9.1 and may not repurchase, redeem or otherwise
retire any Debentures (collectively, "pay the Debentures") (other than in the
form of Subordinated Reorganization Securities and payments and other
distributions made from any funds deposited by the Company pursuant to Section
9.1) if (i) any Senior Indebtedness of the Company is not paid when due or (ii)
any other default on such Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, (x) the default has been cured or waived and any such acceleration
has been rescinded or (y) such Senior Indebtedness has been paid in full;
provided, however, that the Company may pay the Debentures without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the representative of such Senior Indebtedness with respect to
which either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Senior Indebtedness of the Company pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as may
be required to effect such acceleration) or the expiration of any applicable
grace periods, the Company may not pay the Debentures for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
representative of the holders of such Senior Indebtedness specifying an election
to effect a Payment Blockage Period and ending 179 days thereafter (or earlier
if such Payment Blockage Period is terminated (i) by written notice to the
Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Senior Indebtedness has been repaid in
full). Notwithstanding the provisions of the immediately preceding sentence (but
subject to the provisions of the first sentence of this Section), unless the
holders of such Senior Indebtedness or the representative of such holders have
accelerated the maturity of such Senior Indebtedness, the Company may resume
payments on the Debentures after such Payment Blockage Period. The Debentures
shall not be subject to more than one Payment Blockage Period in any consecutive
360-day period, irrespective of the number of defaults with respect to Senior
Indebtedness during such period. For purposes of this Section, no default or
event of
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default with respect to the Senior Indebtedness and which existed or was
continuing on the date of the commencement of any Payment Blockage Period and
which initiated such Payment Blockage Period shall be, or be made, the basis of
the commencement of a subsequent Payment Blockage Period by the representative
of such Senior Indebtedness, whether or not within a period of 360 consecutive
days, unless such default or event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
Section 11.4. Acceleration of Payment of Debentures. If payment of
the Debentures is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Senior Indebtedness of the
Company (or their representative) of the acceleration.
Section 11.5. When Distribution Must Be Paid Over. If a distribution
is made to Holders that because of this Article should not have been made to
them, the Holders who receive the distribution shall hold it in trust for
holders of Senior Indebtedness of the Company and pay it over to them as their
interests may appear.
Section 11.6. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Debentures are paid in full, Holders shall
be subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. A distribution made under
this Article to holders of such Senior Indebtedness which otherwise would have
been made to Holders is not, as between the Company and Holders, a payment by
the Company on such Senior Indebtedness.
Section 11.7. Relative Rights. This Article defines the
relative rights of Holders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation of
the Company, which is absolute and unconditional, to pay principal of and
interest on the Debentures in accordance with their terms; or
(2) prevent the Trustee or any Holder from exercising its available
remedies upon a default in respect of the Debentures (including, without
limitation, the remedies set forth in Article IV), subject to the rights, if
any, of holders of Senior Indebtedness of the Company to receive distributions
otherwise payable to Holders.
Section 11.8. Subordination May Not Be Impaired by Company. No right
of any holder of Senior Indebtedness of the Company to enforce the subordination
of the Indebtedness evidenced by the Debentures shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 11.9. Rights of Trustee and Paying Agent. Notwithstanding
Section 11.3, the Trustee or Paying Agent may continue to make payments on the
Debentures and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that payments may not be made under
this Article. The Company, the Registrar or co-registrar, the Paying Agent, a
representative or a holder of Senior Indebtedness may give such notice;
provided, however, that,
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if the holders of an issue of Senior Indebtedness of the Company have a
representative, only the representative may give such notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article with respect to any Senior Indebtedness of the Company which may at
any time be held by it, to the same extent as any other holder of such Senior
Indebtedness, and nothing in Article VII 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 8.7.
Section 11.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
representative (if any).
Section 11.11. Article XI Not to Prevent Events of Default or Limit
Right to Accelerate. The failure to make a payment pursuant to the Debentures by
reason of any provision in this Article shall not be construed as preventing the
occurrence of a default in respect of the Debentures. Nothing in this Article
shall have any effect on the right of the Holders or the Trustee to accelerate
the maturity of the Debentures.
Section 11.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money held in trust
under Article IX by the Trustee for the payment of principal of and interest on
the Debentures shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article, and none
of the Holders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness of the Company or any other creditor of the
Company.
Section 11.13. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the representative for the holders of Senior Indebtedness
of the Company for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company 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 such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
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
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payment. The provisions of Section 8.1 and Section 8.2 shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article.
Section 11.14. Trustee to Effectuate Subordination. Each Holder by
accepting a Debenture authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of the Company as provided in this Article and appoints the Trustee
as attorney-in-fact for any and all such purposes.
Section 11.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Company or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article or otherwise.
Section 11.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Debenture acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Debentures, to acquire and continue to hold such
Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold such Senior Indebtedness.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. If any provision of this Indenture modifies or excludes
any provision of the TIA that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first class mail, postage prepaid,
telecopier or overnight air courier guaranteeing next day delivery addressed as
follows:
if to the Company:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, Connecticut 06611
Attention: General Counsel
Telephone: 203-459-7000
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Telecopier: 203-[ ]
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Daniel Dunson, Esq.
Telephone: 212-558-4000
Telecopier: 212-558-3588
if to the Trustee:
[_______]
with a copy to:
The Company or the Trustee by notice to the other may designate in
writing additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five days after transmittal, if by first class mail,
postage prepaid when receipt acknowledged, if telecopied; and the next Business
Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication mailed to a Holder shall be mailed by
first class mail or by overnight air courier guaranteeing next day delivery to
the Holder at the Holder's address as it appears in the Debenture Register and
shall be sufficiently given if so mailed within the time prescribed. Any notice
or communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 12.3. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA Section 312(b) with other Holders with respect
to their rights under this Indenture or the Debentures. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c) as to the disclosure of information as to the names and addresses of
Holders made pursuant to the TIA.
Section 12.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company, upon request, shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any,
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provided for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Each such certificate or opinion shall comply with the requirements of the TIA.
Section 12.5. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she
has made such examination or investigation as is necessary to enable the
expression of an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving an Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.
Section 12.6. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by, or a meeting of, Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
Section 12.7. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close. Unless otherwise
provided in this Indenture, if a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.8. GOVERNING LAW, ETC. (A) THIS INDENTURE AND THE
DEBENTURES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
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(b) The Company hereby (i) agrees that any suit, action or
proceeding against it arising out of or relating to this Indenture or the
Debentures, as the case may be, may be instituted in any Federal or state court
sitting in the Borough of Manhattan, The City of New York, (ii) waives to the
extent permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and any
claim that any suit, action or proceeding in such a court has been brought in an
inconvenient forum, (iii) irrevocably submits or will submit, as the case may
be, to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding, (iv) agrees that final judgment in any such suit, action or
proceeding, no longer subject to any appeal, brought in such a court shall be
conclusive and binding may be enforced in the courts of the jurisdiction of
which it is subject by a suit upon judgment, (v) agrees that service of process
by mail to the address specified herein, or such other address as the Company
may designate for such purpose in writing to the Trustee, shall constitute
personal service of such process on it in any such suit, action or proceeding.
Section 12.9. No Recourse Against Others. An incorporator, director,
officer, employee, stockholder or controlling person, as such, of the Company
shall not have any liability for any obligations of the Company under the
Debentures, this Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Debenture, each Holder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Debentures.
Section 12.10. Successors. All agreements of the Company in this
Indenture and the Debentures shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
Section 12.11. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
Section 12.12. Severability. In case any provision in this Indenture
or in the Debentures shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 12.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
Section 12.14. Investment Agreement. Nothing contained herein or
in the Debentures shall be construed to limit the rights of the Investor and
its Affiliates or the obligations of the Company under the Investment Agreement.
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<PAGE> 54
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
OXFORD HEALTH PLANS, INC.
By:______________________________________
Name:
Title:
[Corporate Seal]
Attest:
_____________________________
[__________], as Trustee
By:______________________________________
Name:
Title:
[Corporate Seal]
Attest:
_____________________________
48
<PAGE> 55
EXHIBIT A
FORM OF FACE OF DEBENTURE
[If a Global Debenture, then insert -- THIS DEBENTURE IS A GLOBAL
DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS DEBENTURE MAY
NOT BE EXCHANGEABLE IN WHOLE OR IN PART FOR A DEBENTURE REGISTERED, AND NO
TRANSFER OF THIS DEBENTURE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If a Global Debenture to be held by The Depository Trust Company,
then insert -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER 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 DTC (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 HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND WERE NOT REGISTERED UNDER ANY STATE SECURITIES LAW, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.
A-1
<PAGE> 56
No.[___]
CUSIP NO. ____________
Series E Junior Subordinated Debentures Due May 13, 2008
Oxford Health Plans, Inc., a Delaware corporation for value
received, promises to pay to [___________], or registered assigns, the principal
sum of [__________________] Dollars [if the Debenture is a Global Debenture,
then insert [_________________], or such other principal amount as may be set
forth in the records of the Trustee hereinafter referred to in accordance with
the Indenture,] on May 13, 2008.
Interest Payment Dates: May 13, 2000 and, thereafter, each March 31,
June 30, September 30 and December 31.
Record Dates: Fifteen days prior to any interest payment date.
Additional provisions of this Debenture are set forth on the other
side of this Debenture.
OXFORD HEALTH PLANS, INC.
By:______________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[________]
as Trustee, certifies
that this is one of
the Debentures referred
to in the Indenture.
By___________________________
Authorized Signatory
Date: _____________, 1999
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<PAGE> 57
FORM OF REVERSE SIDE OF DEBENTURE
Series D Junior Subordinated Debentures Due May 13, 2008
1. Interest
Oxford Health Plans, Inc. a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), for value received promises to pay interest
on the principal amount of this Debenture quarterly on the last day of March,
June, September and December (and, if such date is a Legal Holiday, the Business
Day next succeeding such day) at a rate of 14.0% per annum. Interest on the
Debentures will accrue from the most recent date to which interest has been paid
on the Debentures or, if no interest has been paid, from the Issue Date. The
Company shall pay interest on overdue principal (plus interest on such interest
to the extent lawful), at the rate borne by the Debentures to the extent lawful.
2. Method of Payment
By at latest 10:00 a.m. (New York City time) on the date on which
any principal of or interest on any Debenture is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal and/or interest. The Company will pay interest (except
Defaulted Interest) to the Persons who are registered Holders of Debentures at
the close of business on the fifteenth day preceding the relevant interest
payment date (the "Record Date") even if Debentures are canceled, repurchased or
redeemed after the Record Date and on or before the interest payment date.
Holders must surrender Debentures to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company will make all payments in respect of a Debenture
(including principal and interest) by mailing a check to the registered address
of each Holder thereof; provided, however, that payments on the Debentures may
also be made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Debentures, by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States if such Holder elects payment by wire
transfer by giving written notice to the Trustee or the Paying Agent to such
effect designating such account no later than 2 Business Days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. Paying Agent and Registrar
Initially, [___] (the "Trustee," which term includes any successor
trustee under the Indenture), will act as Trustee, Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Holder. The Company may act as Registrar or co-registrar
or Paying Agent.
4. Indenture
The Company issued the Debentures under an Indenture, dated as of
[____] (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), among the Company and the Trustee. The
terms of the Debentures include those
A-3
<PAGE> 58
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Debentures are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of those terms. Each Holder by accepting a
Debenture agrees to be bound by all of the terms and provisions of the
Indenture, as amended or supplemented from time to time.
The Debentures are general unsecured senior obligations of the
Company limited to $[__________] in aggregate principal amount (subject to
Section 2.7, Section 2.8, Section 2.9, Section 6.7 and Section 10.6 of the
Indenture).
5. Change of Control and Optional Redemption
In the event of a Change of Control, any Holder may require the
Company to redeem any or all of the Debentures held by such Holder, in
accordance with the redemption procedures set forth in Article VI of the
Indenture, at 100% of principal amount, plus accrued and unpaid interest
(including Defaulted Interest) to the redemption date (the "Redemption Price")
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant interest payment date). In the event of any
redemption of Debentures in part, a new Debenture or Debentures for the
unredeemed portion of the principal of the Debenture redeemed in part will be
issued upon cancellation of the Debenture surrendered.
On and after May 13, 2003, the Debentures are redeemable by the
Company, in accordance with the redemption procedures set forth in Article VI of
the Indenture, in whole but not in part, at the Redemption Price.
6. Denominations; Transfer; Exchange
The Debentures are in registered form without coupons in
denominations of principal amount of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Debentures in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar shall not be required to register
the transfer of or exchange any Debenture to be redeemed, in whole or in part,
upon a change of control, except the unredeemed portion of any Debenture being
redeemed in part.
7. Subordination
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
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<PAGE> 59
8. Persons Deemed Owners
The registered holder of this Debenture may be treated as the owner
of it for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
10. Discharge Prior to Redemption
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Debentures and the Indenture if the Company deposits with the Trustee money for
the payment of principal and interest on the Debentures to redemption or
maturity, as the case may be.
11. Amendment, Supplement or Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Debentures may be amended or supplemented with the written
consent of the Holders of at least a majority of the aggregate principal amount
of the Outstanding Debentures and (ii) any existing default or Event of Default
and its consequence (other than with respect to nonpayment or in respect of a
provision that cannot be amended without the written consent of each Holder
affected) may be waived with the written consent of the Investor and its
Affiliates (so long as such Persons own at least 20% of the aggregate principal
amount of Outstanding Debentures and subject to the TIA) or Holders of a
majority of the aggregate principal amount of the Outstanding Debentures.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Debentures to, among other things, cure any ambiguity or inconsistency, or
to comply with Article V of the Indenture, or to provide for uncertificated
Debentures in addition to or in place of certificated Debentures, or to add
guarantees with respect to the Debentures or to secure the Debentures, or to add
additional covenants of, or surrender rights and powers conferred on, the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to provide for the succession of a successor
trustee in accordance with the terms of the Indenture prior to such amendment or
supplements, provided that any such change that does not adversely affect the
rights of any Holder in any material respect.
12 Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Debentures may declare all
the Debentures to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Debentures being
due and payable immediately upon the occurrence of such Events of Default.
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<PAGE> 60
Holders may not enforce the Indenture or the Debentures except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Debentures unless it receives reasonable indemnity or security. The Trustee
may withhold from Holders notice of any continuing default or Event of Default
(except a default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Debentures and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of the Company shall not have any liability for any
obligations of the Company under the Debentures, the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Debenture, each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Debentures.
15. Authentication
This Debenture shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Debenture.
16. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Debentures and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Debentures or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Debenture shall be governed by, and construed in accordance
with, the laws of the State of New York.
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<PAGE> 61
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Debenture in larger type. Requests may be made to:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, Connecticut 06611
Attention: General Counsel
A-7
<PAGE> 62
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Debenture on the books of
the Company. The agent may substitute another to act for him.
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Debenture.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
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<PAGE> 63
OPTION OF HOLDER TO ELECT REDEMPTION
If you want to elect to have this Debenture redeemed by the Company
pursuant to Section 6.4 of the Indenture, check the box below:
[ ]
If you want to elect to have only part of this Debenture redeemed by
the Company pursuant to Section 6.4 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: _____________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Debenture)
Signature Guarantee: ___________________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-9
<PAGE> 1
Exhibit 4.7
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
dated as of December -, 1999
between
OXFORD HEALTH PLANS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Warrant Agent
-----------------------------------------------------
Series A Warrants and Series B Warrants
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES.................................................................................................. 1
RECITALS................................................................................................. 1
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................................................................ 1
SECTION 1.2. Other Obligations.......................................................................... 3
ARTICLE II
TRANSFERABILITY
SECTION 2.1. Registration............................................................................... 4
SECTION 2.2. Form, Execution and Delivery of Warrant Certificates....................................... 4
SECTION 2.3. Transfer................................................................................... 5
SECTION 2.4. Legend on Warrant Certificates and Warrant Shares.......................................... 6
SECTION 2.5. Exchange of Warrant Certificate............................................................ 6
SECTION 2.6. Cancellation of Warrant Certificates....................................................... 6
SECTION 2.7. Treatment of Holders of Warrant Certificates............................................... 7
ARTICLE III
EXERCISE OF WARRANTS
SECTION 3.1 ........................................................................................... 7
ARTICLE IV
PAYMENT OF TAXES
SECTION 4.1. Payment of Taxes........................................................................... 8
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
MUTILATED OR MISSING WARRANT
SECTION 5.1. Mutilated or Missing Warrant............................................................... 9
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.1. Warrant Agent.............................................................................. 10
SECTION 6.2. Limitations on Warrant Agent's Obligations................................................. 10
SECTION 6.3. Compliance with Applicable Laws............................................................ 12
SECTION 6.4. Appointment, Resignation and Appointment of Successor...................................... 12
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Amendments................................................................................. 14
SECTION 7.2. Notices and Demands to the Company and Warrant Agent....................................... 15
SECTION 7.3. Successors................................................................................. 15
SECTION 7.4. Governing Law; Choice of Forum; Etc........................................................ 15
SECTION 7.5. Delivery of Prospectus..................................................................... 15
SECTION 7.6. Obtaining of Governmental Approvals........................................................ 16
SECTION 7.7. Benefits of Warrant Agreement.............................................................. 16
SECTION 7.8. Headings................................................................................... 16
SECTION 7.9. Severability............................................................................... 16
SECTION 7.10. Counterparts............................................................................... 16
SECTION 7.11. Inspection of Agreement.................................................................... 16
SCHEDULE
SCHEDULE I. List of Existing Holders
EXHIBITS
EXHIBIT A. Form of Series A Warrant Certificate
EXHIBIT B. Form of Series B Warrant Certificate
</TABLE>
ii
<PAGE> 4
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of December -, 1999 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), between
Oxford Health Plans, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, the holders named on Schedule I hereto (together with their
Affiliates, the "Existing Holders") purchased the Series A Warrants (the "Series
A Warrants") to purchase Warrant Shares and the Series B Warrants (the "Series B
Warrants", and together with the Series A Warrants, the "Warrants") to purchase
Warrants Shares on May 13, 1998 pursuant to an Investment Agreement, dated as of
February 23, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Investment Agreement"), by and between the Company and TPG Partners
II, L.P.;
WHEREAS, the Existing Holders may sell the Warrants evidenced by
warrant certificates issued pursuant to this Agreement (the "Warrant
Certificates");
WHEREAS, nothing in this Agreement is intended to alter or reduce the
existing rights of the Existing Holders; and
WHEREAS, the Warrant Agent has acted on behalf of the Company, and the
Company desires the Warrant Agent to continue to act on behalf of the Company,
and the Warrant Agent is willing so to act, in connection with the issuance,
transfer, exchange, exercise and cancellation of the Warrants;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Board of Directors" means the board of directors of the
Company.
<PAGE> 5
"Business Day" means any day, other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Common Stock" means the Company's common stock, par value
$.01 per share.
"Company" has the meaning set forth in the preamble hereto.
"Existing Holders" has the meaning set forth in the preamble
hereto.
"Expiration Date" means the earlier of (i) May 13, 2008, and
(ii) the date of an Optional Redemption.
"Expiration Time" means 5:00 P.M., New York City time, on the
Expiration Date.
"Investment Agreement" has the meaning set forth in the
preamble hereto.
"Optional Redemption" means, with respect to the Series A
Warrants, a redemption of the Series D Preferred Stock pursuant to
Article V, Section A of the Series D Certificate of Designations or a
redemption of the Series D Debentures pursuant to Section 6.1 of the
Series D Indenture, and, with respect to the Series B Warrants, a
redemption of the Series E Preferred Stock pursuant to Article V,
Section A of the Series E Certificate of Designations or a redemption
of Series E Debentures pursuant to Section 6.1 of the Series E
Indenture.
"Person" means any individual, firm, corporation, company,
limited liability company, association, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Series D Certificate of Designations" means the Certificate
of Designations for the Series D Preferred Stock filed by the Company
with the Secretary of State of the State of Delaware.
"Series D Debentures" means the Series D Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series D Indenture" means the indenture, between the Company
and the trustee specified therein, pursuant to which the Series E
Debentures are issued.
"Series D Preferred Stock" means the Series D Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
"Series E Certificate of Designations" means the Certificate
of Designations for the Series E Preferred Stock filed by the Company
with the Secretary of State of the State of Delaware.
2
<PAGE> 6
"Series E Debentures" means the Series E Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series E Indenture" means the indenture, between the Company
and the trustee specified therein, pursuant to which the Series E
Debentures are issued.
"Series E Preferred Stock" means the Series E Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
"Warrant" has the meaning set forth in the preamble hereto.
"Warrant Agent" has the meaning set forth in the preamble
hereto.
"Warrant Certificate" has the meaning in the preamble hereto.
"Warrantholder" has the meaning set forth in Section 2.1
hereof.
"Warrant Register" has the meaning set forth in Section 2.1
hereof.
"Warrant Shares" means the shares of Common Stock issued, or
issuable upon, exercise of the Warrants.
SECTION 1.2. Other Obligations. Nothing in this Agreement shall permit
the Company or the Warrant Agent to authorize or take any action that alters or
reduces the rights of the Existing Holders under the Investment Agreement or the
Warrants. In the event of any inconsistency between the provisions of this
Agreement, on the one hand, and the Warrant Certificate, on the other hand, the
provisions of the Warrant Certificate shall control. With respect to Existing
Holders, in the case of any inconsistency between the provisions of this
Agreement, on the one hand, or the Investment Agreement, on the other hand, the
provisions of the Investment Agreement shall control to the extent applicable,
except that Section 2.4 hereof supersedes Section 8.10 of the Investment
Agreement, and Section 6.4(a) hereof supersedes Section 10 of Exhibits B and D
to the Investment Agreement.
ARTICLE II
TRANSFERABILITY
SECTION 2.1. Registration. The Warrants shall be issued only in
registered form. The Warrant Agent shall keep, at its corporate trust office,
books (the "Warrant Register") in which, subject to such reasonable regulations
as it may prescribe, it shall register Warrant Certificates in accordance with
Section 2.2 hereof including transfers, exchanges, exercises and cancellations
of outstanding Warrant Certificates. Whenever any Warrant Certificates are
surrendered for transfer or exchange in accordance with Section 2.3 or Section
2.5, an authorized officer of the Warrant Agent shall manually countersign and
deliver the Warrant Certificates which the holder thereof (the "Warrantholder")
making the transfer or exchange is entitled to receive.
SECTION 2.2. Form, Execution and Delivery of Warrant Certificates. (a)
One or more certificates evidencing Series A Warrants to purchase not more than
15,800,000 Warrant Shares (subject to adjustment in accordance with Section 9.2
of the Warrant Certificate) and one or more certificates evidencing Series B
Warrants to purchase not more than 6,730,000 Warrant Shares (subject to
adjustment in accordance with Section 9.2 of the Warrant Certificate) may be
executed by the Company and delivered
3
<PAGE> 7
to the Warrant Agent upon the execution of this Warrant Agreement or from time
to time thereafter. The Warrants shall be issued pursuant to this Agreement only
in exchange for Warrants held by Existing Holders or upon transfer of Warrants
by the Existing Holders or in exchange for or upon transfer of Warrants pursuant
to this Agreement.
(b) Each Warrant Certificate, whenever issued hereunder, shall be in
registered form substantially in the form set forth in Exhibit A hereto, in the
case of Series A Warrants, or in the form set forth in Exhibit B hereto, in the
case of Series B Warrants, which Exhibits are hereby incorporated herein by
reference, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement. Each Warrant
Certificate shall be printed, lithographed, typewritten, mimeographed or
engraved or otherwise reproduced in any other manner as may be approved by the
officers executing the same (such execution to be conclusive evidence of such
approval) and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve (such
execution to be conclusive evidence of such approval) and as are not
inconsistent with the provisions of this Agreement or the Warrants (or, with
respect to Existing Holders, the Investment Agreement) or as may be required to
comply with any law or with any rule or regulation made pursuant thereto, or
with any regulation of any stock exchange on which the Warrants or the Warrant
Shares may be listed, or to conform to usage. Each Warrant Certificate shall be
signed on behalf of the Company by its chairman or vice-chairman of the board of
directors, or its president or vice-president, and by its treasurer or an
assistant treasurer, or its secretary or an assistant secretary. The signature
of any such officer on any Warrant Certificate may be manual or by facsimile.
Each Warrant Certificate, when so signed on behalf of the Company, shall be
delivered to the Warrant Agent together with an order for the countersignature
and delivery of such Warrants by the Warrant Agent.
(c) The Warrant Agent shall, upon receipt of any Warrant Certificate
duly executed on behalf of the Company, countersign such Warrant Certificate and
deliver such Warrant Certificate to or upon the order of the Company. Each
Warrant Certificate shall be dated the date of its countersignature.
(d) No Warrant Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, and no Warrant evidenced
thereby may be exercised, unless such Warrant Certificate has been countersigned
by the manual signature of the Warrant Agent. Such signature by the Warrant
Agent upon any Warrant Certificate executed by the Company shall be conclusive
evidence that such Warrant Certificate has been duly issued under the terms of
this Agreement.
(e) If any officer of the Company who has signed any Warrant
Certificate either manually or by facsimile signature shall cease to be such
officer before such Warrant
4
<PAGE> 8
Certificate shall have been countersigned and delivered by the Warrant Agent,
such Warrant Certificate nevertheless may be countersigned and delivered as
though the person who signed such Warrant Certificate had not ceased to be such
officer of the Company; and any Warrant Certificate may be signed on behalf of
the Company by such persons as, at the actual date of the execution of such
Warrant Certificate, shall be the proper officers of the Company as specified in
this Section 2.2, regardless of whether at the date of the execution of this
Agreement any such person was such officer.
(f) The Warrantholders shall be entitled to receive Warrants in
physical, certificated registered form.
SECTION 2.3. Transfer. A Warrant Certificate may be sold or otherwise
transferred at any time (except as such sale or transfer may be restricted
pursuant to the Securities Act or any applicable state securities laws) and any
such sale or transfer shall be effected on the Warrant Register upon surrender
of such Warrant Certificate at the corporate trust office of the Warrant Agent,
duly endorsed by the Warrantholder or by its duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute, and the Warrant Agent shall countersign and deliver, as provided in
Section 2.2, a new Warrant Certificate or Warrant Certificates of like tenor in
appropriate denomination to the Person or Persons entitled thereto.
SECTION 2.4. Legend on Warrant Certificates and Warrant Shares. (a) By
acceptance of a Warrant Certificate, each Warrantholder is deemed to agree to
(i) the placement on such Warrant Certificate of a legend substantially as set
forth in Exhibit A hereto, in the case of Series A Warrants, or Exhibit B
hereto, in the case of Series B Warrants, and (ii) the placement on certificates
representing the Warrant Shares issuable upon exercise of Warrants held by such
Warrantholder of a legend substantially as set forth below:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS."
(b) The legend shall be removed from a Warrant Certificate, or from a
certificate representing Warrant Shares, if the Warrants evidenced by such
Warrant Certificate, or such Warrant Shares, as the case may be, are sold
pursuant to an effective registration statement under the Securities Act (other
than to a person directly or indirectly controlling or controlled by the Company
or a person under direct or indirect common control with the Company) or there
is delivered to the Company such satisfactory evidence, which may include an
opinion of independent counsel, as reasonably requested by the Company, to
confirm that neither such legend nor the restrictions on transfer set forth
therein are required to ensure that transfers of such Warrants or Warrant
Shares, as the case may be, will not violate the registration and prospectus
delivery requirements of the Securities Act. Any such legend on a Warrant
Certificate may be changed or removed only upon notice by the Company to the
Warrant Agent.
SECTION 2.5. Exchange of Warrant Certificate. Any Warrant Certificate
may be exchanged for another certificate or certificates of like tenor entitling
the Warrantholder to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitles such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant Certificate shall
make such request in writing delivered to the Warrant Agent, and shall
surrender, properly endorsed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute, and the Warrant Agent shall
countersign and deliver, as provided in Section 2.2. hereof, to the Person
entitled thereto a new Warrant Certificate or Certificates as so requested.
SECTION 2.6. Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered to the Warrant Agent for transfer, exchange or exercise
of the Warrants evidenced thereby shall be promptly canceled by the Warrant
Agent and shall not be reissued and, except as expressly permitted by this
Agreement, no Warrant Certificate shall be issued hereunder in lieu thereof. The
Warrant Agent shall deliver to the
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<PAGE> 9
Company from time to time or otherwise dispose of canceled Warrant Certificates
in a manner satisfactory to the Company. Any Warrant Certificate surrendered to
the Company for transfer, exchange or exercise of the Warrants evidenced thereby
shall be promptly delivered to the Warrant Agent and such transfer, exchange or
exercise shall not be effective until such Warrant Certificate has been received
by the Warrant Agent.
SECTION 2.7. Treatment of Holders of Warrant Certificates. Every
Warrantholder consents and agrees with the Company, the Warrant Agent and with
every subsequent Warrantholder that until the Warrant Certificate is transferred
on the books of the Warrant Agent, the Company and the Warrant Agent may treat
the registered Warrantholder of such Warrant Certificate as the absolute owner
of the Warrants evidenced thereby for any purpose and as the person entitled to
exercise the rights attaching to the Warrants evidenced thereby, any notice to
the contrary notwithstanding.
ARTICLE III
EXERCISE OF WARRANTS
SECTION 3.1. (a) A Warrantholder may exercise the Warrants, in whole or
in part, by presentation and surrender to the Warrant Agent of the Warrant
Certificate together with the attached Election to Exercise, in accordance with
Section 4.2 of the Warrant Certificate. If the date specified as the exercise
date is not a Business Day, the Warrants will be deemed to be received and
exercised on the next succeeding day which is a Business Day. If the Warrants
are received or deemed to be received after the Expiration Date, the exercise
thereof will be null and void and any funds delivered to the Warrant Agent will
be returned to the Warrantholder as soon as practicable. In no event will
interest accrue on funds deposited with the Warrant Agent in respect of an
exercise or attempted exercise of Warrants. The validity of any exercise of
Warrants will be determined by the Warrant Agent in its sole discretion and such
determination will be final and binding upon the Warrantholder and the Company.
Neither the Company nor the Warrant Agent shall have any obligation to inform a
Warrantholder of the invalidity of any exercise of Warrants. The Warrant Agent
shall deposit all funds received by it in payment of the Exercise Price in the
account of the Company maintained with the Warrant Agent for such purpose and
shall advise the Company upon its request by telephone at the end of each day on
which funds for the exercise of the Warrants are received of the amount so
deposited to its account. The Warrant Agent shall promptly confirm such
telephonic advice to the Company in writing.
(b) The Warrant Agent shall, by 11:00 A.M. on the second Business Day
following the exercise date of any Warrant, advise the Company and the transfer
agent and registrar in respect of the Warrant Shares issuable upon such exercise
as to the number of Warrants exercised in accordance with the terms and
conditions of this
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<PAGE> 10
Agreement, the instructions of each Warrantholder with respect to delivery of
the Warrant Shares issuable upon such exercise, and the delivery of definitive
Warrant Certificates evidencing the balance, if any, of the Warrants remaining
after such exercise, and such other information as the Company or such transfer
agent and registrar shall reasonably require.
(c) On the terms and subject to the conditions set forth in this
Agreement and in the Warrant Certificate, upon presentation and surrender of the
Warrant Certificate and payment of the aggregate Exercise Price as set forth in
Section 4.2 of the Warrant Certificate, the Company shall promptly issue and
cause to be delivered to the Warrant Agent a certificate or certificates (in
such name or names as the Warrantholder may designate in writing) for the
specified number of duly authorized, fully paid and non-assessable Warrant
Shares issuable upon exercise, and shall deliver to the Warrantholder cash, as
provided in Section 11 of the Warrant Certificate, with respect to any
Fractional Warrant Shares otherwise issuable upon such surrender. Upon receipt
of such Warrant Shares, the Warrant Agent shall transmit such Warrant Shares to
the Warrantholder, or to such Persons as the Warrantholder may designate in
writing together with, or preceded by, the prospectus in accordance with Section
7.5 hereof. The Company agrees that it will provide such information and
documents to the Warrant Agent as may be necessary for the Warrant Agent to
fulfill its obligations under this Agreement. In the event that the Warrants are
exercised in part prior to the Expiration Time, the Company shall issue and
cause to be delivered to the Warrant Agent a certificate or certificates (in
such name or names as the Warrantholder may designate in writing) evidencing any
remaining unexercised Warrants. Upon receipt of such Warrant Certificate, the
Warrant Agent shall countersign and deliver such Warrant Certificate to the
Warrantholder, or to such persons as the Warrantholder may designate in writing.
ARTICLE IV
PAYMENT OF TAXES
SECTION 4.1. Payment of Taxes. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Warrant Shares or of other securities or property
deliverable upon exercise of the Warrants evidenced by a Warrant Certificate
or certificates representing such shares or securities (other than income taxes
imposed on the Warrantholder); provided that the Company shall not be required
to pay any such tax or other charge that may be imposed in connection with any
transfer involved in the issue of any certificate for Warrant Shares or other
securities or property, or payment of cash, to any Person other than the holder
of the Warrant Certificate surrendered upon exercise, and in case of any such
tax or charge, the Warrant Agent and the Company shall not be required to issue
any security or
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property or pay any cash until such tax or charge has been paid or it has been
established to the Warrant Agent's and the Company's satisfaction that no such
tax or charge is payable.
ARTICLE V
MUTILATED OR MISSING WARRANT
SECTION 5.1. Mutilated or Missing Warrant. If any Warrant Certificate
is lost, stolen, mutilated or destroyed, the Company shall issue and the Warrant
Agent shall countersign, in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, upon receipt of a proper
affidavit or other evidence reasonably satisfactory to the Company and the
Warrant Agent (and surrender of any mutilated Warrant Certificate) and bond of
indemnity in form and amount and with corporate surety reasonably satisfactory
to the Company and the Warrant Agent in each instance protecting the Company and
the Warrant Agent, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone. An applicant for such substitute Warrant Certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe. All
Warrant Certificates shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.1. Warrant Agent. The Company hereby appoints ChaseMellon
Shareholder Services, L.L.C. as Warrant Agent of the Company in respect of the
Warrants upon the terms and subject to the conditions herein set forth, and
ChaseMellon Shareholder Services, L.L.C. hereby accepts such appointment. The
Warrant Agent shall have the powers and authority granted to and conferred upon
it hereby and such further powers and authority to act on behalf of the Company
as the Company may hereafter grant to or confer upon it.
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SECTION 6.2. Limitations on Warrant Agent's Obligations. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof, including the following, to all of which the Company agrees:
(a) Compensation and Indemnification. The Company agrees to
pay the Warrant Agent compensation to be agreed upon with the Company
for all services rendered by the Warrant Agent and to reimburse the
Warrant Agent for all reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred by the Warrant Agent in connection
with the services rendered by it hereunder. The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense incurred without gross negligence, bad faith
or willful misconduct on the part of the Warrant Agent, arising out of
or in connection with its acting as Warrant Agent hereunder. Anything
to the contrary notwithstanding, in no event shall the Warrant Agent be
liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Warrant Agent has been advised of the
likelihood of such loss or damage.
(b) Agent for the Company. In acting in the capacity of
Warrant Agent under this Agreement, the Warrant Agent is acting solely
as agent of the Company and does not assume any obligation or
relationship of agency or trust with any of the owners or holders of
the Warrants.
(c) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (which may be counsel to the Company), and the
written advice or opinion of such 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 accordance with the
written advice or opinion of such counsel.
(d) Documents. The Warrant Agent shall be authorized and
protected and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in reliance upon any notice,
direction, consent, certificate, affidavit, statement or other paper or
document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) Certain Transactions. The Warrant Agent, and its officers,
directors and employees, may become the owner of, or acquire any
interest in, any Warrant, with the same rights that it or they would
have were it not the Warrant Agent hereunder, and, to the extent
permitted by applicable law, it or they may engage or be interested in
any financial or other transaction with the Company and may act on, or
as a depositary, trustee or agent for, any committee or body of holders
of Warrants or Warrant Shares, or other securities or obligations of
the Company as freely as if it were not the Warrant Agent hereunder.
Nothing in this Agreement
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shall be deemed to prevent the Warrant Agent from acting as trustee
under the Series A Indenture or the Series E Indenture.
(f) No Liability for Interest. The Warrant Agent shall not be
under any liability for interest on any monies at any time received by
it pursuant to any of the provisions of this Agreement.
(g) No Liability for Invalidity. The Warrant Agent shall not
be under any responsibility with respect to the validity or sufficiency
of this Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Warrant Agent) or with respect to
the validity or execution of the Warrant Certificates (except its
countersignature thereon).
(h) No Responsibility for Recitals. The recitals contained in
this Agreement and in the Warrant Certificates (except as to the
Warrant Agent's countersignature thereon) shall be taken as the
statements of the Company and the Warrant Agent assumes no
responsibility hereby for the correctness of the same.
(i) No Implied Obligations. The Warrant Agent shall be
obligated to perform such duties as are specifically set forth herein
and no implied duties or obligations shall be read into this Agreement
against the Warrant Agent. The Warrant Agent shall not be under any
obligation to take any action hereunder which may tend to involve it in
any expense or liability, the payment of which within a reasonable time
is not, in its opinion, assured to it. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the
Company of any Warrant Certificate authenticated by the Warrant Agent
and delivered by it to the Company pursuant to this Agreement or for
the application by the Company of the proceeds of the issue and sale,
or exercise, of the Warrants. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in this Agreement or in any
Warrant Certificate or in the case of the receipt of any written demand
from a Warrantholder with respect to such default, including, without
limiting the generality of the foregoing, any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise or,
except as provided in Section 7.2 hereof, to make any demand upon the
Company.
(j) Instructions from Company. The Warrant Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the Board, the
President, any Vice President, the Chief Financial Officer or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for
any action taken, suffered or omitted to be taken by it in good faith
in accordance with instructions of any such officers.
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(k) Delegation. The Warrant Agent may execute and exercise any
of the rights or powers hereby vested in it to perform any duty hereunder either
itself or by or through its attorneys or agents.
SECTION 6.3. Compliance with Applicable Laws. The Warrant Agent agrees
to comply with all applicable federal and state laws imposing obligations on it
in respect of the services rendered by it under this Agreement and in connection
with the Warrants, including (but not limited to) the provisions of United
States federal income tax laws regarding information reporting and backup
withholding. The Warrant Agent shall be responsible for its failure to comply
with any such laws imposing obligations on it, including (but not limited to)
any liability for its failure to comply with any applicable provisions of United
States federal income tax laws regarding information reporting and backup
withholding.
SECTION 6.4. Appointment, Resignation and Appointment of Successor. (a)
The Company agrees, for the benefit of the Warrantholders from time to time,
that there shall at all times be a Warrant Agent hereunder until all the
Warrants issued hereunder have been exercised or have expired in accordance with
their terms, which Warrant Agent shall be appointed in the Borough of Manhattan,
The City of New York, and shall have a capital and surplus of at least
$50,000,000.
(b) The Warrant Agent may at any time resign as such agent by giving
written notice to the Company of such intention on its part, specifying the date
on which it desires such resignation to become effective; provided that such
date shall not be less than three months after the date on which such notice is
given, unless the Company agrees to accept such notice less than three months
prior to such date of effectiveness. The Company may remove the Warrant Agent at
any time by giving written notice to the Warrant Agent of such removal,
specifying the date on which it desires such removal to become effective. Such
resignation or removal shall take effect upon the appointment by the Company, as
hereinafter provided, of a successor Warrant Agent (qualified as set forth in
subsection (a)) and the acceptance of such appointment by such successor Warrant
Agent. The obligation of the Company under Section 6.2(a) hereof shall continue
to the extent set forth therein notwithstanding the resignation or removal of
the Warrant Agent.
(c) If at any time the Warrant Agent shall resign, or shall cease to be
qualified as set forth in subsection (a), or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file
a petition seeking relief under any applicable Federal or State bankruptcy or
insolvency law or similar law, or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver, conservator or custodian
of all or any substantial part of its property, or shall admit in writing its
inability to pay or to meet its debts as they mature, or if a receiver or
custodian of it or of all or any substantial part of its property shall be
appointed, or if an order of any court shall be entered for relief against it
under the provisions of any applicable Federal
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or State bankruptcy or similar law, or if any public officer shall have taken
charge or control of the Warrant Agent or of its property or affairs, for the
purpose of rehabilitation, conservation or liquidation, a successor Warrant
Agent, qualified as set forth in subsection (a), shall be appointed by the
Company by an instrument in writing, filed with the successor Warrant Agent.
Upon the appointment as herein provided of a successor Warrant Agent and
acceptance by the latter of such appointment, the Warrant Agent so superseded
shall cease to be Warrant Agent under this Agreement.
(d) Any successor Warrant Agent appointed under this Agreement shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the authority, rights, powers, trusts, immunities, duties and obligations of
such predecessor with like effect as if originally named as Warrant Agent under
this Agreement, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent under this Agreement.
(e) Any Person into which the Warrant Agent may be merged or converted
or any Person with which the Warrant Agent may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Warrant
Agent shall be a party, or any Person to which the Warrant Agent shall sell or
otherwise transfer all or substantially all the assets and business of the
Warrant Agent, in each case provided that it shall be qualified as set forth in
subsection (a), shall be the successor Warrant Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties to this Agreement, including, without limitation, any
successor to the Warrant Agent first named above.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Amendments. (a) This Agreement and any Warrant Certificate
may be amended by the parties hereto by executing a supplemental warrant
agreement, without the consent of the Warrantholder of any Warrant, for the
purpose of (i) curing any ambiguity, or curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement that is not
inconsistent with the provisions of this Agreement or the Warrant Certificates
(or with respect to Existing Holders, the Investment Agreement), (ii) evidencing
the succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company contained in this Agreement and the
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Warrants, (iii) evidencing and providing for the acceptance of appointment by a
successor Warrant Agent with respect to the Warrants, (iv) adding to the
covenants of the Company for the benefit of the Warrantholders or surrendering
any right or power conferred upon the Company under this Agreement, (v)
appointing a successor Warrant Agent, or (vi) amending this Agreement and the
Warrants in any manner that the Company may deem to be necessary or desirable
and that will not adversely affect the interests of the Warrantholders.
(b) Without the consent of each Warrantholder of Warrants affected
thereby, no amendment may be made that (i) changes the Warrants so as to reduce
the number of Warrant Shares purchasable upon exercise of the Warrants or so as
to increase the exercise price, (ii) shortens the period of time during which
the Warrants may be exercised, (iii) otherwise adversely affects the exercise
rights of the Warrantholders in any material respect, or (iv) reduces the number
of unexercised Warrants the consent of the Warrantholders of which is required
for amendment of this Agreement or the Warrants.
(c) Notwithstanding anything contained herein to the contrary, the
Warrant Agent may, but shall not be required to, enter any supplement or
amendment that affects the Warrant Agent's own rights, duties, obligations or
immunities under this Agreement.
SECTION 7.2. Notices and Demands to the Company and Warrant Agent. If
the Warrant Agent shall receive any notice or demand addressed to the Company by
the Warrantholder, the Warrant Agent shall promptly forward such notice or
demand to the Company.
SECTION 7.3. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrantholder shall bind
and inure to the benefit of their respective successors and permitted assigns
hereunder.
SECTION 7.4. Governing Law; Choice of Forum; Etc. The validity,
construction and performance of this Agreement shall be governed by, and
interpreted in accordance with, the laws of New York without reference to its
conflict of laws rules. The Company, the Warrant Agent and the Warrantholder
(the "parties hereto") agree that the appropriate and exclusive forum for any
disputes arising out of this Agreement solely between or among any or all of the
Company, the Warrant Agent and the Existing Holders and/or any Person who has
become a Warrantholder shall be the United States District Court for the
Southern District of New York, and, if such court will not hear any such suit,
the courts of the state of the Company's incorporation, and the parties hereto
irrevocably consent to the exclusive jurisdiction of such courts, and agree to
comply with all requirements necessary to give such courts jurisdiction. The
parties hereto further agree that the parties will not bring suit with respect
to any disputes, except as expressly set forth below, arising out of this
Agreement for the execution or enforcement of judgment, in any jurisdiction
other
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than the above specified courts. Each of the parties hereto irrevocably consents
to the service of process in any action or proceeding hereunder by the mailing
of copies thereof by registered or certified airmail, postage prepaid, if to (i)
the Warrant Agent, at 111 Founders Plaza, Suite 1100, East Hartford, CT 06108,
Attention: Joan Hayes; (ii) the Company, at 48 Monroe Turnpike, Trumbull, CT
06611, Attention: General Counsel, or at such other address specified by the
Company in writing to the Warrant Agent and (iii) any Warrantholder, at the
address of such Warrantholder specified in the Warrant Register. The foregoing
shall not limit the rights of any party hereto to serve process in any other
manner permitted by the law or to obtain execution of judgment in any other
jurisdiction. The parties hereto further agree, to the extent permitted by law,
that final and unappealable judgment against any of them in any action or
proceeding contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified or exemplified copy of which shall be conclusive evidence of the
fact and the amount of indebtedness. The parties hereto agree to waive any and
all rights that they may have to a jury trial with respect to disputes arising
out of this Agreement.
SECTION 7.5. Delivery of Prospectus. The Company shall furnish to the
Warrant Agent sufficient copies of a prospectus relating to the Warrant Shares
deliverable upon exercise of Warrants and complying in all material respects
with the Securities Act (the "Prospectus"), and the Warrant
Agent agrees that upon the exercise of any Warrant, the Warrant Agent shall
deliver a Prospectus to the Warrantholder of such Warrant, prior to or
concurrently with the delivery of the Warrant Shares issued upon such exercise
except in each case to the extent that the Company shall have notified the
Warrant Agent in writing that such delivery of a Prospectus is not required
under the Securities Act.
SECTION 7.6. Obtaining of Governmental Approvals. The Company shall
from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities and securities acts filings under United States Federal and
state laws, which the Company may deem necessary or appropriate in connection
with the issuance, sale, transfer and delivery of the Warrants, the exercise of
the Warrants, the issuance, sale, transfer and delivery of the Warrant Shares to
be issued upon exercise of Warrants or upon the expiration of the period during
which the Warrants are exercisable.
SECTION 7.7. Benefits of Warrant Agreement. Nothing in this Agreement
or any Warrant Certificate shall be construed to give to any Person other than
the Company, the Warrant Agent and the Warrantholders any legal or equitable
right, remedy or claim under this Agreement or any Warrant Certificate, and this
Agreement or any Warrant Certificate shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the Warrantholders.
SECTION 7.8. Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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SECTION 7.9. Severability. If any provision in this Agreement or in any
Warrant Certificate shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provisions in any other jurisdiction, shall not in any
way be affected or impaired thereby.
SECTION 7.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.11. Inspection of Agreement. A copy of this Agreement shall
be available at all reasonable times at the corporate trust office of the
Warrant Agent and at the office of the Company at 48 Monroe Turnpike, Trumbull,
CT 06611, for inspection by any Warrantholder. The Warrant Agent may require any
such Warrantholder to submit satisfactory proof of ownership for inspection by
it.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
OXFORD HEALTH PLANS, INC.
By: __________________________
Name:
Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: __________________________
Name:
Title:
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SCHEDULE I
Name of Warrant Holder
TPG Partners II, L.P.
TPG Parallel II, L.P.
TPG Investors II, L.P.
Chase Equity Associates, L.P.
Oxford Acquisition Corp.
DLJ Merchant Banking Partners II, L.P.
DLJ Merchant Banking Partners II-A, L.P.
DLJ Offshore Partners II, C.V.
DLJ Diversified Partners, L.P.
DLJ Diversified Partners-A, L.P.
DLJ MB Funding II, Inc.
DLJ Millennium Partners, L.P.
DLJ Millennium Partners-A, L.P.
DLJ EAB Partners, L.P.
UK Investment Plan 1997 Partners
DLJ ESC II L.P.
DLJ First ESC, L.P.
DLJ Capital Corporation
Sprout Growth II, L.P.
The Sprout CEO Fund, L.P.
Sprout Capital VIII, L.P.
Sprout Venture Capital, L.P.
<PAGE> 21
Exhibit A
Form of Series A Warrant Certificate
THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND WERE NOT REGISTERED UNDER ANY
STATE SECURITIES LAW, AND THE SECURITIES EVIDENCED HEREBY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THE SECURITIES EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.
IF THE WARRANTHOLDER SPECIFIED IN THIS CERTIFICATE IS AN EXISTING HOLDER (AS
DEFINED IN THE WARRANT AGREEMENT), THEN THIS CERTIFICATE ALSO EVIDENCES AND
ENTITLES SUCH EXISTING HOLDER, AS A HOLDER HEREOF, TO CERTAIN RIGHTS AS SET
FORTH IN THE REGISTRATION RIGHTS AGREEMENT DATED AS OF FEBRUARY 23, 1998, BY AND
BETWEEN TPG OXFORD LLC AND OXFORD HEALTH PLANS, INC. (THE "COMPANY"), THE TERMS
OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY AND AT THE PRINCIPAL OFFICE OF THE
WARRANT AGENT.
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No. [Number of Warrants]
SERIES A WARRANTS
Exercisable commencing May 13, 1998;
Void after Expiration Time (as defined herein)
OXFORD HEALTH PLANS, INC., a Delaware corporation (the
"Company"), hereby certifies that, for value received, ____________________, or
registered assigns (the "Warrantholder"), is the owner of ______________Warrants
(as defined below), each of which entitles the Warrantholder to purchase from
the Company one fully paid, duly authorized and nonassessable share of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock"), at any
time from and after May 13, 1998 (the "Issue Date") and continuing up to the
Expiration Time (as defined herein) at a per share exercise price determined
according to the terms and subject to the conditions set forth in this
certificate (the "Warrant Certificate"). The number of shares of Common Stock
issuable upon exercise of each such Warrant and the exercise price per share of
Common Stock are subject to adjustment from time to time pursuant to the
provisions of Section 9 of this Warrant Certificate. The Warrants evidenced by
this Warrant Certificate are part of a series of warrants to purchase up to
15,800,000 shares of Common Stock (collectively, the "Warrants"), issued
pursuant to an Investment Agreement, dated as of February 23, 1998 (as it may be
amended, supplemented or otherwise modified from time to time, the "Investment
Agreement"), by and between TPG Oxford LLC, a Delaware limited liability company
(the "Investor"), and the Company, or pursuant to the Warrant Agreement, dated
as of December _____ , 1999 (as it may be amended, supplemented or otherwise
modified from time to time, the "Warrant Agreement"), between the Company and
ChaseMellon Shareholder Services, L.L.C., as Warrant Agent.
Section 1. Definitions. As used in this Warrant Certificate, the
following terms shall have the meanings set forth below:
"Board of Directors" means the board of directors of the
Company.
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"Business Day" means any day, other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Certificate of Designations" means, with respect to the
Series D Preferred Stock or the Series E Preferred Stock, as the case
may be, the Certificate of Designations therefor filed by the Company
with the Secretary of State of the State of Delaware.
"Certificate of Incorporation" means the Second Amended and
Restated Certificate of Incorporation of the Company, as amended from
time to time.
"Closing Price" with respect to a share of Common Stock on any
day means, subject to Section 9.1(f) hereof, the last reported sale
price on that day or, in case no such reported sale takes place on such
day, the average of the last reported bid and asked prices, regular
way, on that day, in either case, as reported in the consolidated
transaction reporting system with respect to securities quoted on
Nasdaq or, if the shares of Common Stock are not quoted on Nasdaq, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not quoted on Nasdaq and
not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid
and low asked prices on such other nationally recognized quotation
system then in use, or, if on any such day the shares of Common Stock
are not quoted on any such quotation system, the average of the closing
bid and asked prices as furnished by a professional market maker
selected by the Board of Directors making a market in the shares of
Common Stock. If the shares of Common Stock are not publicly held or so
listed, quoted or publicly traded, the "Closing Price" means the fair
market value of a share of Common Stock, as determined in good faith by
the Board of Directors.
"Common Stock" has the meaning set forth in the preamble
hereto.
"Company" has the meaning set forth in the preamble hereto.
"Debentures" means the Series D Debentures and the Series E Debentures.
"Debentures" means the Series D Debentures and the Series E
Debentures.
"Equity Securities" of any Person means any and all common
stock, preferred stock, any other class of capital stock and
partnership or limited liability company interests of such Person or
any other similar interests of any Person that is not a corporation,
partnership or limited liability company.
"Exercise Price" has the meaning set forth in Section 8
hereof.
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"Expiration Date" means the earlier of (i) May 13, 2008, and
(ii) the date of an Optional Redemption.
"Expiration Time" means 5:00 P.M., New York City time, on the
Expiration Date.
"Fractional Warrant Share" means any fraction of a whole share
of Common Stock issued, or issuable upon, exercise of the Warrants.
"Investment Agreement" has the meaning set forth in the
preamble hereto.
"Investor" has the meaning set forth in the preamble hereto.
"Issue Date" has the meaning set forth in the preamble hereto.
"Nasdaq" means The Nasdaq Stock Market's National Market.
"Offer Time" has the meaning set forth in Section 9.1(e)
hereof.
"Optional Redemption" means a redemption of the Series D
Preferred Stock pursuant to Article V, Section A of the Certificate of
Designations therefor or a redemption of the Series D Debentures
pursuant to Section 6.1 of the Series D Indenture.
"Organic Change" means, with respect to any Person, any
transaction (including without limitation any recapitalization, capital
reorganization or reclassification of any class or series of Equity
Securities, any consolidation of such Person with, or merger of such
Person into, any other Person, any merger of another Person into such
Person (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of such Person), and any sale or transfer or
lease of all or substantially all of the assets of such Person, but not
including any stock split, combination or subdivision which is the
subject of Section 9.1(b)hereof) pursuant to which any class or series
of Equity Securities of such Person is converted into the right to
receive other securities, cash or other property.
"Person" means any individual, firm, corporation, company,
limited liability company, association, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Preferred Stock" means the Series D Preferred Stock
and Series E Preferred Stock.
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"Series D Debentures" means the Series D Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series D Indenture" means the indenture, between the Company
and the trustee specified therein, pursuant to which the Series D
Debentures are issued.
"Series D Preferred Stock" means the Series D Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
"Series E Debentures" means the Series E Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series E Indenture" means the indenture, between the Company
and the trustee specified therein, pursuant to which the Series E
Debentures are issued.
"Series E Preferred Stock" means the Series E Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
"Stated Value" means the stated value of the Series D
Preferred Stock or the Series E Preferred Stock, as the case may be, in
each case as set forth in the Certificate of Designations therefor.
"Subsidiary" means, as to any Person, any other Person of
which more than 50% of the shares of the voting stock or other voting
interests are owned or controlled, or the ability to select or elect
50% or more of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or
by such first Person and one or more of its Subsidiaries.
"Trading Day" means any day on which Nasdaq is open for
trading, or if the shares of Common Stock are not quoted on Nasdaq, any
day on which the principal national securities exchange or national
quotation system on which the shares of Common Stock are listed,
admitted to trading or quoted is open for trading, or if the shares of
Common Stock are not so listed, admitted to trading or quoted, any
Business Day.
"Warrant" has the meaning set forth in the preamble hereto.
"Warrant Agent" means the Person named or otherwise appointed
as such as set forth in Section 10 hereof.
"Warrant Agreement" has the meaning set forth in the preamble
hereto.
"Warrant Certificate" has the meaning in the preamble hereto.
"Warrant Market Price" means the average of the Closing Prices
of a share of Common Stock for the ten consecutive Trading Days ending
on the Trading Day immediately prior to the day on which the Election
to Exercise is delivered.
"Warrant Register" has the meaning set forth in Section 2.2
hereof.
"Warrant Shares" means the shares of Common Stock issued, or
issuable upon, exercise of the Warrants.
"Warrantholder" has the meaning set forth in the preamble
hereto.
Section 2. Transferability.
2.1. Registration. The Warrants shall be issued only in
registered form.
2.2. Transfer. The Warrants evidenced by this Warrant
Certificate may be sold or otherwise transferred at any time (except as such
sale or transfer may be
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restricted pursuant to the Securities Act or any applicable state securities
laws) and any such sale or transfer shall be effected on the books of the
Company (the "Warrant Register") maintained at the corporate trust office of the
Warrant Agent upon surrender of this Warrant Certificate at the corporate trust
office of the Warrant Agent for registration of transfer duly endorsed by the
Warrantholder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall execute, and the
Warrant Agent shall countersign and deliver a new Warrant Certificate or
Certificates in appropriate denominations to the Person or Persons entitled
thereto.
2.3. Legend on Warrant Certificates and Warrant Shares. If and
for so long as required by the Warrant Agreement, this Warrant Certificate and
certificates representing the Warrant Shares shall contain a legend as specified
in Section 2.4 of the Warrant Agreement.
Section 3. Exchange of Warrant Certificate. Any Warrant
Certificate may be exchanged for another certificate or certificates of like
tenor entitling the Warrantholder to purchase a like aggregate number of Warrant
Shares as the certificate or certificates surrendered then entitles such
Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant
Certificate shall make such request in writing delivered to the Warrant Agent,
and shall surrender, properly endorsed, the certificate evidencing the Warrant
to be so exchanged. Thereupon, the Company shall execute, and the Warrant Agent
shall countersign and deliver to the Person entitled thereto, a new Warrant
Certificate or Certificates as so requested.
Section 4. Term of Warrants; Exercise of Warrants.
4.1. Duration of Warrant. On the terms and subject to the
conditions set forth in this Warrant Certificate, the Warrantholder may exercise
the Warrants evidenced hereby, in whole or in part, at any time and from time to
time after the Issue Date and before the Expiration Time. If the Warrants
evidenced hereby are not exercised by the Expiration Time, they shall become
void, and all rights hereunder shall thereupon cease.
4.2. Exercise of Warrant.
(a) On the terms and subject to the conditions set forth in
this Warrant Certificate, the Warrantholder may exercise the Warrants evidenced
hereby, in whole or in part, by presentation and surrender to the Warrant Agent
of this Warrant Certificate together with the attached Election to Exercise duly
filled in and signed, and accompanied by payment to the Company of the Exercise
Price for the number of Warrant Shares specified in such Election to Exercise.
Payment of the aggregate Exercise Price shall be made (i) in cash in an amount
equal to the aggregate Exercise Price; (ii) by certified or official bank check
in an amount equal to the aggregate Exercise Price; (iii) by
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an exchange (which shall be treated as a recapitalization to the extent
allowable under the Internal Revenue Code of 1986, as amended, and applicable
regulations thereunder) with the Company of a number of shares of Senior
Preferred Stock having an aggregate Stated Value plus accumulated and unpaid
dividends thereon equal to the aggregate Exercise Price or by an exchange (which
shall be treated as recapitalization to the extent allowable under the Internal
Revenue Code of 1986, as amended, and applicable regulations thereunder) with
the Company of a principal amount of Debentures having an aggregate principal
amount plus accrued and unpaid interest thereon equal to the aggregate Exercise
Price; (iv) by an exchange (which shall be treated as a recapitalization to the
extent allowable under the Internal Revenue Code of 1986, as amended, and
applicable regulations thereunder) with the Company of outstanding Warrants
(other than the Warrants being exercised) to purchase Warrant Shares having an
aggregate Warrant Market Price which, after subtracting the aggregate exercise
prices thereof, equals the aggregate Exercise Price of the Warrants being
exercised; or (v) by any combination of the foregoing; provided, however, that
(except to the extent expressly permitted by the proviso in Section 5(b) of the
Share Exchange Agreement, dated as of February 13, 1999, by and among the
Company and the investors named therein) the Warrantholders may not use shares
of Series D Preferred Stock pursuant to clause (iii) or (v) in connection with
any exercise prior to May 13, 2000.
(b) On the terms and subject to the conditions set forth in
this Warrant Certificate, upon such presentation and surrender of this Warrant
Certificate and payment of such aggregate Exercise Price as set forth in
subsection (a) above, the Company shall promptly issue and cause to be delivered
to the Warrant Agent a certificate or certificates (in such name or names as the
Warrantholder may designate in writing) for the specified number of duly
authorized, fully paid and non-assessable Warrant Shares issuable upon exercise,
and shall deliver to the Warrantholder cash, as provided in Section 11 hereof,
with respect to any Fractional Warrant Shares otherwise issuable upon such
surrender. Upon receipt of such Warrant Shares, the Warrant Agent shall transmit
such Warrant Shares to the Warrantholder, or to such Persons as the
Warrantholder may designate in writing. In the event that the Warrants evidenced
by this Warrant Certificate are exercised in part prior to the Expiration Time,
the Company shall issue and cause to be delivered to the Warrant Agent a
certificate or certificates (in such name or names as the Warrantholder may
designate in writing) evidencing any remaining unexercised Warrants. Upon
receipt of such Warrant Certificate, the Warrant Agent shall countersign and
deliver such Warrant Certificate to the Warrantholder, or to such persons as the
Warrantholder may designate in writing.
(c) Each Person in whose name any certificate for Warrant
Shares is issued shall for all purposes be deemed to have become the holder of
record of the Warrant Shares represented thereby on the first date on which both
the Warrant Certificate evidencing the respective Warrants was surrendered and
payment of the Exercise Price and any applicable taxes was made, irrespective of
date of issue or delivery of such certificate.
Section 5. Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Warrant Shares or of other securities or property
deliverable upon exercise of the
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Warrants evidenced by this Warrant Certificate or certificates representing such
shares or securities (other than income taxes imposed on the Warrantholder);
provided that the Company shall not be required to pay any such tax or other
charge that may be imposed in connection with any transfer involved in the issue
of any certificate for Warrant Shares or other securities or property, or
payment of cash, to any Person other than the holder of the Warrant Certificate
surrendered upon exercise, and in case of any such tax or charge, the Warrant
Agent and the Company shall not be required to issue any security or property or
pay any cash until such tax or charge has been paid or it has been established
to the Warrant Agent's and the Company's satisfaction that no such tax or charge
is payable.
Section 6. Mutilated or Missing Warrant. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company shall issue and
the Warrant Agent shall countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, upon receipt
of a proper affidavit or other evidence reasonably satisfactory to the Company
and the Warrant Agent (and surrender of any mutilated Warrant Certificate) and
bond of indemnity in form and amount and with corporate surety reasonably
satisfactory to the Company and the Warrant Agent in each instance protecting
the Company and the Warrant Agent, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants as the Warrant Certificate so
lost, stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at
any time enforceable by anyone. An applicant for such substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may prescribe.
All Warrant Certificates shall be held and owned upon the express condition that
the foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
Section 7. Reservation of Shares. The Company hereby agrees
that there shall be reserved for issuance and delivery upon exercise of Warrants
evidenced by this Warrant Certificate, free from preemptive rights, the number
of shares of authorized but unissued shares of Common Stock as shall be required
for issuance or delivery upon exercise of the Warrants evidenced by this Warrant
Certificate. The Company further agrees that it will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company. Without
limiting the generality of the foregoing, the Company agrees that before taking
any action which would cause an
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adjustment reducing the Exercise Price below the then-par value of Warrant
Shares issuable upon exercise of the Warrants evidenced hereby, the Company
shall from time to time take all such action that may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at the Exercise Price as so adjusted.
Section 8. Exercise Price. The price per share (the "Exercise
Price") at which Warrant Shares shall be purchasable upon the exercise of the
Warrants evidenced by this Warrant Certificate shall be $17.75, subject to
adjustment pursuant to Section 9 hereof.
Section 9. Adjustment of Exercise Price and Number of Shares.
The number and kind of securities purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate and the Exercise Price thereof shall be
subject to adjustment from time to time after the date hereof upon the happening
of certain events, as follows:
9.1. Adjustments to Exercise Price. The Exercise Price shall
be subject to adjustment as follows:
(a) Stock Dividends. In case the Company after the date hereof
shall pay a dividend or make a distribution to all holders of shares of
Common Stock in shares of Common Stock, then in any such case the
Exercise Price in effect at the opening of business on the day
following the record date for the determination of stockholders
entitled to receive such dividend or distribution shall be reduced to a
price obtained by multiplying such Exercise Price by a fraction of
which (x) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date and (y) the
denominator shall be the sum of such number of shares of Common Stock
outstanding and the total number of shares of Common Stock constituting
such dividend or distribution, such reduction to become effective
immediately after the opening of business on the day following such
record date. For purposes of this subsection (a), the number of shares
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 issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(b) Stock Splits and Reverse Splits. In case after the date
hereof outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Exercise Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, in case after the date hereof outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common
Stock, the Exercise Price in effect at the opening of business
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on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(c) Issuances Below Market. In case the Company after the date
hereof shall issue rights or warrants to holders of shares of Common
Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Closing Price per share on the
record date for the determination of stockholders entitled to receive
such rights or warrants, the Exercise Price in effect at the opening of
business on the day following such record date shall be adjusted to a
price obtained by multiplying such Exercise Price by a fraction of
which (x) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the
number of shares of Common Stock that the aggregate offering price of
the total number of shares so to be offered would purchase at such
Closing Price and (y) the denominator shall be the number of shares of
Common Stock outstanding at the close of business on such record date
plus the number of additional shares of Common Stock so to be offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following such
record date; provided, however, that no adjustment shall be made if the
Company issues or distributes to each Warrantholder the rights or
warrants that each Warrantholder would have been entitled to receive
had the Warrants held by such Warrantholder been exercised prior to
such record date; and provided, further, that in no event shall the
fact that the Series B Warrants of the Company became exercisable for
shares of Common Stock upon occurrence of the Shareholder Approval (as
defined in the Investment Agreement) constitute an issuance of rights
or warrants for purposes of this subsection (c). For purposes of this
subsection (c), the number of shares 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 issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Company. Rights or warrants
issued by the Company to all holders of Common Stock entitling the
holders thereof to subscribe for or purchase Equity Securities, which
rights or warrants (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued in
respect of future issuances of Common Stock, including shares of Common
Stock issued upon exercise of the Warrants evidenced by this Warrant
Certificate, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events (a "Trigger Event"), shall
for purposes of this subsection (c) not be deemed issued until the
occurrence of the earliest Trigger Event.
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(d) Special Dividends. In case the Company after the date
hereof shall distribute to all holders of shares of Common Stock
evidences of its indebtedness or assets (excluding any regular periodic
cash dividend), Equity Securities (other than Common Stock) or rights
to subscribe (excluding those referred to in subsection (c) above) for
Equity Securities other than Common Stock, in each such case the
Exercise Price in effect immediately prior to the close of business on
the record date for the determination of stockholders entitled to
receive such distribution shall be adjusted to a price obtained by
multiplying such Exercise Price by a fraction of which (x) the
numerator shall be the Closing Price per share of Common Stock on such
record date, less the then-current fair market value as of such record
date (as determined by the Board of Directors in its good faith
judgment) of the portion of assets or evidences of indebtedness or
Equity Securities or subscription rights so distributed applicable to
one share of Common Stock, and (y) the denominator shall be such
Closing Price, such adjustment to become effective immediately prior to
the opening of business on the day following such record date;
provided, however, that no adjustment shall be made (1) if the Company
issues or distributes to each Warrantholder the subscription rights
referred to above that each Warrantholder would have been entitled to
receive had the Warrants held by such Warrantholder been exercised
prior to such record date or (2) if the Company grants to each
Warrantholder the right to receive, upon the exercise of the Warrants
held by such Warrantholder at any time after the distribution of the
evidences of indebtedness or assets or Equity Securities referred to
above, the evidences of indebtedness or assets or Equity Securities
that such Warrantholder would have been entitled to receive had such
Warrants been exercised prior to such record date. The Company shall
provide any Warrantholder, upon receipt of a written request therefor,
with any indenture or other instrument defining the rights of the
holders of any indebtedness, assets, subscription rights or Equity
Securities referred to in this subsection (d). Rights or warrants
issued by the Company to all holders of Common Stock entitling the
holders thereof to subscribe for or purchase Equity Securities, which
rights or warrants (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued in
respect of future issuances of Common Stock, including shares of Common
Stock issued upon exercise of the Warrants evidenced by this Warrant
Certificate, in each case in clauses (i) through (iii) until the
occurrence of a Trigger Event, shall for purposes of this subsection
(d) not be deemed issued until the occurrence of the earliest Trigger
Event.
(e) Tender or Exchange Offer. In case a tender or exchange
offer made by the Company or any Subsidiary of the Company for all or
any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market
value (as determined by the Board of Directors in its good faith
judgment) at the last time (the "Offer Time") tenders
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may be made pursuant to such tender or exchange offer (as it may be
amended) that, together with the aggregate of the cash plus the fair
market value (as determined by the Board of Directors in its good faith
judgment), as of the Offer Time, of consideration payable in respect of
any tender or exchange offer by the Company or any such Subsidiary for
all or any portion of the Common Stock consummated preceding the Offer
Time and in respect of which no Exercise Price adjustment pursuant to
this subsection (e) has been made, exceeds 5% of the product of the
Closing Price of the Common Stock at the Offer Time multiplied by the
number of shares of Common Stock outstanding (including any tendered
shares) at the Offer Time, the Exercise Price shall be reduced so that
the same shall equal the price determined by multiplying the Exercise
Price in effect immediately prior to the Offer Time by a fraction of
which (x) the numerator shall be (i) the product of the Closing Price
of the Common Stock at the Offer Time multiplied by the number of
shares of Common Stock outstanding (including any tendered shares) at
the Offer Time minus (ii) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based
on the acceptance (up to any maximum specified in the terms of the
tender or exchange offer) of all shares validly tendered and not
withdrawn as of the Offer Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y)
the denominator shall be the product of (i) such Closing Price at the
Offer Time multiplied by (ii) such number of outstanding shares at the
Offer Time minus the number of Purchased Shares, such reduction to
become effective immediately prior to the opening of business on the
day following the Offer Time. For purposes of this subsection (e), the
number of shares 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 issued in lieu of
fractions of shares of Common Stock.
(f) Closing Price Determination. For the purpose of any
computation under subsections (c) and (d) of this Section 9.1, the
Closing Price of Common Stock on any date shall be deemed to be the
average of the Closing Prices for the five consecutive Trading Days
ending not later than the day in question and commencing on a day
selected at random in good faith by the Company which is not more than
20 Trading Days before the day in question, provided, however, that (i)
if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Exercise
Price pursuant to this Section 9 occurs on or after the 20th Trading
Day prior to the day in question and prior to the "ex" date for the
issuance or distribution requiring such computation, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the same fraction
which the Exercise Price is so required to be adjusted as a result of
such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the
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Exercise Price pursuant to this Section 9 occurs on or after the "ex"
date for the issuance or distribution requiring such computation and on
or prior to the day in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the Exercise Price is so required to be adjusted as a result of
such other event, and (iii) if the "ex" date for the issuance or
distribution requiring such computation is on or prior to the day in
question, after taking into account any adjustment required pursuant to
clause (ii) of this proviso, the Closing Price for each Trading Day on
or after such "ex" date shall be adjusted by adding thereto the fair
market value on the day in question (as determined by the Board of
Directors in a manner consistent with any determination of such value
for the purposes of subsection (d) of this Section 9.1) of the assets,
evidences of indebtedness, Equity Securities or subscription rights
being distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For the purposes of
any computation under subsection (e) of this Section 9.1, the Closing
Price on any date shall be deemed to be the average of the daily
Closing Prices for the five consecutive Trading Days ending not later
than the Offer Time of such tender or exchange offer and commencing on
a day selected at random in good faith by the Company which date shall
be on or after the latest (the "Commencement Date") of (i) the date 20
Trading Days before the date in question, (ii) the date of commencement
of the tender or exchange offer requiring such computation and (iii)
the date of the last amendment, if any, of such tender or exchange
offer involving a change in the maximum number of shares for which
tenders are sought or a change in the consideration offered; provided,
however, that if the "ex" date for any event (other than the tender or
exchange offer requiring such computation) that requires an adjustment
to the Exercise Price pursuant to this Section 9 occurs on or after the
Commencement Date and prior to the Offer Time for the tender or
exchange offer requiring such computation, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Exercise Price is so required to be adjusted as a result of
such other event. For purposes of this subsection (f), the term "ex"
date, (i) when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way on Nasdaq
or on the relevant exchange or in the relevant market from which the
Closing Price was obtained without the right to receive such issuance
or distribution, (ii) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which
the Common Stock trades regular way on Nasdaq or such exchange or in
such market after the time at which such subdivision or combination
becomes effective, and (iii) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades
regular way on Nasdaq or such exchange or in such market after the
Offer Time of such tender or exchange offer.
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<PAGE> 34
(g) Minimum Adjustment Requirement. No adjustment shall be
required unless such adjustment would result in an increase or decrease
of at least $0.01 in the Exercise Price then subject to adjustment;
provided, however, that any adjustments that are not made by reason of
this subsection (g) shall be carried forward and taken into account in
any subsequent adjustment. In case the Company shall at any time issue
shares of Common Stock by way of dividend on any stock of the Company
or subdivide or combine the outstanding shares of Common Stock, said
amount of $0.01 specified in the preceding sentence (as theretofore
increased or decreased, if said amount shall have been adjusted in
accordance with the provisions of this subsection (g)) shall forthwith
be proportionately increased in the case of such a combination or
decreased in the case of such a subdivision or stock dividend so as
appropriately to reflect the same.
(h) Calculations. All calculations under this Section 9.1
shall be made to the nearest $0.01.
(i) Certificate. Whenever an adjustment in the Exercise Price
is made as required or permitted by the provisions of this Section 9.1,
the Company shall promptly file with the Warrant Agent a certificate of
its chief financial officer setting forth (A) the adjusted Exercise
Price as provided in this Section 9.1 and a brief statement of the
facts requiring such adjustment and the computation thereof and (B) the
number of shares of Common Stock (or portions thereof) purchasable upon
exercise of a Warrant after such adjustment in the Exercise Price in
accordance with Section 9.2 hereof and the record date therefor, and
promptly after such filing shall mail or cause to be mailed a notice of
such adjustment to each Warrantholder at his or her last address as the
same appears on the Warrant Register. Such certificate, in the absence
of manifest error, shall be conclusive and final evidence of the
correctness of such adjustment. The Warrant Agent shall be entitled to
rely upon such certificate, and shall be under no duty or
responsibility with respect to any such certificate except to exhibit
the same to any Warrantholder desiring inspection thereof.
(j) Notice. In case:
(i) the Company shall declare any dividend or any
distribution of any kind or character (whether in cash,
securities or other property) on or in respect of shares of
Common Stock or to the stockholders of the Company (in their
capacity as such), excluding any regular periodic cash
dividend paid out of current or retained earnings (as such
terms are used in generally accepted accounting principles);
or
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<PAGE> 35
(ii) the Company shall authorize the granting to the
holders of shares of Common Stock of rights to subscribe for
or purchase any shares of capital stock or of any other right;
or
(iii) of any reclassification of shares of Common
Stock (other than a subdivision or combination of outstanding
shares of Common Stock), or of any consolidation or merger to
which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and
shall mail or cause to be mailed to the Warrantholders, at their last
addresses as they shall appear upon the Warrant Register, at least 30
days prior to the applicable record date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or, if a record is not
to be taken, the date as of which the holders of shares of Common Stock
of record to be entitled to such dividend, distribution or rights are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and, if applicable, the
date as of which it is expected that holders of shares of Common Stock
of record shall be entitled to exchange their shares of Common Stock
for securities or other property (including cash) deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice, or any
defect therein, shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Section 305. Anything in this Section 9.1 to the contrary
notwithstanding, the Company shall be entitled, but not required, to
make such reductions in the Exercise Price, in addition to those
required by this Section 9.1, as it in its discretion shall determine
to be advisable, including, without limitation, in order that any
dividend in or distribution of shares of Common Stock or shares of
capital stock of any class other than Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of
rights or warrants, or any other transaction having a similar effect,
shall not be treated as a distribution of property by the Company to
its stockholders under Section 305 of the Internal Revenue Code of
1986, as amended, or any successor provision and shall not be taxable
to them.
(l) No Adjustment. Anything to the contrary herein
notwithstanding, no adjustment to the Exercise Price or the number of
shares of Common Stock
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<PAGE> 36
purchasable upon exercise of a Warrant shall be made pursuant to this
Section 9.1 or Section 9.2 hereof as a result of, or in connection
with, the issuance of options or rights to purchase Common Stock issued
to employees of the Company or its Subsidiaries pursuant to a stock
option or other similar plan adopted by the Board of Directors or an
employment agreement approved by the Board of Directors, or the
modification, renewal or extension of any such plan or agreement if
approved by the Board of Directors.
(m) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for purposes of taking any
action that requires an adjustment of the Exercise Price under this
Section 9, and shall, thereafter and before the effective date of such
action, legally abandon its plan to take such action, then thereafter
no adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
9.2. Adjustment to Number of Warrant Shares. Upon each
adjustment of the Exercise Price pursuant to Section 9.1 hereof the number of
Warrant Shares purchasable upon exercise of a Warrant outstanding prior to the
effectiveness of such adjustment shall be adjusted to the number, calculated to
the nearest one-hundredth of a share, obtained by (x) multiplying the number of
Warrant Shares purchasable immediately prior to such adjustment upon the
exercise of a Warrant by the Exercise Price in effect prior to such adjustment
and (y) dividing the product so obtained by the Exercise Price in effect after
such adjustment of the Exercise Price.
9.3. Organic Change.
(a) Company Survives. Upon the consummation of an Organic
Change (other than a transaction in which the Company is not the surviving
entity), lawful provision shall be made as part of the terms of such transaction
whereby the terms of the Warrant Certificates shall be modified, without payment
of any additional consideration therefor, so as to provide that upon exercise of
Warrants following the consummation of such Organic Change, the Warrantholders
of such Warrants shall have the right to purchase only the kind and amount of
securities, cash and other property receivable upon such Organic Change by a
holder of the number of Warrant Shares into which such Warrants might have been
exercised immediately prior to such Organic Change, assuming such holder of
Warrant Shares (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which a sale,
transfer or lease of all or substantially all of the assets of the Company was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person, and (ii) failed to exercise his rights of election, if any,
as to the kind and amount of securities, cash and other property receivable upon
such Organic Change (provided that if the kind and amount of securities, cash
and other property receivable
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<PAGE> 37
upon such Organic Change is not the same for each share of Common Stock held
immediately prior to such Organic Change by others than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing shares"), then for the purpose of this
subsection (a) the kind and amount of securities, cash and other property
receivable upon such Organic Change by each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality of the
non-electing shares); provided, however, that no adjustment shall be made as a
result of such Organic Change to the Exercise Price or the number of Warrant
Shares notwithstanding any provision of Section 9 hereof unless any event
requiring any such adjustment shall have occurred or shall occur prior to, upon
or after such Organic Change. Lawful provision also shall be made as part of the
terms of the Organic Change so that all other terms of the Warrant Certificates
shall remain in full force and effect following such an Organic Change. The
provisions of this Section 9.3(a) shall similarly apply to successive Organic
Changes.
(b) Company Does Not Survive. The Company shall not enter into
an Organic Change that is a transaction in which the Company is not the
surviving entity unless lawful provision shall be made as part of the terms of
such transaction whereby the surviving entity shall issue new securities to each
Warrantholder, without payment of any additional consideration therefor, with
terms that provide that upon the exercise of the Warrants, the Warrantholders of
such Warrants shall have the right to purchase only the kind and amount of
securities, cash and other property receivable upon such Organic Change by a
holder of the number of Warrant Shares into which such Warrants might have been
exercised immediately prior to such Organic Change, assuming such holder of
Warrant Shares (i) is not a Constituent Person or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind and amount of securities, cash and other property receivable upon such
Organic Change (provided that if the kind and amount of securities, cash and
other property receivable upon such Organic Change is not the same for each
non-electing share, then for the purpose of this subsection (b) the kind and
amount of securities, cash and other property receivable upon such Organic
Change by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares); provided,
however, that no adjustment shall be made as a result of such Organic Change to
the Exercise Price or the number of Warrant Shares notwithstanding any provision
of Section 9 hereof unless any event requiring any such adjustment shall have
occurred or shall occur prior to, upon or after such Organic Change. The
certificate or articles of incorporation or other constituent document of the
surviving entity shall provide for such adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be equivalent to the adjustments provided for in
Section 9.1 hereof.
9.4. Statement on Warrants. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to Section 9.1 or
Section
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<PAGE> 38
9.2 hereof, and Warrants issued after such adjustment may state the same
Exercise Price and the same number of Warrant Shares as are stated in this
Warrant Certificate.
Section 10. Warrant Agent. The Company shall cause to be
appointed in the Borough of Manhattan, The City of New York, a Warrant Agent,
having a capital and surplus of at least $50,000,000. Initially, ChaseMellon
Shareholder Services, L.L.C. will act as Warrant Agent.
Section 11. Fractional Interests. The Company shall not be
required to issue Fractional Warrant Shares on the exercise of the Warrants
evidenced by this Warrant Certificate. If any Fractional Warrant Share would,
but for the provisions of this Section 11, be issuable on the exercise of the
Warrants evidenced by this Warrant Certificate (or specified portions thereof),
the Company shall pay an amount in cash equal to the fraction of a Warrant Share
represented by such Fractional Warrant Share multiplied by the Closing Price on
the day of such exercise.
Section 12. No Rights as Shareholder. Nothing in this Warrant
Certificate shall be construed as conferring upon the Warrantholder or its
transferees any rights as a shareholder of the Company, including the right to
vote, receive dividends, consent or receive notices as a shareholder with
respect to any meeting of shareholders for the election of directors of the
Company or any other matter.
Section 13. Successors. All the covenants and provisions of
this Warrant Certificate by or for the benefit of the Company or the
Warrantholder shall bind and inure to the benefit of their respective successors
and permitted assigns hereunder.
Section 14. Governing Law; Choice of Forum, Etc. The validity,
construction and performance of this Warrant Certificate shall be governed by,
and interpreted in accordance with, the laws of New York without reference to
its conflict of laws rules. The Company and the Warrantholder (the "parties
hereto") agree that the appropriate and exclusive forum for any disputes arising
out of this Warrant Certificate solely between or among any or all of the
Company, on the one hand, and the Investor and/or any Person who has become a
Warrantholder, on the other, shall be the United States District Court for the
Southern District of New York, and, if such court will not hear any such suit,
the courts of the state of the Company's incorporation, and the parties hereto
irrevocably consent to the exclusive jurisdiction of such courts, and agree to
comply with all requirements necessary to give such courts jurisdiction. The
parties hereto further agree that the parties will not bring suit with respect
to any disputes, except as expressly set forth below, arising out of this
Warrant Certificate for the execution or enforcement of judgment, in any
jurisdiction other than the above specified courts. Each of the parties hereto
irrevocably consents to the service of process in any action or proceeding
hereunder by the mailing of copies thereof by registered or certified airmail,
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<PAGE> 39
postage prepaid, if to (i) the Company, at 48 Monroe Turnpike, Trumbull, CT
06611, Attention: General Counsel, or at such other address specified by the
Company in writing to the Warrant Agent, and (ii) any Warrantholder, at the
address of such Warrantholder specified in the Warrant Register. The foregoing
shall not limit the rights of any party hereto to serve process in any other
manner permitted by the law or to obtain execution of judgment in any other
jurisdiction. The parties further agree, to the extent permitted by law, that
final and unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and the amount of indebtedness. The parties agree to waive any and all rights
that they may have to a jury trial with respect to disputes arising out of this
Warrant Certificate.
Section 15. Benefits of this Warrant Certificate. Nothing in
this Warrant Certificate shall be construed to give to any Person other than the
Company and the Warrantholder any legal or equitable right, remedy or claim
under this Warrant Certificate, and this Warrant Certificate shall be for the
sole and exclusive benefit of the Company and the Warrantholder. This Warrant
Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Warrant Agent.
Section 16. Other Obligations. The parties hereby acknowledge
that, pursuant to the Warrant Agreement, nothing in the Warrant Agreement shall
permit the Company or the Warrant Agent to authorize or take action that alters
or reduces the rights of the Existing Holders (as defined in the Warrant
Agreement) under the Investment Agreement or the Warrants. In the event of any
inconsistency between the provisions of the Warrant Agreement, on the one hand,
and this Warrant Certificate, on the other hand, the provisions of this Warrant
Certificate shall control. With respect to Existing Holders, in the case of any
inconsistency between the provisions of the Warrant Agreement, on the one hand,
and the Investment Agreement, on the other hand, the provisions of the
Investment Agreement shall control to the extent applicable, except that
Section 2.4 of the Warrant Agreement supersedes Section 8.10 of the Investment
Agreement, and Section 6.4(a) of the Warrant Agreement supersedes Section 10 of
Exhibit B to the Investment Agreement.
A-19
<PAGE> 40
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, as of this __ day of ________________,
______________.
OXFORD HEALTH PLANS, INC.
By:__________________________
Name:
Title:
Attest:
__________________________
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Warrant Agent
By:__________________________
Name:
Title:
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<PAGE> 41
ELECTION TO EXERCISE
(To be executed upon exercise of Warrants)
To OXFORD HEALTH PLANS, INC.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant Certificate for, and to
purchase thereunder, _____________ Warrant Shares, as provided for therein, and
tenders herewith payment of the purchase price in full in the form of [COMPLETE
WHERE APPLICABLE]:
[ ] cash or a certified or official bank check in the amount of
$__________; and/or
[ ] $__________ Stated Value of Senior Preferred Stock (as to
which $ of accumulated dividends are unpaid), of which
$____________ Stated Value and the corresponding accumulated
dividends should be applied toward the payment of such Warrant
Shares; and/or
[ ] ___________ aggregate principal amount of Debentures (as to
which $__________ of accrued interest is unpaid), of which
$________ aggregate principal amount and the corresponding
accrued interest should be applied toward the payment of such
Warrant Shares; and/or
[ ] ____________ number of Warrants, valued at $__________ each
(such value arrived at by subtracting the Exercise Price of
$__________ from the Warrant Market Price of $__________, both
the Exercise Price and Warrant Market Price determined in
accordance with the provisions of the Warrant Certificate);
For a total purchase price of $__________.
If the Stated Value and accumulated and unpaid dividends of
the shares of Senior Preferred Stock, the principal amount of and accrued and
unpaid interest on the Debentures or the value of the Warrants evidenced by the
Warrant Certificate delivered herewith exceeds that portion of the payment which
is to be paid by the surrender of such shares, Debentures or Warrants, you are
authorized, as agent of the undersigned, to deliver to the Company such shares,
Debentures or Warrant Certificate delivered herewith for exchange into smaller
denominations in order that you may deliver to the undersigned new shares of
Senior Preferred Stock, new Debentures or Warrant Certificates, in Stated Value,
principal amount or number as the case may be, equal to the difference between
the Stated Value, principal amount or number as the case may be, of the Senior
Preferred Stock, Debentures or Warrants surrendered, less the Stated Value,
principal amount or number as the case may be, thereof, used to purchase Warrant
Shares.
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<PAGE> 42
Please issue a certificate or certificates for such Warrant Shares in the name
of, and pay any cash for any Fractional Warrant Shares to (please print name
address and social security or other identifying number)*:
Name: _________________________________________________________________________
Address: ______________________________________________________________________
Soc. Sec. #: __________________________________________________________________
AND, if said number of Warrant Shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of the undersigned for the balance remaining of the Warrant Shares
purchasable thereunder rounded up to the next higher whole number of Warrant
Shares.
Signature:**_________________________________
__________
* The Warrant Certificate and the Investment Agreement contain restrictions on
the sale and other transfer of the Warrants evidenced by such Warrant
Certificate.
** The above signature should correspond exactly with the name on the face of
this Warrant Certificate or with the name of the assignee appearing in the
assignment form below.
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<PAGE> 43
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee must be Printed or Typewritten)
Warrants to purchase ______ Warrant Shares of the Company, evidenced by the
within Warrant Certificate hereby irrevocably constituting and appointing ______
_________________ Attorney to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated: ________________ ,_______
______________________________
Signature of Registered Holder*
Signature Guaranteed: _______________________________
Signature of Guarantor
_____________________________
__________
* The above signature should correspond exactly with the name on the face of
this Warrant Certificate.
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<PAGE> 44
Exhibit B
Form of Series B Warrant Certificate
THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND WERE NOT REGISTERED UNDER ANY
STATE SECURITIES LAW, AND THE SECURITIES EVIDENCED HEREBY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THE SECURITIES EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.
IF THE WARRANTHOLDER SPECIFIED IN THIS CERTIFICATE IS AN EXISTING HOLDER (AS
DEFINED IN THE WARRANT AGREEMENT), THEN THIS CERTIFICATE ALSO EVIDENCES AND
ENTITLES SUCH EXISTING HOLDER, AS A HOLDER HEREOF, TO CERTAIN RIGHTS AS SET
FORTH IN THE REGISTRATION RIGHTS AGREEMENT DATED AS OF FEBRUARY 23, 1998, BY AND
BETWEEN TPG OXFORD LLC AND OXFORD HEALTH PLANS, INC. (THE "COMPANY"), THE TERMS
OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY AND AT THE PRINCIPAL OFFICE OF THE
WARRANT AGENT.
B-1
<PAGE> 45
No. [Number of Warrants]
SERIES B WARRANTS
Exercisable commencing May 13, 1998;
Void after Expiration Time (as defined herein)
OXFORD HEALTH PLANS, INC., a Delaware corporation (the
"Company"), hereby certifies that, for value received, ____________________, or
registered assigns (the "Warrantholder"), is the owner of ______________Warrants
(as defined below), each of which entitles the Warrantholder to purchase from
the Company one fully paid, duly authorized and nonassessable share of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock"), at any
time from and after May 13, 1998 (the "Issue Date") and continuing up to the
Expiration Time (as defined herein) at a per share exercise price determined
according to the terms and subject to the conditions set forth in this
certificate (the "Warrant Certificate"). The number of shares of Common Stock
issuable upon exercise of each such Warrant and the exercise price per share of
Common Stock are subject to adjustment from time to time pursuant to the
provisions of Section 9 of this Warrant Certificate. The Warrants evidenced by
this Warrant Certificate are part of a series of warrants to purchase up to
6,730,000 shares of Common Stock (collectively, the "Warrants"), issued pursuant
to an Investment Agreement, dated as of February 23, 1998 (as it may be amended,
supplemented or otherwise modified from time to time, the "Investment
Agreement"), by and between TPG Oxford LLC, a Delaware limited liability company
(the "Investor"), and the Company, or pursuant to the Warrant Agreement, dated
as of December, 1999 (as it may be amended, supplemented or otherwise modified
from time to time, the "Warrant Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., as Warrant Agent.
Section 1 Definitions. As used in this Warrant Certificate,
the following terms shall have the meanings set forth below:
"Board of Directors" means the board of directors of the
Company.
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<PAGE> 46
"Business Day" means any day, other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Certificate of Designations" means, with respect to the
Series D Preferred Stock or the Series E Preferred Stock, as the case
may be, the Certificate of Designations therefor filed by the Company
with the Secretary of State of the State of Delaware.
"Certificate of Incorporation" means the Second Amended and
Restated Certificate of Incorporation of the Company, as amended from
time to time.
"Closing Price" with respect to a share of Common Stock on any
day means, subject to Section 9.1(f) hereof, the last reported sale
price on that day or, in case no such reported sale takes place on such
day, the average of the last reported bid and asked prices, regular
way, on that day, in either case, as reported in the consolidated
transaction reporting system with respect to securities quoted on
Nasdaq or, if the shares of Common Stock are not quoted on Nasdaq, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not quoted on Nasdaq and
not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid
and low asked prices on such other nationally recognized quotation
system then in use, or, if on any such day the shares of Common Stock
are not quoted on any such quotation system, the average of the closing
bid and asked prices as furnished by a professional market maker
selected by the Board of Directors making a market in the shares of
Common Stock. If the shares of Common Stock are not publicly held or so
listed, quoted or publicly traded, the "Closing Price" means the fair
market value of a share of Common Stock, as determined in good faith by
the Board of Directors.
"Common Stock" has the meaning set forth in the preamble
hereto.
"Company" has the meaning set forth in the preamble hereto.
"Debentures" means the Series D Debentures and the Series E
Debentures.
"Equity Securities" of any Person means any and all common
stock, preferred stock, any other class of capital stock and
partnership or limited liability company interests of such Person or
any other similar interests of any Person that is not a corporation,
partnership or limited liability company.
"Exercise Price" has the meaning set forth in Section 8
hereof.
"Expiration Date" means the earlier of (i) May 13, 2008, and
(ii) the date of an Optional Redemption.
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<PAGE> 47
"Expiration Time" means 5:00 P.M., New York City time, on the
Expiration Date.
"Fractional Warrant Share" means any fraction of a whole share
of Common Stock issued, or issuable upon, exercise of the Warrants.
"Investment Agreement" has the meaning set forth in the
preamble hereto.
"Investor" has the meaning set forth in the preamble hereto.
"Issue Date" has the meaning set forth in the preamble hereto.
"Nasdaq" means The Nasdaq Stock Market's National Market.
"Offer Time" has the meaning set forth in Section 9.1(e)
hereof.
"Optional Redemption" means a redemption of the Series E
Preferred Stock pursuant to Article V, Section A of the Certificate of
Designations therefor or a redemption of the Series E Debentures
pursuant to Section 6.1 of the Series E Indenture.
"Organic Change" means, with respect to any Person, any
transaction (including without limitation any recapitalization, capital
reorganization or reclassification of any class or series of Equity
Securities, any consolidation of such Person with, or merger of such
Person into, any other Person, any merger of another Person into such
Person (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of such Person), and any sale or transfer or
lease of all or substantially all of the assets of such Person, but not
including any stock split, combination or subdivision which is the
subject of Section 9.1(b)hereof) pursuant to which any class or series
of Equity Securities of such Person is converted into the right to
receive other securities, cash or other property.
"Person" means any individual, firm, corporation, company,
limited liability company, association, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Preferred Stock" means the Series D Preferred Stock
and Series E Preferred Stock.
"Series D Debentures" means the Series D Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series D Preferred Stock" means the Series D Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
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"Series E Debentures" means the Series E Junior Subordinated
Debentures due May 13, 2008 of the Company.
"Series E Indenture" means the indenture, between the Company
and the trustee specified therein, pursuant to which the Series E
Debentures are issued.
"Series E Preferred Stock" means the Series E Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
"Stated Value" means the stated value of the Series D
Preferred Stock or the Series E Preferred Stock, as the case may be, in
each case as set forth in the Certificate of Designations therefor.
"Subsidiary" means, as to any Person, any other Person of
which more than 50% of the shares of the voting stock or other voting
interests are owned or controlled, or the ability to select or elect
50% or more of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or
by such first Person and one or more of its Subsidiaries.
"Trading Day" means any day on which Nasdaq is open for
trading, or if the shares of Common Stock are not quoted on Nasdaq, any
day on which the principal national securities exchange or national
quotation system on which the shares of Common Stock are listed,
admitted to trading or quoted is open for trading, or if the shares of
Common Stock are not so listed, admitted to trading or quoted, any
Business Day.
"Warrant" has the meaning set forth in the preamble hereto.
"Warrant Agent" means the Person named or otherwise appointed
as such as set forth in Section 10 hereof.
"Warrant Agreement" has the meaning set forth in the preamble
hereto.
"Warrant Certificate" has the meaning in the preamble hereto.
"Warrant Market Price" means the average of the Closing Prices
of a share of Common Stock for the ten consecutive Trading Days ending
on the Trading Day immediately prior to the day on which the Election
to Exercise is delivered.
"Warrant Register" has the meaning set forth in Section 2.2
hereof.
"Warrant Shares" means the shares of Common Stock issued, or
issuable upon, exercise of the Warrants.
"Warrantholder" has the meaning set forth in the preamble
hereto.
Section 2. Transferability.
2.1 Registration. The Warrants shall be issued only in
registered form.
2.2 Transfer. The Warrants evidenced by this Warrant
Certificate may be sold or otherwise transferred at any time (except as such
sale or transfer may be restricted pursuant to the Securities Act or any
applicable state securities laws) and any such sale or transfer shall be
effected on the books of the Company (the "Warrant Register") maintained at the
corporate trust office of the Warrant Agent upon surrender of this Warrant
Certificate at the corporate trust
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office of the Warrant Agent for registration of transfer duly endorsed by the
Warrantholder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall execute, and the
Warrant Agent shall countersign and deliver a new Warrant Certificate or
Certificates in appropriate denominations to the Person or Persons entitled
thereto.
2.3. Legend on Warrant Certificates and Warrant Shares. If and
for so long as required by the Warrant Agreement, this Warrant Certificate and
certificates representing the Warrant Shares shall contain a legend as specified
in Section 2.4 of the Warrant Agreement.
Section 3. Exchange of Warrant Certificate. Any Warrant
Certificate may be exchanged for another certificate or certificates of like
tenor entitling the Warrantholder to purchase a like aggregate number of Warrant
Shares as the certificate or certificates surrendered then entitles such
Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant
Certificate shall make such request in writing delivered to the Warrant Agent,
and shall surrender, properly endorsed, the certificate evidencing the Warrant
to be so exchanged. Thereupon, the Company shall execute, and the Warrant Agent
shall countersign and deliver to the Person entitled thereto, a new Warrant
certificate or Certificates as so requested.
Section 4. Term of Warrants; Exercise of Warrants.
4.1. Duration of Warrant. On the terms and subject to the
conditions set forth in this Warrant Certificate, the Warrantholder may exercise
the Warrants evidenced hereby, in whole or in part, at any time and from time to
time after the Issue Date and before the Expiration Time. If the Warrants
evidenced hereby are not exercised by the Expiration Time, they shall become
void, and all rights hereunder shall thereupon cease.
4.2. Exercise of Warrant.
(a) On the terms and subject to the conditions set forth in
this Warrant Certificate, the Warrantholder may exercise the Warrants evidenced
hereby, in whole or in part, by presentation and surrender to the Warrant Agent
of this Warrant Certificate together with the attached Election to Exercise duly
filled in and signed, and accompanied by payment to the Company of the Exercise
Price for the number of Warrant Shares specified in such Election to Exercise.
Payment of the aggregate Exercise Price shall be made (i) in cash in an amount
equal to the aggregate Exercise Price; (ii) by certified or official bank check
in an amount equal to the aggregate Exercise Price; (iii) by an exchange (which
shall be treated as a recapitalization to the extent allowable under the
Internal Revenue Code of 1986, as amended, and applicable regulations
thereunder) with the Company of a number of shares of Senior Preferred Stock
having an aggregate Stated Value plus accumulated and unpaid dividends thereon
equal to the aggregate Exercise Price or by an exchange (which shall be treated
as a recapitalization to the extent allowable under the Internal Revenue Code of
1986, as amended, and applicable regulations thereunder) with the Company of a
principal amount of Debentures having an aggregate principal amount plus accrued
and unpaid interest thereon equal to the aggregate Exercise Price; (iv) by an
exchange (which shall be treated as a recapitalization to the extent allowable
under the Internal Revenue Code of 1986, as amended, and applicable regulations
thereunder) with the Company of outstanding Warrants (other than the Warrants
being exercised) to purchase Warrant Shares having an aggregate Warrant Market
Price which, after subtracting the aggregate exercise prices thereof, equals the
aggregate Exercise Price of the Warrants being exercised; or (v) by any
combination of the foregoing; provided,
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however, that (except to the extent expressly permitted by the proviso in
Section 5(b) of the Share Exchange Agreement, dated as of February 13, 1999, by
and among the Company and the investors named therein) the Warrantholders may
not use shares of Series D Preferred Stock pursuant to clause (iii) or (v) in
connection with any exercise prior to May 13, 2000.
(b) On the terms and subject to the conditions set forth in
this Warrant Certificate, upon such presentation and surrender of this Warrant
Certificate and payment of such aggregate Exercise Price as set forth in
subsection (a) above, the Company shall promptly issue and cause to be delivered
to the Warrant Agent a certificate or certificates (in such name or names as the
Warrantholder may designate in writing) for the specified number of duly
authorized, fully paid and non-assessable Warrant Shares issuable upon exercise,
and shall deliver to the Warrantholder cash, as provided in Section 11 hereof,
with respect to any Fractional Warrant Shares otherwise issuable upon such
surrender. Upon receipt of such Warrant Shares, the Warrant Agent shall transmit
such Warrant Shares to the Warrantholder, or to such Persons as the
Warrantholder may designate in writing. In the event that the Warrants evidenced
by this Warrant Certificate are exercised in part prior to the Expiration Time,
the Company shall issue and cause to be delivered to the Warrant Agent a
certificate or certificates (in such name or names as the Warrantholder may
designate in writing) evidencing any remaining unexercised Warrants. Upon
receipt of such Warrant Certificate, the Warrant Agent shall countersign and
deliver such Warrant Certificate to the Warrantholder, or to such persons as the
Warrantholder may designate in writing.
(c) Each Person in whose name any certificate for Warrant
Shares is issued shall for all purposes be deemed to have become the holder of
record of the Warrant Shares represented thereby on the first date on which both
the Warrant Certificate evidencing the respective Warrants was surrendered and
payment of the Exercise Price and any applicable taxes was made, irrespective of
date of issue or delivery of such certificate.
Section 5. Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Warrant Shares or of other securities or property
deliverable upon exercise of the Warrants evidenced by this Warrant Certificate
or certificates representing such shares or securities (other than income taxes
imposed on the Warrantholder); provided that the Company shall not be required
to pay any such tax or other charge that may be imposed in connection with any
transfer involved in the issue of any certificate for Warrant Shares or other
securities or property, or payment of cash, to any Person other than the holder
of the Warrant Certificate surrendered upon exercise, and in case of any such
tax or charge, the Warrant Agent and the Company shall not be required to issue
any security or property or pay any cash until such tax or charge has been paid
or it has been established to the Warrant Agent's and the Company's satisfaction
that no such tax or charge is payable.
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Section 6. Mutilated or Missing Warrant. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company shall issue and
the Warrant Agent shall countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, upon receipt
of a proper affidavit or other evidence reasonably satisfactory to the Company
and the Warrant Agent (and surrender of any mutilated Warrant Certificate) and
bond of indemnity in form and amount and with corporate surety reasonably
satisfactory to the Company and the Warrant Agent in each instance protecting
the Company and the Warrant Agent, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants as the Warrant Certificate so
lost, stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at
any time enforceable by anyone. An applicant for such substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may prescribe.
All Warrant Certificates shall be held and owned upon the express condition that
the foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
Section 7. Reservation of Shares. The Company hereby agrees
that there shall be reserved for issuance and delivery upon exercise of Warrants
evidenced by this Warrant Certificate, free from preemptive rights, the number
of shares of authorized but unissued shares of Common Stock as shall be required
for issuance or delivery upon exercise of the Warrants evidenced by this Warrant
Certificate. The Company further agrees that it will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company. Without
limiting the generality of the foregoing, the Company agrees that before taking
any action which would cause an adjustment reducing the Exercise Price below the
then-par value of Warrant Shares issuable upon exercise of the Warrants
evidenced hereby, the Company shall from time to time take all such action that
may be necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock at the Exercise Price as so
adjusted.
Section 8. Exercise Price. The price per share (the "Exercise
Price") at which Warrant Shares shall be purchasable upon the exercise of the
Warrants evidenced by this Warrant Certificate shall be $17.75, subject to
adjustment pursuant to Section 9 hereof.
Section 9. Adjustment of Exercise Price and Number of Shares.
The number and kind of securities purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate and the Exercise Price thereof shall be
subject to adjustment from time to time after the date hereof upon the happening
of certain events, as follows:
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9.1. Adjustments to Exercise Price. The Exercise Price shall
be subject to adjustment as follows:
(a) Stock Dividends. In case the Company after the date hereof
shall pay a dividend or make a distribution to all holders of shares of
Common Stock in shares of Common Stock, then in any such case the
Exercise Price in effect at the opening of business on the day
following the record date for the determination of stockholders
entitled to receive such dividend or distribution shall be reduced to a
price obtained by multiplying such Exercise Price by a fraction of
which (x) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date and (y) the
denominator shall be the sum of such number of shares of Common Stock
outstanding and the total number of shares of Common Stock constituting
such dividend or distribution, such reduction to become effective
immediately after the opening of business on the day following such
record date. For purposes of this subsection (a), the number of shares
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 issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(b) Stock Splits and Reverse Splits. In case after the date
hereof outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Exercise Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, in case after the date hereof outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common
Stock, the Exercise Price in effect at the opening of business on the
day following the day upon which such combination becomes effective
shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or
combination becomes effective.
(c) Issuances Below Market. In case the Company after the date
hereof shall issue rights or warrants to holders of shares of Common
Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Closing Price per share on the
record date for the determination of stockholders entitled to receive
such rights or warrants, the Exercise Price in effect at the opening of
business on the day following such record date shall be adjusted to a
price obtained by multiplying such Exercise Price by a fraction of
which (x) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the
number of shares of Common Stock that the aggregate offering price of
the total number of shares so to be offered would purchase at such
Closing Price and (y) the denominator shall be the number of shares of
Common Stock outstanding at the close of business on such record date
plus the number of additional shares of Common Stock so to be offered
for
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subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following such
record date; provided, however, that no adjustment shall be made if the
Company issues or distributes to each Warrantholder the rights or
warrants that each Warrantholder would have been entitled to receive
had the Warrants held by such Warrantholder been exercised prior to
such record date; and provided, further, that in no event shall the
fact that the Series B Warrants of the Company became exercisable for
shares of Common Stock upon occurrence of the Shareholder Approval (as
defined in the Investment Agreement) constitute an issuance of rights
or warrants for purposes of this subsection (c). For purposes of this
subsection (c), the number of shares 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 issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Company. Rights or warrants
issued by the Company to all holders of Common Stock entitling the
holders thereof to subscribe for or purchase Equity Securities, which
rights or warrants (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued in
respect of future issuances of Common Stock, including shares of Common
Stock issued upon exercise of the Warrants evidenced by this Warrant
Certificate, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events (a "Trigger Event"), shall
for purposes of this subsection (c) not be deemed issued until the
occurrence of the earliest Trigger Event.
(d) Special Dividends. In case the Company after the date
hereof shall distribute to all holders of shares of Common Stock
evidences of its indebtedness or assets (excluding any regular periodic
cash dividend), Equity Securities (other than Common Stock) or rights
to subscribe (excluding those referred to in subsection (c) above) for
Equity Securities other than Common Stock, in each such case the
Exercise Price in effect immediately prior to the close of business on
the record date for the determination of stockholders entitled to
receive such distribution shall be adjusted to a price obtained by
multiplying such Exercise Price by a fraction of which (x) the
numerator shall be the Closing Price per share of Common Stock on such
record date, less the then-current fair market value as of such record
date (as determined by the Board of Directors in its good faith
judgment) of the portion of assets or evidences of indebtedness or
Equity Securities or subscription rights so distributed applicable to
one share of Common Stock, and (y) the denominator shall be such
Closing Price, such adjustment to become effective immediately prior to
the opening of business on the day following such record date;
provided, however, that no adjustment shall be made (1) if the Company
issues or distributes to each Warrantholder the subscription rights
referred to above that each Warrantholder would have been entitled to
receive had the Warrants held by such Warrantholder been exercised
prior to such record date or (2) if the Company grants to each
Warrantholder the right to receive, upon the exercise of the Warrants
held by such Warrantholder at any time after the distribution of the
evidences of indebtedness or assets or Equity Securities referred to
above, the evidences of
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indebtedness or assets or Equity Securities that such Warrantholder
would have been entitled to receive had such Warrants been exercised
prior to such record date. The Company shall provide any Warrantholder,
upon receipt of a written request therefor, with any indenture or other
instrument defining the rights of the holders of any indebtedness,
assets, subscription rights or Equity Securities referred to in this
subsection (d). Rights or warrants issued by the Company to all holders
of Common Stock entitling the holders thereof to subscribe for or
purchase Equity Securities, which rights or warrants (i) are deemed to
be transferred with such shares of Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of
Common Stock, including shares of Common Stock issued upon exercise of
the Warrants evidenced by this Warrant Certificate, in each case in
clauses (i) through (iii) until the occurrence of a Trigger Event,
shall for purposes of this subsection (d) not be deemed issued until
the occurrence of the earliest Trigger Event.
(e) Tender or Exchange Offer. In case a tender or exchange
offer made by the Company or any Subsidiary of the Company for all or
any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market
value (as determined by the Board of Directors in its good faith
judgment) at the last time (the "Offer Time") tenders may be made
pursuant to such tender or exchange offer (as it may be amended) that,
together with the aggregate of the cash plus the fair market value (as
determined by the Board of Directors in its good faith judgment), as of
the Offer Time, of consideration payable in respect of any tender or
exchange offer by the Company or any such Subsidiary for all or any
portion of the Common Stock consummated preceding the Offer Time and in
respect of which no Exercise Price adjustment pursuant to this
subsection (e) has been made, exceeds 5% of the product of the Closing
Price of the Common Stock at the Offer Time multiplied by the number of
shares of Common Stock outstanding (including any tendered shares) at
the Offer Time, the Exercise Price shall be reduced so that the same
shall equal the price determined by multiplying the Exercise Price in
effect immediately prior to the Offer Time by a fraction of which (x)
the numerator shall be (i) the product of the Closing Price of the
Common Stock at the Offer Time multiplied by the number of shares of
Common Stock outstanding (including any tendered shares) at the Offer
Time minus (ii) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered and not withdrawn as of the Offer
Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the denominator shall be
the product of (i) such Closing Price at the Offer Time multiplied by
(ii) such number of outstanding shares at the Offer Time minus the
number of Purchased Shares, such reduction to become effective
immediately prior to the opening of business on the day following the
Offer Time. For purposes of this subsection (e), the number of shares
of Common Stock at any time outstanding shall not include shares held
in the treasury of the Company but shall include
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shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock.
(f) Closing Price Determination. For the purpose of any
computation under subsections (c) and (d) of this Section 9.1, the
Closing Price of Common Stock on any date shall be deemed to be the
average of the Closing Prices for the five consecutive Trading Days
ending not later than the day in question and commencing on a day
selected at random in good faith by the Company which is not more than
20 Trading Days before the day in question, provided, however, that (i)
if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Exercise
Price pursuant to this Section 9 occurs on or after the 20th Trading
Day prior to the day in question and prior to the "ex" date for the
issuance or distribution requiring such computation, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the same fraction
which the Exercise Price is so required to be adjusted as a result of
such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Exercise Price pursuant to this Section 9 occurs on
or after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the day in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal
of the fraction by which the Exercise Price is so required to be
adjusted as a result of such other event, and (iii) if the "ex" date
for the issuance or distribution requiring such computation is on or
prior to the day in question, after taking into account any adjustment
required pursuant to clause (ii) of this proviso, the Closing Price for
each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the fair market value on the day in question (as determined by
the Board of Directors in a manner consistent with any determination of
such value for the purposes of subsection (d) of this Section 9.1) of
the assets, evidences of indebtedness, Equity Securities or
subscription rights being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date. For
the purposes of any computation under subsection (e) of this Section
9.1, the Closing Price on any date shall be deemed to be the average of
the daily Closing Prices for the five consecutive Trading Days ending
not later than the Offer Time of such tender or exchange offer and
commencing on a day selected at random in good faith by the Company
which date shall be on or after the latest (the "Commencement Date") of
(i) the date 20 Trading Days before the date in question, (ii) the date
of commencement of the tender or exchange offer requiring such
computation and (iii) the date of the last amendment, if any, of such
tender or exchange offer involving a change in the maximum number of
shares for which tenders are sought or a change in the consideration
offered; provided, however, that if the "ex" date for any event (other
than the tender or exchange offer requiring such computation) that
requires an adjustment to the Exercise Price pursuant to this Section 9
occurs on or after the Commencement Date and prior to the Offer Time
for the tender or exchange offer requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date
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for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Exercise Price is so required
to be adjusted as a result of such other event. For purposes of this
subsection (f), the term "ex" date, (i) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock trades regular way on Nasdaq or on the relevant exchange or in
the relevant market from which the Closing Price was obtained without
the right to receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
Nasdaq or such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when used with
respect to any tender or exchange offer means the first date on which
the Common Stock trades regular way on Nasdaq or such exchange or in
such market after the Offer Time of such tender or exchange offer.
(g) Minimum Adjustment Requirement. No adjustment shall be
required unless such adjustment would result in an increase or decrease
of at least $0.01 in the Exercise Price then subject to adjustment;
provided, however, that any adjustments that are not made by reason of
this subsection (g) shall be carried forward and taken into account in
any subsequent adjustment. In case the Company shall at any time issue
shares of Common Stock by way of dividend on any stock of the Company
or subdivide or combine the outstanding shares of Common Stock, said
amount of $0.01 specified in the preceding sentence (as theretofore
increased or decreased, if said amount shall have been adjusted in
accordance with the provisions of this subsection (g)) shall forthwith
be proportionately increased in the case of such a combination or
decreased in the case of such a subdivision or stock dividend so as
appropriately to reflect the same.
(h) Calculations. All calculations under this Section 9.1
shall be made to the nearest $0.01.
(i) Certificate. Whenever an adjustment in the Exercise Price
is made as required or permitted by the provisions of this Section 9.1,
the Company shall promptly file with the Warrant Agent a certificate of
its chief financial officer setting forth (A) the adjusted Exercise
Price as provided in this Section 9.1 and a brief statement of the
facts requiring such adjustment and the computation thereof and (B) the
number of shares of Common Stock (or portions thereof) purchasable upon
exercise of a Warrant after such adjustment in the Exercise Price in
accordance with Section 9.2 hereof and the record date therefor, and
promptly after such filing shall mail or cause to be mailed a notice of
such adjustment to each Warrantholder at his or her last address as the
same appears on the Warrant Register. Such certificate, in the absence
of manifest error, shall be conclusive and final evidence of the
correctness of such adjustment. The Warrant Agent shall be entitled to
rely upon such certificate, and shall be under no duty or
responsibility with respect to any such certificate except to exhibit
the same to any Warrantholder desiring inspection thereof.
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(j) Notice. In case:
(a) the Company shall declare any dividend or any
distribution of any kind or character (whether in cash,
securities or other property) on or in respect of shares of
Common Stock or to the stockholders of the Company (in their
capacity as such), excluding any regular periodic cash
dividend paid out of current or retained earnings (as such
terms are used in generally accepted accounting principles);
or
(b) the Company shall authorize the granting to the
holders of shares of Common Stock of rights to subscribe for
or purchase any shares of capital stock or of any other right;
or
(c) of any reclassification of shares of Common Stock
(other than a subdivision or combination of outstanding shares
of Common Stock), or of any consolidation or merger to which
the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall mail
or cause to be mailed to the Warrantholders, at their last addresses as they
shall appear upon the Warrant Register, at least 30 days prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or, if a record is not to be taken, the date as of which the holders of shares
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and, if applicable, the date as of which it is
expected that holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
(including cash) deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up. Failure to give any such
notice, or any defect therein, shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Section 305. Anything in this Section 9.1 to the contrary
notwithstanding, the Company shall be entitled, but not required, to
make such reductions in the Exercise Price, in addition to those
required by this Section 9.1, as it in its discretion shall determine
to be advisable, including, without limitation, in order that any
dividend in or distribution of shares of Common Stock or shares of
capital stock of any class other than Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of
rights or warrants, or any other transaction having a similar effect,
shall not be
B-14
<PAGE> 58
treated as a distribution of property by the Company to its
stockholders under Section 305 of the Internal Revenue Code of 1986, as
amended, or any successor provision and shall not be taxable to them.
(l) No Adjustment. Anything to the contrary herein
notwithstanding, no adjustment to the Exercise Price or the number of
shares of Common Stock purchasable upon exercise of a Warrant shall be
made pursuant to this Section 9.1 or Section 9.2 hereof as a result of,
or in connection with, the issuance of options or rights to purchase
Common Stock issued to employees of the Company or its Subsidiaries
pursuant to a stock option or other similar plan adopted by the Board
of Directors or an employment agreement approved by the Board of
Directors, or the modification, renewal or extension of any such plan
or agreement if approved by the Board of Directors.
(m) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for purposes of taking any
action that requires an adjustment of the Exercise Price under this
Section 9, and shall, thereafter and before the effective date of such
action, legally abandon its plan to take such action, then thereafter
no adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
9.2. Adjustment to Number of Warrant Shares. Upon each
adjustment of the Exercise Price pursuant to Section 9.1 hereof the number of
Warrant Shares purchasable upon exercise of a Warrant outstanding prior to the
effectiveness of such adjustment shall be adjusted to the number, calculated to
the nearest one-hundredth of a share, obtained by (x) multiplying the number of
Warrant Shares purchasable immediately prior to such adjustment upon the
exercise of a Warrant by the Exercise Price in effect prior to such adjustment
and (y) dividing the product so obtained by the Exercise Price in effect after
such adjustment of the Exercise Price.
9.3. Organic Change.
(a) Company Survives. Upon the consummation of an Organic
Change (other than a transaction in which the Company is not the surviving
entity), lawful provision shall be made as part of the terms of such transaction
whereby the terms of the Warrant Certificates shall be modified, without payment
of any additional consideration therefor, so as to provide that upon exercise of
Warrants following the consummation of such Organic Change, the Warrantholders
of such Warrants shall have the right to purchase only the kind and amount of
securities, cash and other property receivable upon such Organic Change by a
holder of the number of Warrant Shares into which such Warrants might have been
exercised immediately prior to such Organic Change, assuming such holder of
Warrant Shares (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which a sale,
transfer or lease of all or substantially all of the assets of the Company was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person, and (ii) failed to exercise his rights of election, if any,
as to the kind and amount of securities, cash and other property receivable upon
such Organic Change (provided that if the kind and amount of securities, cash
and other
B-15
<PAGE> 59
property receivable upon such Organic Change is not the same for each share of
Common Stock held immediately prior to such Organic Change by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing shares"), then for the
purpose of this subsection (a) the kind and amount of securities, cash and other
property receivable upon such Organic Change by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares); provided, however, that no adjustment shall be made as a
result of such Organic Change to the Exercise Price or the number of Warrant
Shares notwithstanding any provision of Section 9 hereof unless any event
requiring any such adjustment shall have occurred or shall occur prior to, upon
or after such Organic Change. Lawful provision also shall be made as part of the
terms of the Organic Change so that all other terms of the Warrant Certificates
shall remain in full force and effect following such an Organic Change. The
provisions of this Section 9.3(a) shall similarly apply to successive Organic
Changes.
(b) Company Does Not Survive. The Company shall not enter into
an Organic Change that is a transaction in which the Company is not the
surviving entity unless lawful provision shall be made as part of the terms of
such transaction whereby the surviving entity shall issue new securities to each
Warrantholder, without payment of any additional consideration therefor, with
terms that provide that upon the exercise of the Warrants, the Warrantholders of
such Warrants shall have the right to purchase only the kind and amount of
securities, cash and other property receivable upon such Organic Change by a
holder of the number of Warrant Shares into which such Warrants might have been
exercised immediately prior to such Organic Change, assuming such holder of
Warrant Shares (i) is not a Constituent Person or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind and amount of securities, cash and other property receivable upon such
Organic Change (provided that if the kind and amount of securities, cash and
other property receivable upon such Organic Change is not the same for each
non-electing share, then for the purpose of this subsection (b) the kind and
amount of securities, cash and other property receivable upon such Organic
Change by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares); provided,
however, that no adjustment shall be made as a result of such Organic Change to
the Exercise Price or the number of Warrant Shares notwithstanding any provision
of Section 9 hereof unless any event requiring any such adjustment shall have
occurred or shall occur prior to, upon or after such Organic Change. The
certificate or articles of incorporation or other constituent document of the
surviving entity shall provide for such adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be equivalent to the adjustments provided for in
Section 9.1 hereof.
9.4. Statement on Warrants. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to Section 9.1 or
Section 9.2
B-16
<PAGE> 60
hereof, and Warrants issued after such adjustment may state the same Exercise
Price and the same number of Warrant Shares as are stated in this Warrant
Certificate.
Section 10. Warrant Agent. The Company shall cause to be
appointed in the Borough of Manhattan, The City of New York, a Warrant Agent,
having a capital and surplus of at least $50,000,000. Initially, ChaseMellon
Shareholder Services, L.L.C., will act as Warrant Agent.
Section 11. Fractional Interests. The Company shall not be
required to issue Fractional Warrant Shares on the exercise of the Warrants
evidenced by this Warrant Certificate. If any Fractional Warrant Share would,
but for the provisions of this Section 11, be issuable on the exercise of the
Warrants evidenced by this Warrant Certificate (or specified portions thereof),
the Company shall pay an amount in cash equal to the fraction of a Warrant Share
represented by such Fractional Warrant Share multiplied by the Closing Price on
the day of such exercise.
Section 12. No Rights as Shareholder. Nothing in this Warrant
Certificate shall be construed as conferring upon the Warrantholder or its
transferees any rights as a shareholder of the Company, including the right to
vote, receive dividends, consent or receive notices as a shareholder with
respect to any meeting of shareholders for the election of directors of the
Company or any other matter.
Section 13. Successors. All the covenants and provisions of
this Warrant Certificate by or for the benefit of the Company or the
Warrantholder shall bind and inure to the benefit of their respective successors
and permitted assigns hereunder.
Section 14. Governing Law; Choice of Forum, Etc. The validity,
construction and performance of this Warrant Certificate shall be governed by,
and interpreted in accordance with, the laws of New York without reference to
its conflict of laws rules. The Company and the Warrantholders (the "parties
hereto") agree that the appropriate and exclusive forum for any disputes arising
out of this Warrant Certificate solely between or among any or all of the
Company, on the one hand, and the Investor and/or any Person who has become a
Warrantholder, on the other, shall be the United States District Court for the
Southern District of New York, and, if such court will not hear any such suit,
the courts of the state of the Company's incorporation, and the parties hereto
irrevocably consent to the exclusive jurisdiction of such courts, and agree to
comply with all requirements necessary to give such courts jurisdiction. The
parties hereto further agree that the parties will not bring suit with respect
to any disputes, except as expressly set forth below, arising out of this
Warrant Certificate for the execution or enforcement of judgment, in any
jurisdiction other than the above specified courts. Each of the parties hereto
irrevocably consents to the service of process in any action or proceeding
hereunder by the mailing of copies thereof by registered or certified airmail,
postage prepaid, if to (i) the Company, at 48 Monroe Turnpike, Trumbull,CT
06611, Attention: General Counsel, or at such other address specified by the
Company in writing to the Warrant Agent, and (ii) any Warrantholder, at the
address of such Warrantholder specified in the Warrant Register.
B-17
<PAGE> 61
The foregoing shall not limit the rights of any party hereto to serve process in
any other manner permitted by the law or to obtain execution of judgment in any
other jurisdiction. The parties further agree, to the extent permitted by law,
that final and unappealable judgment against any of them in any action or
proceeding contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified or exemplified copy of which shall be conclusive evidence of the
fact and the amount of indebtedness. The parties agree to waive any and all
rights that they may have to a jury trial with respect to disputes arising out
of this Warrant Certificate.
Section 15. Benefits of this Warrant Certificate. Nothing in
this Warrant Certificate shall be construed to give to any Person other than the
Company and the Warrantholder any legal or equitable right, remedy or claim
under this Warrant Certificate, and this Warrant Certificate shall be for the
sole and exclusive benefit of the Company and the Warrantholder. This Warrant
Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Warrant Agent.
Section 16. Other Obligations. The parties hereby acknowledge
that, pursuant to the Warrant Agreement, nothing in the Warrant Agreement shall
permit the Company or the Warrant Agent to authorize or take action that alters
or reduces the rights of the Existing Holders (as defined in the Warrant
Agreement) under the Investment Agreement or the Warrants. In the event of any
inconsistency between the provisions of the Warrant Agreement, on the one hand,
and this Warrant Certificate, on the other hand, the provisions of this Warrant
Certificate shall control. With respect to Existing Holders, in the case of any
inconsistency between the provisions of the Warrant Agreement, on the one hand,
and the Investment Agreement, on the other hand, the provisions of the
Investment Agreement shall control to the extent applicable, except that Section
2.4 of the Warrant Agreement supersedes Section 8.10 of the Investment
Agreement, and Section 6.4(a) of the Warrant Agreement supersedes Section 10 of
Exhibit D to the Investment Agreement.
B-18
<PAGE> 62
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, as of this __ day of __________________,
_____________________.
OXFORD HEALTH PLANS, INC.
By:______________________
Name:
Title:
Attest:
______________________
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. , as Warrant Agent
By:______________________
Name:
Title:
B-19
<PAGE> 63
ELECTION TO EXERCISE
(To be executed upon exercise of Warrants)
To OXFORD HEALTH PLANS, INC.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant Certificate for, and to
purchase thereunder, ____________ Warrant Shares, as provided for therein, and
tenders herewith payment of the purchase price in full in the form of [COMPLETE
WHERE APPLICABLE]:
[ ] cash or a certified or official bank check in the amount of
$__________; and/or
[ ] $__________ Stated Value of Senior Preferred Stock (as to
which $__________ of accumulated dividends are unpaid), of
which $____________ Stated Value and the corresponding
accumulated dividends should be applied toward the payment of
such Warrant Shares; and/or
[ ] ___________ aggregate principal amount of Debentures (as to
which $__________ of accrued interest is unpaid), of which
$________ aggregate principal amount and the corresponding
accrued interest should be applied toward the payment of such
Warrant Shares; and/or
[ ] _______ number of Warrants, valued at $__________ each (such
value arrived at by subtracting the Exercise Price of
$__________ from the Warrant Market Price of $__________, both
the Exercise Price and Warrant Market Price determined in
accordance with the provisions of the Warrant Certificate);
For a total purchase price of $__________.
If the Stated Value and accumulated and unpaid dividends of
the shares of Senior Preferred Stock, the principal amount of an accrued and
unpaid interest on the Debentures or the value of the Warrants evidenced by the
Warrant Certificate delivered herewith exceeds that portion of the payment which
is to be paid by the surrender of such shares, Debentures or Warrants, you are
authorized, as agent of the undersigned, to deliver to the Company such shares,
Debentures or Warrant Certificate delivered herewith for exchange into smaller
denominations in order that you may deliver to the undersigned new shares of
Senior Preferred Stock, new Debentures or Warrant Certificates, in Stated Value,
principal amount or number as the case may be, equal to the difference between
the Stated Value, principal amount or number as the case may be, of the Senior
Preferred Stock, Debentures or Warrants surrendered, less the Stated Value,
principal amount or number as the case may be, thereof, used to purchase Warrant
Shares.
B-20
<PAGE> 64
Please issue a certificate or certificates for such Warrant Shares in the name
of, and pay any cash for any Fractional Warrant Shares to (please print name
address and social security or other identifying number)*:
Name: _________________________________________________________________________
Address: ______________________________________________________________________
Soc. Sec. #: __________________________________________________________________
AND, if said number of Warrant Shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of the undersigned for the balance remaining of the Warrant Shares
purchasable thereunder rounded up to the next higher whole number of Warrant
Shares.
Signature:** ________________________________
__________
* The Warrant Certificate and the Investment Agreement contain restrictions on
the sale and other transfer of the Warrants evidenced by such Warrant
Certificate.
** The above signature should correspond exactly with the name on the face of
this Warrant Certificate or with the name of the assignee appearing in the
assignment form below.
B-21
<PAGE> 65
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
_______________________________________________________________________________
_______________________________________________________________________________
(Name and Address of Assignee must be Printed or Typewritten)
Warrants to purchase ______ Warrant Shares of the Company, evidenced by the
within Warrant Certificate hereby irrevocably constituting and appointing _____
_________________ Attorney to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated: ________________ ,_______
______________________________
Signature of Registered Holder*
Signature Guaranteed: ______________________________
Signature of Guarantor
_____________________________
__________
* The above signature should correspond exactly with the name on the face of
this Warrant Certificate.
B-22
<PAGE> 1
EXHIBIT 5
December 20, 1999
Oxford Health Plans, Inc.,
48 Monroe Turnpike,
Trumbull, Connecticut 06611.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 277,629.157 shares of Series D Cumulative Preferred Stock, par value
$.01 per share (the "Series D Preferred"), of Oxford Health Plans, Inc., a
Delaware corporation (the "Company"); 132,808.069 shares of Series E Cumulative
Preferred Stock, par value $.01 per share (the "Series E Preferred"), of the
Company; $277,629,157 principal amount of Series D Junior Subordinated
Debentures due May 13, 2008 (the "Series D Debentures") of the Company;
$132,808,069 principal amount of Series E Junior Subordinated Debentures due
May 13, 2008 (the "Series E Debentures") of the Company; 15,800,000 Series A
Warrants and 6,730,000 Series B Warrants (together the "Warrants") of the
Company, and the 22,530,000 shares of Common Stock, par value $.01 per share,
of the Company initially issuable upon exercise of the Warrants (the "Shares")
(the Series D Preferred, the Series E Preferred, the Series D Debentures, the
Series E Debentures, the Warrants and the Shares collectively, the
"Securities"), we, as your counsel, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion,
when the registration statement on Form S-3 (File No. 333-77529), as amended
(the "Registration Statement"), relating to the Securities has become
effective under the Act and the Securities have been duly issued and sold as
contemplated by the Registration Statement:
(1) the Series D Preferred, the Series E Preferred and the Warrants will be
validly issued, fully paid and nonassessable, and the Shares, when duly issued
upon exercise of the Warrants, will be validly issued, fully paid and
nonassessable; and
(2) when the Indenture relating to the Series D Debentures and the
Indenture relating to the Series E Debentures have been duly authorized,
executed and delivered, the terms of each of the Series D Debentures and the
Series E Debentures and of their issuance and sale have been duly established in
conformity with the applicable Indenture so as not to violate any applicable law
or result in a default under a breach of any agreement or instrument binding
upon the Company and so as to comply with any requirement or restriction imposed
by any court or governmental body having jurisdiction over the Company, the
Certificate of Incorporation of the Company has been amended in accordance with
the laws of the State of Delaware to confer the power to vote on holders of the
Series D Debentures and the Series E Debentures as contemplated by the
applicable Indenture, and the Series D Debentures and the Series E Debentures
have been duly executed, authenticated, issued and delivered in accordance with
the applicable Indenture, the Series D Debentures and the Series E Debentures
will constitute valid and legally binding obligations of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the States of New York and Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity
of Securities" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE> 1
Exhibit 8
December 20, 1999
Oxford Health Plans, Inc.,
48 Monroe Turnpike,
Trumbull, Connecticut 06611.
Ladies and Gentlemen:
We have acted as your counsel in connection with the registration under the
Securities Act of 1933 (the "Act") of 277,629.157 shares of Series D Cumulative
Preferred Stock, par value $.01 per share, of Oxford Health Plans, Inc., a
Delaware corporation (the "Company"), 132,808.069 shares of Series E Cumulative
Preferred Stock, par value $.01 per share, of the Company, $277,629,157
principal amount of Series D Junior Subordinated Debentures due May 13, 2008 of
the Company, $132,808,069 principal amount of Series E Junior Subordinated
Debentures due May 13, 2008 of the Company, 15,800,000 Series A Warrants of the
Company, 6,730,000 Series B Warrants of the Company and 22,530,000 shares of
common stock, par value $.01 per share, of the Company. We hereby confirm to you
that our opinion is as set forth under the caption "Material United States
Federal Income Tax Consequences" in the prospectus (the "Prospectus"), included
in the related Registration Statement on Form S-3, as amended, that you filed
with the Securities and Exchange Commission (the "Registration Statement").
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Material
United States Federal Income Tax Consequences." In giving such consent, we do
not admit that we are in the category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE> 1
EXHIBIT 12
OXFORD HEALTH PLANS, INC. & SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before
income taxes............... $ 89,880 $(605,376) $(615,229) $(431,611) $172,049 $91,501 $49,926
Add back fixed charges..... 38,232 45,078 59,030 8,000 7,000 5,000 3,000
--------- --------- --------- --------- -------- ------- -------
Total earnings (loss)...... $ 128,112 $(560,298) $(556,199) $(423,611) $179,049 $96,501 $52,926
========= ========= ========= ========= ======== ======= =======
Fixed charges:
Interest (none
capitalized)........... $ 30,232 $ 33,078 $ 43,030 $ -- $ -- $ -- $ --
Interest component of
rental payments........ 8,000 12,000 16,000 8,000 7,000 5,000 3,000
--------- --------- --------- --------- -------- ------- -------
Total fixed charges.... $ 38,232 $ 45,078 $ 59,030 $ 8,000 $ 7,000 $ 5,000 $ 3,000
Preference dividends and
amortization............. $ 33,962 $ 16,785 $ 27,668 -- -- -- --
--------- --------- --------- --------- -------- ------- -------
Total fixed charges and
preference
dividends............ $ 72,194 $ 61,863 $ 86,698 $ 8,000 $ 7,000 $ 5,000 $ 3,000
========= ========= ========= ========= ======== ======= =======
Ratio of earnings to
combined fixed charges
and preference
dividends................ 1.7 * * * 25.5 19.3 17.6
========= ========= ========= ========= ======== ======= =======
</TABLE>
- -------------------------
* Earnings were insufficient to cover fixed charges and preference dividends by
$642.9 million for the year ended December 31, 1998, $431.6 million for the
year ended December 31, 1997 and $622.2 million for the nine months ended
September 30, 1998.
For purposes of computing these ratios, we increased our combined earnings
before income taxes, as reported in our annual report on Form 10-K/A No. 2 for
the year ended December 31, 1998, as amended by our Form 10-K/A No. 3, and in
our quarterly report on Form 10-Q for the quarter ended September 30, 1999, by
the amount of our fixed charges. We then divided the amount of earnings by the
amount of fixed charges and preference dividends, resulting in the ratio of
earnings to combined fixed charges and preference dividends. Fixed charges
represent interest expense plus the estimated interest factor in rental expense.
We have not capitalized interest in any period.
<PAGE> 1
Exhibit 15
Letter of Ernst & Young LLP
Re Unaudited Condensed Consolidated Interim Financial Information
To Oxford Health Plans, Inc.:
We are aware of the incorporation by reference in the Registration Statement
(Form S-3 No. 333-77529) of Oxford Health Plans, Inc. for the registration of
22,530,000 shares of its common stock, 277,629.157 shares of Series D Cumulative
Preferred Stock, 132,808.069 shares of Series E Cumulative Preferred Stock,
$277,629,157 aggregate principal amount of Series D Junior Subordinated
Debentures and $132,808,069 aggregate principal amount of Series E Junior
Subordinated Debentures, 15,800,000 Series A Warrants, and 6,730,000 Series B
Warrants of our report dated May 5, 1999 relating to the unaudited condensed
consolidated interim financial statements of Oxford Health Plans, Inc. that are
included in its Form 10-Q/A No. 2 for the quarter ended March 31, 1999, our
report dated August 6, 1999 relating to the unaudited condensed consolidated
interim financial statements of Oxford Health Plans, Inc. that are included in
its Form 10-Q for the quarter ended June 30, 1999, and our report dated October
29, 1999 relating to the unaudited condensed consolidated interim financial
statements of Oxford Health Plans, Inc. that are included in its Form 10-Q for
the quarter ended September 30, 1999.
/s/ Ernst & Young LLP
Stamford, Connecticut
December 16, 1999
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Oxford Health Plans, Inc.:
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-77529) and the related Prospectus of
Oxford Health Plans, Inc. for the registration of 22,530,000 shares of its
common stock, 277,629.157 shares of Series D Cumulative Preferred Stock,
132,808.069 shares of Series E Cumulative Preferred Stock, $277,629,157
aggregate principal amount of Series D Junior Subordinated Debentures,
$132,808,069 aggregate principal amount of Series E Junior Subordinated
Debentures, 15,800,000 Series A Warrants and 6,730,000 Series B Warrants and to
the incorporation by reference therein of our report dated March 9, 1999, with
respect to the consolidated financial statements and schedules of Oxford Health
Plans, Inc. included in its Annual Report on Form 10-K/A No. 2, as amended by
Form 10-K/A No. 3, for the year ended December 31, 1998, filed with Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
December 16, 1999
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Oxford Health Plans, Inc.:
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Oxford Health Plans, Inc., related to the registration of common stock,
Series D Cumulative Preferred Stock and Series E Cumulative Preferred Stock,
Series D Junior Subordinated Debentures and Series E Junior Subordinated
Debentures, and Series A Warrants and Series B Warrants, of our reports dated
February 23, 1998, relating to the consolidated balance sheet of Oxford Health
Plans, Inc. and subsidiaries as of December 31, 1997, and the related statements
of operations, shareholders' equity (deficit) and comprehensive earnings (loss),
and cash flows for each of the years in the two-year period ended December 31,
1997, and the related consolidated financial statement schedules, which reports
appear in the December 31, 1998 annual report on Form 10-K/A No. 2, as amended
by 10-K/A No. 3, of Oxford Health Plans, Inc. and subsidiaries.
We also consent to the reference to our firm under the heading "Experts" in the
prospectus.
/S/ KPMG LLP
Stamford, Connecticut
December 17, 1999
