<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TOTAL RENAL CARE HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0354549
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
SUITE 800
21250 HAWTHORNE BOULEVARD
TORRANCE, CALIFORNIA 90503-5517
(310) 792-2600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN E. KING
CHIEF FINANCIAL OFFICER
TOTAL RENAL CARE HOLDINGS, INC.
SUITE 800
21250 HAWTHORNE BOULEVARD
TORRANCE, CALIFORNIA 90503-5517
(310) 792-2600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
CYNTHIA M. DUNNETT
RONN S. DAVIDS
RIORDAN & MCKINZIE
29TH FLOOR
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 629-4824
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY PRICE FEE(1)
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<S> <C> <C> <C> <C>
7% Convertible Subordinated Notes due
2009.................................... $345,000,000 100% $345,000,000 $95,915
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Common Stock, par value $0.001 per
share................................... (2) N/A(2) N/A(2) None(2)
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</TABLE>
(1) Calculated pursuant to Rule 457(i) under the Securities Act of 1933, as
amended.
(2) An indeterminable number of shares of Common Stock issuable upon
conversion of the registrant's 7% Convertible Subordinated Notes due 2009
(the "Notes"), including such additional shares of Common Stock issuable
pursuant to the antidilution provisions of the Notes, are registered
hereunder. Pursuant to Rule 457(i), no registration fee is required for
these shares.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. THIS +
+PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR SOLICITATION OF +
+YOUR OFFER TO BUY THESE SECURITIES, NOR WILL WE SELL THEM OR ACCEPT YOUR +
+OFFER TO BUY THEM, IN ANY STATE OR OTHER JURISDICTION WHERE THAT WOULD NOT BE +
+PERMITTED OR LEGAL PRIOR TO REGISTRATION OR QUALIFICATION IN THAT STATE OR +
+OTHER JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--DECEMBER 18, 1998
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PROSPECTUS
, 1999
[LOGO OF TOTAL RENAL CARE]
TOTAL RENAL CARE HOLDINGS, INC.
$345,000,000 PRINCIPAL AMOUNT
7% CONVERTIBLE SUBORDINATED NOTES DUE 2009
10,515,087 SHARES
COMMON STOCK, PAR VALUE $0.001 PER SHARE
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THE COMPANY:
. We are the second largest domestic, and largest independent worldwide,
provider of high-quality dialysis and related services for patients
suffering from chronic kidney failure, also known as end stage renal
disease.
. Total Renal Care Holdings, Inc.
Suite 800
21250 Hawthorne Boulevard
Torrance, California 90503-5517
(310) 792-2600
THE OFFERING:
. Notes: The resale of up to $345.0 million of our Notes.
. Common Stock: The resale of up to 10,515,087 shares of our Common Stock
initially issuable upon conversion of the Notes into shares of Common
Stock.
. Selling Securityholders: The Notes and any shares of Common Stock issued
upon conversion of the Notes may be offered for the accounts of certain
Selling Securityholders. As information regarding these Selling
Securityholders changes, we will supplement this prospectus.
. Proceeds: We will not receive any proceeds from the resale of the Notes
or any Common Stock issued upon conversion of the Notes.
THE NOTES:
. Maturity: May 15, 2009.
. Interest Payments: Semi-annually on May 15 and November 15 of each year,
commencing on May 15, 1999.
. Conversion Price: $32.81 per share, subject to adjustment (equal to an initial
conversion ratio of 30.4785 shares of Common Stock per $1,000 principal amount
of Notes).
. Conversion Right: Convertible at any time, in whole or in part.
. Redemption: We have the right to redeem the Notes on or after November 15,
2001.
. Ranking of Notes: General, unsecured obligations, junior to all of our
existing and future senior indebtedness and effectively behind all existing
and future liabilities of our subsidiaries.
TRADING FORMAT/NYSE SYMBOL:
. Notes: The PORTAL market.
. Common Stock: Trades on the New York Stock Exchange under the symbol "TRL." On
December , 1998, the last reported sales price was $ per share.
This investment involves risk. See "Risk Factors" beginning on page 4.
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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.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Disclosure Regarding Forward-Looking
Statements.............................. i
Incorporation By Reference............... i
Summary.................................. 1
Risk Factors............................. 4
Use of Proceeds.......................... 7
Ratio of Earnings to Fixed Charges....... 7
Selling Securityholders.................. 8
</TABLE>
<TABLE>
<S> <C>
PAGE
Description of Notes.................... 9
Description of Capital Stock............ 25
Description of Indebtedness............. 27
Plan of Distribution.................... 29
Legal Matters........................... 30
Experts................................. 30
Available Information................... 30
</TABLE>
---------------
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We caution the readers that this prospectus includes and incorporates by
reference certain "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act")
that are based on management's beliefs, as well as on assumptions made by and
information currently available to management. All statements other than
statements of historical fact included in this prospectus, including without
limitation, certain statements under "Summary," and located elsewhere herein
regarding our financial position and business strategy, may constitute forward-
looking statements. In addition, forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "believe," "plan," "seek," or
"continue" or the negative thereof or variations thereon or similar
terminology. Such forward-looking statements involve known and unknown risks,
including, but not limited to, economic and market conditions, the regulatory
environment in which we operate, competitive activities or other business
conditions. Although we believe that our expectations with respect to the
forward-looking statements are based upon reasonable assumptions within the
bounds of our knowledge of our business and operations as of the date hereof,
there can be no assurance that our actual results, performance or achievements
will not differ materially from any future results, performance or achievements
expressed or implied from such forward-looking statements. Important factors
that could cause actual results to differ materially from our expectations
("Cautionary Statements") are disclosed in this prospectus, including without
limitation in conjunction with the forward-looking statements included and
incorporated by reference in this prospectus and under "Risk Factors." All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by these
Cautionary Statements.
Market data used throughout this prospectus, including information relating
to our relative position in the dialysis industry, is based on the good faith
estimate of management, which estimates are based upon their review of internal
surveys, independent industry publications and other publicly available
information. Although we believe that such sources are reliable, the accuracy
and completeness of such information is not guaranteed and has not been
independently verified.
---------------
INCORPORATION BY REFERENCE
The following documents have been filed with the Securities and Exchange
Commission (the "Commission" or the "SEC") and are incorporated by reference:
(1) our Annual Report on Form 10-K for the year ended December 31, 1997;
(2) Amendment No. 2 to our Annual Report on Form 10-K/A for the year
ended December 31, 1997;
(3) our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998;
(4) our Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1998;
(5) our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1998;
(6) our Current Reports on Form 8-K dated January 22, 1998, February 18,
1998, February 27, 1998, April 1, 1998, April 30, 1998 and November 3,
1998; and
(7) all documents subsequently filed by us pursuant to sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the termination of this offering.
Any statement contained herein or in the documents incorporated by reference
herein are deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained herein or which is incorporated by
reference herein modifies or supersedes that statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute part of this prospectus.
We will provide without charge to each person, including any prospective
investor to whom this prospectus has been delivered, upon written or oral
request of such person, a copy of any and all of the documents referred to
above that have been or may be incorporated by reference herein other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference herein). Requests for such copies should be directed to Total
Renal Care Holdings, Inc., attention John E. King, Suite 800, 21250 Hawthorne
Boulevard, Torrance, California 90503-5517, telephone number (310) 792-2600.
i
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all of the information that
you should consider. You should read the entire prospectus and the information
incorporated by reference carefully, including the "Risk Factors" section and
our consolidated financial statements (and related notes). Unless otherwise
indicated, "we," "us," "our" and similar terms, as well as references to the
"Company," refer to Total Renal Care Holdings, Inc. ("TRCH") and its
subsidiaries.
THE COMPANY
We are the second largest domestic, and largest independent worldwide,
provider of integrated dialysis services for patients suffering from chronic
kidney failure, also known as end stage renal disease ("ESRD"). We provide
dialysis and ancillary services to our patients through a network of outpatient
dialysis facilities. In addition, we provide inpatient dialysis services at
hospitals. We also offer ancillary services including ESRD laboratory and
pharmacy services, vascular access management, physician practice management,
pre- and post-transplant services and ESRD clinical research programs. On
February 27, 1998, we acquired Renal Treatment Centers, Inc. ("RTC"), the
fourth largest provider of integrated dialysis services in the United States,
in a stock-for-stock exchange transaction valued at approximately $1.3 billion
(the "Merger").
Our principal executive offices are located at Suite 800, 21250 Hawthorne
Boulevard, Torrance, California 90503-5517 and our telephone number is (310)
792-2600.
1
<PAGE>
THE OFFERING
Total Amount of Notes
Offered..................... The resale of up to $345.0 million in principal
amount of 7% Convertible Subordinated Notes due
2009.
Common Stock Offered........ The resale of an indeterminable number of shares
of our Common Stock (the "Conversion Shares")
including any additional Conversion Shares
issuable pursuant to the antidilution provisions
of the Notes, issuable upon conversion of the
Notes into shares of Common Stock. For more
details, see the section "Description of Capital
Stock."
Issuer...................... Total Renal Care Holdings, Inc.
Maturity.................... May 15, 2009.
Interest.................... Annual rate: 7%.
Payment frequency: Every six months on May 15 and
November 15.
First payment: May 15, 1999.
Conversion Rights........... The Notes are convertible, at the holder's
option, at any time prior to May 15, 2009, into
the Conversion Shares, at a conversion price of
$32.81 per share of Common Stock, subject to
adjustment (the conversion ratio is 30.4785
shares of our Common Stock per $1,000 principal
amount of Notes).
Change of Control........... We will be required to offer to purchase the
Notes at 100% of their principal amount, plus
interest and liquidated damages, if any, if a
Change of Control (see page for a definition
of this term) occurs.
Optional Redemption......... On or after November 15, 2001, we may redeem some
or all of the Notes at any time at the redemption
prices listed in the section "Description of
Notes" under the heading "Optional Redemption."
Ranking..................... These Notes are subordinated, unsecured general
debts. They are junior to all of our existing and
future Senior Indebtedness (see page for a
definition of this term) and effectively behind
all existing and future liabilities of our
subsidiaries.
Use of Proceeds............. We will not receive any proceeds from the resale
of the Notes or any Conversion Shares issued upon
conversion of the Notes. For more details, see
the section "Use of Proceeds."
Selling Securityholders..... The Notes and any Conversion Shares issued upon
conversion of the Notes may be offered for the
accounts of certain selling securityholders (the
"Selling Securityholders"). As information
regarding these Selling Securityholders changes,
we will supplement this prospectus. For more
details, see the section "Selling
Securityholders."
2
<PAGE>
Trading..................... The Notes are eligible for trading in the Private
Offerings, Resale and Trading through Automatic
Linkage ("PORTAL") market. Our Common Stock
trades on the New York Stock Exchange under the
symbol "TRL."
Risk Factors................ Investment in the Notes and/or the Conversion
Shares issuable upon conversion of the Notes
involves a high degree of risk. Therefore, you
should carefully consider the matters set forth
in the section "Risk Factors" which begins on
page .
3
<PAGE>
RISK FACTORS
In addition to the other information set forth in this prospectus, you should
carefully consider the following factors and additional factors set forth in
the documents incorporated by reference in this prospectus.
SUBORDINATION
The Notes are subordinated in right of payment to all of our existing and
future Senior Indebtedness and, effectively, all existing and future
liabilities (including trade payables) of our subsidiaries. The Indenture (see
page 9 for a definition of this term) does not restrict the incurrence of
Senior Indebtedness or other liabilities by us or our subsidiaries. By reason
of the subordination of the Notes, in the event of the insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up of our business or
similar proceeding, or upon a default in payment with respect to any of our
indebtedness or an event of default with respect to this indebtedness resulting
in its acceleration, our assets will be available to pay the amounts due on the
Notes only after all Senior Indebtedness has been paid in full. The Notes rank
on the same level as all of our other unsecured, subordinated obligations, but
effectively will be subordinated to all obligations of our subsidiaries. An
acceleration of subsidiary debt or a failure to pay the same at the maturity
thereof will not constitute a default or event of default under the Indenture.
For more details, see the section "Description of Notes."
SUBSTANTIAL LEVERAGE, DEBT SERVICE OBLIGATIONS AND RESTRICTIVE DEBT COVENANTS
We are highly leveraged (which means that the amount of our outstanding debt
is large compared to the net book value of our assets) and have substantial
repayment obligations under our outstanding debt, including interest expense
associated with the Notes.
On April 30, 1998, we replaced our $1.05 billion credit facilities with an
aggregate of $1.35 billion of new credit facilities (the "Credit Facilities")
with various banks, DLJ Capital Funding, Inc., as Syndication Agent, and The
Bank of New York, as Administrative Agent. The Credit Facilities currently
contain numerous financial and operating covenants that limit our ability (and
the ability of most of our subsidiaries) to undertake certain transactions.
These covenants require that we meet certain interest coverage, net worth and
leverage tests. The Indenture and the Credit Facilities permit us and our
subsidiaries to incur or guarantee additional debt, subject to certain
limitations in the case of the Credit Facilities. For more details, see the
sections "Description of Indebtedness" under the heading "Credit Facilities"
and "Description of Notes."
Our level of debt and the limitations imposed on us by our debt agreements
could have other important consequences to you, including the following (for
more details, see the section "Description of Indebtedness"):
. We will have to use a portion of our cash flow from operations for debt
service, rather than for our operations;
. We may not be able to obtain additional debt financing for future working
capital, capital expenditures, acquisitions or other corporate purposes;
. The debt under the Credit Facilities is at a variable interest rate,
making us vulnerable to increases in interest rates; and
. We could be less able to take advantage of significant business
opportunities, such as acquisitions, and react to changes in market or
industry conditions.
HOLDING COMPANY STRUCTURE
TRCH is a holding company, and our only material assets are the stock of our
subsidiaries. All of our operations are conducted by our subsidiaries, which
own substantially all of our consolidated assets. Consequently, our operating
cash flow and our ability to service our debt, including the Notes, depends
upon
4
<PAGE>
the operating cash flow of our subsidiaries and the payment of funds by them to
us in the form of loans, dividends or otherwise. These payments may not be
adequate to pay interest and principal on the Notes when due. In addition, the
ability of our subsidiaries to make payments to us depends on applicable law
and restrictions under the Credit Facilities and other present and future debt
instruments to which they are a party, which may include requirements to
maintain minimum levels of working capital and other assets.
POSSIBLE INABILITY TO PURCHASE NOTES UPON CHANGE OF CONTROL
Under the Indenture, upon the occurrence of a Change of Control a holder of
the Notes may require us to repurchase all or a portion of its Notes at 100% of
the principal amount of the Notes plus accrued and unpaid interest and any
Liquidated Damages (see page 21 for a definition of this term), if any, to the
date of purchase. If a Change of Control were to occur, we may not be able to
pay the repurchase price for all of the Notes submitted for repurchase. In
addition, the terms of some of our existing debt agreements, including the
Credit Facilities, prohibit us from purchasing any Notes until all debt under
such agreements is paid in full, except in limited circumstances. Our future
credit agreements or other agreements relating to debt may contain similar
provisions. If a Change of Control occurs while we are prohibited from
purchasing the Notes, we could seek the consent of our lenders to the purchase
of the Notes or could attempt to refinance the borrowings that contain the
prohibition. If we do not obtain a consent or repay the borrowings, we would
remain prohibited from purchasing the Notes. In such case, our failure to
purchase submitted Notes would constitute an event of default under the
Indenture, which would, in turn, constitute a further default under certain of
our existing or future debt agreements, including the Credit Facilities. In
such case, certain persons could declare all debt under the Notes or the Credit
Facilities due and payable.
Our inability to pay all debt under the Credit Facilities would constitute an
event of default under the Indenture, which could accelerate all debt under the
Indenture. In the event of a Change of Control, we might not be able to
refinance the Credit Facilities, which would allow us to repay all tendered
Notes, and we might not have sufficient assets to satisfy all of our
obligations under the Credit Facilities and the Notes. In addition to the
above, if we undergo a change of control (as defined in the particular debt
instrument), certain of our existing debt (such as the Credit Facilities) and
future debt may be accelerated or we may be required to repurchase such debt.
For more details, see the sections "Description of Indebtedness" under the
heading "Credit Facilities" and "Description of Notes" under the heading
"Repurchase of Notes at the Option of the Holder upon a Change of Control."
LACK OF PUBLIC MARKET FOR THE NOTES
There is currently no public market for the Notes. We cannot provide any
assurances that a public market will develop for the Notes or that you will be
able to sell your Notes. If a public market were to exist, the Notes might
trade at prices higher or lower than their initial offering price. The trading
price would depend on many factors, such as prevailing interest rates and the
market for similar securities, general economic conditions and our financial
condition, performance and prospects. Historically, the market for non-
investment grade debt has been subject to disruptions that have caused
substantial fluctuation in the prices of these securities. The market for the
Notes may be subject to such disruptions, which could have an adverse effect on
you. You should be aware that you may be required to bear the financial risk of
an investment in the Notes for an indefinite period of time. We do not intend
to apply for listing or quotation of the Notes; however, the Notes are eligible
for trading in the PORTAL market.
The Initial Purchasers (see page 8 for a definition of this term) have
advised us that they intend to make a market in the Notes. However, the Initial
Purchasers are not obligated to do so, and they may discontinue any market-
making activities with respect to the Notes at any time without notice. In
addition, such market-making activity would be subject to the limitations
imposed by the Securities Act of 1933, as amended (the "Securities Act") and
the Exchange Act, and may be limited during the pendency of a shelf
registration statement relating to the Notes. For more details, see the
sections "Description of Notes" and "Plan of Distribution."
5
<PAGE>
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price and volume of our Common Stock historically has been, and
could in the future be, subject to significant fluctuations in response to many
factors, including:
.Quarter-to-quarter variations in our results of operations;
.Changes in our earnings estimates by analysts;
.Changes in federal, state or foreign regulation of the dialysis service
industry;
.Changes in reimbursement rates for dialysis services;
.Loss of key personnel;
.Competition;
.Announcement and market acceptance of acquisitions; and
.General market conditions and other events or factors.
6
<PAGE>
USE OF PROCEEDS
As the Notes and any Conversion Shares issued upon conversion of the Notes
are offered by the Selling Securityholders and not by us, we will not receive
any proceeds from the resale of the Notes or any Conversion Shares issuable
upon conversion of the Notes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for each of the periods indicated.
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED MAY ENDED YEAR ENDED NINE MONTHS ENDED
31, DECEMBER 31,(1) DECEMBER 31, SEPTEMBER 30,
-------------- --------------- -------------- ---------------------------
1993 1994 1995 1994 1995 1995 1996 1997 1997 1998 1998
---- ---- ---- ------- ------- ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(supplemental)(2)
Ratio of Earnings to
Fixed Charges.......... 4.11 6.06 2.97 3.17 3.48 3.22 3.96 3.47 3.82 1.35 3.07
</TABLE>
- ---------------------
(1) In 1995, we changed our fiscal year end to December 31 from May 31.
(2) A supplemental calculation of the ratio of earnings to fixed charges is
presented to exclude nonrecurring merger costs and interest rate swap
termination costs. During the nine months ended September 30, 1998, we
recorded $92.8 million of fees and expenses related to the Merger and to
the integration of the combined companies. In April 1998, we recorded $9.8
million related to interest rate swap termination costs.
The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings. Earnings is defined as pretax income from continuing operations
adjusted by adding fixed charges and excluding interest capitalized during the
period. Fixed charges means the total of interest expense and amortization of
financing costs, the estimated interest component of rental expense on
operating leases and preferred stock dividends.
7
<PAGE>
SELLING SECURITYHOLDERS
We originally issued the Notes in a private placement to Donaldson, Lufkin
and Jenrette Securities Corporation, BNY Capital Markets, Inc., Credit Suisse
First Boston Corporation and Warburg Dillon Read LLC (the "Initial Purchasers")
on November 18, 1998, at a purchase price of 97% of face value. The Initial
Purchasers then sold the Notes in transactions exempt from the registration
requirements of the Securities Act to persons reasonably believed by the
Initial Purchasers to be Qualified Institutional Buyers and to institutional
"accredited investors" (each as defined in accordance with the Securities Act).
The Selling Securityholders may, from time to time, offer and sell any or all
of the Notes and the Conversion Shares under this prospectus. All of the Notes
and the Conversion Shares offered pursuant to this prospectus are offered by
the Selling Securityholders. Any sales of the Notes or the Conversion Shares
will be for the account of the Selling Securityholders and we will not receive
any of the proceeds from these sales.
United States Trust Company of New York (the "Trustee") provided us the
information contained in the following table with respect to the Selling
Securityholders and the respective principal amount of Notes that may be sold
by each of them under this prospectus. We have not independently verified this
information.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF SHARES OF COMMON PERCENTAGE OF
NOTES OWNED THAT PERCENTAGE STOCK THAT MAY COMMON STOCK
NAME(1) MAY BE SOLD(1) OF NOTES BE SOLD(2)(3) OUTSTANDING(2)(4)
------- ------------------- ----------- ---------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
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* Less than 1%.
(1) This information is as of , 1999.
(2) Assumes that no Selling Securityholder beneficially owns any shares of
Common Stock other than shares issuable pursuant to conversion of the
Notes.
(3) Assumes conversion of all Notes owned by the Selling Securityholder at the
initial conversion price of $32.81 per share. This initial conversion price
may be adjusted under certain circumstances. For more details, see the
section "Description of Notes." As a result, the number of Conversion
Shares issuable upon conversion of the Notes may increase or decrease.
Under the terms of the Indenture, cash will be paid instead of issuing
fractional shares upon conversion.
(4) As of December 31, 1998, we had of shares of Common Stock outstanding.
In accordance with the rules of the Commission, the percentage of Common
Stock outstanding owned by each Selling Securityholder is computed as
follows: (a) the numerator is the number of shares of Common Stock held by
that Selling Securityholder upon conversion of all Notes owned by that
Selling Securityholder and (b) the denominator includes the number of
shares of Common Stock outstanding and the number of shares of Common Stock
held by that Selling Securityholder upon conversion of all Notes owned by
that Selling Securityholder.
8
<PAGE>
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
were issued pursuant to an indenture (the "Indenture") dated as of November 18,
1998 by and between TRCH and United States Trust Company of New York, as
trustee (the "Trustee"). The following summary of the Notes, the Indenture and
the Registration Rights Agreement (as defined herein) does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Indenture and the Registration Rights Agreement,
including the definitions therein of certain terms. Copies of the Indenture and
the Registration Rights Agreement may be obtained from the Company upon
request. Capitalized terms used herein without definition have the meanings
ascribed to them in the Indenture or the Registration Rights Agreement, as
appropriate. As used in this section, the "Company" refers to TRCH, exclusive
of its subsidiaries. Wherever particular provisions or defined terms of the
Indenture (or the form of Note which is a part thereof) or the Registration
Rights Agreement are referred to in this summary, such provisions or defined
terms are incorporated by reference as a part of the statements made and such
statements are qualified in their entirety by such reference. Certain
definitions of terms used in the following summary are set forth under "Certain
Definitions."
GENERAL
The Notes are general, unsecured obligations of the Company, limited in
aggregate principal amount to $345.0 million. The Notes are subordinated in
right of payment to all existing and future Senior Indebtedness, as described
under "Subordination" below. The Notes were issued in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
The Notes mature on May 15, 2009. The Notes bear interest at the rate of 7%
per annum from their date of issuance, or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semi-annually in
cash in arrears on May 15 and November 15 of each year, commencing May 15,
1999, to the persons in whose names such Notes are registered at the close of
business on May 1 and November 1 immediately preceding such Interest Payment
Dates. Principal of, premium on, if any, interest on, and Liquidated Damages,
if any, with respect to, the Notes will be payable, the Notes will be
convertible and the Notes may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose,
which office or agency shall be maintained in New York, New York. Interest will
be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
At the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders of the Notes at the addresses
set forth upon the registry books of the Company. No service charge will be
made for any registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee presently located at 114 West 47th Street, New York, New York
10036-1532.
The Indenture does not contain any financial covenants or any restrictions on
the payment of dividends, the issuance or repurchase of securities of the
Company or the incurrence of indebtedness, including Senior Indebtedness. The
Indenture contains no covenants or other provisions to afford protection to
holders of Notes (the "Holders") in the event of a highly leveraged transaction
or a change of control of the Company, except to the limited extent described
under "Repurchase of Notes at the Option of the Holder Upon a Change of
Control."
CONVERSION RIGHTS
Each Holder of Notes has the right at any time prior to the close of business
on the Stated Maturity of the Notes, unless previously redeemed or repurchased,
at the Holder's option, to convert any portion of the principal amount thereof
that is $1,000 or an integral multiple thereof into shares of Common Stock at
the
9
<PAGE>
Conversion Price set forth on the cover page of this prospectus (subject to
adjustment as described below). The right to convert a Note called for
redemption or delivered for repurchase and not withdrawn will terminate at the
close of business on the Business Day immediately prior to the Redemption Date
or Repurchase Date, as applicable, for such Note, unless the Company
subsequently fails to pay the applicable Redemption Price or Repurchase Price,
as the case may be.
In the case of any Note that has been converted into Common Stock after any
Record Date, but on or before the next Interest Payment Date, interest, the
stated due date of which is on such Interest Payment Date, shall be payable on
such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder of such Note who is a Holder on such Record Date.
Any Note converted after any Record Date but before the next Interest Payment
Date (other than Notes called for redemption) must be accompanied by payment of
an amount equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion; provided that no
such payment shall be required with respect to interest payable on November 15,
2001. No fractional shares of Common Stock will be issued upon conversion but,
in lieu thereof, an appropriate amount will be paid in cash by the Company
based on the market price of Common Stock (determined in accordance with the
Indenture) at the close of business on the day of conversion. As a result of
the foregoing provisions, Holders who surrender Notes for conversion on a date
that is not an Interest Payment Date will not receive any interest for the
period from the Interest Payment Date next preceding the date of conversion to
the date of conversion or for any later period, except for Notes that are
called for redemption on a Redemption Date between a Record Date and the
corresponding Interest Payment Date as provided above.
The Conversion Price is subject to adjustment in certain events, including
(a) any payment of a dividend (or other distribution) payable in Common Stock
on any class of Capital Stock of the Company, (b) any issuance to all or
substantially all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
Current Market Price of Common Stock (determined in accordance with the
Indenture): provided, however, that if such rights, options or warrants are
only exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
certain subdivisions, combinations or reclassifications of the outstanding
Common Stock, (d) any distribution to all or substantially all holders of
Common Stock of evidences of indebtedness, shares of Capital Stock (other than
Common Stock), cash or other assets (including securities, but excluding those
dividends, rights, options, warrants and distributions referred to above and
distributions in connection with the liquidation, dissolution or winding up of
the Company and excluding dividends and distributions paid exclusively in cash
and in mergers and consolidations to which the second succeeding paragraph
applies), (e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed
upon a merger or consolidation to which the second succeeding paragraph
applies) to all or substantially all holders of Common Stock in an aggregate
amount that, combined together with (1) all other such all-cash distributions
made within the then preceding 12 months in respect of which no adjustments
have been made and (2) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by the Company or
any of its Subsidiaries for Common Stock concluded within the preceding 12
months in respect of which no adjustment has been made exceeds 15.0% of the
Company's market capitalization (defined as being the product of the then
Current Market Price of the Common Stock multiplied by the number of shares of
Common Stock then outstanding) on the record date of such distribution, and (f)
the completion of a tender offer made by the Company or any of its Subsidiaries
for Common Stock to the extent that the aggregate consideration, together with
(1) any cash and other consideration payable in a tender offer by the Company
or any of its Subsidiaries for Common Stock expiring within the 12 months
preceding the expiration of such tender offer in respect of which no adjustment
has been made and (2) the aggregate amount of any such all-cash distributions
referred to in (e) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 15.0% of the Company's market
capitalization on the expiration of such tender offer. In the event of a
distribution to all or substantially all of the holders of Common Stock of
rights, warrants or options to subscribe for or purchase any securities (other
than those
10
<PAGE>
referred to in (b) above), the Company may instead of making an adjustment in
the Conversion Price, provide that each Holder of a Note, who converts the Note
after the record date for such distribution and prior to the expiration of such
rights, shall be entitled to receive upon such conversion of the Note, in
addition to shares of Common Stock, an appropriate number of such rights,
warrants or options. No adjustment of the Conversion Price is required to be
made until the cumulative adjustments amount to one percent or more of the
Conversion Price as last adjusted.
The Company, from time to time and to the extent permitted by law, may reduce
the Conversion Price by any amount for any period of at least 20 Business Days,
in which case the Company shall give at least 15 days notice of such reduction
to the Trustee and the Holders, if the Board of Directors has made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those set
forth above, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for United States Federal income tax purposes.
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Notes (other than certain changes in par
value) or consolidation or merger of the Company with or into another Person or
any consolidation or merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Note then outstanding
will, without the consent of any Holder of Notes, become convertible only into
the kind and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by a holder of the number of shares of Common Stock into which such Note was
convertible immediately prior thereto after giving effect to any adjustment
required to be made as set forth above; provided that if the kind or amount of
securities, cash and other property is not the same for each share of Common
Stock held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer, or conveyance, any Holder who fails to exercise any
right of election shall receive per share the kind and amount of securities,
cash or other property received per share by a plurality of such shares.
The Company will use all reasonable efforts to cause all registrations to be
made with, and to obtain any approvals by, any governmental authority under any
Federal or state law of the United States that may be required on the part of
the Company in connection with the conversion of the Notes into Common Stock.
If at any time during the two-year period following the date of the original
issuance of the Notes a registration statement under the Securities Act
covering the shares of Common Stock issuable upon conversion of the Notes is
not effective or is otherwise unavailable for effecting resales of such shares,
shares of Common Stock issued upon conversion of the Notes may not be sold or
otherwise transferred except in accordance with or pursuant to an exemption
from, or otherwise in a transaction not subject to, the registration
requirements of the Securities Act.
SUBORDINATION
The Notes are general, unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness. Any borrowings
under the Credit Facilities will constitute Senior Indebtedness and the Credit
Facilities provide for aggregate borrowings of $1.35 billion. The Notes are
effectively subordinated in right of payment to all existing and future
liabilities (including trade payables) of the Company's subsidiaries. The
Indenture does not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its Subsidiaries or the ability of the Company
to transfer assets or business operations to its Subsidiaries, subject to the
provisions described under "Repurchase of Notes at the Option of the Holder
Upon a Change of Control" and "Limitation on Merger, Sale or Consolidation."
11
<PAGE>
The Indenture provides that no payment (by setoff or otherwise) may be made
by or on behalf of the Company, directly or through any Subsidiary, on account
of the principal of, premium, if any, or interest on and Liquidated Damages or
any other obligations under or with respect to, the Notes, or to acquire any of
the Notes (including repurchases of Notes at the option of the Holder) for cash
or property (other than Junior Securities), or on account of the redemption
provisions of the Notes (collectively, the "Subordinated Obligations"), (1)
upon the maturity of any Senior Indebtedness, by lapse of time, acceleration
(unless waived) or otherwise, unless and until all principal of, premium, if
any, and interest on, and fees, charges, expenses, indemnifications and all
other amounts payable in respect of Senior Indebtedness are first paid in full
in cash, or (2) in the event of default in the payment of any principal of,
premium, if any, or interest on, any Designated Senior Indebtedness when it
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise (collectively, a "Payment Default"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist. The payment of cash, property or securities (other than Junior
Securities) upon conversion of a Note will constitute payment on a Note and
therefore will be subject to the subordination provisions in the Indenture.
Upon (1) the happening of an event of default (other than a Payment Default)
that permits, or would permit with (a) the passage of time, (b) the giving of
notice, (c) the making of any payment of the Notes then required to be made or
(d) any combination thereof (collectively, a "Non-Payment Default"), the
holders of any Designated Senior Indebtedness or their representative
immediately to accelerate the maturity of such Designated Senior Indebtedness
and (2) written notice of such Non-Payment Default being given to the Company
and the Trustee by the holders of such Designated Senior Indebtedness or their
representative (a "Blockage Notice"), then, unless and until such Non-Payment
Default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company, directly
or through any Subsidiary, on account of the Subordinated Obligations.
Notwithstanding the foregoing, unless (1) the Designated Senior Indebtedness in
respect of which such Non-Payment Default exists has been declared due and
payable in its entirety within 179 days after the Blockage Notice is delivered
as set forth above (the "Payment Blockage Period"), and (2) such declaration
has not been rescinded or waived, at the end of the Payment Blockage Period,
the Company shall be required to pay to the Holders of the Notes all regularly
scheduled payments on the Notes that were not paid during the Payment Blockage
Period due to the foregoing prohibitions (and upon the making of such payments
any acceleration of the Notes made or other remedies commenced during the
Payment Blockage Period shall be of no further force or effect) and to resume
all other payments as and when due on the Notes. Not more than one Blockage
Notice may be given in any consecutive 365-day period, irrespective of the
number of defaults with respect to Senior Indebtedness during such period. In
no event, however, may the total number of days during which any Payment
Blockage Period is or Payment Blockage Periods are in effect exceed 179 days in
the aggregate during any consecutive 365-day period.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of the creditors or any
marshaling of assets or liabilities (1) the holders of all Senior Indebtedness
will first be entitled to receive payment in full before the Holders of the
Notes are entitled to receive any payment (other than Junior Securities) on
account of the Subordinated Obligations and (2) any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than Junior Securities) to which the Holders of the Notes or
the Trustee on behalf of the Holders would be entitled (by setoff or
otherwise), except for the subordination provisions contained in the Indenture,
will be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full in cash of all
such Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.
In the event that, notwithstanding the foregoing, any payment or distribution
of assets of the Company or any Subsidiary (other than Junior Securities as
aforesaid) shall be received by the Holders of the Notes or the Trustee on
behalf of the Holders or any Paying Agent at a time when such payment or
distribution is prohibited
12
<PAGE>
by the foregoing provisions, such payment or distribution shall be held in
trust for the benefit of the holders of Senior Indebtedness, and shall be paid
or delivered by such Holders or the Trustee or such Paying Agent, as the case
may be, to the holders of the Senior Indebtedness remaining unpaid or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all such Senior Indebtedness in full in
cash after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes affects the obligation
of the Company, which is absolute and unconditional, to pay, when due,
principal of, premium, if any, and interest on the Notes. The subordination
provisions of the Indenture and the Notes do not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder of any Notes, subject to the preceding paragraphs, to
pursue any other rights or remedies with respect to the Notes.
The Company conducts its operations through its Subsidiaries. Accordingly,
the Company's ability to meet its cash obligations in the future in part will
be dependent upon the ability of its Subsidiaries to make cash distributions to
the Company. The ability of its Subsidiaries to make distributions to the
Company is and will continue to be restricted by, among other limitations,
applicable provisions of the laws of national and state governments and may be
restricted by contractual provisions. The Indenture does not limit the ability
of the Company's Subsidiaries to incur such contractual restrictions in the
future. The right of the Company to participate in the assets of any Subsidiary
(and thus the ability of Holders of the Notes to benefit indirectly from such
assets) is generally subject to the prior claims of creditors, including trade
creditors, of that Subsidiary except to the extent that the Company itself is
recognized as a creditor of such Subsidiary, in which case the Company's claims
would still be subject to any security interest of other non-subordinated or
pari passu creditors of such Subsidiary. The Notes, therefore, are effectively
subordinated to obligations to creditors, including trade creditors, of
Subsidiaries of the Company with respect to the assets of the Subsidiaries
against which such creditors have a more direct claim. An acceleration of
Subsidiary debt or a failure to pay the same at the maturity thereof will not
constitute a Default or Event of Default under the Indenture.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshaling of assets or liabilities of the Company
and its Subsidiaries, Holders of Notes may receive ratably less than other
creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes are not subject to redemption prior to November 15, 2001 and will
be redeemable on and after such date at the option of the Company, in whole or
in part, upon not less than 30 nor more than 60 days' notice to each Holder, at
the following Redemption Prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing November 15 of the
years indicated below, in each case (subject to the right of Holders of record
on a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such Redemption Date) together with accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001.................... 104.90%
2002.................... 104.20%
2003.................... 103.50%
2004.................... 102.80%
</TABLE>
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2005.................... 102.10%
2006.................... 101.40%
2007.................... 100.70%
2008 and thereafter..... 100.00%
</TABLE>
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<PAGE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
Notice of any redemption will be sent, by first-class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date"), to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the registry books of the Registrar. The notice
of redemption must state the Redemption Date, the Redemption Price and the
amount of accrued interest and Liquidated Damages, if any, to be paid. Any
notice that relates to a Note to be redeemed in part only must state the
portion of the principal amount to be redeemed and must state that on and after
the Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued. On and
after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto. The Notes do not have the benefit of any
sinking fund.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred (other than a Change of Control under clause (ii) of the definition
thereof which does not trigger prepayment rights for lenders under the change
of control provision of either of the Credit Facilities), the Company is
required to make an irrevocable and unconditional (except as described below)
offer (the "Repurchase Offer") to purchase all Notes on the date ("Repurchase
Date") that is no later than 45 Business Days (except as described below) after
the occurrence of such Change of Control at a cash price (the "Repurchase
Price") equal to 100% of the principal amount thereof, together with accrued
and unpaid interest and Liquidated Damages, if any, to (but excluding) the
Repurchase Date. A Holder of Notes may accept the Repurchase Offer with respect
to all or a portion of its Notes (provided that the principal amount of such
Notes must be $1,000 or an integral multiple thereof). The Repurchase Offer
shall be made within 25 Business Days following a Change of Control and shall
remain open for 20 Business Days following its commencement except to the
extent that a longer period is required by applicable law (the "Repurchase
Offer Period"). Upon expiration of the Repurchase Offer Period, the Company
shall purchase all Notes tendered in response to the Repurchase Offer. If
required by applicable law, the Repurchase Date and the Repurchase Offer Period
may be extended as so required.
The Indenture provides that a "Change of Control" means (i) the acquisition
by any Person (including any syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Exchange Act) (excluding the Company or any wholly
owned Subsidiary thereof or any employee benefit plan of the Company or any
such Subsidiary) of beneficial ownership, directly or indirectly, through a
purchase, merger, or other acquisition transaction or series of transactions of
shares of capital stock of the Company entitling such Person to exercise more
than 50% of the total voting power of all shares of capital stock of the
Company entitling the holders thereof to vote generally in elections of
directors; or (ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of all or substantially all of the assets of the
Company to another Person (other than a merger or sale of assets that (x) does
not result in a material reclassification, conversion, exchange, or
cancellation of outstanding shares of capital stock, (y) is effected solely to
change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion, or exchange of outstanding shares of Common Stock
solely into shares of common stock, or (z) does not have the result that the
shareholders of the Company immediately before such transaction own, directly
or indirectly, immediately following such transaction, less than 50% of the
combined total voting power of all shares of Capital Stock of the Person
resulting from such transaction entitling the holders thereof to vote generally
in elections of directors); provided, however, that a Change of Control shall
not be deemed to have occurred if at least 90% of the consideration (excluding
cash payments for fractional shares) to be received by the holders of the
Common Stock in the transaction or transactions constituting the Change of
Control consists of shares of common stock or other equity securities traded on
a national securities exchange or quoted on the Nasdaq National Market, and, as
a result of such transaction or transactions, the Notes become convertible into
such common stock or other equity securities.
14
<PAGE>
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent
on the facts and circumstances existing at such time. As a result, there may be
a degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
On or before the Repurchase Date, the Company will (1) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(2) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) of
all Notes so tendered and (3) deliver to the Trustee the Notes so accepted,
together with an officers' certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any), and
the Trustee will promptly authenticate and mail or deliver to such Holders a
new Note or Notes equal in principal amount to any unpurchased portion of the
Notes surrendered. Any Notes not so accepted will be promptly mailed or
delivered by the Company to the Holder thereof. The Company will announce
publicly the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company, and, thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between the Company and the Initial Purchasers.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders of the Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect Holders, if such transaction does not
constitute a Change of Control. Moreover, certain events with respect to the
Company which may involve an actual change of control of the Company may not
constitute a Change of Control for purposes of the Indenture.
The right to require the Company to repurchase Notes as a result of the
occurrence of a Change of Control could create an event of default under Senior
Indebtedness as a result of which any repurchase could be blocked by the
subordination provisions of the Notes. Failure of the Company to repurchase the
Notes when required would result in an Event of Default with respect to the
Notes whether or not such repurchase is permitted by the subordination
provisions. See "--Subordination."
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Note upon a Change of
Control that adversely affects a Holder is permissible without the consent of
the Holder of the Note so affected. In the event of a Change of Control, if
Holders of in excess of two-thirds of the outstanding aggregate principal
amount of the Notes so determine at any time following the occurrence of such
Change of Control and before the close of business on the Business Day
immediately preceding the Repurchase Date, such event shall not be treated as a
Change of Control for purposes of the Indenture. In such event, (1) the Company
shall not be required to make the Repurchase Offer, (2) to the extent the
Repurchase Offer has already been made, such Repurchase Offer shall be deemed
revoked and (3) to the extent any Notes have been tendered in response to any
such revoked Repurchase Offer, such tender shall be rescinded and the Notes so
tendered shall be promptly returned to the Holders thereof. For purposes of any
such determination by the Holders of the outstanding Notes, Notes held by the
Company or an Affiliate of the Company (including any Person that would become
an Affiliate of the Company (or its successor) as a consequence of the event or
series of events that otherwise would be treated as a Change of Control for
purposes of the Indenture) shall be disregarded.
To the extent applicable, the Company will comply with the provisions of Rule
13e-4 and l4e-1 or any other tender offer rules under the Exchange Act and any
other securities laws, and will file a Schedule 13e-4 or any other schedule if
required under such rules, in connection with any offer by the Company to
repurchase Notes at the option of the Holders upon a Change of Control.
15
<PAGE>
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into, or sell, lease or otherwise dispose of
all or substantially all of its assets (on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons (other than to its wholly owned Subsidiaries),
unless (1) either (a) in the case of a merger or consolidation, the Company is
the surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indentures;
and (2) no Default or Event of Default shall exist immediately before or after
giving effect on a pro forma basis to such transaction.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more subsidiaries, which properties and assets, if held by the Company instead
of such subsidiary, would constitute all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee, within 15 days after it is or would have been required to file such
with the Commission, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the Commission if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
Commission and, in each case, together with a management's discussion and
analysis of financial condition and results of operations as such would be so
required. In addition, for so long as the Notes or the Common Stock into which
they are convertible are Transfer Restricted Securities (as defined), and if
the Company ceases to have a class of equity securities registered under
Section 12(b) or 12(g) of the Exchange Act, or ceases to be subject to Section
15(d) of the Exchange Act, the Company will continue to provide to Holders the
information specified by Rule 144A(d)(4).
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (1) the failure by the Company
to pay any installment of interest on the Notes as and when due and payable and
the continuance of any such failure for 30 days, (2) the failure by the Company
to pay all or any part of the principal of, or premium, if any, on the Notes
when and as the same become due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation, pursuant to any
Repurchase Offer, (3) the failure of the Company to perform its covenants and
agreements regarding any conversion of Notes required under the Indenture and
the continuance of any such failure for 30 days, (4) the failure by the Company
to observe or perform any other covenant or agreement contained in the Notes or
the Indenture and, subject to certain exceptions, the continuance of such
failure for a period of 60 days after written notice is given to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes outstanding, (5) certain events of
bankruptcy, insolvency or reorganization in respect of the Company or any of
its Significant
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Subsidiaries, (6) failure to make any payment at final stated maturity,
including any applicable grace period, in respect of Indebtedness of the
Company (other than non-recourse obligations) in an amount in excess of
$10 million, and continuance of such failure for 30 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of Notes outstanding, (7)
default with respect to any Indebtedness of the Company (other than non-
recourse obligations), which default results in the acceleration of
Indebtedness in an amount in excess of $10 million without such Indebtedness
having been discharged or such acceleration having been rescinded or annulled
for 30 days after written notice is given to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of Notes outstanding and (8) final unsatisfied judgments not
covered by insurance aggregating in excess of $10 million, at any one time
rendered against the Company or any of its Significant Subsidiaries and not
stayed, bonded or discharged within 60 days. The Indenture provides that if a
Default occurs and is continuing, the Trustee must, within 90 days after the
Trustee's receiving actual notice of occurrence of such Default, give to the
Holders notice of such Default, but the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the Holders, except in the case of a Default
in the payment of the principal of, premium, if any, or interest on any of the
Notes when due or in the payment of any redemption or repurchase obligation.
The Indenture provides that if an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (5) above with respect to
the Company), then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Notes then outstanding, by
notice in writing to the Company (and to the Trustee if given by Holders), may
declare all principal, premium, if any, accrued interest and Liquidated
Damages, if any, on or with respect to the Notes to be due and payable
immediately. If an Event of Default specified in clause (5) above with respect
to the Company occurs, all principal, premium, if any, accrued interest and
Liquidated Damages, if any, will be immediately due and payable on all
outstanding Notes without any declaration or other act on the part of the
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes generally are authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, and Liquidated Damages with respect to,
the Notes that have become due solely by such acceleration, have been cured or
waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of, interest on, or Liquidated Damages with
respect to, any Note not yet cured, or a default with respect to any covenant
or provision that cannot be modified or amended without the consent of the
Holder of each outstanding Note affected. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable security or indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal, premium, if any,
or interest or Liquidated Damages, if any, on the Notes, unless the Holder
gives to the Trustee written notice of a continuing Event of Default, the
Holders of at least 25.0% in principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy, such Holders offer to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense, the Trustee does not comply with the request within 60 days after the
receipt of the request and the offer of indemnity, and the Trustee shall not
have received a contrary direction from the Holders of a majority in principal
amount of the outstanding Notes.
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AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain purposes without the consent of
the Holders. With the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, the Company
and the Trustee are permitted to amend or supplement the Indenture or any
supplemental indenture or modify or waive the rights of the Holders; provided
that no such modification may, without the consent of each Holder affected
thereby: (1) change the Stated Maturity of any Note or reduce the principal
amount thereof or the rate (or extend the time for payment) of interest thereon
or any premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Note or any premium or the
interest thereon is payable, or impair the right to institute suit for the
conversion of any Note or the enforcement of any such payment on or after the
due date thereof (including, in the case of redemption, on or after the
Redemption Date), or reduce the Repurchase Price, or alter the Repurchase Offer
(other than as set forth herein) or redemption provisions in a manner adverse
to the Holders, or (2) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture or
(3) adversely affect the right of such Holder to convert Notes or alter, in a
manner that adversely affects the right of such Holder, the provisions relating
to anti-dilution protection in respect thereof. A supplemental indenture
entered into in compliance with the "Limitation on Merger, Sale or
Consolidation" covenant would not require the consent of the Holders of the
Notes.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no shareholder, employee, officer, director or
partner, as such, past, present or future, of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
the Company under the Indenture or the Notes by reason of his, her or its
status as such shareholder, employee, officer, director or partner.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the Indenture.
The Company or Trustee may require a Holder, among other things, to furnish
appropriate endorsements, legal opinions and transfer documents, and to pay any
taxes and fees required by law or permitted by the Indenture. The Company is
not required to transfer or exchange any Notes selected for redemption. Also,
the Company is not required to transfer or exchange any Notes for a period of
15 days before the mailing of a Repurchase Offer or notice of redemption.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
BOOK ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, Notes initially resold to
"qualified institutional buyers," as defined in Rule 144A under the Securities
Act ("QIBs"), are evidenced by one or more global Notes (the "Global Note"),
which were deposited on the date of the closing of the sale of the Notes (the
"Closing Date") with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co. ("Cede") as the
Depositary's nominee. Except as set forth below, the Global Note may be
transferred, in whole or in part, only to another nominee of the Depositary or
to a successor of the Depositary or its nominee.
Notes that were (1) originally issued to or transferred to institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)) under
the Securities Act ("IAIs") who are not QIBs (the "Non-Global Purchasers"); or
(2) issued as described below under "Certificated Securities," were issued in
registered form (the "Certificated Securities"). Upon the transfer to a QIB of
Certificated Securities initially issued to a Non-Global Purchaser, such
Certificated Securities will, unless the Global Notes have previously been
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exchanged for Certificated Securities, be exchanged for an interest in the
Global Notes representing the principal amount of Certificated Securities being
transferred.
QIBs may hold their interests in the Global Note directly through the
Depositary if such holders are participants in the Depositary, or indirectly
through organizations which are participants in the Depositary (the
"Participants"). Transfers between Participants will be effected in accordance
with the Depositary's rules and will be settled in same-day funds.
The Depositary has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its Participants and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, "Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. QIBs may elect to hold Notes purchased by them through the
Depositary. QIBs who are not Participants may beneficially own securities held
by or on behalf of the Depositary only through Participants or Indirect
Participants.
Ownership of the Notes evidenced by the Global Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of Participants),
the Participants and the Indirect Participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
that they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Notes evidenced by the Global Notes will
be limited to such extent.
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by the Global Notes for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in a Global Note will not be entitled to have Notes represented by such Global
Note registered in their names, will not receive or be entitled to receive
physical delivery of Certificated Notes, and will not be considered the owners
or holders thereof under the Indenture for any purpose, including with respect
to the giving of any directions, instructions or approvals to the Trustee
thereunder. As a result, the ability of a Person having a beneficial interest
in Notes represented by a Global Note to pledge such interest to Persons that
do not participate in the Depositary's system, or to otherwise take actions
with respect to such interest, may be affected by the lack of a physical
certificate evidencing such interest.
Neither the Company nor the Trustee have any responsibility or liability for
any aspect of the records relating to or payments made on account of Notes by
the Depositary, or for maintaining, supervising or reviewing any records of the
Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, interest on, and
Liquidated Damages with respect to, any Note represented by a Global Note
registered in the name of the Depositary or its nominee on the applicable
record date will be payable by the Trustee to or at the direction of the
Depositary or its nominee in its capacity as the registered Holder of the
Global Notes representing such Notes under the Indenture. Under the terms of
the Indenture, the Company and the Trustee may treat the Persons in whose names
the Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including, principal, premium, if any, interest, or Liquidated
Damages with respect thereto), or immediately to credit the accounts of the
relevant Participants with such payment, in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Notes as shown on the records of the Depositary. Payments by the Participants
and the Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants.
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Holders who desire to convert their Notes into Common Stock pursuant to the
terms of the Notes should contact their brokers or other Participants or
Indirect Participants to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.
If (1) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (2) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes
in definitive form under the Indenture, then, upon surrender by the Depositary
of the Global Notes, Certificated Notes will be issued to each person that the
Depositary identifies as the beneficial owner of the Notes represented by the
Global Notes. In addition, subject to certain conditions, any Person having a
beneficial interest in a Global Note may, upon request to the Trustee, exchange
such beneficial interest for Notes in the form of Certificated Notes. Upon any
such issuance, the Trustee is required to register such Certificated Notes in
the name of such Person or Persons (or the nominee of any thereof), and cause
the same to be delivered thereto. All such Certificated Notes shall bear
appropriate legends restricting their transferability.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may
conclusively rely on, and shall be protected in relying on, instructions from
the Depositary for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the Notes to be issued).
CERTIFICATED SECURITIES
If (1) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (2) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes
in definitive form under the Indenture, then, upon surrender by the Global Note
Holder of the Global Note, Notes in such form will be issued to each Person
that the Global Note Holder and the Depositary identifies as the beneficial
owner of the related Notes. In addition, subject to certain conditions, any
Person having a beneficial interest in the Global Note may, upon request to the
Trustee, exchange such beneficial interest for Notes in definitive form. Upon
any such issuance, the Trustee is required to register such Notes in the name
of, and cause the same to be delivered to, such Person or Persons (or the
nominee of any thereof). Such Notes would be issued in fully registered form.
Neither the Company nor the Trustee shall be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners or
the related Notes and each such Person may conclusively rely on, and shall be
protected in relying on, instructions from the Global Note Holder or of the
Depositary for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the Notes to be issued.)
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration Rights
Agreement on November 18, 1998 (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, the Company has agreed to file with the
Commission on or prior to 90 days after the Closing Date a shelf registration
statement under the Securities Act (the "Shelf Registration Statement") on Form
S-3 or another appropriate form to cover resales of Transfer Restricted
Securities by the holders thereof who satisfy certain conditions relating to
the provision of information in connection with the Shelf Registration
Statement. Accordingly, the Company has filed the registration statement of
which this prospectus is a part. The Company will use its reasonable best
efforts to keep the Shelf Registration Statement effective until the earlier of
such date that is two years after the latest date of initial issuance of the
Notes or the date all Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold or there cease to be outstanding any
Transfer Restricted Securities. For purposes of the foregoing, "Transfer
Restricted Securities" means each Note and share of Common Stock
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issued upon conversion thereof until the earlier of the date on which such Note
or share of Common Stock has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or the
date on which such Note or share of Common Stock is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act (or any similar provisions then in force).
The Registration Rights Agreement provides that (1) the Company will file the
Shelf Registration Statement with the Commission on or prior to 90 days after
the Closing Date and (2) the Company will use its reasonable best efforts to
cause the Shelf Registration Statement to be declared effective by the
Commission on or prior to 180 days after the Closing Date (the "Effectiveness
Target Date"). If (1) the Shelf Registration Statement is not filed with the
Commission on or prior to 90 days after the Closing Date, (2) the Shelf
Registration Statement has not been declared effective by the Commission within
180 days after the Closing Date or (3) the Shelf Registration Statement is
filed and declared effective but shall thereafter cease to be effective or the
prospectus contained therein ceases to be usable for a period of time which
shall exceed 90 days in the aggregate during any 365-day period (each such
event referred to in clauses (1) through (3), a ("Registration Default"), the
Company will accrue liquidated damages ("Liquidated Damages") in favor of each
Holder of Transfer Restricted Securities, during the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to $0.05 per week per $1,000 principal amount of Notes and, if
applicable, on an equivalent basis per share (subject to adjustment in the
event of stock splits, stock recombinations, stock dividends and the like) of
Common Stock constituting Transfer Restricted Securities held by such Holder.
The rate of accrual of the Liquidated Damages will increase by an additional
$0.05 per week per $1,000 principal amount of Notes and, if applicable, by an
equivalent amount per week per share (subject to adjustment as set forth above)
of Common Stock constituting Transfer Restricted Securities for each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Liquidated Damages with respect to any Registration Default of $0.25
per week per $1,000 principal amount of Notes or, if applicable, an equivalent
amount per week per share (subject to adjustment as set forth above) of Common
Stock constituting Transfer Restricted Securities. All accrued Liquidated
Damages shall be paid to the Holders of Notes or shares of Common Stock (as
applicable) in the same manner as interest payments on the Notes on semi-annual
payment dates which correspond to interest payment dates for the Notes.
Following the cure of a Registration Default, Liquidated Damages will cease to
accrue with respect to such Registration Default. The use of the Shelf
Registration Statement for effecting resales of Transfer Restricted Securities
may be suspended in certain circumstances described in the Registration Rights
Agreement upon notice by the Company to the holders of the Transfer Restricted
Securities, subject to the rights of the holders of Transfer Restricted
Securities to receive Liquidated Damages if the aggregate number of days of
such suspensions in any 365-day period exceeds the period described above.
The Company will provide to each Holder of Transfer Restricted Securities
included in the Shelf Registration Statement copies of the prospectus contained
in the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit resales of the Transfer Restricted Securities. A Holder
who sells Transfer Restricted Securities pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such Holder (including certain indemnification provisions).
Holders of the Transfer Restricted Securities will be required to make certain
representations to the Company (as described in the Registration Rights
Agreement) and will be required to deliver promptly information to be used in
connection with the Shelf Registration Statement in order to have their
Transfer Restricted Securities included in the Shelf Registration Statement. If
a Holder fails to provide such information within the prescribed time periods,
the Transfer Restricted Securities of such Holder will not be included in the
Shelf Registration Statement and the Holder will not be entitled to any
Liquidated Damages. A Holder's ability to sell such Transfer Restricted
Securities may be limited or the price at which such Transfer Restricted
Securities can be sold may be adversely affected if the Transfer Restricted
Securities are not included in the Shelf Registration Statement.
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GOVERNING LAW
The Indenture and the Notes and the Registration Rights Agreement provide
that they are governed in accordance with the laws of the State of New York,
without regard to choice of laws provisions.
THE TRUSTEE
United States Trust Company of New York is the Trustee under the Indenture. A
successor Trustee may be appointed in accordance with the terms of the
Indenture.
The Indenture contains certain limitations on the rights of the Trustee, in
the event it becomes a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in
other transactions with the Company and its Subsidiaries; provided, however,
that if it acquires any conflicting interest (as defined), it must eliminate
such conflict or resign.
In case an Event of Default shall occur (and shall not be cured or waived),
the Trustee will be required to use the degree of care of a prudent person in
the conduct of its own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Notes and there can be no
assurance as to the liquidity of any markets that may develop for the Notes,
the ability of the Holders to sell their Notes or at what price Holders of the
Notes will be able to sell their Notes. Future trading prices of the Notes will
depend upon many factors including, among other things, prevailing interest
rates, the Company's operating results, the price of the Common Stock and the
market for similar securities. The Initial Purchasers have informed the Company
that they intend to make a market in the Notes offered hereby; however, the
Initial Purchasers are not obligated to do so and any such market making
activity may be terminated at any time without notice to the Holders of the
Notes. The Notes are eligible for trading on the PORTAL Market. The Company
does not intend to apply for listing of the Notes on any securities exchange.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York or Los
Angeles, California are authorized or obligated by law or executive order to
close.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is
a party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participation or other equivalents of or
interests (however designated) in stock issued by that Person.
"Continuing Director" means at any date a member of the Company's Board of
Directors (1) who was a member of such board on the date of initial issuance of
the Notes or (2) who was nominated or elected by at least a majority of the
directors who were such Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were such Continuing
Directors at the time of such nomination or election.
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"Credit Facilities" means (1) the Amended and Restated Revolving Credit
Agreement, dated as of April 30, 1998, by and among the Company, the lenders
party thereto, DLJ Capital Funding, Inc., as Syndication Agent, First Union
National Bank, as Documentation Agent, and The Bank of New York, as
Administrative Agent, as amended prior to or on the Issue Date, and (2) the
Amended and Restated Term Loan Agreement, dated as of April 30, 1998, by and
among the Company, the lenders party thereto, DLJ Capital Funding, Inc., as
Syndication Agent, and The Bank of New York, as Administrative Agent, as
amended prior to or on the Issue Date, in each case including any notes,
guaranties, security or pledge agreements, letters of credit and other
documents or instruments executed pursuant thereto and any appendices, exhibits
or schedules to any of the foregoing, as the same may be in effect from time to
time, and in each case, as such agreements, notes, guaranties, security or
pledge agreements, letters of credit and other documents or instruments may be
amended, modified, supplemented, renewed, refunded, replaced, refinanced,
extended or restated from time to time (whether with the original agents and
lenders or other agents and lenders or otherwise, and whether provided under
the original credit or loan agreement or other credit or loan agreements or
otherwise), including any (1) extension of the maturity of any Indebtedness or
other obligation incurred thereunder or contemplated thereby, (2) addition or
deletion of borrowers or guarantors thereunder, so long as the borrowers
include one or more of the Company and its Subsidiaries and their respective
successors and assigns, (3) increase in the amount of Indebtedness or other
obligations incurred thereunder or available to be borrowed thereunder or
(4) other alteration of the terms and conditions thereof.
"Designated Senior Indebtedness" means (1) any Indebtedness outstanding under
any of the Credit Facilities and (2) any other Senior Indebtedness, the
principal amount of which is, or under which the lenders party thereto are
committed to lend or advance, $10 million or more, provided, that such other
Senior Indebtedness has been designated by the Company in the instrument or
agreement creating or evidencing the same as "Designated Senior Indebtedness."
"Indebtedness" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of any such Person, (1) in respect of
borrowed money (whether or not the lender has recourse to all or any portion of
the assets of such person), (2) evidenced by credit or loan agreements, bonds,
notes, debentures or similar instruments (including, without limitation, notes
or similar instruments given in connection with the acquisition of any
business, properties or assets of any kind), (3) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (4) for the
payment of money relating to a Capitalized Lease Obligation or (5) evidenced by
a letter of credit, bank guarantee or a reimbursement obligation of such Person
with respect to any letter of credit; (b) all obligations of such Person issued
or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business); (c) all net obligations of such Person under Interest Swap
and Hedging Obligations; (d) all liabilities of others of the kind described in
the preceding clauses (a),(b) or (c) that such Person has guaranteed or that is
otherwise its legal liability, or which is secured by a lien on property of
such Person (other than carriers', warehousemens', mechanics', repairmens' or
other like non-consensual statutory liens arising in the ordinary course of
business); and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligation issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c)
or (d), or this clause (e), whether or not between or among the same parties.
"Interest Swap and Hedging Obligations" means the obligations of any Person
under any interest rate or currency protection agreement, future agreement,
option agreement, swap agreement, cap agreement or other interest rate or
currency hedge agreement, collar agreement or other similar agreement or
arrangement to which such Person is a party or beneficiary.
"Junior Securities" means Capital Stock in the Company and any Indebtedness
of the Company, in each case that (a) is authorized and issued pursuant to a
plan of reorganization of the Company (which authorization states that it gives
effect to the subordination of such Junior Securities to all Senior
Indebtedness), (b) is subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the
same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness
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pursuant to the Indenture, and (c) contains terms, provisions, covenants and
default provisions not more beneficial to the Holders of the Notes as compared
to the holders of the Senior Indebtedness on the issue date of the Notes.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowed as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
and liabilities accrued or due on or in connection with, and Interest Swap and
Hedging Obligations issued by parties to and secured with, the Credit
Facilities and any other Indebtedness of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company, unless the instrument creating or
evidencing such Indebtedness expressly provides that such Indebtedness is not
senior or superior in right of payment to the Notes or is pari passu with, or
subordinated to, the Notes; provided that in no event shall Senior Indebtedness
include (a) Indebtedness of the Company owed to any Subsidiary of the Company,
(b) Indebtedness of the Company representing any trade account payable incurred
in the ordinary course of business, (c) any liability for taxes owed or owing
by the Company or any Subsidiary of the Company or (d) the Notes.
"Significant Subsidiary" means as of any date of determination, (i) any
Subsidiary of the Company that has aggregate total assets in an amount in
excess of 10% of the consolidated total assets of the Company and its
Subsidiaries at such date of determination and (ii) any Subsidiary of the
Company for which the net income of such Subsidiary and its Subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principals, during the four fiscal quarters most recently ended
preceding the date of determination, exceeded 10% of the net income of the
Company and its Subsidiaries during such period.
"Stated Maturity" when used with respect to any Note, means May 15, 2009.
"Subsidiary" with respect to any Person, means (1) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (2) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (3) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
24
<PAGE>
DESCRIPTION OF CAPITAL STOCK
This summary highlights certain provisions of our Certificate of
Incorporation, as amended to date (the "Certificate of Incorporation") and our
Bylaws (the "Bylaws"). This summary is not complete and does not contain all
of the provisions of our Certificate of Incorporation or our Bylaws and is
qualified in its entirety by reference to these documents.
Our authorized capital stock is 200 million shares, consisting of 195
million shares of Common Stock, par value $0.001 per share, (the "Common
Stock") and 5 million shares of Preferred Stock, par value $0.001 per share
(the "Preferred Stock") in such series and with such voting powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
may be fixed from time to time by our Board of Directors for each series.
COMMON STOCK
As of December 31, 1998, there were shares of Common Stock issued
and outstanding. We do not anticipate paying any cash dividends on the Common
Stock in the foreseeable future and we are subject to certain restrictions on
our ability to pay dividends on the Common Stock under the Credit Facilities.
Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. There are no
cumulative voting rights applicable to the Common Stock.
The rights, preferences and privileges of holders of our Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of Preferred Stock which we may designate and issue in
the future. Subject to the preferences applicable to shares of Preferred Stock
outstanding at any time, holders of shares of Common Stock are entitled to
receive dividends ratably, if, when and as declared by the Board of Directors,
from funds legally available therefor and are entitled, in the event of
liquidation, to share ratably in all assets remaining after payment of
liabilities and Preferred Stock preferences, if any. Holders of Common Stock
have no preemptive, subscription, redemption or conversion rights and there
are no sinking fund provisions relating to these shares.
The authorized but unissued shares of Common Stock are available for
issuance without further action by our stockholders, unless such action is
required by applicable law or the rules of any stock exchange on which the
Common Stock may be listed.
The outstanding shares of Common Stock are, and the Conversion Shares
issuable upon conversion of the Notes will be, when issued and paid for, fully
paid and non-assessable.
PREFERRED STOCK
The Certificate of Incorporation authorizes the Board of Directors to
establish series of Preferred Stock and to determine, with respect to any
series of Preferred Stock, the voting powers, or no voting powers, and such
designations, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof,
as are stated in the resolutions of the Board of Directors providing for such
series.
As of December 1, 1998, there were no shares of Preferred Stock issued and
outstanding. The authorized but unissued shares of Preferred Stock are
available for issuance without further action by our stockholders. This will
allow us to issue shares of Preferred Stock without the expense and delay of a
special stockholders' meeting, unless such action is required by applicable
law or the rules of any stock exchange on which our securities may be listed.
We believe that the Preferred Stock will provide flexibility in structuring
possible future financing and acquisitions, and in meeting other corporate
needs. Although the Board of Directors has no intention at the present time of
doing so, it could issue a series of Preferred Stock, the terms of which,
subject to certain limitations imposed by the securities laws, could impede
the completion of a merger, tender offer or
25
<PAGE>
other takeover attempt. The Board of Directors will make any determination to
issue such shares based on its judgment as to our best interests and the best
interests of our stockholders at the time of issuance. The Board of Directors,
in so acting, could issue Preferred Stock having terms that could discourage an
acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market price
of such stock.
CERTAIN CHARTER AND BYLAW PROVISIONS
Pursuant to the provisions of the Delaware General Corporation Law (the
"DGCL"), we have adopted provisions in our Certificate of Incorporation and
Bylaws which require us to indemnify our officers and directors to the fullest
extent permitted by law, and eliminate the personal liability of our directors
to us or our stockholders for monetary damages for breach of their duty of due
care except (1) for any breach of the duty of loyalty; (2) for acts or omission
not in good faith or which involve intentional misconduct or knowing violations
of law; (3) for liability under Section 174 of the DGCL (relating to certain
unlawful dividends, stock repurchases or stock redemptions); or (4) for any
transaction from which the director derived any improper personal benefit.
These provisions do not eliminate a director's duty of care. Moreover, the
provisions do not apply to claims against a director for violation of certain
laws, including federal securities laws. We believe that these provisions will
assist us in attracting or retaining qualified individuals to serve as
directors and officers.
Our Certificate of Incorporation includes a provision which allows our Board
of Directors to issue up to five million shares of Preferred Stock with voting,
liquidation and conversion rights that could be superior to and adversely
affect the voting power of holders of Common Stock. The issuance of Preferred
Stock could have the effect of delaying, deferring or preventing a change in
control. We have no present plans to issue any shares of Preferred Stock.
DELAWARE ANTI-TAKEOVER LAW
We are a Delaware corporation that is subject to Section 203 of the DGCL
("Section 203"). Under Section 203 certain "business combinations" between a
Delaware corporation, whose stock generally is publicly traded or held of
record by more than 2,000 stockholders, and an "interested stockholder" are
prohibited for a three-year period following the date that such stockholder
became an interested stockholder, unless (1) the corporation has elected in its
certificate of incorporation not to be governed by Section 203 (the Company has
not made such election); (2) the business combination was approved by the board
of directors of the corporation before the other party to the business
combination became an interested stockholder; (3) upon consummation of the
transaction that made it an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
commencement of the transaction (excluding voting stock owned by directors who
are also officers or held in employee benefit plans in which the employees do
not have a confidential right to tender or vote stock held by the plan); or (4)
the business combination is approved by the board of directors of the
corporation and ratified by two-thirds of the voting stock which the interested
stockholder did not own. The three-year prohibition also does not apply to
certain business combinations proposed by an interested stockholder following
the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors. The
term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of
the corporation or its majority-owned subsidiaries, and transactions which
increase an interested stockholder's percentage ownership of stock. The term
"interested stockholder" is defined generally as those stockholders who become
beneficial owners of 15% or more of a Delaware corporation's voting stock,
together with the affiliates or associates of that stockholder.
TRANSFER AGENT
The registrar and transfer agent for our Common Stock is The Bank of New
York.
26
<PAGE>
DESCRIPTION OF INDEBTEDNESS
This summary highlights certain provisions of our debt instruments. This
summary is not complete and does not contain all of the provisions of our debt
instruments and is qualified in its entirety by reference to the documents.
CREDIT FACILITIES
On April 30, 1998, we replaced our $1.05 billion credit facilities with the
Credit Facilities, in an aggregate of $1.35 billion, with various banks, DLJ
Capital Funding, Inc. (an affiliate of the lead Initial Purchaser), as
Syndication Agent, and The Bank of New York (an affiliate of an Initial
Purchaser), as Administrative Agent. The following is a summary description of
the principal terms of the Credit Facilities.
STRUCTURE
The Credit Facilities provide for a ten-year $400.0 million senior term
facility (the "Term Facility") and a seven-year $950.0 million revolving senior
credit facility (the "Revolving Facility"). Under the Revolving Facility, up to
$100.0 million may be used in connection with letters of credit, and up to
$15.0 million in short-term funds may be borrowed the same day that notice is
given to the banks under a "Swing Line" facility.
SECURITY; GUARANTEES
The obligations under the Credit Facilities are guaranteed by each of our
existing direct and indirect material subsidiaries and future direct and
indirect material domestic subsidiaries. The Credit Facilities and the
guarantees thereof are, subject to certain exceptions, secured by all of the
capital stock (or similar equity interests) of our existing direct and indirect
material subsidiaries and future direct and indirect material domestic
subsidiaries.
INTEREST RATE
In general, borrowings under the Credit Facilities bear interest at one of
two floating rates selected by us: (1) the Alternate Base Rate (defined as the
higher of The Bank of New York's prime rate or the federal funds rate plus
0.5%) plus, for borrowings under the Term Facility only, a margin that ranges
from 0.5% to 0.75% depending on our leverage ratio; or (2) the Eurodollar Rate
(defined as the rate at which The Bank of New York is offering dollar deposits
in the interbank eurodollar market, adjusted for statutory reserves) plus a
margin that ranges from 0.45% to 1.75% in the case of the Revolving Facility
and 1.75% to 2.00% in the case of the Term Facility depending on our leverage
ratio. Swing Line borrowings bear interest at either a rate negotiated by us
and The Bank of New York, as the swing line lender, at the time of borrowing
or, if no rate is negotiated and agreed upon, the Alternate Base Rate.
MATURITY
We are required to repay the amount borrowed under the Term Facility in
yearly installments of $4.0 million beginning on September 30, 1998 and
continuing through September 30, 2007. The remaining balance of $360.0 million
is due when the Term Facility matures on March 31, 2008. The Term Facility may
be prepaid at any time upon proper notice, but the redemption price will be
101.5% of the outstanding balance if prepayment is made on or prior to April
30, 1999 and 100.75% of the outstanding balance if prepayment is made from May
1, 1999 to April 30, 2000. The Revolving Facility will terminate on March 31,
2005.
FEES
We are required to pay the banks which are party to the Credit Facilities a
commitment fee based on the daily average unused portion of the Revolving
Facility which accrues from the closing date of the Credit Facilities. We are
also obligated to pay letter of credit fees on the aggregate stated amount of
outstanding letters of credit.
27
<PAGE>
COVENANTS
The Credit Facilities contain a number of covenants (in addition to the
financial covenants) that, among other things, restrict our ability and that of
our subsidiaries to (1) dispose of assets; (2) incur additional indebtedness;
(3) prepay other indebtedness (including the Notes, subject to certain
exceptions) or amend certain debt instruments (including the Indenture); (4)
pay dividends; (5) create liens on assets; (6) amend our Certificate of
Incorporation or Bylaws; (7) make investments, loans or advances; (8) make
acquisitions; (9) engage in mergers or consolidations; (10) change the business
conducted by us or our subsidiaries; (11) make capital expenditures or engage
in certain transactions with affiliates; and (12) otherwise restrict certain
corporate activities. In addition, the Credit Facilities contain financial
covenants that require us to maintain, on a consolidated basis, specified
financial tests including a minimum interest coverage ratio, a minimum net
worth test, a minimum cash flow ratio and maximum leverage ratio.
EVENTS OF DEFAULT
The Credit Facilities contain customary events of default, including (1)
nonpayment of principal, interest or fees; (2) material inaccuracy of
representations and warranties; (3) violation of covenants; (4) cross-defaults
to certain other indebtedness; (5) certain events of bankruptcy and insolvency;
(6) certain ERISA matters; (7) material judgments; (8) invalidity of any
guaranty or security interest; and (9) a change of control of us in certain
circumstances. In addition, if we or any of our subsidiaries become ineligible
for participation in, or are suspended from receiving reimbursement under,
Medicare or Medicaid programs resulting in a 5% decrease in our consolidated
net operating revenues, we will be in default under the Revolving Facility.
SWAP AGREEMENTS
In conjunction with the refinancing of our Credit Facilities, our two
existing forward interest rate swap agreements with notional amounts of $100.0
million and $200.0 million were canceled in April 1998. During the quarter
ended June 30, 1998, we entered into forward interest rate cancelable swap
agreements with a combined notional amount of $800.0 million. The lengths of
the agreements are between three and ten years with cancellation clauses at the
swap holders' option from one to seven years. The underlying blended interest
rate is fixed at approximately 5.65% plus an applicable margin based upon our
current leverage ratio. Currently, the effective interest rate for these swaps
is 7.15%.
5 5/8% CONVERTIBLE NOTES AND RELATED GUARANTY
We have guaranteed the $125.0 million outstanding 5 5/8% Convertible
Subordinated Notes due 2006 (the "5 5/8% Convertible Notes") of RTC, our
wholly-owned subsidiary. The 5 5/8% Convertible Notes are convertible into
shares of our Common Stock at an effective conversion price of $25.62 per
share. Although these notes do not mature until 2006, RTC may redeem them at
its option subsequent to July 16, 1999. The redemption price, expressed as a
percentage of the principal amount of the notes, is shown below for 12-month
periods beginning July 15:
<TABLE>
<CAPTION>
YEAR PERCENTAGE YEAR PERCENTAGE
---- ---------- ---- ----------
<S> <C> <C> <C>
1999.................... 103.94% 2003.................... 101.69%
2000.................... 103.38% 2004.................... 101.13%
2001.................... 102.81% 2005.................... 100.56%
2002.................... 102.25% 2006.................... 100.00%
</TABLE>
Our guaranty of the 5 5/8% Convertible Notes is pari passu with trade
payables and is subordinate to the Credit Facilities and any future debt which
we may incur (unless it otherwise states). The Notes are effectively
subordinate to the 5 5/8% Convertible Notes.
28
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to the resale of $345.0 million of Notes issued in a
private placement on November 13, 1998 and the resale of an indeterminable
amount of Conversion Shares, including any additional Conversion Shares
issuable pursuant to the antidilution provisions of the Notes, which are
issuable upon conversion of the Notes. The Registration Statement (of which
this prospectus is a part) does not cover the issuance of shares of Common
Stock upon conversion of the Notes into the Conversion Shares.
The sale or distribution of the Notes and the Conversion Shares may be
effected directly to purchasers by the Selling Securityholders as principals or
through one or more underwriters, brokers, dealers or agents from time to time
in one or more transactions (which may involve crosses or block transactions)
(i) on any exchange or in the over-the-counter marker, (ii) in transactions
otherwise than in the over-the-counter market or (iii) through the writing of
options (whether such options are listed on an options exchange or otherwise)
on, or in settlement of short sale of the Notes or the Conversion Shares. The
Selling Securityholders may also loan or pledge the Notes or the Conversion
Shares to broker-dealers that in turn may sell such securities. Any of such
transactions may be effected at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case
as determined by the Selling Securityholder or by agreement between the Selling
Securityholder and underwriters, brokers, dealers or agents, or purchasers. If
the Selling Securityholders effect such transactions by selling the Notes or
the Conversion Shares to or through underwriters, brokers, dealers or agents,
such underwriters, brokers, dealers or agents may receive compensation in the
form of discounts, concessions or commissions from the Selling Securityholders
or commissions from purchasers of the Notes or the Conversion Shares for whom
they may act as agent (which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents may be in excess of those
customary in the types of transactions involved). The Selling Securityholders
and any brokers, dealers or agents that participate in the distribution of the
Notes or the Conversion Shares may be deemed to be underwriters, and any profit
on the sale of the Notes or the Conversion Shares by them and any discounts,
concessions or commissions received by any such underwriters, brokers, dealers
or agents may be deemed to be underwriting discounts and commissions under the
Securities Act.
To the extent required, the aggregate principal amount of Notes and number of
shares of Common Stock to be sold hereby, the names of the Selling
Securityholders, the purchase price, the name of any such agent, dealer or
underwriter and any applicable commissions, discounts or other terms
constituting compensation with respect to a particular offer will be set forth
in an accompanying prospectus supplement. The aggregate proceeds to the Selling
Securityholders from the sale of the Notes or shares of Common Stock offered by
them hereby will be the purchase price of such Notes or shares of Common Stock
less discounts and commissions, if any.
The Notes and the Conversion Shares which may be offered hereby may be sold
from time to time in one or more transactions at fixed offering prices, which
may be changed, or at varying prices determined at the time of sale or at
negotiated prices. Such prices will be determined by the holders of such
securities or by agreement between such holders and underwriters or dealers who
may receive fees or commissions in connection therewith.
The outstanding Common Stock is listed for trading on the New York Stock
Exchange, and the Conversion Shares issuable upon conversion of the Notes have
been authorized for listing on the New York Stock Exchange upon official notice
of issuance. There is no assurance as to the development or liquidity of any
trading market that may develop for the Notes.
In order to comply with the securities laws of certain states, if applicable,
the Notes and the Conversion Shares offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Notes and the Conversion Shares offered hereby
may not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and compliance with same is effected.
29
<PAGE>
The Selling Securityholders and any brokers, dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Notes or the Conversion Shares offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions or discounts received by such brokers, dealers, agents or
underwriters and any profit on the resale of the Notes or the Conversion Shares
offered hereby and purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We will not receive any of the proceeds from the offering of Notes and the
Conversion Shares issuable upon conversion thereof by the Selling
Securityholders that are sold pursuant to the Registration Statement (of which
this prospectus is a part). The Selling Securityholders and we have agreed to
indemnify each other against certain liabilities arising under the Securities
Act. We have agreed to pay all expenses incident to the offer and sale of the
Notes and the Conversion Shares offered hereby by the Selling Securityholders
to the public, other than selling commissions and fees.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Notes offered
hereby will be passed upon for us by Barry C. Cosgrove, our General Counsel.
Mr. Cosgrove holds stock and options to purchase stock granted under our
employee stock plans which in the aggregate represent less than 1% of our
Common Stock.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
TRCH Annual Report on Form 10-K/A Amendment No. 2 for the years ended December
31, 1997 and 1996 and May 31, 1995 and the seven months ended December 31, 1995
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act, and in
accordance therewith we file reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other documents and
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Regional Offices of the Commission
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates and from the Commission's Web Site
located at http://www.sec.gov. Such reports, proxy statements and other
documents and information concerning us are also available for inspection at
the office of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999
[LOGO OF TOTAL RENAL CARE HOLDINGS, INC.]
TOTAL RENAL CARE HOLDINGS, INC.
$345,000,000
7% CONVERTIBLE SUBORDINATED NOTES DUE 2009
10,515,087 SHARES
COMMON STOCK, PAR VALUE $0.001 PER SHARE
-----------------------------------------------
PROSPECTUS
-----------------------------------------------
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor
any sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of the Company
have not changed since the date hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
SEC registration fee................................................ $95,915
Printing fees....................................................... 50,000
Trustee's and transfer agent's fees................................. 5,000
Accounting fees and expenses........................................
Legal fees and expenses.............................................
Miscellaneous.......................................................
-------
Total............................................................... $
=======
</TABLE>
None of the above expenses will be borne by the Selling Securityholders.
- ---------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL provides that a Delaware corporation may indemnify
any person against expenses, judgments, fines and settlements actually and
reasonably incurred by any such person in connection with a threatened, pending
or completed action, suit or proceeding in which he is involved by reason of
the fact that he is or was director, officer, employee or agent of such
corporation, provided that (i) such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the corporation and (ii) with respect to any criminal action or proceeding,
such person had no reasonable cause to believe his conduct was unlawful. If the
action or suit is by or in the name of the corporation, the corporation may
indemnify any such person against expense actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the Delaware Court of Chancery
or the court in which the action or suit is brought determines upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expense as the court deems proper.
Article XI, Section I of our Bylaws provides for indemnification of our
directors and officers to the fullest extent permitted by the Delaware
Corporation Law. In accordance with the Delaware Corporation Law, our
Certificate of Incorporation, as amended, limits the personal liability of our
directors for violations of their fiduciary duty. The Certificate of
Incorporation eliminates each director's liability to us or our stockholders
for monetary damages or breach of fiduciary duty as a director except (i) for
any breach of the director's duty of loyalty to us or our stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under the section of the Delaware law
providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions, or (iv) for any transaction from which
a director derived any improper personal benefit. The effect of this provision
is to eliminate the personal liability of directors for monetary damages for
actions involving a breach of their fiduciary duty of care, including any such
actions involving gross negligence. This provision will not, however, limit in
any way the liability of directors for violations of the federal securities
laws. The Company has entered into indemnification agreements with each of its
directors and officers to indemnify them to the maximum extent permitted by
Delaware law.
The Purchase Agreement and the Registration Rights Agreement executed in
connection with the private placement of the Notes and filed as Exhibit 4.4 and
Exhibit 4.5, respectively, hereto provide for the indemnification of our
directors and certain of our officers by the Initial Purchasers and the Selling
Securityholders, respectively, against certain liabilities, including
liabilities under the Securities Act.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Shareholders Agreement, dated August 11, 1994, between DLJ Merchant
Banking Partners, L.P., DLJ International Partners, C.V., DLJ
Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., NME
Properties Corp., Continental Bank, as voting trustee, and the
Company.++
4.2 Agreement and Amendment, dated as of June 30, 1995, between DLJMBP,
DLJIP, DLJOP, DLJMBF, DLJ First Esc, LLC, Tenet Healthcare
Corporation, the Company, Victor M.G. Chaltiel, the Putnam
Purchasers, the Crescent Purchasers and the Harvard Purchasers,
relating to the Shareholders Agreement dated as of August 11, 1994
between DLJMB, DLJIP, DLJOP, DLJMBF, NME Properties, Continental
Bank, as voting trustee, and the Company.++
4.3 Indenture, dated as of November 18, 1998, between the Company and the
Trustee and Form of Note.+
4.4 Registration Rights Agreement, dated as of November 18, 1998, between
the Company and the Initial Purchasers.+
4.5 Purchase Agreement, dated as of November 12, 1998, between the Company
and the Initial Purchasers.+
5.1 Opinion of Barry C. Cosgrove.+
12.1 Computation of Ratio of Earnings to Fixed Charges.+
23.1 Consent of PricewaterhouseCoopers LLP.+
23.2 Consent of Barry C. Cosgrove (included in Exhibit 5.1).+
24.1 Power of Attorney with respect to the Company (included on page II-
4).+
25.1 Statement of Eligibility of Trustee under the Trust Indenture Act of
1939 on Form T-1.+
</TABLE>
- ---------------------
+ Filed herewith.
++ Filed on August 29, 1995 as an exhibit to the Company's Form 10-K for the
year ended May 31, 1995.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
II-2
<PAGE>
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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.
(5) That for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Torrance, State of
California, on December 16, 1998.
TOTAL RENAL CARE HOLDINGS, INC.
/s/ John E. King
By: _________________________________
John E. King
Senior Vice President, Finance
and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Victor M.G. Chaltiel, Barry C. Cosgrove and
John E. King, and each of them his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, including any post-effective
amendments as well as any related registration statement (or amendment
thereto) filed in reliance upon Rule 462(b) under the Securities Act, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
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/ Victor M.G. Chaltiel Chairman of the Board, Chief December 16, 1998
____________________________________ Executive Officer,
Victor M.G. Chaltiel President and Director
(Principal Executive
Officer)
/s/ John E. King Senior Vice President, December 16, 1998
____________________________________ Finance and Chief Financial
John E. King Officer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ Maris Andersons Director December 16, 1998
____________________________________
Maris Andersons
/s/ Peter T. Grauer Director December 16, 1998
____________________________________
Peter T. Grauer
/s/ Regina E. Herzlinger Director December 16, 1998
____________________________________
Regina E. Herzlinger
/s/ Shaul G. Massry Director December 16, 1998
____________________________________
Shaul G. Massry
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Shareholders Agreement, dated August 11, 1994, between DLJ Merchant
Banking Partners, L.P., DLJ International Partners, C.V., DLJ
Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., NME
Properties Corp., Continental Bank, as voting trustee, and the
Company.++
4.2 Agreement and Amendment, dated as of June 30, 1995, between DLJMBP,
DLJIP, DLJOP, DLJMBF, DLJ First Esc, LLC, Tenet Healthcare
Corporation, the Company, Victor M.G. Chaltiel, the Putnam
Purchasers, the Crescent Purchasers and the Harvard Purchasers,
relating to the Shareholders Agreement dated as of August 11, 1994
between DLJMB, DLJIP, DLJOP, DLJMBF, NME Properties, Continental
Bank, as voting trustee, and the Company.++
4.3 Indenture, dated as of November 18, 1998, between the Company and the
Trustee and Form of Note.+
4.4 Registration Rights Agreement, dated as of November 18, 1998, between
the Company and the Initial Purchasers.+
4.5 Purchase Agreement, dated as of November 12, 1998, between the Company
and the Initial Purchasers.+
5.1 Opinion of Barry C. Cosgrove.+
12.1 Computation of Ratio of Earnings to Fixed Charges.+
23.1 Consent of PricewaterhouseCoopers LLP.+
23.2 Consent of Barry C. Cosgrove (included in Exhibit 5.1).+
24.1 Power of Attorney with respect to the Company (included on page II-
4).+
25.1 Statement of Eligibility of Trustee under the Trust Indenture Act of
1939 on Form T-1.+
</TABLE>
- ---------------------
+ Filed herewith.
++ Filed on August 29, 1995 as an exhibit to the Company's Form 10-K for the
year ended May 31, 1995.
<PAGE>
EXHIBIT 4.3
================================================================================
TOTAL RENAL CARE HOLDINGS, INC.,
Issuer,
and
United States Trust Company of New York,
Trustee
_________________
INDENTURE
Dated as of November 18, 1998
_________________
$345,000,000
7% Convertible Subordinated Notes due 2009
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA
Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.8;
7.10;
14.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 14.3
(c) 14.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6;
14.2
(d) 7.6
314(a) 4.5;
4.6
14.2
(b) N.A.
(c)(1) 2.2;
7.2;
14.4
(c)(2) 7.2;
14.4
(c)(3) N.A.
(d) N.A.
</TABLE>
ix
<PAGE>
<TABLE>
<S> <C>
(e) 14.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5;
14.2
(c) 7.1(a)
(d) 2.8;
6.11;
7.1(c)
(e) 6.13
316(a)(last sentence) 2.9
(a)(1)(A) 6.11
(a)(1)(B) 6.12
(a)(2) N.A.
(b) 6.12;
6.7;
6.8
(c) 1.1
317(a)(1) 6.3
(a)(2) 6.4
(b) 2.4
318(a) 14.1
</TABLE>
- ---------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed a part
of the Indenture.
x
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
<S> <C>
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE........................................................ 1
Section 1.1. Definitions................................................................................ 1
Section 1.2. Incorporation by Reference of TIA.......................................................... 12
Section 1.3. Rules of Construction...................................................................... 13
ARTICLE II. THE SECURITIES.................................................................................. 14
Section 2.1. Form and Dating............................................................................ 14
Section 2.2. Execution and Authentication............................................................... 14
Section 2.3. Registrar and Paying Agent................................................................. 15
Section 2.4. Paying Agent to Hold Assets in Trust....................................................... 16
Section 2.5. Securityholder Lists....................................................................... 16
Section 2.6. Transfer and Exchange...................................................................... 17
Section 2.7. Replacement Securities..................................................................... 24
Section 2.8. Outstanding Securities..................................................................... 25
Section 2.9. Treasury Securities........................................................................ 26
Section 2.10. Temporary Securities....................................................................... 26
Section 2.11. Cancellation............................................................................... 26
Section 2.12. Defaulted Interest......................................................................... 27
Section 2.13. CUSIP Numbers.............................................................................. 28
Section 2.14. Deposit of Moneys.......................................................................... 29
ARTICLE III. REDEMPTION..................................................................................... 29
Section 3.1. Right of Redemption........................................................................ 29
Section 3.2. Notices to Trustee......................................................................... 29
Section 3.3. Selection of Securities to Be Redeemed..................................................... 30
Section 3.4. Notice of Redemption....................................................................... 30
Section 3.5. Effect of Notice of Redemption............................................................. 32
Section 3.6. Deposit of Redemption Price................................................................ 32
Section 3.7. Securities Redeemed in Part................................................................ 33
ARTICLE IV. COVENANTS....................................................................................... 33
Section 4.1. Payment of Securities...................................................................... 33
Section 4.2. Maintenance of Office or Agency............................................................ 34
Section 4.3. Corporate Existence........................................................................ 34
Section 4.4. Payment of Taxes and Other Claims.......................................................... 34
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.5. Compliance Certificate; Notice of Default.................................................. 35
Section 4.6. Reports.................................................................................... 35
Section 4.7. Rule 144A Information Requirement.......................................................... 36
Section 4.8. Further Instruments and Acts............................................................... 36
ARTICLE V. SUCCESSOR CORPORATION............................................................................ 37
Section 5.1. Limitation on Merger, Sale or Consolidation................................................ 37
Section 5.2. Successor Corporation Substituted.......................................................... 37
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES.................................................................. 38
Section 6.1. Events of Default.......................................................................... 38
Section 6.2. Acceleration of Maturity Rescission and Annulment.......................................... 41
Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee............................ 42
Section 6.4. Trustee May File Proofs of Claim........................................................... 43
Section 6.5. Trustee May Enforce Claims Without Possession of Securities................................ 44
Section 6.6. Priorities................................................................................. 44
Section 6.7. Limitation on Suits........................................................................ 45
Section 6.8. Unconditional Right of Holders to Receive Principal, Premium, and Interest................. 46
Section 6.9. Rights and Remedies Cumulative............................................................. 46
Section 6.10. Delay or Omission Not Waiver............................................................... 46
Section 6.11. Control by Holders......................................................................... 47
Section 6.12. Waiver of Default.......................................................................... 47
Section 6.13. Undertaking for Costs...................................................................... 48
Section 6.14. Restoration of Rights and Remedies......................................................... 48
ARTICLE VII. TRUSTEE......................................................................................... 48
Section 7.1. Duties of Trustee.......................................................................... 49
Section 7.2. Rights of Trustee.......................................................................... 50
Section 7.3. Individual Rights of Trustee............................................................... 51
Section 7.4. Trustee's Disclaimer....................................................................... 52
Section 7.5. Notice of Default.......................................................................... 52
Section 7.6. Reports by Trustee to Holders.............................................................. 52
Section 7.7. Compensation and Indemnity................................................................. 53
Section 7.8. Replacement of Trustee..................................................................... 54
Section 7.9. Successor Trustee by Merger, Etc........................................................... 56
Section 7.10. Eligibility; Disqualification.............................................................. 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.11. Preferential Collection of Claims Against Company........................................... 56
Section 7.12. Other Capacities............................................................................ 56
ARTICLE VIII. SATISFACTION AND DISCHARGE..................................................................... 56
Section 8.1. Satisfaction and Discharge of Indenture..................................................... 56
Section 8.2. Repayment to the Company.................................................................... 57
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................................ 57
Section 9.1. Supplemental Indentures Without Consent of Holders.......................................... 57
Section 9.2. Amendments, Supplemental Indentures and Waivers with
Consent of Holders.......................................................................... 58
Section 9.3. Compliance with TIA......................................................................... 60
Section 9.4. Revocation and Effect of Consents........................................................... 60
Section 9.5. Notation on or Exchange of Securities....................................................... 61
Section 9.6. Trustee to Sign Amendments, Etc............................................................. 61
ARTICLE X. MEETINGS OF HOLDERS............................................................................ 61
Section 10.1. Purposes for Which Meetings May Be Called................................................... 61
Section 10.2. Manner of Calling Meetings.................................................................. 62
Section 10.3. Calling of Meetings by the Company or Holders............................................... 62
Section 10.4. Who May Attend and Vote at Meetings......................................................... 63
Section 10.5. Regulations May Be Made by Company; Conduct of the
Meeting: Voting Rights: Adjournment......................................................... 63
Section 10.6. Voting at the Meeting and Record to Be Kept................................................. 64
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be
Hindered or Delayed by Call of Meeting...................................................... 64
ARTICLE XI. RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL........................................... 65
Section 11.1. Repurchase of Securities at Option of the Holder Upon a
Change of Control........................................................................... 65
Section 11.2. Rescission of Change of Control Determination............................................... 68
ARTICLE XII. SUBORDINATION.................................................................................. 68
Section 12.1. Securities Subordinated to Senior Indebtedness.............................................. 68
Section 12.2. No Payment on Securities in Certain Circumstances........................................... 69
Section 12.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution Liquidation or Reorganization................................... 71
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 12.4. Holders to Be Subrogated to Rights of Holders of Senior Indebtedness........................ 72
Section 12.5. Obligations of the Company Unconditional.................................................... 72
Section 12.6. Trustee and Other Agents Entitled to Assume Payments
Not Prohibited in Absence of Notice......................................................... 73
Section 12.7. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness............................................ 74
Section 12.8. Holders Authorize Trustee to Effectuate Subordination of
Securities.................................................................................. 74
Section 12.9. Right of Trustee to Hold Senior Indebtedness................................................ 75
Section 12.10. Article XII Not to Prevent Events of Default................................................ 75
Section 12.11. No Duty of Trustee and Other Agents to Holders of Senior
Indebtedness................................................................................ 75
ARTICLE XIII. CONVERSION OF SECURITIES....................................................................... 76
Section 13.1. Conversion Privilege........................................................................ 76
Section 13.2. Exercise of Conversion Privilege............................................................ 76
Section 13.3. Fractional Interests........................................................................ 78
Section 13.4. Conversion Price............................................................................ 78
Section 13.5. Adjustment of Conversion Price.............................................................. 78
Section 13.6. Continuation of Conversion Privilege in Case of Reclassifi-
cation, Change, Merger, Consolidation or Sale of Assets..................................... 85
Section 13.7. Notice of Certain Events.................................................................... 86
Section 13.8. Taxes on Conversion......................................................................... 87
Section 13.9. Company to Provide Stock.................................................................... 88
Section 13.10. Disclaimer of Responsibility for Certain Matters............................................ 88
Section 13.11. Return of Funds Deposited for Redemption of Converted
Securities.................................................................................. 89
ARTICLE XIV. MISCELLANEOUS.................................................................................. 89
Section 14.1. TIA Controls................................................................................ 89
Section 14.2. Notices..................................................................................... 89
Section 14.3. Communications by Holders with Other Holders................................................ 91
Section 14.4. Certificate and Opinion as to Conditions Precedent.......................................... 91
Section 14.5. Statements Required in Certificate or Opinion............................................... 91
Section 14.6. Rules by Trustee, Paying Agent, Registrar................................................... 92
Section 14.7. Legal Holidays.............................................................................. 92
Section 14.8. Governing Law............................................................................... 93
Section 14.9. No Adverse Interpretation of Other Agreements............................................... 93
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 14.10. No Recourse Against Others.................................................................. 93
Section 14.11. Successors.................................................................................. 94
Section 14.12. Duplicate Originals......................................................................... 94
Section 14.13. Severability................................................................................ 94
Section 14.14. Table of Contents, Headings, Etc............................................................ 94
Section 14.15. Qualification of Indenture.................................................................. 94
Section 14.16. Benefits of Indenture....................................................................... 95
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
EXHIBIT A: Form of Security........................................................................... A-1
EXHIBIT B: Certificate to be Delivered Upon Exchange or
Registration of Transfer of Notes.......................................................... B-1
EXHIBIT C: Form of Conversion Notice.................................................................. C-1
</TABLE>
vi
<PAGE>
INDENTURE, dated as of November 18, 1998, between Total Renal Care
Holdings, Inc., a Delaware corporation (the "Company"), and United States Trust
Company of New York, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 7%
Convertible Subordinated Notes due 2009:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
-----------
"Acceleration Notice" shall have the meaning specified in Section
-------------------
6.2.
"Affiliate" means any person directly or indirectly controlling or
---------
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the terms "control," "controlling" and "controlled"
mean the power to direct the management and policies of a person, directly or
through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Trustee and any Registrar, Paying Agent, co-
-----
Registrar, authenticating agent or Securities Custodian.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
--------------
federal, state or foreign law for the relief of debtors.
"Beneficial Owner" for purposes of the definition of Change of
----------------
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Ex-
change Act, whether or not applicable.
<PAGE>
"Blockage Notice" shall have the meaning specified in Section
---------------
12.2(b).
"Board of Directors" means, with respect to any person, the Board
------------------
of Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly
----------------
adopted resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday that is not a day on which banking institutions in New York, New York or
Los Angeles, California are authorized or obligated by law or executive order to
close.
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as a
capital lease obligation under GAAP.
"Capital Stock" means, with respect to any Person, any and all
-------------
shares, interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participation or other equivalents of or
interests (however desig nated) in stock issued by that Person.
"Cash" means such coin or currency of the United States of America
----
as at the time of payment shall be legal tender for the payment of public and
private debts.
"Change of Control" means (i) the acquisition by any Person
-----------------
(including any syndicate or group deemed to be a "person" under Section
13(d)(3) of the Exchange Act) (excluding the Company or any wholly owned
Subsidiary thereof or any employee benefit plan of the Company or any such
Subsidiary) of beneficial ownership, directly or indirectly, through a purchase,
merger, or other acquisition transaction or series of transactions of shares of
capital stock of the Company entitling such Person to exercise more than 50% of
the total voting power of all shares of capital stock of the Company entitling
the holders thereof to vote generally in elections of directors; or (ii) any
consolidation of the Company with, or merger of
2
<PAGE>
the Company into, any other Person, any merger of another Person into the Com-
pany, or any sale or transfer of all or substantially all of the assets of the
Company to another Person (other than a merger or sale of assets that (x) does
not result in a material reclassification, conversion, exchange, or cancellation
of outstanding shares of capital stock, (y) is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of common stock, or (z) does not have the result that the shareholders of the
Company immediately before such transaction own, directly or indirectly,
immediately following such transaction, less than 50% of the combined total
voting power of all shares of Capital Stock of the Person resulting from such
transaction entitling the holders thereof to vote generally in elections of
directors); provided, however, that a Change of Control shall not be deemed to
have occurred either (i) if at least 90% of the consideration (excluding cash
payments for fractional shares) to be received by the holders of the Common
Stock in the transaction or transactions constituting the Change of Control
consists of shares of common stock or other equity securities traded on a
national securities exchange or quoted on the Nasdaq National Market, and, as a
result of such transaction or transactions, the Notes become convertible into
such common stock or other equity securities or (ii) unless, in the case of
clause (ii) of this definition, a "change of control" (as defined in the Credit
Facilities) shall also have occurred under both of the Credit Facilities.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common Stock" means the Company's common stock, $0.001 par value
------------
per share, or as such stock may be reconstituted from time to time.
"Company" means the party named as such in this Indenture until a
-------
successor replaces it pursuant to the Indenture, and thereafter means such
successor.
"Conversion Price" shall have the meaning specified in Section
----------------
13.4.
"Conversion Shares" shall have the meaning specified in Section
-----------------
13.5(1).
"Credit Facilities" means (i) the Amended and Restated Revolving
-----------------
Credit Agreement, dated as of April 30, 1998, by and among the Company, the
lenders party thereto, DLJ Capital Funding, Inc., as Syndication Agent, First
Union National Bank, as Documentation Agent, and The Bank of New York, as
Administrative Agent, as amended prior to or on the Issue Date and (2) the
Amended and
3
<PAGE>
Restated Term Loan Agreement, dated as of April 30, 1998, by and among the
Company, the lenders party thereto, DLJ Capital Funding, Inc., as Syndication
Agent, and The Bank of New York, as Administrative Agent, as amended prior to or
on the Issue Date, in each case including any notes, guaranties, security or
pledge agreements, letters of credit and other documents or instruments executed
pursuant thereto and any appendices, exhibits or schedules to any of the
foregoing, as the same may be in effect from time to time, and in each case, as
such agreements, notes, guaranties, security or pledge agreements, letters of
credit and other documents or instruments may be amended, modified,
supplemented, renewed, refunded, replaced, refinanced, extended or restated from
time to time (whether with the original agents and lenders or other agents and
lenders or otherwise, and whether provided under the original credit or loan
agreements or other credit or loan agreements or otherwise), including any (i)
extension of the maturity of any Indebtedness or other obligation incurred
thereunder or contemplated thereby, (ii) addition or deletion of borrowers or
guarantors thereunder, so long as the borrowers include one or more of the
Company and its Subsidiaries and their respective successors and assigns, (iii)
increase in the amount of Indebtedness or other obligations incurred thereunder
or available to be borrowed thereunder or (iv) other alteration of the terms and
conditions thereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in Section
------------------
13.2.
"Default" means any event or condition that is, or after notice or
-------
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
------------------
2.12.
"Definitive Securities" means Securities that are in the form of
---------------------
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 3 thereof.
"Depositary" means, with respect to the Securities issuable or
----------
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
4
<PAGE>
"Designated Senior Indebtedness" means (i) any Indebtedness
------------------------------
outstanding under any of the Credit Facilities and (ii) any other Senior
Indebtedness, the principal amount of which is, or under which the lenders party
thereto are committed to lend or advance, $10 million or more; provided that
such other Senior Indebtedness has been designated by the Company in the
instrument or agreement creating or evidencing the same as "Designated Senior
Indebtedness."
"Distribution Date" shall have the meaning specified in Section
-----------------
13.5(1).
"DTC" shall have the meaning specified in Section 2.3.
---
"Event of Default" shall have the meaning specified in Section
----------------
6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section
---------------
13.5(f).
"GAAP" means United States generally accepted accounting
----
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession which are in effect in the United States;
provided, however, that for purposes of determining compliance with covenants in
- -------- -------
the Indenture, "GAAP" means such generally accepted accounting principles which
are in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph
---------------
referred to in footnote 1 and the additional schedule referred to in footnote 4
to the form of Security attached hereto as Exhibit A.
"Holder" or "Securityholder" means the person in whose name a
---------------------------
Security is registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication, (a) all
------------
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the lender has recourse to all or any
portion of
5
<PAGE>
the assets of such Person), (ii) evidenced by credit or loan agreements, bonds,
notes, debentures or similar instruments (including, without limitation, notes
or similar instruments given in connection with the acquisition of any business,
properties or assets of any kind), (iii) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (iv) for the payment of money
relating to a Capitalized Lease Obligation or (v) evidenced by a letter of
credit, bank guarantee or a reimbursement obligation of such Person with
respect to any letter of credit; (b) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (c) all net obligations of such Person under Interest Swap and
Hedging Obligations; (d) all liabilities of others of the kind described in the
preceding clauses (a), (b) or (c) that such Person has guaranteed or that is
otherwise its legal liability, or which is secured by a Lien on property of such
Person (other than carrier's, warehousemen's, mechanic's, repairmen's or other
like non-consensual statutory Liens arising in the ordinary course of business);
and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligation issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c) or
(d), or this clause (e), whether or not between or among the same parties.
"Indenture" means this Indenture, as amended or supplemented from
---------
time to time in accordance with the terms hereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
------------------
Corporation, BNY Capital Markets, Inc., Credit Suisse First Boston Corporation
and Warburg Dillon Read LLC.
"Interest Payment Date" means the stated due date of an
---------------------
installment of interest on the Securities.
"Interest Swap and Hedging Obligation" means the obligations of
------------------------------------
any Person under any interest rate or currency protection agreement, future
agreement, option agreement, swap agreement, cap agreement or other interest
rate or currency hedge agreement, collar agreement or other similar agreement or
arrangement to which such Person is a party or beneficiary.
"Issue Date" means the date of first issuance of the Securities
----------
under this Indenture.
6
<PAGE>
"Junior Securities" means Capital Stock in the Company and any
-----------------
Indebtedness of the Company, in each case that (a) is authorized and issued
pursuant to a plan of reorganization of the Company (which authorization states
that it gives effect to the subordination of such Junior Securities to all
Senior Indebtedness), (b) is subordinated to all Senior Indebtedness (and any
debt securities issued in exchange for Senior Indebtedness) to substantially the
same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness pursuant to the Indenture and (c) contains terms,
provisions, covenants and default provisions not more beneficial to the Holders
of the Notes as compared to the holders of Senior Indebtedness on the issue date
of the Notes.
"Last Sale Price" shall have the meaning specified in Section
---------------
13.3.
"Legal Holiday" shall have the meaning specified in Section 14.7.
-------------
"Lien" means any mortgage, lien, pledge, charge, security interest
----
or other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Liquidated Damages" shall have the meaning specified in the
------------------
Registration Rights Agreement.
"non-electing share" shall have the meaning specified in Section
------------------
13.6.
"Non-Payment Default" shall have the meaning specified in Section
-------------------
12.2(b).
"Non-Recourse Debt" means Indebtedness of a Person to the extent
-----------------
that under the terms thereof and pursuant to applicable law, no personal
recourse could be had against such Person for the payment of the principal of or
interest or premium or any other amounts with respect to such Indebtedness or
for any claim based on such Indebtedness and that enforcement of obligations on
such Indebtedness is limited solely to recourse against interests in specified
assets.
"Notice of Default" shall have the meaning specified in Section
-----------------
6.1(4), (5) or (6).
7
<PAGE>
"Offer" shall have the meaning specified in Section 13.5(f).
-----
"Offering Memorandum" means the final Offering Memorandum, dated
-------------------
November 13, 1998, in connection with which the Securities were offered and sold
by the Company.
"Officer" means, with respect to the Company, the Chief Executive
-------
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company, a
---------------------
certificate signed by two Officers of the Company (one of whom shall be the
principle executive, financial or accounting officer of the Company) and
otherwise complying with the requirements of Section 2.2, if applicable, and
Sections 14.4 and 14.5.
"Opinion of Counsel" means a written opinion from legal counsel
------------------
(who can be counsel to the Company or an employee of the Company) who is
reasonably acceptable to the Trustee and which complies with the requirements of
Sections 14.4 and 14.5.
"Paying Agent" shall have the meaning specified in Section 2.3.
------------
"Payment Blockage Period" shall have the meaning specified in
-----------------------
Section 12.2(b).
"Payment Default" shall have the meaning specified in Section
---------------
12.2(a).
"Person" or "person" means any corporation, individual, limited
------------------
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such
---------
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
"property" means any right or interest in or to property or assets
--------
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
8
<PAGE>
"Purchase Agreement" means that certain Purchase Agreement, dated
------------------
November 12, 1998, by and among the Company and the Initial Purchasers.
"Purchased Shares" shall have the meaning specified in Section
----------------
13.5(f).
"Record Date" means a record date specified in the Securities
-----------
whether or not such record date is a Business Day.
"Redemption Date," when used with respect to any Security to be
---------------
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security attached hereto as
Exhibit A.
"Redemption Price," when used with respect to any Security to be
----------------
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Security attached hereto as Exhibit A, which shall include,
without duplication, in each case, accrued and unpaid interest and Liquidated
Damages, if any, to but excluding, the Redemption Date.
"Registrar" shall have the meaning specified in Section 2.3.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated the date hereof, by and among the Initial Purchasers and the
Company, as such agreement may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Repurchase Date" shall have the meaning specified in Section
---------------
11.1(a).
"Repurchase Offer" shall have the meaning specified in Section
----------------
11.1(b).
"Repurchase Offer Period" shall have the meaning specified in
-----------------------
Section 1l.l (b).
"Repurchase Price" shall have the meaning specified in Section
----------------
l1.l (a).
9
<PAGE>
"Repurchase Put Date" shall have the meaning specified in Section
-------------------
11.1(b).
"Restricted Security" means a Security, unless or until it has
-------------------
been (i) disposed of in a transaction effectively registered under the
Securities Act or (ii) distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
---
"Securities" means, collectively, the 7% Convertible Subordinated
----------
Notes due 2009, as supplemented from time to time in accordance with the terms
hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
--------------
the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with
--------------------
respect to the Securities in global form, or any successor entity thereto.
"Senior Indebtedness" means all obligations of the Company to pay
-------------------
the principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowed as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
and liabilities accrued or due on or in connection with, and Interest Swap and
Hedging Obligations issued by parties to and secured with, the Credit Facilities
and any other Indebtedness of the Company, whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company, unless the instrument creating or evidencing such
Indebtedness expressly provides that such Indebtedness is not senior or superior
in right of payment to the Securities or is pari passu with, or subordinated to,
----------
the Securities; provided that in no event shall Senior Indebtedness include (a)
--------
Indebtedness of the Company owed to any Subsidiary of the Company, (b)
Indebtedness of the Company representing any trade account payable incurred in
the ordinary course of business, (c) any liability for taxes owed or owing by
the Company or any Subsidiary of the Company or (d) the Securities.
"Shelf Registration Statement" shall have the meaning specified in
----------------------------
the
10
<PAGE>
Registration Rights Agreement.
"Significant Subsidiary" means as of any date of determination, (i)
----------------------
any Subsidiary of the Company that has aggregate total assets in an amount in
excess of 10% of the consolidated total assets of the Company and its
Subsidiaries at such date of determination and (ii) any Subsidiary of the
Company for which the net income of such Subsidiary and its Subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principals, during the four fiscal quarters most recently ended
preceding the date of determination, exceeded 10% of the net income of the
Company and its Subsidiaries during such period.
"Special Record Date" for payment of any Defaulted Interest means a
-------------------
date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Note, means May 15,
---------------
2009.
"Subordinated Obligations" shall have the meaning set forth in Article
------------------------
XII.
"Subsidiary" with respect to any Person, means (i) a corporation a
----------
majority of whose Capital Stock with voting power normally entitled to vote in
the election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person, or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
---
77aaa-77bbbb) as in effect on the date of the execution of this Indenture,
except as provided by Section 9.3 hereof pursuant to which the term "TIA" will
mean such Trust Indenture Act as amended through and including the date
specified by such Section 9.3 for purposes thereof.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
-----------
11
<PAGE>
and Friday, other than any day on which securities are not traded on the New
York Stock Exchange (or, if the Common Stock is not listed thereon, on the
principal national securities exchange or any national automated quotation
system on which the Common Stock is listed or admitted to trading).
"Transfer Restricted Securities" means Securities that (i) bear or are
------------------------------
required to bear the legend set forth in Section 2.6 hereof and (ii) contain the
paragraph referred to in footnote 2 to the form of security attached hereto as
Exhibit A and the paragraph referred to in footnotes 4 and 5 to the certificate
attached hereto as Exhibit B.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust division
-------------
(or any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"U.S. Government Obligations" means direct noncallable obligations of,
---------------------------
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
Section 1.2. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
----------
"Indenture securities" means the Securities.
--------------------
"Indenture securityholder" means a Holder or a Securityholder.
------------------------
"Indenture to be qualified" means this Indenture.
-------------------------
12
<PAGE>
"Indenture trustee" or "institutional trustee" means the Trustee.
-----------------
"Obligor" on the indenture securities means the Company and any other
-------
obliger on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in
the plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(7) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated
otherwise.
ARTICLE II.
13
<PAGE>
THE SECURITIES
Section 2.1. Form and Dating.
---------------
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve, with the consent of the Trustee, the form of the Securities and any
notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A hereto
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the forms of Securities 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. If any term or provision of a Security limits, qualifies, or conflicts
with the terms of this Indenture, the terms of this Indenture shall control.
Section 2.2. Execution and Authentication.
----------------------------
Two Officers shall sign the Security for the Company by manual or
facsimile signature. The Company's seal may be, but is not required to be,
impressed, affixed, imprinted or reproduced on the Securities and may be in
facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that or any office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless and
the Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. Such
signature shall be conclusive evidence, and the only evidence, that the Security
has been authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Securities for original issue in
the aggregate principal amount of up to $345,000,000 upon a written order of the
14
<PAGE>
Company. The order shall specify (i) the amount of Securities to be
authenticated and (ii) the date on which the Securities are to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed $345,000,000 except as provided in Section 2.7; provided, that Securities
--------
in excess of $300,000,000 shall not be issued other than pursuant to the over-
allotment option granted by the Company to the Initial Purchasers thereof. Upon
the written order of the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of Securities originally
issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. Anauthenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries, and has the same protections under the
Indenture.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
Section 2.3. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency in New York, New York,
where Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent") and where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles III, VIII and XI and as
otherwise specified in the Indenture, neither the Company nor any Affiliate of
the Company shall act as Paying Agent. The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Company may have one or
more co-Registrars and one or more additional Paying Agents. The term "Paying
Agent" includes any additional Paying Agent. The Company hereby initially
appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby
initially agrees so to act. The Company may change any Paying Agent or Registrar
without notice to any Holder.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
15
<PAGE>
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any 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 7.7.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 2.4. Paying Agent to Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, interest on or Liquidated Damages with respect
to, the Securities (whether such assets have been distributed to it by the
Company or any other obligor on the Securities), and shall notify the Trustee in
writing of any Default in making any such payment. If either of the Company or
a Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any Payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent (if other than the Company or an
Affiliate of the Company) shall have no further liability for such assets.
Section 2.5. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the fourth Business Day preceding 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
16
<PAGE>
date as the Trustee reasonably may require of the names and addresses of
Holders.
Section 2.6. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Definitive Securities. When Definitive
----------------------------------------------
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
- -------- -------
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are Definitive
Securities, shall be accompanied by the following additional information
and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) that is aware that any sale of securities to it will
be made in reliance on Rule 144A under the Securities Act and that is
acquiring such Transfer Restricted Security for its own account or for
the account of another such "qualified institutional buyer," a
certification from such Holder to that effect (in substantially the
form set forth on the reverse of the Security);
17
<PAGE>
(C) if such Transfer Restricted Security is being transferred to
an institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, a
certification to that effect (in substantially the form set forth on
the reverse of the Security) accompanied by a certificate in the form
of Exhibit B to the Indenture to the Trustee and if either the Trustee
or the Company so requests, an Opinion of Counsel satisfactory to the
requesting party to the effect that such transfer is in compliance
with the Securities Act; or
(D) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act and with all applicable securities laws of the
states of the United States, a certification to that effect (in
substantially the form set forth on the reverse of the Security) and
if either the Trustee or the Company so requests, an Opinion of
Counsel satisfactory to the requesting party to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
------------------------------------------------------------------
Interest in a Global Security. A Definitive Security may not be exchanged for a
- -----------------------------
beneficial interest in a Global Security, except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer in
form reasonably satisfactory to the Company and the Registrar or Co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing,
together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the Security, that
such Definitive Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the applicable Global Security;
18
<PAGE>
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the appropriate Global
Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall issue and the Trustee, upon receipt of the
authentication order of the Company in the form of an Officers' Certificate,
shall authenticate an appropriate new Global Security in the appropriate
principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and exchange
------------------------------------------
of Global Securities or beneficial interests therein shall be effected through
the Depositary, in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a Definitive
-----------------------------------------------------------------------
Security.
- --------
(i) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Definitive Security.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Trustee of a written instruction or such
other form of instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the reverse of the Security);
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) that is aware that any sale of Securities to it will
be made in reliance on Rule 144A under the Securities Act and that is
acquiring such beneficial interest in the Transfer Restricted Security
19
<PAGE>
for its own account or the account of another "qualified institutional
buyer," a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security);
(C) if such Definitive Security is being transferred to an
institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, a
certification to that effect (in substantially the form set forth on
the reverse of the Security) accompanied by a certificate in the form
of Exhibit B to the Indenture to the Trustee and if either the Trustee
or the Company so requests, an Opinion of Counsel satisfactory to the
requesting party to the effect that such transfer is in compliance
with the Securities Act; or
(D) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act and in accordance with all applicable securities laws
of the states of the United States, a certification to that effect
from the transferor (in substantially the form set forth on the
reverse of the Security) and if either the Trustee or the Company so
requests, an Opinion of Counsel satisfactory to the requesting party
to the effect that such transfer is in compliance with the Securities
Act;
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the applicable Global Security to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication order
in the form of an Officers' Certificate, the Trustee will authenticate and
deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
make such Definitive Securities available for delivery to the persons in
whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities. Notwith-
----------------------------------------------------------
20
<PAGE>
standing any other provisions of this Indenture (other than the provisions set
forth in subsection (f) of this Section 2.6), a Global Security may not be
transferred as a whole except (i) by the Depositary to a nominee of the
Depositary, (ii) by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or (iii) by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(6) Authentication of Definitive Securities in Absence of Depositary. If
----------------------------------------------------------------
at any time:
(1) the Depositary for the Securities notifies the Company and the
Company notifies the Trustee in writing that the Depositary is no longer
willing or able to continue as Depositary for the Global Securities and a
successor Depositary for the Global Securities is not appointed by the
Company within 90 days after delivery of such notice; or
(2) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under
this Indenture;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will, or its authenticating agent will, authenticate and deliver Definitive
Securities, in an aggregate principal amount equal to the principal amount of
the Global Securities, in exchange for such Global Securities.
(7) Legends.
-------
(1) Except as permitted by the following paragraph (ii), each Security
certificate evidencing the Global Securities and the Definitive Securities
(and all Securities issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT AS SET FORTH IN THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF
OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT EITHER
(A) IT IS A
21
<PAGE>
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (A FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE), (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING."
(2) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(i) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security (1)
in the case
22
<PAGE>
of a sale or transfer pursuant to Rule 144 under the Securities Act,
after delivery of a customary Opinion of Counsel satisfactory to the
Company to the effect that such transfer is in compliance with the
Securities Act or (2) in the case of a sale or transfer pursuant to an
effective registration statement under the Securities Act; and
(2) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.6(c) hereof); provided, however, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing to
the Registrar that such request is being made pursuant to Rule 144
(such certification to be substantially in the form set forth on the
reverse of the Security).).
(8) Cancellation and/or Adjustment of Global Security. At such time as all
------------------------------------------------
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the written direction of the Trustee, to reflect
such reduction.
(9) Obligations with respect to Transfers and Exchanges of Definitive
-----------------------------------------------------------------
Securities.
- ----------
(1) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee or any authenticating agent of
the Trustee, upon receipt of the authentication order of the Company
in the form of an Officers' Certificate, shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-Registrar's
written request.
(2) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar govern-
23
<PAGE>
mental charge payable in connection therewith (other than any
such transfer taxes, assessments, or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.2
(fourth paragraph), 2.10, 3.7, 9.5, or 1 1.1 (final paragraph)).
(3) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive
Security selected for redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Definitive
Security being redeemed in part, or (b) any Security for a period
beginning 15 Business Days before the mailing of a notice of an
offer to repurchase pursuant to Article XI hereof or the mailing
of a notice of redemption of Securities pursuant to Article III
hereof and ending at the close of business on the day of such
mailing.
(10) General.
-------
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 Security (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Security) 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 2.7. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee and the Company, to the effect that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee, upon receipt of the authentication order of the Company in the form of
an Officers' Certificate, shall authenticate a replacement Security if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge such Holder for their expenses
in replacing a Security.
24
<PAGE>
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion,
but subject to any conversion rights, may, instead of issuing a new Security,
pay such Security, upon satisfaction of the conditions set forth in the
preceding paragraph.
Every new Security issued pursuant to this Section 2.7 in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section 2.7 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies of any Holder with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
Section 2.8 Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee (including any Security represented by a
Global Security) except those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced or paid pursuant to Section 2.7 (other
than a mutilated Security surrendered for replacement), the replaced or paid
Security ceases to be outstanding unless the Trustee receives proof satisfactory
to it that the replaced or paid Security is held by a bona fide purchaser. A
mutilated Security ceases to be outstanding upon surrender of such Security and
replacement thereof pursuant to Section 2.7.
Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company or its Affiliates) in trust or set aside and segregated
in trust by the Company or one of its Subsidiaries (if the Company or one of its
Subsidiaries shall act as the Paying Agent) for the Holders of such Notes shall
be deemed to be no longer outstanding on and after the date for such payment or
redemption and shall
25
<PAGE>
cease to accrue interest.
Section 2.9. Treasury Securities.
-------------------
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company or an Affiliate of the
Company shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that a Trust Officer
of the Trustee actually knows are so owned shall be disregarded. The Company
shall notify the Trustee, in writing, when the Company or an Affiliate of the
Company repurchases or otherwise acquires Securities and of the principal amount
of such Securities so repurchased or otherwise acquired. Notwithstanding the
foregoing, Securities that are to be acquired by the Company or any Affiliate of
the Company pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by the Company or such Affiliate until legal title to
such Securities has passed to such entity.
Section 2.10. Temporary Securities.
--------------------
Until Definitive Securities are ready for delivery, the Company
may prepare and the Trustee (upon written request from the Company) shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Company
reasonably and in good faith considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Definitive Securities in exchange for temporary Securities. Until
so exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as permanent Securities authenticated and
delivered hereunder.
Section 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.7, the Company may not issue new Securities
to replace Securities that have been paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in
26
<PAGE>
lieu of or in exchange for any Securities canceled as provided in this Section
2.11, except as expressly permitted in the form of Securities and as permitted
by this Indenture. All cancelled Securities shall be destroyed (subject to the
record retention requirements of the Exchange Act) and certification of their
destruction delivered to the Company, unless the Company shall direct in writing
that cancelled Securities be returned to it.
Section 2.12. Defaulted Interest.
------------------
Interest on any Security which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the person
in whose name that Security (or one or more predecessor Securities) is
registered at the close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date plus, to the
extent lawful, any interest payable on the defaulted interest (collectively,
herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered holder on the relevant Record Date, and such Defaulted Interest shall
be paid by the Company, at its election in each case, as provided in clause (1)
or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment. Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest
which shall be not more than 15 Business Days and not less than
10 Business Days prior to the date of the proposed payment and
not less than 10 Business Days after the receipt by the Trustee
of the notice of the proposed payment ("Special Record Date").
The Trustee shall promptly notify the Company in writing of such
Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at such
Holder's address as it appears in the registry books of the
Registrar not less than 10 Business Days prior to such Special
Record Date. Notice of
27
<PAGE>
the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names
the Securities (or their respective predecessor Securities) are
registered on such Special Record Date and shall no longer be
payable pursuant to the following clause (2). Prior to 12:00 noon
New York time on the date on which the Defaulted Interest is to
be paid, the Company shall deposit with the Trustee an amount of
Cash equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest.
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, if,
after written notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
Notwithstanding the foregoing, any interest which is paid prior
to the expiration of the grace period provided in Section 6.1 shall be paid to
the Holders of the Securities as of the regular Record Date for such Interest
Payment Date for which interest has not been paid.
Section 2.13. CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
--------
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
Section 2.14. Deposit of Moneys.
-----------------
28
<PAGE>
Prior to noon New York time on each Interest Payment Date,
Redemption Date and Repurchase Date, and on the Stated Maturity Date, the
Company shall have deposited with the Paying Agent such amounts in immediately
available funds sufficient to make Cash payments, if any, due on such Interest
Payment Date, Redemption Date, Repurchase Date or Stated Maturity Date, as the
case may be, in a timely manner which permits the Paying Agent to remit payment
to the Holders on such Interest Payment Date, Redemption Date, Repurchase Date
or Stated Maturity Date.
ARTICLE III.
REDEMPTION
Section 3.1. Right of Redemption.
-------------------
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with Paragraph 5 of the Securities and
this Article III. The Company will not have the right to redeem any Securities
prior to November 15, 2001. On or after November 15, 2001, the Company will
have the right to redeem all or any part of the Securities at the Redemption
Prices specified in Paragraph 5 therein under the caption "Redemption," in each
case including accrued and unpaid interest and Liquidated Damages, if any, to,
but excluding, the Redemption Date.
Section 3.2. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph
5 of the Securities, it shall notify the Trustee in writing of the Redemption
Date, the principal amount of Securities to be redeemed, the Redemption Price
and whether it wants the Trustee, on behalf of the Company, to give notice of
redemption to the Holders.
If the Company elects to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by crediting
against any such redemption Securities it has not previously delivered to the
Trustee for cancellation, it shall so notify the Trustee in writing of the
amount of the reduction and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in
29
<PAGE>
this Section 3.2 at least 45 days but not more than 75 days before the
Redemption Date (unless a shorter notice period shall be satisfactory to the
Trustee) together with an Officer's Certificate stating that such redemption
will comply with the conditions contained herein. Any such notice to the Trustee
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
Section 3.3. Selection of Securities to Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed on a
pro rata basis, by lot or by such other method as the Trustee shall determine to
- --- ----
be fair and appropriate and in such manner as complies with any applicable
depositary, legal and stock exchange or automated quotation system requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
Section 3.4. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed at
such Holder's address as it appears on the security register maintained by the
Registrar. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice of
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date, and that the Securities called for
redemption may not be converted after the Business Day
immediately prior to the Redemption Date;
(2) the Redemption Price, including the amount of accrued
30
<PAGE>
and unpaid interest and Liquidated Damages, if any, to be paid upon
such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect
the Redemption Price plus accrued interest;
(5) that, unless (a) the Company defaults in its obligation to
deposit Cash with the Paying Agent in accordance with Section 3.6
hereof or (b) such redemption payment is prohibited pursuant to
Article XII hereof or otherwise, interest on, and Liquidated Damages
with respect to, Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption
Price, including accrued and unpaid interest and Liquidated Damages,
if any, to, but excluding the Redemption Date, upon surrender to the
Paying Agent of the Securities called for redemption and to be re
deemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of
such Security to be redeemed and that, on or after the Redemption
Date, upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof
will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Security
ties to be redeemed and the aggregate principal amount of Securities
to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4
and pursuant to the redemption provisions of Paragraph 5 of the
31
<PAGE>
Securities.
The notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice.
Section 3.5. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date. Upon
surrender to the Trustee or Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date; provided
--------
that if the Redemption Date is after a regular Record Date and on or prior to
the corresponding Interest Payment Date, the accrued interest and Liquidated
Damages, if any, shall be payable to the Holder of the redeemed Securities
registered on the relevant Record Date; and provided, further, that if a
-------- -------
Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day. Notices mailed as provided in this Article
III shall be conclusively presumed to have been given whether or not a given
Holder receives the Notice.
Section 3.6. Deposit of Redemption Price.
---------------------------
Prior to 12:00 noon New York time on the Redemption Date, the
Company shall deposit with the Paying Agent (other than the Company or an
Affiliate of the Company) Cash sufficient to pay the Redemption Price of,
including accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to, all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any Cash so deposited which is not required
for that purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article III and payment of the Securities called for
redemption is not prohibited under Article XII or otherwise, interest on the
Securities to be re deemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Securities are presented for payment.
Notwithstanding anything herein to
32
<PAGE>
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Security.
Section 3.7. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee, upon receipt of a written order of the
Company in the form of an Officers' Certificate, shall thereafter authenticate
and make available for delivery to the Holder, without service charge to the
Holder, a new Security or Securities equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Securities.
---------------------
The Company shall pay the principal of, interest on, and
Liquidated Damages with respect to, the Securities on the dates and in the
manner provided in this Indenture and the Securities, as applicable. An
installment of principal of, interest on, or Liquidated Damages with respect to,
the Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 12:00 noon New York time on that date,
Cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on
overdue installments of interest at the rate specified in the Securities
compounded semi-annually, to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in New York, New York, an office or
agency where Securities may be presented or surrendered for payment, where
33
<PAGE>
Securities may be surrendered for registration of transfer or exchange and for
conversion and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presenta presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 14.2.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
-------- -------
any manner relieve the Company of its obligation to maintain an office or agency
in New York, New York, for such purposes. The Company shall give prior written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Company hereby initially
designates the corporate trust office of the Trustee in New York, New York, as
the office contemplated by this Section 4.2.
Section 4.3. Corporate Existence.
-------------------
Subject to Article V, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence in accordance with its organizational documents and the rights
(charter and statutory) and corporate franchises of the Company; provided,
--------
however, that the Company shall not be required to preserve, with respect to
- -------
itself, any right or franchise, if the Company shall, in good faith, reasonably
determine that the preservation thereof is no longer necessary or desirable in
the conduct of the business of such entity and the loss thereof is not adverse
in any material respect to the Holders.
Section 4.4. Payment of Taxes and Other Claims.
---------------------------------
The Company shall, and shall cause each of its Subsidiaries to,
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, all material taxes, assessments and governmental charges
(including withhold withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Subsidiaries or any
of their respective properties and assets; provided, however, that neither the
-------- -------
Company nor any Subsidiary shall be required to pay or discharge or cause to be
paid or discharged any such tax, assess-
34
<PAGE>
ment or charge whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
Section 4.5. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to a Trust Officer of the Trustee
within 120 days after the end of its fiscal year an Officers' Certificate
complying with Section 314(a)(4) of the TIA and stating that a review of its
activities and the activities of its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining, without regard to notice periods or periods of grace, whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this Indenture and,
if such signor does know of such a failure to comply, the certificate shall
describe such failure with reasonable particularity. The Officers' Certificate
shall also notify the Trustee should the relevant fiscal year end on any date
other than the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to a Trust Officer of the Trustee, promptly upon becoming
aware of any Default, Event of Default or fact which would prohibit the making
of any payment to or by the Trustee in respect of the Securities, an Officers'
Certificate specifying such Default, Event of Default or fact and what action
the Company is taking or proposes to take with respect thereto. The Trustee
shall not be deemed to have knowledge of any Default, any Event of Default or
any such fact unless one of its Trust Officers receives written notice thereof
from the Company or any of the Holders.
Section 4.6. Reports.
-------
Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee within 15 days after it is or would have been required to
file such with the SEC, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the SEC if the Company were subject to the requirements of
Section 13 or 15(d) of the Exchange Act, including, with respect to annual
information only, a report thereon by the Company's certified independent public
accountants as such would be required in such reports to the SEC and, in each
case, together with a management's discussion
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and analysis of financial condition and results of operations which would be so
required.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.7. Rule 144A Information Requirement.
---------------------------------
If at any time there are Transfer Restricted Securities
outstanding and the Company shall cease to have a class of equity securities
registered under Sections 12(b) or 12(g) of the Exchange Act or shall cease to
be subject to Section 15(d) of the Exchange Act, the Company shall furnish,
within a reasonable period of time, to the Holders or beneficial holders of the
Securities or the underlying Common Stock and prospective purchasers of
Securities or the underlying Common Stock designated by the Holders of
Transfer Restricted Securities, upon their written request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
until such time as the Shelf Registration Statement has become effective under
the Securities Act. The Company shall also furnish such information during the
pendency of any suspension of effectiveness of the Shelf Registration Statement.
Section 4.8. Further Instruments and Acts.
----------------------------
Upon the 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.
ARTICLE V.
SUCCESSOR CORPORATION
Section 5.1. Limitation on Merger, Sale or Consolidation.
-------------------------------------------
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(a) The Company shall not, directly or indirectly, consolidate
with or merge with or into another Person or sell, lease or otherwise dispose of
all or substantially all of its assets (on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons (other than to its wholly owned Subsidiaries),
unless (i) either (a) in the case of a merger or consolidation, the Company is
the surviving entity or (b) the resulting, surviving Person in such merger or
consolidation (if not the Company), or transferee entity (in the case of a sale,
lease or other disposition of assets) is a corporation organized under the laws
of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Securities and the Indenture; (ii) no Default or
Event of Default shall exist or shall occur immediately before or after giving
effect on a pro forma basis to such transaction; and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and, if a supplemental
indenture is required, such supplemental indenture comply with the Indenture and
that all conditions precedent in the Indenture relating to such transactions
have been satisfied.
(b) For purposes of clause (a) of this Section 5.1 and Section
13.6, the sale, lease 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, unless such
disposition is to the Company.
Section 5.2. Successor Corporation Substituted.
---------------------------------
Upon any permitted consolidation or merger or any permitted sale,
lease or other disposition of all or substantially all of the assets of the
Company in accordance with the foregoing, the successor corporation formed by
such consolida consolidation or into which the Company is merged or to which
such sale, lease or other disposition is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if such successor corporation had been
named therein as the Company, and when a succes successor corporation duly
assumes all of the obligations of the Company pursuant hereto and pursuant to
the Securities, the predecessor shall be released from such obligations.
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ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) failure by the Company to pay any installment of
interest on the Securities as and when the same becomes due and
payable and the continuance of such failure for a period of 30
days, whether or not such payment is prohibited by Article XII;
(2) failure by the Company to pay all or any part of the
principal of, or premium, if any on the Securities when and as
the same become due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation, failure
to pay all or any part of the Repurchase Price on the Repurchase
Date in accordance with Article XI, whether or not such payment
is prohibited by Article XII;
(3) failure of the Company to perform its covenants and
agreements in accordance with Article XIII and the continuance of
any such failure for 30 days;
(4) failure by the Company to observe or perform any
covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any
covenant or agreement which is specifically dealt with elsewhere
in this Section 6.1), and continuance of such failure for a
period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the Company
and the Trustee by Holders of at least 25% in aggregate principal
amount of the then outstanding Securities, a written notice
specifying the nature of the purported default, and that the
same, if not cured, would constitute an Event of Default under
this Indenture;
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(5) failure to make any payment at final stated maturity,
including any applicable grace period, in respect of Indebtedness of
the Company (other than Non-Recourse Debt) in an amount in excess of
$10,000,000, and continuance of such failure for 30 days after written
notice is given to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in aggregate principal
amount of Securities outstanding specifying the nature of the
purported default, and that the same, if not cured, would constitute
an Event of Default under this Indenture;
(6) default with respect to any Indebtedness of the Company,
which default results in the acceleration of Indebtedness (other than
Non-Recourse Debt) in an amount in excess of $10,000,000 without such
Indebtedness having been discharged or such acceleration having been
rescinded or annulled for 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of Securities
outstanding specifying the nature of the purported default, and that
the same, if entered, would constitute an Event of Default under this
Indenture;
(7) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or any of
its Significant Subsidiaries as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Company or any
of its Significant Subsidiaries under any bankruptcy or similar law,
and such decree or order shall have continued undischarged and
unstayed for a period of 45 days; or a decree or order of a court of
competent jurisdiction over the appointment of a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of the Company, any
of its Significant Subsidiaries, or of the property of any such
Person, or for the winding up or liquidation of the affairs of any
such Person, shall have been entered, and such decree, judgment, or
order shall have remained in force undischarged and unstayed for a
period of 45 days;
(8) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding against it, or
39
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shall file a petition or answer or consent seeking reorganization
under any bankruptcy or similar law or similar statute, or shall
consent to the filing of any such petition, or shall consent to
the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any of its assets
or property, or shall make a general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall, within the meaning
of any Bankruptcy Law, become insolvent, fail generally to pay
its debts as they become due, or take any corporate action in
furtherance of or to facilitate, conditionally or otherwise, any
of the foregoing; or
(9) final unsatisfied judgments not covered by insurance,
aggregating in excess of $10,000,000 at any one time shall have
been rendered against the Company or any of its Significant
Subsidiaries and not have been stayed, bonded or discharged for a
period (during which execution shall not be effectively stayed)
of 60 days after the right to appeal such judgment has expired
(or, in the case of any such final judgment which provides for
payment over time, which shall so remain unstayed, unhanded or
undischarged beyond any applicable payment date provided
therein).
Notwithstanding the 60-day period and notice requirement
contained in Section 6. 1(4) above, with respect to a default under Article XI
the 60-day period referred to in Section 6.1(4) shall be deemed to have begun as
of the date the Change of Control notice is required to be sent in the event
that the Company has not complied with the provisions of Section 11.1 and the
Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(4)
to the Company and, if applicable, the Trustee; provided, however, that if the
-------- -------
breach or default is a result of a default in the payment when due of the
Repurchase Price on the Repurchase Date, such Event of Default shall be deemed,
for purposes of this Section 6.1, to arise no later than on the final Repurchase
Date.
Section 6.2. Acceleration of Maturity Rescission and Annulment.
-------------------------------------------------
If an Event of Default (other than an Event of Default
specified in Section 6.1(7) or (8) relating to the Company) occurs and is
continuing, then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of at least 25% in aggregate principal
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amount of then outstanding Securities, by a notice in writing to the Company
(and to the Trustee if given by Holders) (an "Acceleration Notice"), may declare
all unpaid principal, premium, if any, accrued interest and Liquidated Damages,
if any, of the Securities (or the Repurchase Price if the Event of Default
includes failure to pay the Repurchase Price, determined as set forth below),
with respect thereto, to be due and payable immediately without any other
declaration or act on the part of the Trustee or the Holders. If an Event of
Default specified in Section 6.1(7) or (8) relating to the Company occurs, all
principal, premium, if any, accrued interest and Liquidated Damages on or with
respect thereto will be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of Trustee or the
Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of no less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(A) the principal of (and premium, if any, applicable to) any
Securities which would then be due otherwise than by such declaration
of acceleration, and interest thereon at the rate borne by the
Securities,
(B) to the extent that payment of such interest is lawful,
interest upon overdue interest and Liquidated Damages at the rate
borne by the Securities,
(C) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, interest on and Liquidated Damages with
respect to Securities that have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section
6.12, including, if applicable, any Event of Default relating to
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the covenants contained in Section 11.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent Default or Event of
Default or impair any right consequent thereon.
Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if an Event of Default in payment of
principal, premium, interest or Liquidated Damages specified in clause (1) or
(2) of Section 6.1 occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal, premium (if
any), interest, Liquidated Damages and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal (and
premium, if any), Liquidated Damages and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs, fees and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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Section 6.4. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (which term as used in this Section shall include any
predecessor Trustee) (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, interest or Liquidated
Damages) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal
(and premium, if any), interest and Liquidated Damages owing and
unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim under Section 7.7 for the
compensation, fees, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such
judicial proceeding, and
(2) To collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same in
accordance with Section 6.6;
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 compensation, expenses, fees,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7. To the extent that the payment of
such compensation, expenses, fees, disbursements and advances of Trustee, its
agents and counsel and any other amounts due to the Trustee under Section 7.7
hereof out of the estate in any such judicial proceeding shall be denied for any
reason, payment of the same shall be secured by a perfected first priority
security interest in and lien on, and shall be paid out of, any and all
distributions, dividends, money securities and other properties that the Holders
may be entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise, and any such security
interest and lien in
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favor of any predecessor Trustee shall be senior to the security interest and
lien in favor of the current Trustee.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.5. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, fees, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
Section 6.6. Priorities.
----------
Any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any), interest or Liquidated Damages, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee (including any predecessor Trustee) in payment
of all amounts due pursuant to Section 7.7;
SECOND: To the holders of Senior Indebtedness of the Company to the
extent provided in Article XII;
THIRD: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any), interest on and Liquidated Damages with
respect to, the Securities in respect or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal, premium (if
any), interest and Liquidated Damages, respectively; and
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FOURTH: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
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
Trustee shall mail to each Holder and the Company a notice stating the Record
Date, Payment Date and amount to be paid.
Section 6.7. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to
be incurred or reasonably probable to be incurred in compliance with
such request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of then outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under
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this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
Section 6.8. Unconditional Right of Holders to Receive Principal, Premium, and
-----------------------------------------------------------------
Interest.
- --------
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall, subject to the provisions of Article XII, have the right,
which is absolute and unconditional, to receive payment of the principal of, and
premium (if any), and interest on, such Security when due (including, in the
case of redemption, the Redemption Price on the applicable Redemption Date, and
in the case of the Repurchase Price, on the applicable Repurchase Date), to
convert such Security in accordance with Article XIII, and to institute suit for
the enforcement of any such payment and right to convert after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
Section 6.9. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 6.11. Control by Holders.
------------------
The Holder or Holders of no less than a majority in aggregate princi-
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pal amount of then outstanding Securities shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred upon the Trustee,
provided that
- --------
(1) such direction shall be made in writing to the Trustee and
shall not be in conflict with any rule of law or with this Indenture,
(2) the Trustee shall not have determined that the action so
directed would be unjustly prejudicial to the Holders not taking part
in such direction or would expose the Trustee to personal liability,
and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 6.12. Waiver of Default.
-----------------
The Holder or Holders of not less than a majority in aggregate
principal amount of then outstanding Securities may, on behalf of all Holders,
prior to the declaration of acceleration of the maturity of the Securities,
waive any default hereunder and its consequences or compliance with any
provision of this Indenture or the Securities, except a default or compliance:
(A) in the payment of the principal of, premium, if any, interest
on any Security not yet cured as specified in clauses (1) and (2) of
Section 6.1, or
(B) in respect of a covenant or provision hereof which, under
Article IX, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
Section 6.13. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this
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Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted to be taken by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys' fees
and expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 6.13 shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of then outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of, premium
(if any), interest on or Liquidated Damages with respect to, any Security on or
after the respective Stated Maturity of such Security (including, in the case of
redemption, on or after the Redemption Date).
Section 6.14. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 7.1. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
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(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture or the TIA and no others, and
no covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(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 provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts purported to be 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 7.1.
(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.
(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 written
direction received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any liability. The Trustee shall be under
no obligation to perform any of its rights or duties hereunder or to take or
omit to take any action under this Indenture or at the request, order or
direction of the Holders or in the exercise of any of its rights or powers
unless such Holders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
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(e) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets received by
it except as the Trustee may agree in writing with the Company. Assets held in
trust by the Trustee need not be segregated from other assets except to the
extent required by law.
Section 7.2. Rights of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may conclusively 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 consult with
counsel of its selection and 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 any such 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 attorney or agent (other
than an agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which reasonably believes to be authorized or within its
discretion, rights or powers conferred upon it by this Indenture.
(e) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
(f) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
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(g) Except with respect to Section 4.1, the Trustee shall have no duty to
inquire as to the performance of the Company's covenants in Article IV hereof.
In addition, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default, except (i) any Event of Default occurring pursuant to Sections
6.1(1) or 6.1(2), or (ii) any Default or Event of Default of which a Trust
Officer of the Trustee shall have received written notification or obtained
actual knowledge.
(h) No permissive right of the Trustee to act hereunder shall be construed
as a duty.
(i) If in the administration of this Indenture the Trustee deems it desir-
able that a matter be proved or established prior to taking, suffering or
omitting to take any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate, an Opinion of Counsel, or both.
(j) The Trustee shall not be deemed to have notice or knowledge (including
actual knowledge) of any matter unless a Trust Officer has actual knowledge
thereof or unless written notice thereof is received by the Trustee at the
office specified in Section 14.2 and such notice references the Securities
generally, the Company or this Indenture.
(k) The Trustee may consult with counsel with respect to legal matters
relating to this Indenture or Notes and the advice or opinion of counsel shall
be full and complete authorization and protection from liability with 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 7.3. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, any
of its Subsidiaries, or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or
adequacy of
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<PAGE>
this Indenture, the Registration Rights Agreement, the Offering Memorandum or
the Securities and it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
in this Indenture or the Securities, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
Section 7.5. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder notice of
the uncured Default or Event of Default within 90 days after the date the same
is known by the Trustee or the Trustee receives written notice of the occurrence
of such Default or Event of Default unless such Default is cured or waived. The
Trustee may withhold such notice if and so long as a Trust Officer in good faith
determines that withholding the notice is in the interest of the Holders,
except in the case of a Default in payment of principal (or premium, if any) of,
interest on or Liquidated Damages with respect to, any Security (including the
payment of the Repurchase Price on the Repurchase Date and the payment of the
Redemption Price on the Redemption Date).
Section 7.6. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each November 15 beginning with the November
15 following the date of this Indenture, the Trustee shall, if required by law,
mail to each Holder a brief report dated as of such reporting date that complies
with TIA (S) 313(a) if and to the extent required by such Section 313(a). The
Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall
be mailed to the Company and, if required, filed with the SEC and each stock
exchange, if any, on which the Securities are listed.
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system or
of any delisting thereof.
Section 7.7. Compensation and Indemnity.
--------------------------
The Company agrees to pay to the Trustee from time to time such
compensation for its services as the parties shall agree from time to time in
writing
52
<PAGE>
and, in the absence of such agreement, reasonable compensation for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses, fees and advances incurred or made by it. Such expenses
shall include the reasonable compensation, disbursements, fees and expenses of
the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, employees, attorneys-in-fact and
agents (each an "Indemnified Party") for, and hold them harmless against, any
and all claims, demands, expenses (including but not limited to reasonable
compensation, fees, disbursements and expenses of the Trustee's agents and
counsel), losses, damages or liabilities incurred by it without negligence, bad
faith or willful misconduct on the part of such Indemnified Party, arising out
of, related to, or in connection with the acceptance or administration of this
trust and its rights or duties hereunder, including the reasonable costs and
expenses, and the costs and expenses of enforcing this Indenture (including this
Section 7.7) against the Company and of defending itself against any claim
(whether asserted by the Company, or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. An Indemnified Party shall notify the Company promptly of any
claim asserted against such Indemnified Party for which it may seek indemnity.
Failure by an Indemnified Party to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and an
Indemnified Party shall provide reasonable cooperation at the Company's
expense in the defense. An Indemnified Party may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel; provided
--------
that (i) the Company will not be required to pay such fees and expenses if it
assumes the Indemnified Party's defense and there is no conflict of interest
between the Company and the Indemnified Party in connection with such defense
and (ii) the Company shall not be obligated to pay the fees and expenses of more
than one counsel (plus local counsel, if any) in any one proceeding (or related
proceedings), which counsel shall be selected by the Trustee. The Company need
not pay for any settlement made without its written consent.
The Company need not reimburse any expense or indemnify against
any loss or liability to the extent attributable to the negligence, bad faith or
willful misconduct of the Trustee or any other Indemnified Party.
To secure the Company's payment obligations in this Section 7.7,
the
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Trustee and each predecessor Trustee shall have a perfected lien prior to the
Securities on all assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust to pay principal and premium, if any, of or
interest on particular Securities. Any lien in favor of a predecessor Trustee
shall be senior to any lien in favor of the current Trustee.
When the Trustee incurs expenses or fees or renders services
after an Event of Default specified in Section 6.1(7) or (8) occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
The Trustee shall comply with the provision of Section 313(b)(2)
of the TIA, to the extent applicable.
The Company's obligations under this Section 7.7 and any lien
arising hereunder shall survive indefinitely, including upon the resignation or
removal of the Trustee, the discharge of the Company's obligations pursuant to
Article VIII of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing.
The Holder or Holders of a majority in principal amount of then outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing. The Company, by Board of Directors resolution, may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any bankruptcy law;
(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements
54
<PAGE>
of this Section 7.8.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holder or Holders of a majority in principal amount of then outstanding
Securities may, with the Company's consent, appoint a successor Trustee to
replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appoint ment to the retiring Trustee and to the Company. Immediately upon
delivery of such notice and provided that all sums owing to the retiring Trustee
provided for in Section 7.7 have been paid, the retiring Trustee shall transfer
all property held by it as trustee to the successor Trustee, subject to the lien
provided in Section 7.7, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder.
If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holder or Holders of at least 10% in principal amount of then outstanding
Securities may, petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee, after written request by any Holder who has been
a Holder for at least six months, fails to comply with Section 7.10, any such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue
indefinitely for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
55
<PAGE>
Section 7.10. Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA
(S) 310(a)(1), (2) and (5). The Trustee and its direct parent or, in the case of
a corporation included in a bank holding company system, the related bank
holding company, shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any
creditor relationship listed in TIA (S) 311(b). A Trustee who has resigned or
been removed shall be subject to TIA (S) 311(a) to the extent indicated.
Section 7.12. Other Capacities.
----------------
All references in this Indenture to the Trustee shall be deemed
to refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacity as any Agent.
ARTICLE VIII.
SATISFACTION AND DISCHARGE
Section 8.1. Satisfaction and Discharge of Indenture.
---------------------------------------
The Company may terminate its obligations under this Indenture
(subject to the provisions of this Article VIII and Section 7.7) when it shall
have delivered to the Trustee for cancellation all Securities theretofore
authenticated (other than any Securities which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Article II
hereof) and the following conditions shall be satisfied:
(1) The Company has paid all sums payable under the
Indenture; and
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<PAGE>
(2) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in the United
States, each stating that all conditions precedent have been
complied with as contemplated by this Section 8.1.
Section 8.2. Repayment to the Company.
------------------------
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, for the payment of the principal of, premium, if any,
interest on or Liquidated Damages with respect to any Security and remaining
unclaimed for two years after such principal, premium, if any, interest or
Liquidated Damages has become due and payable shall be paid to the Company on
its written request; and the Holder of such Security shall thereafter look only
to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holder, the Company, when authorized
by Board Resolutions, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency;
(2) to create additional covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does
not materially adversely affect the rights of any Holder;
(3) to provide for collateral for or guarantors of the
Securities;
(4) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
obligations
57
<PAGE>
of the Company herein and in the Securities in accordance with
Article V;
(5) to comply with the TIA; or
(6) to provide for uncertificated Notes in addition to or
in place of certificated Notes.
The Company shall deliver to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with this Section 9.1.
Section 9.2. Amendments, Supplemental Indentures and Waivers with Consent of
---------------------------------------------------------------
Holders.
- -------
Subject to the last sentence of this paragraph, with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding, by written act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by Board Resolutions,
and the Trustee may amend or supplement this Indenture or the Securities or
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or the Securities or of modifying in any manner the
rights of the Holders under this Indenture or the Securities. Subject to the
last sentence of this paragraph, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding Securities may, in
writing, waive compliance by the Company with any provision of this Indenture or
the Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
(1) change the Stated Maturity of any Security or reduce
the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the
coin or currency in which, any Security or any premium or the
interest thereon with respect thereto is payable, or impair the
right to institute suit for the conversion of any Security or the
enforcement of any such payment on or after the due date thereof
(including, in the case of redemption, on or after the Redemption
Date), or reduce the Repurchase Price, or alter the Repurchase
Offer (other than as set forth herein) or redemption provisions
in a manner adverse to the Holders;
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<PAGE>
(2) reduce the percentage in principal amount of the
outstanding Securities, the consent of whose Holders is required
for any such amendment, supplemental indenture or waiver provided
for in the Indenture;
(3) adversely affect the right of such Holder to convert
Securities or the rights of any holder conferred by Article XIII;
or
(4) reduce the percentage of the principal amount of Notes
whose Holders must consent to an amendment, supplement or waiver
or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the Holder of
each out standing Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby at
such Holders' addresses as the same appear on the registry books of the
Registrar a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2
or Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment,
supplement or waiver.
Section 9.3. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
59
<PAGE>
Section 9.4. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company, the Trustee or the Person designated by the Company as the Person
to whom consents should be sent if such revocation is received by the Company or
such Person before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date.
Notwithstanding the preceding paragraph, after an amendment,
supplement or waiver becomes effective, it shall bind every Holder, unless it
makes a change described in any of clauses (1) through (4) of Section 9.2, in
which case, the amendment, supplement or waiver shall bind only each Holder of a
Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security unless consent of all Holders has been obtained pursuant to clauses (1)
through (4) of Section 9.2.
Section 9.5. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall
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<PAGE>
authenticate a new Security that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
Section 9.6. Trustee to Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided that the Trustee may, but shall
--------
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Officer's Certificate and an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article IX is authorized or permitted by this Indenture.
ARTICLE X.
MEETINGS OF HOLDERS
Section 10.1. Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article X for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to waive or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Holders pursuant to any of the provisions of
Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to the
provisions of Article VII;
(c) to consent to an amendment, supplement or waiver pursuant to
provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on behalf of
the Holder or Holders of any specified aggregate principal amount of the
Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
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Section 10.2. Manner of Calling Meetings.
--------------------------
The Trustee may at any time call a meeting of Holders to take any
action specified in Section 10.1, to be held at such time and at such place in
New York, New York or elsewhere as the Trustee shall determine. Notice of every
meeting of Holders, setting forth the time and place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
at the Company's expense by the Trustee, first-class postage prepaid, to the
Company and to the Holders at their last addresses as they shall appear on the
registration books of the Registrar, not less than 10 nor more than 60 days
prior to the date fixed for a meeting.
Any meeting of Holders shall be valid without notice if the Holders of
all Securities then outstanding are present in Person or by proxy, or if notice
is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3. Calling of Meetings by the Company or Holders.
---------------------------------------------
In case at any time the Company or the Holders of not less than 10% in
aggregate principal amount of the Securities then outstanding, shall have
requested the Trustee to call a meeting of Holders to take any action specified
in Section 10.1, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such written
request, then the Company or the Holders of Securities in the amount above
specified may determine the time and place in New York, New York or elsewhere
for such meeting and may call such meeting for the purpose of taking such
action, by mailing or causing to be mailed notice thereof as provided in Section
10.2, or by causing notice thereof to be published at least once in each of two
successive calendar weeks (on any Business Day during such week) in a newspaper
or newspapers printed in the English language, customarily published at least
five days a week of a general circulation in the City of New York, State of New
York, the first such publication to be not less than 10 nor more than 60 days
prior to the date fixed for the meeting.
Section 10.4. Who May Attend and Vote at Meetings.
-----------------------------------
To be entitled to vote at any meeting of Holders, a Person shall (a)
be
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a registered Holder of one or more Securities, or (b) be a Person appointed by
an instrument in writing as proxy for the registered Holder or Holders of
Securities. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company, and its counsel.
Section 10.5. Regulations May Be Made by Company; Conduct of the Meeting:
-----------------------------------------------------------
Voting Rights: Adjournment.
--------------------------
Notwithstanding any other provision of this Indenture, the Company may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Holders, in regard to proof of the holding of Securities and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those Persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Holders shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders as provided in Section 10.3, in which case the Company or
the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Securities represented at the meeting and entitled to vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him,
in whole vote increments; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Securities challenged as not
outstanding and ruled by the chairman of the meeting to be not then outstanding.
The chairman of the meeting shall have no right to vote other than by virtue of
Securities held by him or instruments in writing as aforesaid duly designating
him as the proxy to vote on behalf of other Holders. Any meeting of Holders duly
called pursuant to the provisions of Section 10.2 or Section 10.3 may be
adjourned from time to time by vote of the Holder or Holders of a majority in
aggregate principal amount of the Securities
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<PAGE>
represented at the meeting and entitled to vote, and the meeting may be held as
so adjourned without further notice.
Section 10.7. Voting at the Meeting and Record to Be Kept.
-------------------------------------------
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
of Securities or of their representatives by proxy and the principal amount of
the Securities voted by the ballot. The permanent chairman of the meeting shall
appoint two inspectors of votes, who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Holders
shall be prepared by the secretary of the meeting and there shall be attached to
such record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having knowledge of
the facts, setting forth a copy of the notice of the meeting and showing that
such notice was mailed as provided in Section 10.2 or published as provided in
Section 10.3. The record shall be signed and verified by the affidavits of the
permanent chairman and the secretary of the meeting and one of the duplicates
shall be delivered to the Company and the other to the Trustee to be preserved
by the Trustee, the latter to have attached thereto the ballots voted at the
meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.8. Exercise of Rights of Trustee or Holders May Not Be Hindered or
---------------------------------------------------------------
Delayed by Call of Meeting.
--------------------------
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this Indenture or of
the Securities.
ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
Section 11.1. Repurchase of Securities at Option of the Holder Upon a Change of
-----------------------------------------------------------------
64
<PAGE>
Control.
-------
(a) Subject to Section 11.2, in the event that a Change of Control has
occurred, the Company shall offer, subject to the terms and conditions of this
Indenture, to purchase all or any part of each Holder's Securities (provided
--------
that the principal amount of such Securities must be $1,000 or an integral
multiple thereof) on the date (the "Repurchase Date") fixed in the manner
provided in this Section 11.1 that is no later than 45 Business Days (except as
hereinafter provided) after the occurrence of such Change of Control, at a cash
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest and Liquidated Damages, if any, to
(but excluding) the Repurchase Date.
(b) In the event that, pursuant to this Section 11.1, the Company shall be
required to commence an offer to purchase Securities (a "Repurchase Offer"), the
Company shall follow the procedures set forth in this Section 11.1 as follows:
(1) the Repurchase Offer shall commence on the date specified by
the Company that shall be within 25 Business Days following a Change of
Control;
(2) the Repurchase Offer shall remain open for 20 Business Days
following its commencement, except to the extent that a longer period
is required by applicable law (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase Offer, the Company shall
purchase all Securities tendered in response to the Repurchase Offer;
(4) if the Repurchase Date is on or after an interest payment
Record Date and on or before the related Interest Payment Date, any
accrued interest and Liquidated Damages will be paid to the Person in
whose name a Security is registered at the close of business on such
Record Date, and no additional interest or Liquidated Damages will be
payable to Holders who tender Securities pursuant to the Repurchase
Offer;
(5) the Company shall provide the Trustee with written notice of
the Repurchase Offer at least 5 Business Days before the commencement
of any Repurchase Offer (or such shorter period that
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is satisfactory to the Trustee); and
(6) on or before the commencement of any Repurchase Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Holders, which (to
the extent consistent with this Indenture) shall govern the terms of the
Repurchase Offer and shall state:
(i) that the Repurchase Offer is being made pursuant to such notice and
this Section 11.1 and that all Securities, or portions thereof, tendered will be
accepted for payment;
(ii) the Repurchase Price (including the amount of accrued and unpaid
interest and Liquidated Damages, if any), the Repurchase Date and the Repurchase
Put Date;
(iii) that any Security, or portion thereof, not tendered and accepted
for payment will continue to accrue interest and Liquidated Damages, if any;
(iv) that, unless the Company defaults in depositing Cash with the
Paying Agent in accordance with the last paragraph of this clause (b) or such
payment is prevented pursuant to Article XII, any Security, or portion thereof,
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest after the Repurchase Date;
(v) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Repurchase Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Paying Agent (which may not for
purposes of this Section 11.1, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) at the address
specified in the notice prior to the close of business on the earlier of (a) the
third Business Day prior to the Repurchase Date and (b) the third Business Day
following the expiration of the Repurchase Offer (such earlier date being the
"Repurchase Put Date");
(vi) that Holders will be entitled to withdraw their election, in whole or
in part, if the Paying Agent (which may not for purposes of this Section 11.1,
notwithstanding anything in this Indenture to the contrary, be the Company or
any Affiliate of the Company) receives, up to the close of
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business on the Repurchase Put Date, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of Securities
purchased; and
(vii) a brief description of the events resulting in such Change of
Control.
Any notice of a Repurchase Offer mailed in accordance with the
foregoing provisions shall be conclusively presumed to have been duly given
whether or not a given Holder receives the same.
Any such Repurchase Offer shall comply with all applicable provisions
of federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture which conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall, to the extent
lawful, (i) accept for payment Securities or portions thereof properly tendered
pursuant to the Repurchase Offer on or before the Repurchase Put Date, (ii)
deposit with the Paying Agent Cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) of
all Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to Holders of Securities so
accepted payment in an amount equal to the Repurchase Price (together with
accrued and unpaid interest and Liquidated Damages, if any), and the Trustee
will promptly authenticate and mail or deliver to such Holders a new Security or
Securities equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.
Section 11.2. Rescission of Change of Control Determination.
---------------------------------------------
At any time prior to the close of business on the Business Day
immediately preceding the Repurchase Date, the Holders of more than 66-2/3% in
aggregate principal amount of the then outstanding Securities, by written act of
said Holders delivered to the Company and the Trustee, may determine that the
event
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giving rise to the Change of Control shall not be treated as a Change of Control
for purposes of Section 11.1, in which event:
(1) the provisions of Section 11.1(a) shall not apply;
(2) if a Repurchase Offer has been made by the Company pursuant
to Section 11.1(b), such Repurchase Offer shall be deemed revoked; and
(3) if any Securities have been tendered in response to the
revoked Repurchase Offer, such tenders shall be deemed rescinded and
the Securities promptly returned to the Holders thereof.
Following a determination by the Holders pursuant to this Section
11.2, the Company shall mail to all Holders a notice briefly describing such
determination. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such determination. An effective determination under this Section 11.2 shall be
binding on all holders.
ARTICLE XII.
SUBORDINATION
Section 12.1. Securities Subordinated to Senior Indebtedness.
----------------------------------------------
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of, premium, if any, and interest on and
Liquidated Damages with respect to, the Securities and (b) any other payment in
respect of the Securities, including on account of the acquisition or redemption
of the Securities by the Company (but specifically excluding payments to the
Trustee for its own benefit), is subordinated, to the extent and in the manner
provided in this Article XII, to the prior payment in full of all Senior
Indebtedness of the Company, whether outstanding at the date of this Indenture
or thereafter created, incurred, assumed or guaranteed, and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness.
This Article XII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of
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them may enforce such provisions. In addition, the payment of cash, property or
securities (other than Junior Securities) upon conversion of a Security pursuant
to Article XIII will constitute payment on a Security and therefore will be
subject to the subordination provisions contained in this Indenture.
Section 12.2. No Payment on Securities in Certain Circumstances.
-------------------------------------------------
(a) No payment (by setoff or otherwise) may be made by or on behalf of the
Company, directly or indirectly through an Subsidiary, on account of the
principal of, premium, if any, interest on, or Liquidated Damages or any other
obligations under or with respect to, the Securities, or to acquire any of the
Securities (including repurchases of Securities at the option of the Holder) for
cash or property (other than Junior Securities), or on account of the redemption
provisions of the Securities (collectively, the "Subordinated Obligations"), (i)
upon the maturity of any Senior Indebtedness by lapse of time, acceleration
(unless waived) or otherwise, unless and until all principal of, premium, if
any, and interest on, and fees, charges, expenses, indemnifications and all
other amounts payable in respect of Senior Indebtedness are first paid in full
in cash, or (ii) in the event of default in the payment of any principal of,
premium, if any, or interest in respect of Senior Indebtedness when it becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (collectively, a "Payment Default"), unless and until
such Payment Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit, with (w) the passage of time, (x) the
giving of notice, (y) the making of any payment of the Securities then required
to be made, or (z) any combination thereof (collectively, a "Non-Payment
Default"), the holders of any Designated Senior Indebtedness or their
representative immediately to accelerate its maturity and (ii) written notice of
such Non-Payment Default given to the Company and the Trustee by the holders of
such Designated Senior Indebtedness or their representative (a "Blockage
Notice"), then, unless and until such Non-Payment Default has been cured or
waived or otherwise has ceased to exist, no payment (by set-off or otherwise)
may be made by or on behalf of the Company directly or through any Subsidiary on
account of the Subordinated Obligations. Notwithstanding the foregoing, on
the first to occur of (i) the date that is 179 days after the Blockage Notice is
delivered as set forth above (the "Payment Blockage Period"), and (ii) the date
on which all Payment Defaults and Non-Payment Defaults have been cured or
waived, the Company shall be required to pay to the Holders of the Securities
all regularly scheduled payments on the Securities that were not paid to the
Holders of the Securities during the Payment Blockage Period due to the
foregoing
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prohibitions (and upon the making of such payments any acceleration of the
Securities made or other remedies commenced during the Payment Blockage Period
shall be of no further force or effect) and to resume all other payments as and
when due on the Securities, provided that no Payment Default shall have occurred
and be continuing. Not more than one Blockage Notice may be given in any
consecutive 365-day period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period. In no event, however, may the total
number of days during which any Payment Blockage Period is or Payment Blockage
Periods are in effect exceed 179 days in the aggregate during any consecutive
365-day period.
(c) In furtherance of the provisions of Section 12.1, in the event that,
notwithstanding the foregoing provisions of this Section 12.2, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee on behalf of the Holders or any Paying Agent for the
benefit of the Holders at a time when such payment or distribution is prohibited
by the provisions of this Section 12.2, such payment or distribution (subject to
the provisions of Sections 12.6 and 12.9) shall be held in trust for the benefit
of the holders of Senior Indebtedness, and shall be paid or delivered by such
Holders or the Trustee or such Paying Agent, as the case may be, to the holders
of Senior Indebtedness of the Company remaining unpaid or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any of such Senior Indebtedness of the
Company may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness of the Company held or
represented by each, for application to the payment of all Senior Indebtedness
of the Company in full after giving effect to any concurrent payment and
distribution to the holders of such Senior Indebtedness.
Section 12.3. Securities Subordinated to Prior Payment of All Senior
------------------------------------------------------
Indebtedness on Dissolution Liquidation or Reorganization.
---------------------------------------------------------
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first be
entitled to receive payments in full in cash before the Holders are entitled to
receive any payment (other than Junior Securities) on account of the
Subordinated Obligations;
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(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the provisions of this Article
XII, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness or
their representative to the extent necessary to make payment in full in cash of
all such Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness
(but this Section 12.3(b) shall not apply to payments or distributions to the
Trustee for its own benefit); and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary of any kind or
character, whether in cash, property or securities (other than Junior Securities
as aforesaid), shall be received by the Trustee for the benefit of the Holders
or the Holders or any Paying Agent for the benefit of the Holders (or, if the
Company or any Affiliate of the Company is acting as its own Paying Agent, money
for any such payment or distribution shall be segregated or held in trust) on
account of Subordinated Obligations before all Senior Indebtedness is paid in
full, such payment or distribution (subject to the provisions of Sections 12.6
and 12.9) shall be held in trust for the benefit of the holders of Senior
Indebtedness, and shall be paid or delivered by such Holders or the Trustee or
such Paying Agent, as the case may be, to the holders of Senior Indebtedness of
the Company remaining unpaid or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness of the Company held or represented by each, for application
to the payment of all Senior Indebtedness of the Company in full in cash after
giving effect to any concurrent payment and distribution to the holders of such
Senior Indebtedness.
Section 12.4 Holders to Be Subrogated to Rights of Holders of Senior
-------------------------------------------------------
Indebtedness.
- ------------
Subject to the payment in full in cash of all Senior Indebtedness of
the Company as provided herein, the Holders of Securities shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments or
distributions
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of assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Article XII, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article XII are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XlI shall have been
applied, pursuant to the provisions of this Article XII, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full in cash.
Section 12.5 Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article XII or elsewhere in this Indenture
or in the Securities is intended to or shall impair as between the Company and
the Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on, the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XII, of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article XII or elsewhere in
this Indenture or in the Securities, upon any distribution of assets of the
Company referred to in this Article XII, the Trustee, subject to the provisions
of Sections 7.1 and 7.2, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such
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distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XII so long as such court has been apprised of the provisions of, or the order,
decree or certificate makes reference to, the provisions of this Article XII.
Nothing in this Section 12.5 shall apply to the claims of, or payments to, the
Trustee under or pursuant to Section 7.7 or otherwise for its own benefit.
Section 12.6 Trustee and Other Agents Entitled to Assume Payments Not Prohibited
-------------------------------------------------------------------
in Absence of Notice.
- --------------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities by virtue of the operation of this
Article XII, but failure to give such notice shall not affect the subordination
of the Securities pursuant to this Article XII. The Trustee and all other
Agents shall not at any time be charged with knowledge of the existence of any
facts which would prohibit the making of any payment to or by the Trustee unless
and until a Trust Officer of the Trustee or any Paying Agent shall have actually
received, no later than one Business Day prior to such payment, written notice
thereof in compliance with Section 14.2 from the Company or from one or more
holders of Senior Indebtedness or from any representative therefor and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Sections 7.1 and 7.2, shall be entitled in all respects conclusively to
assume that no such fact exists.
Section 12.7 Subordination Rights Not Impaired by Acts or Omissions of the
-------------------------------------------------------------
Company or Holders of Senior Indebtedness.
- -----------------------------------------
No right of any present or future holders of any Senior Indebtedness
to enforce subordination provisions contained in this Article XII shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. Without the consent of or notice to the Trustee or the
Holders, the holders of Senior Indebtedness may extend, renew, modify or amend
the terms of the Senior Indebtedness or any security therefor and release,
sell or exchange such security and otherwise deal freely with the Company, all
without impairing the liabilities and obligations of the parties to this
Indenture or the Holders.
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Section 12.8 Holders Authorize Trustee to Effectuate Subordination of
--------------------------------------------------------
Securities.
- ----------
Each Holder of the Securities by his acceptance thereof authorizes the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provisions contained in this Article XII pursuant
to this Indenture, and appoints the Trustee his attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors of the Company),
the immediate filing of a claim for the unpaid balance of his Securities in the
form required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of the Senior Indebtedness or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebted ness or their
representative to vote in respect of the claim of any Securityholder in any such
proceeding.
Section 12.9 Right of Trustee to Hold Senior Indebtedness.
--------------------------------------------
The Trustee and any Agent shall be entitled to all of the rights set
forth in this Article XII in respect of any Senior Indebtedness at any time held
by it to the same extent as any other holder of Senior Indebtedness, and nothing
in this Indenture shall be construed to deprive the Trustee or any Agent of any
of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.7.
Section 12.10 Article XII Not to Prevent Events of Default.
--------------------------------------------
The failure to make a payment on account of principal of, premium, if
any, interest on, or Liquidated Damages with respect to, the Securities by
reason of any provision of this Article XII shall not be construed as preventing
the occurrence of a Default or an Event of Default under Section 6.1 or in any
way prevent the
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Holders from exercising any right hereunder other than the right to receive
payment on the Securities.
Section 12.11 No Duty of Trustee and Other Agents to Holders of Senior
--------------------------------------------------------
Indebtedness.
- ------------
The Trustee and the other Agents shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to
any such holders (other than for its willful misconduct or negligence) if it
shall in good faith mistakenly pay over or distribute to the Holders of
Securities or the Company or any other Person, cash, property or securities to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article XII or otherwise. Nothing in this Section 12.12 shall affect the
obligation of any other such Person receiving such payment or distribution from
the Trustee or any other Agent to hold such payment for the benefit of, and to
pay such payment over to, the holders of Senior Indebtedness or their
representative.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article XII and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture as against the Trustee.
ARTICLE XIII.
CONVERSION OF SECURITIES
Section 13.1 Conversion Privilege.
--------------------
Subject to and upon compliance with the provisions of this Article
XIII, at the option of the Holder thereof, any Security may at any time, be
converted, in whole, or in part in multiples of $1,000 principal amount, into
fully paid and non-assessable shares of Common Stock issuable upon conversion of
the Securities, at the conversion price in effect at the Date of Conversion,
until and including, but not after the close of business on the Stated Maturity,
unless such Security or some portion thereof shall have been called for
redemption or delivered for repurchase prior to such date and no default is made
in making due provision for the payment of the Redemption Price in accordance
with the terms of this Indenture, in which case, with respect to such Security
or portion thereof as has been so called for redemption or delivered for
repurchase, such Security or portion thereof may be so converted
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until and including, but not after, the close of business on the Business Day
immediately prior to the Redemption Date or Repurchase Date, as applicable, for
such Security, unless the Company subsequently fails to pay the applicable
Redemption Price or Repurchase Price, as the case may be.
Section 13.2 Exercise of Conversion Privilege.
--------------------------------
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security to the Company at any
time during usual business hours at its office or agency maintained for the
purpose as provided in this Indenture, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security, that
the Holder elects to convert such Security or a stated portion thereof
constituting a multiple of $1,000 principal amount, and, if such Security is
surrendered for conversion during the period between the close of business on
any Record Date and the opening of business on the next following Interest
Payment Date and has not been called for redemption on a Redemption Date or
repurchase on a Repurchase Date which occurs within such period, accompanied
(except in the case of the Interest Payment Date occurring on November 15, 2001)
by payment in New York clearing house funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount of the Security being surrendered for conversion,
notwithstanding such conversion and the interest payable in respect of such
Security on such Interest Payment Date shall be paid to the Holder of such
Security as of the Record Date. Interest payable in respect of a Security
surrendered for conversion on or after an Interest Payment Date shall be paid to
the Holder of such Security as of the next preceding Record Date,
notwithstanding the exercise of the right of conversion. Such notice of
conversion shall also state the name or names (with address) in which the
certificate or certificates for shares of Common Stock shall be issued.
Securities surrendered for conversion shall (if reasonably required by the
Company or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company duly
executed by, the Holder or his attorney duly authorized in writing, with
appropriate signature guarantee. As promptly as practicable after the receipt of
such notice and the surrender of such Security as aforesaid, the Company shall,
subject to the provisions of Section 13.8 hereof, issue and deliver at such
office or agency to such Holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock issuable on such
conversion of Securities in accordance with the provisions of this Article XIII
and Cash, as provided in Section 13.3 hereof, in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion. Such conversion
shall be deemed to have been effected immediately
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prior to the close of business on the date (herein called the "Date of
Conversion") on which such Security shall have been surrendered as aforesaid,
and the person or persons in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become on the Date of Conversion the holder or holders of record
of the shares represented thereby; provided, however, that any such surrender on
-------- -------
any date when the stock transfer books of the Company shall be closed shall
cause the person or persons in whose name or names the certificate or
certificates for such shares are to be issued to be deemed to have become the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open but such
conversion shall nevertheless be at the conversion price in effect at the close
of business on the date when such Security shall have been so surrendered with
the conversion notice. In the case of conversion of a portion, but less than
all, of a Security, the Company shall as promptly as practicable execute, and
the Trustee shall thereafter authenticate and deliver to the Holder thereof, at
the expense of the Company, a Security or Securities in the aggregate principal
amount of the unconverted portion of the Security surrendered. Except as
otherwise expressly provided in this Indenture, no payment or adjustment shall
be made for interest accrued on any Security (or portion thereof) converted or
for dividends or distributions on any Common Stock issued upon conversion of any
Security.
Section 13.3 Fractional Interests.
--------------------
No fractions of shares or scrip representing fractions of shares shall
be issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered. If any
fraction of a share of Common Stock would, except for the foregoing provisions
of this Section 13.3, be issuable on the conversion of any Security or
Securities, the Company shall make payment in lieu thereof in an amount of Cash
equal to the value of such fraction computed on the basis of the last sale price
of the Common Stock as reported on the New York Stock Exchange (or if not listed
for trading thereon, then on the principal national securities exchange or on
the principal automated quotation system on which the Common Stock is listed or
admitted to trading) at the close of business on the Date of Conversion or if no
such sale takes place on such day, the last sale price for such day shall be the
average of the closing bid and asked prices regular way on the New York Stock
Exchange (or if not listed for trading thereon, on the principal national
securities exchange or on the principal automated quotation system on which the
Common Stock is listed or admitted to trading) for such day (any such last
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sale price being hereinafter referred to as the "Last Sale Price"). If on the
Date of Conversion, the Common Stock is not quoted by any such organization, the
fair value of such Common Stock on such day, as reasonably determined in good
faith by the Board of Directors of the Company, shall be used.
Section 13.4 Conversion Price.
----------------
The conversion price per share of Common Stock issuable upon
conversion of the Securities (as such price may be adjusted, herein called the
"Conversion Price") shall initially be $32.81 (which reflects a conversion rate
of 30.4785 shares of Common Stock per $1,000 in principal amount of Securities).
Section 13.5 Adjustment of Conversion Price.
------------------------------
The Conversion Price shall be subject to adjustment from time to time
as follows:
(a) In case there shall be made or paid a dividend or made a distribution
in shares of Common Stock on any class of Capital Stock of the Company, the
Conversion Price in effect immediately following the record date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on such date and the denominator shall be the sum of
such number of shares and the total number of shares constituting such dividend
or other distribution. An adjustment made pursuant to this subsection (a) shall
become effective immediately, except as provided in subsection (i) and (j)
below, after such record date.
(b) In case the Company shall (1) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately following the effectiveness
of such action shall be adjusted by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination and the
denominator shall be the number of shares outstanding immediately after giving
effect to such subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (b) shall become effective immediately, except as
provided in subsection (i) and (j) below, after the effective date of a
subdivision, combination or reclassification.
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(c) In case there shall be an issuance of rights, options or warrants to
all or substantially all holders of Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share of the Common Stock (as determined pursuant to
subsection (g) below) on the record date fixed for determination of the
shareholders entitled to receive such rights, option or warrants, the Conversion
Price in effect immediately following such record date shall be adjusted to a
price, computed to the nearest cent, so that the same shall equal the price
determined by multiplying:
(i) such Conversion Price by a fraction, of which
(ii) the numerator shall be (A) the number of shares of Common Stock
outstanding on such record date plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights, options or warrants and dividing the product so
obtained by such current market price), and of which
(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on such record date plus (B) the number of additional
shares of Common Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided
in subsection (i) and (j) below, after the record date for the determination of
holders entitled to receive such rights, options or warrants; provided, however,
-------- -------
that if any such rights, options or warrants issued by the Company as described
in this subsection (c) are only exercisable upon the occurrence of certain
triggering events, then the Conversion Price will not be adjusted as provided in
this subsection (c) until such triggering events occur. Upon the expiration or
termination of any rights, options or warrants without the exercise of such
rights, options or warrants, the Conversion Price then in effect shall be
adjusted immediately to the Conversion Price which would have been in effect at
the time of such expiration or termination had such rights, options or warrants,
to the extent outstanding immediately prior to such expiration or termination,
never been issued.
(d) In case there shall be a distribution to all or substantially all
holders of Common Stock, of any assets, evidences of indebtedness, cash or
securities (other than (x) dividends or distributions exclusively in cash, (y)
any dividend or distribution for which an adjustment is required to be made in
accordance with subsection
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(a) or (c) above and in mergers and consolidations to which Section 13.6
applies, or (z) any distribution of rights or warrants subject to subsection (1)
below or any distribution in connection with a liquidation, dissolution or
winding up of the Company) then in each such case the Conversion Price in effect
immediately following the record date fixed for the determination of the
shareholders entitled to such distribution shall be adjusted so that the same
shall equal the price determined by multiplying such Conversion Price by a
fraction of which the numerator shall be the then current market price per share
of the Common Stock (determined as pro vided in subsection (g) below) on such
record date less the then fair market value (as reasonably determined in good
faith by the Board of Directors of the Company) of the portion of the assets so
distributed applicable to one share of Common Stock, and of which the
denominator shall be such current market price per share of the Common Stock
(determined as provided in subsection (g) below). Such adjustment shall become
effective immediately, except as provided in subsection (i) and (j) below, after
the record date for the determination of shareholders entitled to receive such
distribution.
(e) In case there shall be made any distribution consisting exclusively of
cash (excluding any cash portion of distributions for which an adjustment is
required to be made in accordance with subsection (d) above, or cash distributed
upon a merger or consolidation to which Section 13.6 applies) to all or
substantially all holders of Common Stock in an aggregate amount that, combined
together with (i) all other such all-cash distributions made within the 12
months immediately preceding the record date fixed for determination of the
shareholders entitled to such distribution in respect of which no adjustment
pursuant to this subsection (e) has been made and (ii) any cash and the fair
market value of other consideration paid or payable in respect of any tender
offer by the Company or any of its Subsidiaries for Common Stock concluded
within the 12 months immediately preceding the record date fixed for determining
the shareholders entitled to such distribution in respect of which no adjustment
has been made, exceeds 15.0% of the Company's market capitalization (defined as
being the product of the then current market price of the Common Stock
(determined as provided in subsection (g) below) times the number of shares of
Common Stock then outstanding) on the record date fixed for the determination of
the shareholders entitled to such distribution, in each such case the Conversion
Price immediately following such record date shall be adjusted so that the same
shall equal the price determined by multiplying such Conversion Price by a
fraction of which the numerator shall be the then current market price per share
of the Common Stock (determined as provided in subsection (g) below) on such
record date less the amount of the cash and/or fair market value (as reasonably
determined in good faith by the Board of Directors of the Company) of other
consideration so
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distributed applicable to one share of Common Stock, and of which the
denominator shall be such current market price per share of the Common Stock.
Such adjustment shall become effective immediately, except as provided in
subsection (i) and (j) below, after the record date for the determination of
shareholders entitled to receive such distribution.
(f) In case the Company or any Subsidiary of the Company shall complete a
tender offer for all or any portion of the Common Stock (any such tender offer
being referred to as an "Offer") that involves an aggregate consideration having
a fair market value as of the expiration of such Offer (the "Expiration Time")
that, together with (i) any cash and the fair market value of any other
consideration payable in respect of any other tender offer, as of the expiration
of such other tender offer, expiring within the 12 months preceding the
expiration of such Offer and in respect of which no Conversion Price adjustment
pursuant to this subsection (f) has been made and (ii) the aggregate amount of
any all-cash distributions referred to in subsection (e) of this Section 13.5 to
all holders of Common Stock within the 12 months preceding the expiration of
such Offer for which no conversion price adjustment pursuant to such subsection
(e) has been made, exceeds 15.0% of the product of the then current market price
per share (determined as provided in subsection (g) below) of the Common Stock
at the Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, the Conversion Price in
effect immediately following such Expiration Time shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall be
(i) the product of the then current market price per share (determined as
provided in subsection (g) below) of the Common Stock at the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
shares) at the Expiration Time minus (ii) the fair market value of the aggregate
consideration payable to shareholders based on the acceptance (up to any maximum
specified in the terms of the Offer) of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so accepted being
referred to as the "Purchased Shares") and the denominator shall be the product
of (i) such current market price per share at the Expiration Time times (ii)
such number of outstanding shares at the Expiration Time less the number of
Purchased Shares, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
For purposes of this subsection (f), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
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(g) For the purpose of any computation under subsections (c), (d), (e) and
(f) above, the current market price per share of Common Stock on any date shall
be deemed to be the average of the Last Sale Prices of a share of Common Stock
for the five consecutive Trading Days selected by the Company commencing not
more than 20 Trading Days before, and ending not later than, the earlier of the
date in question and the date before the "'ex' date," with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 13.3 hereof, the fair value of the
Common Stock on such day, as reasonably determined in good faith by the Board
of Directors of the Company, shall be used. For purposes of this paragraph, the
term "'ex' date," when used with respect to any issuance, distribution or
payments with respect to an Offer, means the first date on which the Common
Stock trades regular way on the New York Stock Exchange (or if not listed or
admitted to trading thereon, then on the principal national securities exchange
or the principal automated quotation system if the Common Stock is listed or
admitted to trading thereon) without the right to receive such issuance,
distribution or Offer.
(h) In addition to the foregoing adjustments in subsections (a), (b), (c),
(d), (e) and (f) above, the Company, from time to time and to the extent
permitted by law, may reduce the Conversion Price by any amount for at least 20
Business Days, if the Board of Directors has made a determination, which
determination shall be conclusive, that such reduction would be in the best
interests of the Company. The Company shall give notice to the Trustee and cause
notice of such reduction to be mailed to each Holder of Securities at such
Holder's address as the same appears on the registry books of the Registrar, at
least 15 days prior to the date on which such reduction commences. The Company
may, at its option, also make such reductions in the Conversion Price in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of shares of Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for United States federal income tax
purposes.
(i) In any case in which this Section 13.5 shall require that an adjustment
be made immediately following a record date, the Company may elect to defer the
effectiveness of such adjustment (but in no event until a date later than the
effective time of the event giving rise to such adjustment), in which case the
Company shall, with respect to any Security converted after such record date and
on and before such adjustment shall have become effective (i) defer paying any
Cash payment pursuant to Section 13.3 hereof or issuing to the Holder of such
Security the number of shares
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of Common Stock and other capital stock of the Company (or other assets or
securities) issuable upon such conversion in excess of the number of shares of
Common Stock and other Capital Stock of the Company issuable thereupon only on
the basis of the Conversion Price prior to adjustment, and (ii) not later than
five Business Days after such adjustment shall have become effective, pay to
such Holder the appropriate Cash payment pursuant to Section 13.3 hereof and
issue to such Holder the additional shares of Common Stock and other Capital
Stock of the Company issuable on such conversion. Notwithstanding the foregoing,
no adjustment of the Conversion price shall be made if the event giving rise to
such adjustment does not occur.
(j) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price; provided that any adjustments which by reason of this
--------
subsection (j) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
XIII shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. In no event shall the Conversion Price be less than
the par value of a share of the Company's Common Stock.
(k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and each conversion agent an
Officers' Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
showing in reasonable detail the facts upon which such adjustment is based,
which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) mail or cause to be mailed a notice of such adjustment to
each Holder of Securities at such Holder's address as the same appears on the
registry books of the Registrar. Unless and until a Trust Officer has received
an Officers' Certificate setting forth an adjustment of the Conversion Price,
the Trustee may assume that no such adjustment has been made and that the last
Conversion Price for which the Trustee has received an Officers' Certificate is
the current Conversion Price. Neither the Trustee nor any Conversion Agent shall
be under any duty or responsibility with respect to any such Officer's
Certificate or the information and calculation contained therein, except to
exhibit the same to any Holder deserving inspection thereof, at its office
during normal business hours.
(l) In the event that the Company distributes rights or warrants (other
than those referred to in subsection (c) above) pro rata to holders of Common
--- ----
Stock, so long as any such rights or warrants have not expired or been redeemed
by the
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Company, instead of making an adjustment in the Conversion Price, the Company
may make proper provision so that the Holder of any Note surrendered for conver-
sion will be entitled to receive upon such conversion, in addition to the shares
of Common Stock issuable upon such conversion (the "Conversion Shares"), a
number of rights or warrants to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of rights or
warrants of separate certificates evidencing such rights or warrants (the
"Distribution Date"), the same number of rights or warrants to which a holder of
a number of shares of Common Stock equal to the number of Conversion Shares is
entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the rights or warrants, and (ii) if such
conversion occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
the principal amount of such Note so converted was convertible immediately prior
to such Distribution Date would have been entitled on such Distribution Date in
accordance with the terms and provisions of and applicable to the rights or
warrants.
Section 13.5 Continuation of Conversion Privilege in Case of Reclassification,
-----------------------------------------------------------------
Change, Merger, Consolidation or Sale of Assets.
- -----------------------------------------------
If there shall occur: (a) any reclassification or change of
outstanding shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value, to par value, or as a result of a subdivision or combination), (b)
any consolidation or merger of the Company with or into any other Person, or the
consolidation or merger of any other Person with or into the Company (other than
a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) any sale,
transfer or conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), then the Company, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
only into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by a holder of the number
of shares of Common Stock issuable upon conversion of such Security immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance assuming such holder of Common Stock of the Company failed to
exercise his rights of an election, if any, as to the kind or amount of
securities, cash and other property
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receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance (provided that if the kind or amount of securities, cash,
--------
and other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance is not the same for each share of Common
Stock of the Company held immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or conveyance in respect of which such
rights of election shall not have been exercised ("non-electing share"), then
for the purpose of this Section 13.6 the kind and amount of securities, cash and
other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance 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). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XIII. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of shares of Common Stock
includes shares of stock or other securities and property (including cash) of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the
Securities as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 13.6 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be
mailed to each Holder of Securities at such Holder's address as the same appears
on the registry books of the Registrar.
Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Holders of
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Article VIII hereof, may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee prior
to the execution of any such supplemental indenture) with respect thereto.
Section 13.6 Notice of Certain Events.
------------------------
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In case:
(a) the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock (other than cash dividends);
(b) the Company shall authorize the granting to all or substantially all
the holders of Common Stock of rights, warrants or options to subscribe for or
purchase any shares of stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or change of the
Common Stock (including a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or the
sale or conveyance of all or substantially all the property or business of the
Company;
(d) there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) the Company or any of its Subsidiaries shall complete an Offer, as
defined in Section 13.5;
then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 13.2 hereof,
and shall cause to be mailed to each Holder of Securities, at such Holder's
address as it shall appear on the registry books of the Registrar, at least 10
days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating the date on which (1) a record is expected to be taken for the
purpose of such dividend, distribution, rights, warrants or options or Offer, or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights, warrants or
options or to participate in such Offer are to be determined, or (2) such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up is expected to become effective and the date, if any
is to be fixed, as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification, change, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding-up.
Section 13.7 Taxes on Conversion.
-------------------
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The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant thereto; provided, however,
-------- -------
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any such
tax or has established, to the satisfaction of the Company, that such tax has
been paid. The Company extends no protection with respect to any other taxes
imposed in connection with conversion of Securities.
Section 13.8 Company to Provide Stock.
------------------------
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Securities from time to time as such Securities are presented for
conversion, provided that nothing contained in this Section 13.9 shall be
--------
construed to preclude the Company from satisfying its obligations in respect of
the conversion of Securities by delivery of repurchased shares of Common Stock
which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of
conversion of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use its reasonable efforts
to secure such registration or approval, as the case may be, provided, however,
-------- -------
that nothing in this Section 13.9 shall be deemed to limit in any way the
obligations of the Company provided in this Article XIII.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
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The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and non-
assessable by the Company and free of preemptive rights.
Section 13.9 Disclaimer of Responsibility for Certain Matters.
------------------------------------------------
Neither the Trustee nor any agent of the Trustee shall at any time be
under any duty or responsibility to any Holder of Securities to determine
whether any facts exist which may require any adjustment of the Conversion
Price, or with respect to the Officers' Certificate referred to in Section 13.5
hereof, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any agent of the Trustee shall be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property (including cash), which may at any time be issued or
delivered upon the conversion of any Security; and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Neither the
Trustee nor any agent of the Trustee shall be responsible for any failure of the
Company to issue, register the transfer of or deliver any shares of Common Stock
or stock certificates or other securities or property (including cash) upon the
surrender of any Security for the purpose of conversion or, subject to Article
VIII hereof, to comply with any of the covenants of the Company contained in
this Article XIII.
Section 13.10 Return of Funds Deposited for Redemption of Converted Securities.
----------------------------------------------------------------
Any funds which at any time shall have been deposited by the Company
or on its behalf with the Trustee or any other Paying Agent for the purpose of
paying the principal of and interest on any of the Securities and which shall
not be required for such purposes because of the conversion of such Securities,
as provided in this Article XIII, shall promptly after such conversion be repaid
to the Company by the Trustee or such other Paying Agent in accordance with the
Company's written instructions.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1 TIA Controls.
------------
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If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, whether or
not this Indenture has been qualified under 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, then the applicable TIA provision shall be
deemed to apply to this Indenture as so modified, or shall be excluded, as the
case may be.
Section 14.2 Notices.
-------
Any notices or other communications to the Company or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by recognized overnight courier, by telecopier
or registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Total Renal Care Holdings, Inc.
21250 Hawthorne Boulevard, Suite 800
Torrance, California 90503
Attention: Chief Financial Officer
Telephone: (310) 792-2600
Telecopy: (310) 792-0020
if to the Trustee:
The United States Trust Company of New York
114 West 47/th/ Street
New York, New York 10036
Attention: Corporate Trust and Agency Division
Telephone: (212) 852-1000
Telecopy: (212) 852-1626
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; the next Business Day after delivery to an overnight courier; and
five Business Days after mailing if sent by registered or certified mail,
postage prepaid
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(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is given in the manner provided above, it is duly
given, whether or not the addressee receives it except for notices and
communications to the Trustee which shall be effective only upon actual receipt
thereof.
Section 14.3 Communications by Holders with Other Holders.
--------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA (S) 312(c).
Section 14.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to
take any action (other than the original issuance of the Securities pursuant to
this Indenture) under this Indenture, the Company 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 and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied or complied
with; and
(2) upon the Trustee's request, 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 and covenants have
been satisfied or complied with.
Section 14.5 Statements Required in Certificate or Opinion.
---------------------------------------------
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Each Officers' Certificate or Opinion of Counsel with respect to
compliance with or satisfaction of with a condition or covenant provided for in
this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the exami-
nation 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 Person, he or she
has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been satisfied or complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been satisfied or complied
with; provided, however, that with respect to matters of fact an
-------- -------
Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous, and provided that any such certificate or opinion names the Trustee
as an addressee and is furnished to the Trustee at the time of delivery of such
certificate or opinion. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Opinions of Counsel required to be delivered to the
Trustee may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government or other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
91
<PAGE>
Section 14.6. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 14.7. Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or any day that is not
a Business Day. If a payment date is a Legal Holiday at such place, payment may
be made at such place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
Section 14.8. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
92
<PAGE>
Section 14.9. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 14.10. No Recourse Against Others.
--------------------------
No direct or indirect partner, employee, shareholder, director or
officer, as such, past, present or future of the Company or any successor
corporation, shall have any personal liability in respect of the obligations of
the Company under the Securities or this Indenture (or for any claim based on,
or in respect of, or by reason of, such obligations or their creation) by reason
of his, her or its status as such partner, shareholder, employee, director or
officer. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
Section 14.11. Successors.
----------
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor and assigns.
Section 14.12. Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 14.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 14.14. Table of Contents, Headings, Etc.
---------------------------------
93
<PAGE>
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 14.15. Qualification of Indenture.
--------------------------
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs, fees and expenses (including attorneys' fees and
expenses for the Company and the Trustee) incurred in connection therewith,
including, but not limited to, costs, fees and expenses of qualification of the
Indenture and the Securities and printing this Indenture and the Securities.
The Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.
Section 14.16. Benefits of Indenture.
---------------------
Nothing in this Indenture or the Securities, express or implied,
shall give to any Person other than the parties hereto, the holders of Senior
Indebtedness (subject to Article XII), the persons contemplated by Section 7.7
and the Holders, any benefits or any legal or equitable right, remedy or claim
under this Indenture or the Securities.
94
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
TOTAL RENAL CARE HOLDINGS, INC.,
a Delaware corporation
By: _____________________________________
Name:________________________________
Title:_______________________________
United States Trust Company of New York,
as Trustee
By: _____________________________________
Name:________________________________
Title:_______________________________
<PAGE>
EXHIBIT A
---------
[FORM OF SECURITY]
TOTAL RENAL CARE HOLDINGS, INC.
7% CONVERTIBLE SUBORDINATED NOTES DUE 2009
No. CUSIP No. ______
$
TOTAL RENAL CARE HOLDINGS, INC., a Delaware corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________, or registered assigns, the principal sum of _________ Dollars, on
May 15, 2009.
Interest Payment Dates: May 15, and November 15; commencing May 15,
1999.
Record Dates: May 1 and November 1.
Reference is made to the further provisions of this Note hereinafter
set forth, which will, for all purposes, have the same effect as if set forth at
this place.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
TOTAL RENAL CARE HOLDINGS, INC., a Dela-
ware corporation
By: _________________________________
Name:
Title:
By: _________________________________
Name:
Title:
<PAGE>
Certificate of Authentication:
This is one of the Notes described in the within-mentioned Indenture.
Dated:_____________
United States Trust Company of New York, as Trustee
By:_______________________________________________
Authorized Signatory
A-3
<PAGE>
TOTAL RENAL CARE HOLDINGS, INC.
7% Convertible Subordinated Notes due 2009
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by The
Depository Trust Company, a New York corporation ("Depositary"), to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of the Depository to
the Company or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of the Depositary (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), 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./1/
_____________________
/1/ This paragraph should only be added if the Note is issued in global form.
A-4
<PAGE>
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT AS SET
FORTH IN THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT EITHER (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE SECURITIES ACT, (C) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (A FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE), (D) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING./2/
1. Interest.
--------
______________________
/2/ This paragraph should be included only for Transfer Restricted Securities.
A-5
<PAGE>
Total Renal Care Holdings, Inc., a Delaware corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Note at the rate of 7% per annum. To the extent it is lawful, the Company
promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 7% per annum compounded semi-annually.
The Company will pay interest semi-annually in cash in arrears on May 15 and
November 15 of each year (each, an "Interest Payment Date"), commencing May 15,
1999. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Notes, from
November 18, 1998. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. Method of Payment.
-----------------
The Company shall pay interest on the Notes (except defaulted interest) to
the Persons who are the registered Holders at the close of business on the
Record Date immediately preceding the Interest Payment Date. Any such interest
not so punctually paid, and defaulted interest relating thereto, may be paid
to the Persons who are registered Holders at the close of business on a Special
Record Date for the payment of such defaulted interest, as more fully provided
in the Indenture referred to below. Holders must surrender Notes to a Paying
Agent to collect principal payments. Except as provided below, the Company shall
pay principal and interest in such coin or currency of the United States of
America as at the time of payment shall be legal tender for payment of public
and private debts ("U.S. Legal Tender"). The Notes will be payable as to
principal, premium, interest and Liquidated Damages at the office or agency of
the Company maintained for such purpose within or without New York, New York, or
at the option of the Company, payment of principal, premium, interest and
Liquidated Damages may be made by check mailed to the Holders at their addresses
set forth in the registry of Holders, and provided that, upon the request of The
Depository Trust Company, a New York corporation (the "Depositary"), payment
by wire transfer to an account within the United States of immediately
available funds will be required with respect to principal of, premium and
interest on and Liquidated Damages with respect to Global Notes and all other
Notes held of record by the Depositary, or its nominee, if the Depositary shall
have provided wire transfer instructions to the Company or the Paying Agent.
3. Paying Agent and Registrar.
--------------------------
A-6
<PAGE>
Initially, United States Trust Company of New York (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. Indenture.
---------
The Company issued the Notes under an Indenture, dated as of November 18,
1998 (as amended or supplemented from time to time the "Indenture"), between the
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act, as in effect on the date of the Indenture. The Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
obligations of the Company limited in aggregate principal amount to
$345,000,000.
5. Redemption.
----------
The Notes may be redeemed in whole or from time to time in part at any time
on and after November 15, 2001, at the option of the Company, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, in each case, plus any accrued but
unpaid interest and Liquidated Damages to, but excluding the Redemption Date.
The Notes may not be so redeemed prior to November 15, 2001.
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning on November 15 Redemption Price
------------------------ ----------------
<S> <C>
2001.................................... 104.90%
2002.................................... 104.20%
2003.................................... 103.50%
2004.................................... 102.80%
2005.................................... 102.10%
2006.................................... 101.40%
2007.................................... 100.70%
2008 and thereafter..................... 100.00%
</TABLE>
Any such redemption will comply with Article III of the Indenture.
A-7
<PAGE>
6. Notice of Redemption.
--------------------
Notice of redemption will be sent by first class mail, at least 30 days and
not more than 60 days prior to the Redemption Date to the Holder of each Note to
be redeemed at such Holder's last address as then shown upon the registry books
of the Registrar. Notes may be redeemed in part in integral multiples of
$1,000 only.
Except as set forth in the Indenture, from and after any Redemption Date, if
monies for the redemption of the Notes called for redemption shall have been
deposited with the Paying Agent on such Redemption Date and payment of the Notes
called for redemption is not prohibited under Article XII of the Indenture, the
Notes called for redemption will cease to bear interest and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date.
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with, the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Notes
selected for redemption.
8. Persons Deemed Owners.
---------------------
The registered Holder of a Note may be treated as the owner of it for all
purposes, subject to the provisions of the Indenture and the Notes with respect
to record dates.
9. Unclaimed Money.
---------------
If money for the payment of principal, interest or Liquidated Damages
remains unclaimed for one year, the Trustee and the Paying Agent(s) will pay the
money back to the Company at its written request. After that, all liability of
the Trustee and such Paying Agent(s) with respect to such money shall cease.
10. Amendment; Supplement; Waiver.
-----------------------------
A-8
<PAGE>
Subject to specified exceptions, the Indenture or the Notes may be amended
or supplemented, and any existing Default or Event of Default or compliance with
any provision may be waived, with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, or make any other change that does not materially adversely
affect the rights of any Holder of a Note.
11. Conversion Rights.
-----------------
Subject to the provisions of the Indenture, the Holders have the right to
convert the principal amount of the Notes into fully paid and nonassessable
shares of Common Stock of the Company at an office or agency maintained for such
purpose as provided in the Indenture at the initial conversion price per share
of Common Stock of $32.81 (which reflects a conversion rate of approximately
30.4785 shares of Common Stock per $1,000 in principal amount of Notes), or at
the adjusted conversion price then in effect, if adjustment has been made as
provided in the Indenture, upon surrender of the Note to the Company, together
with a fully executed notice in substantially the form attached hereto and, if
required by the Indenture, an amount equal to accrued interest payable on such
Note.
12. Ranking.
-------
Payment of principal, premium, if any, interest on and Liquidated Damages
and other amounts with respect to the Notes is subordinated, in the manner and
to the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness.
13. Repurchase at Option of Holder Upon a Change of Control.
-------------------------------------------------------
If there is a Change of Control, the Company shall, subject to certain
exceptions, be required, subject to the provisions of the Indenture, to offer to
purchase on the Repurchase Date all outstanding Notes at a purchase price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Repurchase Date. Holders of
Notes will receive a Repurchase Offer from the Company prior to any related
Repurchase Date and may elect to have such Notes purchased by completing the
form entitled "Option of Holder to Elect Purchase" appearing below.
A-9
<PAGE>
14. Successors.
----------
When a successor assumes all the obligations of its predecessor under the
Notes and the Indenture, the predecessor will be released from those
obligations.
15. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing (other than an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable immediately in the manner and with the effect provided in
the Indenture. Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal, interest
or Liquidated Damages), if it determines that withholding notice is in their
interest.
16. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or
its Affiliates, and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
17. No Recourse Against Others.
--------------------------
No direct or indirect partner, shareholder, director, officer or employee,
as such, past, present or future, of the Company or any successor corporation
shall have any personal liability in respect of the obligations of the Company
under the Notes or the Indenture, or for any claim based on, in respect of, or
by reason of, such obligations or their creation, by reason of his, her or its
status as such partner, shareholder, director, officer or employee. Each Holder
of a Note by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
A-10
<PAGE>
18. Authentication.
--------------
This Note shall not be valid until the Trustee or authenticating agent signs
the certificate of authentication on this Note.
19. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
20. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
21. CUSIP Numbers.
-------------
A-11
<PAGE>
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
22. Additional Rights of Holders of Transfer Restricted Notes.
---------------------------------------------------------
In addition to the rights provided to Holders of Notes under the Indenture,
Holders of Notes shall have all the rights set forth in the Registration Rights
Agreement.
23. Copies of Agreements.
--------------------
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Request may be made to:
Total Renal Care Holdings, Inc.
21250 Hawthorne Boulevard, Suite 800
Torrance, California 90503
Attention: Secretary
A-12
<PAGE>
FORM OF ASSIGNMENT
I or we assign this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Note or other identifying number of assignee
and irrevocably appoint __________________ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated:________________ Signed:_________________________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guaranty:_____________________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Article XI of the Indenture, check the box: [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Article XI of the Indenture, state the amount you want to be
purchased:
$________________
Dated:________________ Signed:______________________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guaranty:__________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Note Transfer Agent Medallion Program ("STAMP") or such
other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-14
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES/3/
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of de- Amount of in of this Global Signature of au-
crease in Principal crease in Principal Note following thorized signatory
Date of Amount of this Amount of this such decrease (or of Trustee or
Exchange Global Note Global Note increase) Notes Custodian
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
</TABLE>
_________________
/3/ This schedule should only be added if the Note is issued in global form.
A-15
<PAGE>
EXHIBIT B
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES/4/
Re: 7% CONVERTIBLE SUBORDINATED NOTES DUE 2009 OF TOTAL RENAL CARE HOLDINGS,
INC.
This Certificate relates to $__________ principal amount of Notes held in
__________ book-entry or ____________ definitive form by
____________________________ (the "Transferor").
1. The Transferor (check applicable box):
-------------------------------------
[_] (a) has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[_] (b) has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
2. In connection with any such request and in respect of each such Note,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act because (check applicable box):
[_] (a) Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
[_] (b) Such Note is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that is aware that the transfer is being
________________
/4/ This Certificate shall be included only for the Transfer Restricted Notes.
B-1
<PAGE>
made in reliance on Rule 144A (in satisfaction of Section 2.6(a)(ii)(B),
Section 2.6(b)(i)(x) or Section 2.6(d)(i)(B) of the Indenture).
[_] (c) Such Note is being transferred to an institutional investor that is an
"accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7) under
the Securities Act which delivers a certificate in the form of Exhibit B to the
Indenture to the Trustee (in satisfaction of Section 2.6(a)(ii)(C) or Section
2.6(d)(i)(C) of the Indenture), and delivers an opinion of counsel, if the
Company or the Trustee so requests.
[_] (d) Such Note is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act. If
requested by either the Company, an Opinion of Counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of
the Indenture).
__________________________________________
[INSERT NAME OF TRANSFEROR]
By:_______________________________________
Date:_________
B-2
<PAGE>
3. Affiliation with the Company [check if applicable]:
[_] (a) The undersigned represents and warrants that it is, or at some time
during which it held this Note was, an Affiliate of the Company.
[_] (b) If 3(a) above is checked and if the undersigned was not an Affiliate
of the Company at all times during which it held this Note, indicate the periods
during which the undersigned was an Affiliate of the Company:
[_] (c) If 3(a) above is checked and if the Transferee will not pay the full
purchase price for the transfer of this Note on or prior to the date of
transfer indicate when such purchase price will be paid:
B-3
<PAGE>
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:/5/
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:________ _____________________________________________
NOTICE: To be executed by an officer.
_____________________
/5/ This Certificate shall be included only for the Transfer Restricted Notes.
B-4
<PAGE>
EXHIBIT C
---------
FORM OF CONVERSION NOTICE
-------------------------
TO: TOTAL RENAL CARE HOLDINGS, INC.
The undersigned owner of this Note hereby: (i) irrevocably exercises the
option to convert this Note, or the portion hereof below designated, for shares
of Common Stock of Total Renal Care Holdings, Inc. in accordance with the terms
of this Indenture referred to in this Security and (ii) directs that such shares
of Common Stock deliverable upon the conversion, together with any check in
payment for fractional shares and any Note(s) representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. The under signed
acknowledges that if such shares of Common Stock have not yet been registered
with the Securities and Exchange Commission, such shares may be required to bear
a restrictive legend. If shares are to be delivered registered in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and deliver the Certificate to be delivered upon
Exchange or Registration of Transfer of Notes. Any amount required to be paid
by the undersigned on account of interest accompanies this Note.
Dated:__________
____________________________________________________
Signature
Fill in for registration of shares if to be delivered, and of Notes if to be
issued, otherwise than to and in the name of the registered holder.
____________________________________________________
Social Security or other Taxpayer Identifying Number
C-1
<PAGE>
(Name)
(Street Address)
City, State and Zip Code)
(Please print name and address)
Principal amount to be converted (if less than
all)
$_______________________________________________
C-2
<PAGE>
EXHIBIT 4.4
7% CONVERTIBLE SUBORDINATED NOTES DUE 2009
REGISTRATION RIGHTS AGREEMENT
DATED AS OF NOVEMBER 18, 1998
BY AND AMONG
TOTAL RENAL CARE HOLDINGS, INC.,
AS THE COMPANY
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
BNY CAPITAL MARKETS, INC.,
CREDIT SUISSE FIRST BOSTON CORPORATION AND
WARBURG DILLON READ LLC,
AS INITIAL PURCHASERS
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of
November 18, 1998, by and among Total Renal Care Holdings, Inc., a Delaware
corporation (the "Company"), and Donaldson, Lufkin & Jenrette Securities
Corporation, BNY Capital Markets, Inc., Credit Suisse First Boston Corporation
and Warburg Dillon Read LLC (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
November 12, 1998, by and among the Company and the Initial Purchasers (the
"Purchase Agreement"). In order to induce the Initial Purchasers to enter into
the Purchase Agreement, the Company has agreed to provide the registration
rights provided for in this Agreement to the Initial Purchasers and its direct
and indirect transferees. The execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Affiliate: As defined in Rule 144 of the Securities Act.
---------
Agreement: This Registration Rights Agreement, as the same may be
---------
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
------------
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Common Stock: Common Stock, par value $.001 per share, of the
------------
Company.
Commission: The Securities and Exchange Commission.
----------
Effectiveness Period: As defined in Section 2(a) hereof.
--------------------
<PAGE>
Effectiveness Target Date: The 180th day following the Closing Date.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated by the SEC thereunder.
Exempt Resales: The transactions in which the Initial Purchaser
--------------
proposes to sell the Notes to either (i) "qualified institutional buyers" as
such term is defined in Rule 144A of the Act or (ii) institutional "accredited
investors," as defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that
make certain representations and agreements to the Company.
Filing Date: The 90th day after the Closing Date.
-----------
Holder: Each registered holder of any Transfer Restricted Securities.
------
Indenture: The Indenture, dated the date hereof, between the Company
---------
and the Trustee thereunder, pursuant to which the Notes are being issued, as
amended, modified or supplemented from time to time in accordance with the terms
thereof.
Interest Payment Date: As defined in the Indenture.
---------------------
Liquidated Damages: As defined in Section 3(a) hereof.
------------------
Notes: The 7% Convertible Subordinated Notes due 2009 of the Company
-----
issued pursuant to the Indenture (including any such Notes issued pursuant to
the exercise of the over-allotment option provided in the Purchase Agreement).
Proceeding: An action, claim, suit or proceeding (including, without
----------
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer Restricted Securities
covered by such Registration Statement, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Registration Default: As defined in Section 3(a) hereof.
--------------------
2
<PAGE>
Registration Statement: Any registration statement of the Company
----------------------
that covers any of the Transfer Restricted Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
---------
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
---
Securities Act or Act: The Securities Act of 1933, as amended, and
---------------------
the rules and regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 2 hereof.
------------------
Special Counsel: Any special counsel to the holders of Transfer
---------------
Restricted Securities, for which holders of Transfer Restricted Securities will
be reimbursed pursuant to Section 5(b) hereof.
TIA: The Trust Indenture Act (15 U.S.C. Section 77aaa-77bbbb) as in
---
effect on the date of the Indenture.
3
<PAGE>
Transfer Restricted Securities: The Notes and the shares of Common
------------------------------
Stock into which the Notes are convertible, upon original issuance thereof, and
at all times subsequent thereto, until, in the case of any such Note or share
the earlier of, (i) the date on which it has been registered effectively
pursuant to the Securities Act and disposed of in accordance with the
Registration Statement relating to it, (ii) the date on which either such Note
or the shares of Common Stock issued upon conversion of such Note are
distributed to the public pursuant to Rule 144 or are saleable pursuant to Rule
144(k) or (iii) the date on which such security cease to be outstanding.
Trustee: United States Trust Company of New York, the trustee under
-------
the Indenture.
underwritten registration or underwritten offering: A registration in
--------------------------------------------------
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
2. Shelf Registration
------------------
(a) The Company shall mail as soon as practicable a questionnaire (the
"Questionnaire"), soliciting the information required by Items 507 and 508 of
Regulation S-K, to each of the Holders, and shall deliver a copy of such
Questionnaire to any Holder who so requests. As a condition to any Holder's
Transfer Restricted Securities being included in the Registration Statement
referred to below, such Holder shall submit a Questionnaire and shall amend and
submit to the Company a revised Questionnaire any time the information contained
therein ceases to be accurate and complete. The Company agrees to file with the
SEC on or prior to the Filing Date, a Registration Statement (the "Shelf
Registration") for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Transfer Restricted Securities held by Holders. Holders
shall be included as selling securityholders in such Registration Statement no
earlier than twenty days after they have fully completed and returned to the
Company the Questionnaire. The Shelf Registration shall be on Form S-3 under
the Securities Act or another appropriate form permitting registration of such
Transfer Restricted Securities for resale by the Holders in the manner or
manners reasonably designated by them (including, without limitation, one or
more underwritten offerings). The Company shall use its reasonable best efforts,
as described in Section 4, to cause the Shelf Registration to be declared
effective pursuant to the Securities Act on or prior to the Effectiveness Target
Date, and to keep the Shelf Registration continuously effective under the
Securities Act for 24 months after the latest date of initial issuance of the
Notes (the "Effectiveness Period"), or such shorter period ending when either
(l) all Transfer Restricted Securities covered by the Shelf Registration have
been sold in the manner set forth and as contemplated in the Shelf Registration
or (2) there cease to be outstanding any Transfer Restricted Securities.
4
<PAGE>
(b) The Company shall use all reasonable best efforts to keep the
Shelf Registration continuously effective, for the period described in Section
2(a) hereof, by supplementing and amending the Shelf Registration if required
by the rules, regulations or instructions applicable to the registration form
used for such Shelf Registration, if required by the Securities Act or if
reasonably requested by the holders of a majority in amount of the Transfer
Restricted Securities (determined on a fully converted basis) covered by such
Registration Statement or by any underwriter of such Transfer Restricted
Securities.
(c) Notwithstanding anything to the contrary in this Section 2, but
subject to compliance with Section 3, the Company may, by delivering written
notice to the Holders, prohibit offers and sales of Transfer Restricted
Securities pursuant to the Shelf Registration at any time if (A)(i) the Company
is in possession of material non-public information relating to the Company,
(ii) the Company determines (based on advice of counsel) that such prohibition
is necessary in order to avoid a requirement to disclose such material non-
public information to the public and (iii) the Company determines in good faith
that public disclosure of such material non-public information would not be in
the best interests of the Company and its stockholders, or (B)(i) the Company
has made a public announcement relating to an acquisition or business
combination transaction including the Company and/or one or more of its
subsidiaries that is material to the Company and its subsidiaries taken as a
whole and (ii) the Company determines in good faith that (x) offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration prior to the
consummation of such transaction (or such earlier date as the Company shall
determine) would not be in the best interests of the Company and its
stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in the Shelf Registration;
provided, however, that upon (i) the public disclosure by the Company of the
- -------- -------
material non-public information described in clause (A) of this paragraph or
(ii) the consummation, abandonment or termination of, or the availability of the
required financial statements with respect to, a transaction described in clause
(B) of this paragraph, the suspension of the use of the Shelf Registration
pursuant to this Section 2(c) shall cease and the Company shall promptly comply
with Section 4(b) hereof and notify Holders that dispositions of Transfer
Restricted Securities may be resumed.
3. Liquidated Damages
------------------
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Sections 2 and 4(b) hereof and that it would
not be possible to ascertain the extent of such damages. Accordingly, in the
event of such failure by the Company to fulfill such obligations, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder
under the circumstances and to the extent set forth below.
5
<PAGE>
If (i) the Shelf Registration has not been filed with the SEC on or
prior to the Filing Date; or (ii) the Shelf Registration is not declared
effective by the SEC on or prior to the Effectiveness Target Date; or (iii) the
Shelf Registration has been declared effective by the SEC and such Shelf
Registration ceases to be effective or the Prospectus contained herein ceases to
be usable (including as a result of a prohibition against sales of Transfer
Restricted Securities pursuant to Section 2(c) hereof or a suspension of the use
of the Prospectus as described in the last paragraph of Section 4 hereof) at any
time during the Effectiveness Period for a period of time which shall exceed 90
days in the aggregate during any 365-day period (any of the foregoing, a
"Registration Default"), then the Company shall become obligated to pay
Liquidated Damages in cash to each Holder immediately following the occurrence
of such Registration Default in an amount equal to $0.05 per week per $1,000
principal amount of Notes and, if applicable, $0.0016 per week per share
(subject to adjustment in the event of stock splits, stock recombinations, stock
dividends and the like) of Common Stock constituting Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of such Liquidated Damages will
increase by an additional $0.05 per week per $1,000 principal amount of Notes
and, if applicable, $0.0016 per week per share (subject to adjustment as set
forth above) of Common Stock constituting Transfer Restricted Securities for
each subsequent 90-day period until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed $0.25
- -------- -------
per week per $1,000 principal amount of Notes or, if applicable, $0.008 per week
per share (subject to adjustment as set forth above) of Common Stock
constituting Transfer Restricted Securities. Following the cure of all
Registration Defaults relating to any Transfer Restricted Securities, the
accrual of Liquidated Damages with respect to such Transfer Restricted
Securities will cease. A Registration Default under clause (i) above shall be
cured on the date that the Shelf Registration is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that the
Shelf Registration is declared effective by the SEC; and a Registration Default
under clause (iii) above shall be cured on the date the Shelf Registration is
declared effective or the Prospectus contained therein again becomes usable
consistent with applicable law.
(b) The Company shall notify the Trustee as promptly as possible, but
in no event more than three Business Days after each and every date on which a
Registration Default occurs. Liquidated Damages shall be paid on each Interest
Payment Date by the Company to the Holders of Transfer Restricted Securities as
of the immediately preceding Record Date (as defined in the Indenture) in the
same manner interest is paid to Holders of Notes pursuant to the Indenture.
Each obligation to pay Liquidated Damages shall be deemed to commence accruing
on the date of the applicable Registration Default and to cease accruing when
all Registration Defaults have been cured. In no event shall the Company pay
Liquidated Damages in excess of the applicable maximum weekly amount set forth
above, regardless of whether one or multiple Registration Defaults exist (e.g.,
subject to increase as set forth above for each subsequent 90-day period,
Liquidated Damages shall equal $.05 per week per $1,000 principal amount of
Notes during the first 90-day period
6
<PAGE>
immediately following the occurrence of the first Registration Default
regardless of whether additional Registration Defaults occur during such 90-day
period).
4. Registration Procedures
-----------------------
In connection with the Company's registration obligations hereunder,
the Company shall use its reasonable best efforts to effect such registrations
on the appropriate form available for the sale of the Transfer Restricted
Securities to permit the sale of Transfer Restricted Securities in accordance
with the method or methods of disposition thereof (including, without
limitation, one or more underwritten offerings) specified by the holders of a
majority in amount of Transfer Restricted Securities (determined on a fully
converted basis), and pursuant thereto the Company shall as expeditiously as
possible:
(a) No fewer than five Business Days prior to the initial filing of a
Registration Statement or Prospectus and no fewer than two Business Days prior
to the filing of any amendment or supplement thereto, furnish to the Holders of
the Transfer Restricted Securities, their Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review and comment of such Holders, their
Special Counsel and such underwriters, if any, for a period of at least five
Business Days and cause the officers and directors of the Company, counsel to
the Company and independent certified public accountants to the Company to
respond to such inquiries as shall be necessary in connection with such
Registration Statement, in the opinion of respective counsel to such Holders and
such underwriters, to conduct a reasonable investigation within the meaning of
the Securities Act. The Company shall not file any such Registration Statement
or related Prospectus or any amendments or supplements thereto (other than any
document that would be incorporated or deemed to be incorporated in the
Registration Statement by reference) to which the Holders of a majority of the
Transfer Restricted Securities (determined on a fully converted basis), their
Special Counsel, or the managing underwriters, if any, shall reasonably object
on a timely basis; provided that the Company may assume, for the purposes of
--------
this subparagraph (a), that objections to the inclusion of information
specifically requested to be included in the Registration Statement by the staff
of the SEC, or in the opinion of counsel to the Company required to be in the
Registration Statement, or specifically required by the Securities Act or other
applicable law, shall not be deemed to be reasonable; and provided further, that
-------- -------
the Company shall not be permitted to include in the Registration Statement any
securities other than the Transfer Restricted Securities;
(b) Prepare and file with the SEC such amendments, including post-
effective amendments, to each Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the applicable time
period; cause, subject to Section 2(c) hereof,
7
<PAGE>
the related Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424; and comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented;
(c) Notify the Holders of Transfer Restricted Securities to be sold or
their Special Counsel and the managing underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment is proposed
to be filed, and (B) with respect to a Registration Statement or any post-
effective amendment, when the same has become effective, (ii) of any request by
the SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for additional
information, (iii) of the issuance by the SEC, any state securities commission,
any other governmental agency or any court of any stop order, order or
injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any Proceeding for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Transfer Restricted Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose, and (v) of the happening of
any event that makes any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, and that, in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) Use all reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of any order enjoining or suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Transfer
Restricted Securities for sale in any jurisdiction, at the earliest practicable
moment;
(e) If requested by the managing underwriters, if any, or the Holders
of a majority in amount of the Transfer Restricted Securities (determined on a
fully converted basis) being sold in connection with such offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holders agree should
be included therein relating to the terms of the sale of the Transfer Restricted
Securities
8
<PAGE>
of such Holder in the Prospectus, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted Securities and
(ii) make all required filings of such Prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
-------- -------
required to take any action pursuant to this Section 4(e) that would, in the
opinion of counsel for the Company, violate applicable law;
(f) Furnish to each Holder, their Special Counsel and each managing
underwriter, if any, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits, unless requested in writing
by such Holder, counsel or managing underwriter);
(g) Deliver to each Holder, their Special Counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such persons reasonably request; and the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders of Transfer Restricted Securities and the
underwriters, if any, in connection with the offering and sale of the Transfer
Restricted Securities covered by such Prospectus and any amendment or supplement
thereto;
(h) Prior to any public offering of Transfer Restricted Securities,
use all reasonable efforts to register or qualify or cooperate with the Holders
of Transfer Restricted Securities to be sold, the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Transfer
Restricted Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder or underwriter
reasonably requests in writing; use all reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and use all
reasonable efforts to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Registration Statement; provided, however, that the
-------- -------
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the
9
<PAGE>
Holders and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust Company
and to enable such Transfer Restricted Securities to be in such denominations
and registered in such names as the managing underwriters, if any, or Holders
may request at least two Business Days prior to any sale of Transfer Restricted
Securities;
(j) Use all reasonable efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may require such registration or approval, except as may be
required as a consequence of the nature of such selling Holder's business, in
which case the Company will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Transfer Restricted Securities; provided,
--------
however, that the Company shall not be required to register the Transfer
- -------
Restricted Securities in any jurisdiction that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject or to require the Company to qualify to do business in any jurisdiction
where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by Section 4(c)(v)
hereof, as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, to provide a CUSIP number for
the Transfer Restricted Securities;
(m) Enter into such agreements (including an underwriting agreement in
form, scope and substance as is customary in underwritten offerings) and take
all such other reasonable actions in connection therewith (including those
reasonably requested by the managing underwriters, if any, or the Holders of a
majority in amount of the Transfer Restricted Securities being sold (determined
on a fully converted basis)) in order to expedite or facilitate the disposition
of such Transfer Restricted Securities, and, in such connection, if an
underwriting agreement is entered into, (i) make such representations and
warranties to the underwriters with respect to the business of the
10
<PAGE>
Company and its subsidiaries (including with respect to businesses or assets
acquired or to be acquired by any of them), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings, and confirm the same
if and when requested; (ii) use all reasonable best efforts to obtain opinions
of counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any), addressed to each of the underwriters, covering the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by the underwriters; (iii) use
all reasonable best efforts to obtain customary "cold comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed (where reasonably possible) to each
selling Holder and each of the underwriters, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings; (iv) the underwriting
agreement shall contain indemnification provisions and procedures no less
favorable to the selling Holders of Transfer Restricted Securities and the
underwriters than those set forth in Section 6 hereof (or such other provisions
and procedures acceptable to Holders of a majority in amount of the Transfer
Restricted Securities (determined on a fully converted basis) covered by such
Registration Statement and the managing underwriters); and (v) deliver such
documents and certificates as may be reasonably requested by the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties made pursuant to clause (i) of this Section 4(m) and to evidence
compliance with any customary conditions contained in the underwriting
agreement;
(n) Make available for inspection by a representative of the Holders
of not less than a majority of the Transfer Restricted Securities (determined on
a fully converted basis) being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any Special Counsel,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries as they may reasonably request (including with respect to
businesses and assets acquired or to be acquired to the extent that such
information is available to the Company), and cause the officers, directors,
agents and employees of the Company and its subsidiaries (including with respect
to businesses and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration Statement,
provided, however, that such persons shall first agree in writing with the
- -------- -------
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of
11
<PAGE>
such information shall be kept confidential by such persons, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to Federal securities laws in connection with the filing of any
Registration Statement or the use of any Prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person, from a
source other than the Company and such source is not bound by a confidentiality
obligation;
(o) Cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under the Indenture and the holders of the Transfer Restricted Securities to
effect such changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA; and execute, and use its
reasonable best efforts to cause such trustee to execute, all customary
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(p) Comply with applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158, no later than 45
days after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule 158;
and
(q) Use all reasonable best efforts to (i) list all shares of Common
Stock covered by such Registration Statement on the New York Stock Exchange (or
on another national securities exchange on which the Common Stock is then
listed) or (ii) authorize for quotation on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or the National Market
System of NASDAQ all shares of Common Stock covered by such Registration
Statement if any of the Company's Common Stock is then so authorized for
quotation.
The Company may require each seller of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer
12
<PAGE>
Restricted Securities of any seller who fails to furnish such information within
a reasonable time after receiving such request and the Transfer Restricted
Securities of such seller shall not be entitled to Liquidated Damages as a
result of the Company's exclusion from such registration. Each such Holder
agrees, by the acquisition of Transfer Restricted Securities, and agrees to
confirm such agreement in writing upon request of the Company, to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event as a result of which any Prospectus relating to such registration contains
or would contain an untrue statement of a material fact regarding such Holder or
such Holder's intended method of distribution of such Transfer Restricted
Securities, or omits to state any material fact regarding such Holder or such
Holder's intended method of distribution of such Transfer Restricted Securities,
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
Holder or the distribution of such Transfer Restricted Securities, an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder agrees (on behalf of itself and any beneficial owner of
its Transfer Restricted Securities) by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company pursuant to Section
2(c) hereof or of the happening of any event of the kind described in Section
4(c)(ii), 4(c)(iii), 4(c)(iv) or 4(c)(v) hereof, such Holder will forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 4(k) hereof,
or until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus, and, if so directed by the
Company, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's
13
<PAGE>
possession of the Prospectus covering such Transfer Restricted Securities at the
time of receipt of such notice.
5. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by it whether or not any
Registration Statement is filed or becomes effective and whether or not any
securities are issued or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
securities or Blue Sky laws (including, without limitation and in addition to
that provided for in (b) below, reasonable fees and disbursements of counsel for
the underwriters or Special Counsel for the Holders in connection with Blue Sky
qualifications of the Transfer Restricted Securities )), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Transfer
Restricted Securities in a form eligible for deposit with The Depository Trust
Company and of printing Prospectuses if the printing of Prospectuses is
requested by the managing underwriters, if any), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
Special Counsel for the Holders (plus any local counsel deemed appropriate by
the Holders of a majority in amount of the Transfer Restricted Securities
(determined on a fully converted basis)), in accordance with the provisions of
Section 5(b) hereof, (v) fees and disbursements of all independent certified
public accountants referred to in Section 4(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Company so desires such insurance, and (vii) fees and expenses
of all other persons retained by the Company. In addition, the Company shall
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, and the fees and expenses incurred in
connection with the listing of the securities to be registered on the New York
Stock Exchange (or on another national securities exchange or on NASDAQ).
Notwithstanding the foregoing or anything in this Agreement to the contrary,
each Holder of the Transfer Restricted Securities being registered shall pay all
commissions, placement agent fees and underwriting discounts and commissions
with respect to any Transfer Restricted Securities sold by it and the fees and
disbursements of any counsel or other advisors or experts retained by such
Holders (severally or jointly), other than Special Counsel and local counsel
referred to in clause (iv) above.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Securities being registered in
such registration for the reasonable fees and disbursements of not more than one
counsel (in addition to any appropriate local
14
<PAGE>
counsel), who shall be Skadden, Arps, Slate, Meagher & Flom LLP, unless another
firm shall be chosen by the Holders of a majority in amount of the Transfer
Restricted Securities (determined on a fully converted basis) for whose benefit
the applicable Registration Statement is being prepared.
6. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each Holder, its directors, officers and each Person, if any, who
controls such Initial Purchaser or such Holder (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act), from and against any and all
losses, claims, damages, liabilities and judgments (including without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action that could give rise
to any such losses, claims, damages, liabilities or judgments) caused by any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in any Registration Statement, preliminary prospectus
or Prospectus (or any amendment or supplement thereto) provided by the Company
to any Holder or any prospective purchaser of Notes, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
and made in conformity with information relating to such Holder furnished in
writing to the Company by such Holder, provided, however, that the
-------- -------
indemnification contained in this Section 6(a) with respect to a preliminary
Prospectus shall not inure to the benefit of any Holder (or to the benefit of
any person controlling such Holder) on account of any such loss, claim, damage,
liability or judgment arising from the sale of the Transfer Restricted
Securities by such Holder to any person if the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
a preliminary Prospectus was corrected in the Prospectus and, due to the
wrongful actions or wrongful inaction of such Holder, such Holder did not send
or give in a timely manner, a copy of the Prospectus to such person (as then
amended or supplemented) if the Company had previously furnished sufficient
copies thereof to such Holder in a timely basis.
The Company agrees to notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental
investigation) or litigation in connection with the matters addressed by this
Agreement which involves the Company or any person indemnified hereunder. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
(b) In connection with any Registration Statement in which a Holder is
participating, such Holder agrees, severally and not jointly, to indemnify and
hold harmless the
15
<PAGE>
Company and its directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company to the same extent as the foregoing indemnity from the Company set
forth in section (a) above, but only with reference to information relating to
such Holder furnished in writing to the Company by such Holder expressly for use
in any Registration Statement. In no event shall any Holder, its directors,
officers or any Person who controls such Holder be liable or responsible for any
amount in excess of the amount by which the total amount received by such Holder
with respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 6(a) or 6(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
-----------------
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
-------------------
(provided, that the failure to give such notice shall not relieve the Company of
its obligations pursuant to this Agreement except to the extent that the Company
has been materially prejudiced by such failure) and the indemnifying party shall
assume the defense of such action, including the employment of counsel
reasonably satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any action in
respect of which indemnity may be sought pursuant to both Sections 6(a) and
6(b), a Holder shall not be required to assume the defense of such action
pursuant to this Section 6(c), but may employ separate counsel and participate
in the defense thereof, but the fees and expenses of such counsel, except as
provided below, shall be at the expense of the Holder). Any indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of
the Holders
16
<PAGE>
(determined on a fully converted basis), in the case of the parties indemnified
pursuant to Section 6(a), and by the Company, in the case of parties indemnified
pursuant to Section 6(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein (other than as set
forth in clause (a) above), then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or judgments (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Holders, on
the other hand, from the sale of Transfer Restricted Securities or (ii) if the
allocation provided by clause 6(d)(i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 6(d)(i) above but also the relative fault of the Company,
on the one hand, and of the Holders, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or by the Holders, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and judgments referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
17
<PAGE>
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 6, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
7. Rules 144 and 144A
------------------
The Company agrees, for so long as any Transfer Restricted Securities
remain outstanding and during any period in which the Company (i) is not subject
to Section 13 of 15(d) of the Exchange Act, to make available, upon request of
any Holder, to such Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii)
is subject to Section 13 of 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
8. Underwritten Registrations
--------------------------
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in amount of such Transfer
Restricted Securities (determined on a fully converted basis) included in such
18
<PAGE>
offering, such selection to be subject to the consent of the Company (which will
not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
(b) Each Holder agrees, if requested (pursuant to a timely written
notice) by the managing underwriters in an underwritten offering, not to effect
any private sale or distribution (including a sale pursuant to Rule 144(k) and
Rule 144A, but excluding non-public sales to any of its affiliates, officers,
directors, employees and controlling persons) of any of the Notes, in the case
of an offering of the Company's debt securities, or the Common Stock, in the
case of an offering of the Company's equity securities, during the period
beginning 10 days prior to, and ending 90 days after, the closing date of the
underwritten offering.
The foregoing provisions of this Section 8(b) shall not apply to any
Holder if such Holder is prevented by applicable statute or regulation from
entering into any such agreement.
(c) The Initial Purchasers and all Holders of Transfer Restricted
Securities agree that, notwithstanding any other term or provision hereof, the
Company shall not be required to enter into any agreements (including
underwriting agreements) or take any other actions contemplated by Section 4(m)
hereof unless requested in writing by the Holders of at least a majority of the
Transfer Restricted Securities (determined on a fully converted basis) sold to
the Initial Purchasers pursuant to the Purchase Agreement.
9. Miscellaneous
-------------
(a) Remedies. The Company acknowledges and agrees that any failure by
--------
the Company to comply with its obligations under this Agreement may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations hereunder. The Company
further agrees to waive the defense in any action for specific performance that
a remedy at law would be adequate.
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<PAGE>
(b) No Inconsistent Agreements. The Company will not, on or after the
--------------------------
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 3
hereof and this Section 9(c)(i), the Company has obtained the written consent of
Holders of all outstanding Transfer Restricted Securities and (ii) in the case
of all other provisions hereof, the Company has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities (determined on a fully converted basis) (excluding Transfer
Restricted Securities held by the Company or its Affiliates). Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose Transfer Restricted
Securities are being sold pursuant to a Registration Statement and that does not
affect directly or indirectly the rights of other Holders of Transfer Restricted
Securities may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities (determined on a fully
converted basis) being sold by such Holders pursuant to such Registration
Statement.
(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company:
Total Renal Care Holdings, Inc.
Suite 800
21250 Hawthorne Blvd.
Torrance, California 90503-5517
20
<PAGE>
Telecopier No.: (310) 792-0020
Attention: Chief Financial Officer
With a copy to:
Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, California 92626
Telecopier No.: (714) 549-3244
Attention: James W. Loss
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders; provided, that nothing herein shall be deemed to permit any
--------
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
21
<PAGE>
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW (S) 5-1401.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
22
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
TOTAL RENAL CARE HOLDINGS, INC.
By:__________________________________
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed
and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
WARBURG DILLON READ LLC
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: ___________________________
Name:
Title:
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EXHIBIT 4.5
TOTAL RENAL CARE HOLDINGS, INC.
$300,000,000
7% Convertible Subordinated Notes due 2009
PURCHASE AGREEMENT
November 12, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
WARBURG DILLON READ LLC
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$300,000,000
7% Convertible Subordinated Notes due 2009
of
TOTAL RENAL CARE HOLDINGS, INC.
PURCHASE AGREEMENT
November 12, 1998
Donaldson, Lufkin & Jenrette
Securities Corporation
BNY Capital Markets, Inc.
Credit Suisse First Boston Corporation
Warburg Dillon Read LLC
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Total Renal Care Holdings, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
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Securities Corporation, BNY Capital Markets, Inc., Credit Suisse First Boston
Corporation and Warburg Dillon Read LLC (each an "INITIAL PURCHASER" and,
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collectively, the "INITIAL PURCHASERS") an aggregate of $300,000,000 in
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principal amount of its 7 % Convertible Subordinated Notes due 2009 (the "FIRM
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NOTES"), subject to the terms and conditions set forth herein. The Company also
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proposes to issue and sell to the Initial Purchasers not more than an additional
$45,000,000 principal amount of 7% Convertible Subordinated Notes due 2009, of
the Company (the "ADDITIONAL NOTES"), if requested by the Initial Purchasers as
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provided in Section 2 hereof. The Firm Notes and the Additional Notes are
herein collectively referred to as the "NOTES." The Notes are to be
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issued pursuant to the provisions of an indenture (the "INDENTURE"), to be dated
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as of the Closing Date (as defined below), among the Company and United States
Trust Company of New York, as trustee (the "TRUSTEE"), pursuant to which the
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Notes, as provided therein, will be convertible at the option of the holders
thereof, into shares of Common Stock, par value $0.001 per share, of the Company
(the "COMMON STOCK"). The Notes and the Common Stock issuable upon conversion
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thereof are referred to herein, collectively, as the "SECURITIES." Capitalized
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terms used but not defined herein shall have the meanings given to such terms in
the Indenture.
1. OFFERING MEMORANDUM. The Notes will be offered and sold to the
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Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
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Company has prepared a preliminary offering memorandum, dated November 9, 1998
(the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum, dated
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November 13, 1998 (the "OFFERING MEMORANDUM"), relating to the Notes.
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Upon original issuance thereof, and until such time as the same is no
in exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED,
EXCEPT AS SET FORTH IN THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF
OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT IT IS
EITHER (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) (A "QIB") OR (B) AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESEN-
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TATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (A FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE), (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. (a) On the basis of the
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representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, the principal amount of
Firm Notes set forth opposite the name of such Initial Purchaser on Schedule A
hereto at a purchase price equal to 97% of the principal amount thereof (the
"PURCHASE PRICE").
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(b) On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions hereof, the Company
agrees to issue and sell to the Initial Purchasers, and the Initial Purchasers
shall have the right, but not the obligation, to purchase from the Company from
time to time up to all of the Additional Notes at the Purchase Price.
Additional Notes may be purchased solely for the purpose of covering over-
allotments made in connection with the offering of the Notes. The Initial
Purchasers may exercise their right to purchase Additional Notes in whole or in
part from time to time by giving written notice thereof to the Company at any
time within 30 days after the date of this Agreement. Such notice shall specify
the aggregate principal amount of Additional Notes to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date specified
in any such notice shall be a business day (i) no earlier than the Closing Date
(as hereinafter defined), (ii) no later than ten business days after such notice
has been given and (iii) no earlier than two business days after such notice has
been given.
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3. TERMS OF OFFERING. The Initial Purchasers have advised the
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Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") of
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the Notes purchased hereunder on the terms set forth in the Offering Memorandum,
as amended or supplemented, solely to (i) persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBS") and (ii) institutional "accredited investors," as
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defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that make certain
representations and agreements to the Company (each, an "ACCREDITED
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INSTITUTION") (such persons specified in clauses (i) and (ii) being referred to
herein as the "ELIGIBLE PURCHASERS"). The Initial Purchasers will offer the
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Notes to Eligible Purchasers initially at a price equal to 100% of the principal
amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
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the form of Exhibit A hereto, for so long as such Securities constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
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Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "COMMISSION")
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under the circumstances set forth therein, a shelf registration statement
pursuant to Rule 415 under the Act (the "REGISTRATION STATEMENT") relating to
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the resale by certain holders of the Securities and to use its reasonable best
efforts to cause such Registration Statement to be declared and remain effective
and usable for the periods specified in the Registration Rights Agreement. This
Agreement, the Indenture, the Notes, and the Registration Rights Agreement are
hereinafter sometimes referred to collectively as the "OPERATIVE DOCUMENTS."
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4. DELIVERY AND PAYMENT.
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(a) Delivery of, and payment of the Purchase Price for, the Firm
Notes shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP
("SKADDEN"), 919 Third Avenue, New York, New York 10022-3897, or such other
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location as may be mutually acceptable. Such delivery and payment shall be made
at 9:00 a.m. New York City time, on November 18, 1998 or at such other time on
the same date or such other date as shall be agreed upon by the Initial
Purchasers and the Company in writing. The time and date of such delivery and
the payment for the Firm Notes are herein called the "CLOSING DATE."
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(b) Delivery to the Initial Purchasers of and payment for any
Additional Notes to be purchased by the Initial Purchasers shall be made at the
offices
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of Skadden at 9:00 a.m., New York City time, on the date specified in the
exercise notice given by the Initial Purchasers pursuant to Section 2(b) or such
other time on the same or such other date as the Initial Purchasers and the
Company shall agree in writing. The time and date of delivery and payment for
any Additional Notes are hereinafter referred to as an "OPTION CLOSING DATE."
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(c) Notes sold by the Initial Purchasers to QIBs will be represented
by one or more Notes in definitive global form, registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate
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principal amount corresponding to the aggregate principal amount of the Notes
sold to such QIBs (collectively, the "GLOBAL NOTE"). Notes sold by the Initial
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Purchasers to Accredited Institutions that are not QIBs will be represented by
one or more Notes in definitive form, registered in the name of such Accredited
Institutions, having an aggregate principal amount corresponding to the
aggregate principal amount of the Notes sold to such Accredited Institutions
(collectively, the "ACCREDITED INSTITUTION NOTE"). The Global Note and the
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Accredited Institution Note shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers direct) in each case with any transfer
taxes thereon duly paid by the Company against payment by the Initial Purchasers
of the Purchase Price thereof by wire transfer in same day funds to the order of
the Company. The Global Note and the Accredited Institution Note shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with the
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Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Notes for offering or sale in any
jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum, the Offering Memorandum or any documents or information incorporated
by reference therein (the "INCORPORATED DOCUMENTS") untrue or that requires any
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additions to or changes in the Preliminary Offering Memorandum, the Offering
Memorandum or any Incorporated Documents in order to make the statements therein
not misleading. The Company shall use its best efforts to prevent the issuance
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of any stop order or order suspending the qualification or exemption of any
Notes under any state securities or Blue Sky laws and, if at any time any state
securities commission or other federal or state regulatory authority shall issue
an order suspending the qualification or exemption of any Notes under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum, any Incorporated Documents, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request for the time period specified in Section 5(c). Subject to the Initial
Purchasers' compliance with its representations and warranties and agreements
set forth in Section 7 hereof, the Company consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, any Incorporated
Documents, and any amendments and supplements thereto required pursuant hereto,
by the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and until completion of
the distribution of the Notes, but in no event later than six months from the
dater hereof, (i) not to make any amendment or supplement to the Offering
Memorandum of which the Initial Purchasers shall not previously have been
advised or to which the Initial Purchasers shall reasonably object after being
so advised and (ii) to prepare promptly upon the Initial Purchasers' reasonable
request, any amendment or supplement to the Offering Memorandum which may be
necessary or advisable in connection with such Exempt Resales.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the
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statements therein, in the light of the circumstances when it is so delivered,
not misleading, or so that such Offering Memorandum will comply with applicable
law, and to furnish to the Initial Purchasers and such other persons as the
Initial Purchasers may designate such number of copies thereof as the Initial
Purchasers may reasonably request.
(e) Prior to the sale of all Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the registration or qualification of the
Notes for offer and sale to the Initial Purchasers and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation in any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as reasonably practicable after the end of each
fiscal year to the record holders of the Notes a financial report of the Company
and its subsidiaries on a consolidated basis (and a similar financial report of
all unconsolidated subsidiaries, if any), all such financial reports to include
a consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as reasonably practicable after the end of each quarterly
period (except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of operations
and a consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) For a period of five years from the date hereof, to furnish to
the Initial Purchasers as soon as reasonably available copies of all reports or
other communications furnished by the Company to its security holders or
furnished to or
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filed with the Commission or any national securities exchange on which any class
of securities of the Company is listed and such other publicly available
information concerning the Company and/or its subsidiaries as the Initial
Purchasers may reasonably request.
(h) So long as any of the Notes remain outstanding and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make
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available to any holder of Notes in connection with any sale thereof and any
prospective purchaser of such Notes from such holder, the information ("RULE
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144A INFORMATION") required by Rule 144A(d)(4) under the Act.
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(i) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Notes to the Initial Purchasers and pursuant to Exempt Resales,
and all other fees and expenses in connection with the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum, any Incorporated Documents, and all amendments and supplements to
any of the foregoing (including financial statements), including the mailing and
delivering of copies thereof to the Initial Purchasers and persons designated by
them in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Notes to the Initial Purchasers and pursuant to
Exempt Resales, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement, the other Operative Documents and
any other agreements or documents in connection with the offering, purchase,
sale or delivery of the Notes, (iv) all expenses in connection with the
registration or qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and reasonable fees and disbursements of
counsel for the Initial Purchasers in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of printing
certificates representing the Securities, (vi) all expenses and listing fees in
connection with the application for quotation of the Notes in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System -
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PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the Trustee's
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counsel in connection with the Indenture and the Notes, (viii) the costs and
charges of any transfer agent, registrar and/or depositary (including DTC), (ix)
any fees charged
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by rating agencies for the rating of the Notes, (x) all costs and expenses of
any Registration Statement, as set forth in the Registration Rights Agreement,
(xi) all expenses and listing fees in connection with the application for
listing the Common Stock on the New York Stock Exchange ("NYSE") (or on another
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national securities exchange or in connection with including the Common Stock
for quotation on the Nasdaq Stock Market's National Market (the "NASDAQ NATIONAL
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MARKET")) and (xii) all other costs and expenses incident to the performance of
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the obligations of the Company hereunder for which provision is not otherwise
made in this Section.
(j) To use its best efforts to effect the inclusion of the Notes in
PORTAL and to maintain the listing of the Notes on PORTAL for so long as the
Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(l) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
warrants, rights or options to purchase or otherwise acquire debt securities of
the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(m) The Company shall not, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for,
warrants, options or rights to purchase or acquire, Common Stock ("OTHER
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SECURITIES") or in any other manner transfer all or a portion of the economic
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consequences associated with the ownership of any Common Stock, or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such Other Securities, in
cash or otherwise), except to the Initial Purchasers pursuant to this Agreement,
for a period of 90 days after the Closing Date without the prior written consent
of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). Notwithstanding
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the foregoing, during such
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period the Company may issue stock and options to purchase stock (1) pursuant to
the Company's existing employee stock plans and (2) as consideration in
connection with acquisitions. The Company also agrees not to file, except
pursuant to the Registration Rights Agreement, any registration statement with
respect to any shares of Comon Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 90 days after the
Closing Date without the prior written consent of DLJ.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Notes to the Initial Purchasers or pursuant to
Exempt Resales in a manner that would require the registration of any such sale
of the Notes under the Act.
(o) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(p) To use the proceeds from the sale of the Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(q) To cause the Common Stock issuable upon conversion of the Notes
to be listed on the NYSE (or on another national securities exchange or to be
duly included for quotation on the Nasdaq National Market) in accordance with
NYSE policy for listed companies and to use its best efforts to cause the Common
Stock to remain listed on the NYSE (or on another national securities exchange
or duly included for quotation on the Nasdaq National Market) for five years
following the date hereof.
(r) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date, and to satisfy all conditions precedent to the delivery of the
Notes.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. As of
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the date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum, as of the date thereof, and
the Offering Memorandum, including the Incorporated Documents, did and do not,
and any supplement or amendment to them did and will not, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties
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contained in this paragraph (a) shall not apply to (i) pricing and other
financial terms intentionally left blank in the Preliminary Offering Memorandum
or (ii) statements in or omissions from the Preliminary Offering Memorandum or
the Offering Memorandum (or any supplement or amendment thereto) based upon and
made in conformity with information relating to the Initial Purchasers furnished
to the Company in writing by the Initial Purchasers expressly for use therein.
No stop order preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act, has been issued. The
Incorporated Documents, at the time they were or hereafter are filed or last
amended, as the case may be, with the Commission, complied and will comply in
all material respects with the requirements of the Exchange Act.
(b) Each of the Company and its subsidiaries as defined in Rule 405
of Regulation C under the Act (each a "SUBSIDIARY") has been duly incorporated
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or formed, is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation or as a partnership duly formed and has the
corporate or partnership power and authority, as the case may be, to carry on
its business as described in the Preliminary Offering Memorandum and the
Offering Memorandum and to own, lease and operate its properties, and each
corporate Subsidiary is duly qualified and is in good standing as a foreign
corporation and each Subsidiary is authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified and in good standing could not, in the aggregate, reasonably be
expected to have a material adverse effect on the business, prospects,
operations, properties, or financial condition of the Company and its
Subsidiaries, considered as a whole (a "MATERIAL ADVERSE EFFECT").
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(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) Except as disclosed in the Offering Memorandum, all of the
outstanding shares of capital stock of each of the Company's corporate
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and, (i) in the cases of Total Renal Care, Inc., TRC West, Inc.,
Total Renal Care Acquisition Corp., Renal Treatment Centers, Inc., Renal
Treatment Centers - Mid-Atlantic, Inc., Renal Treatment Centers - Northeast,
Inc., Renal Treatment Centers - California, Inc., Renal Treatment Centers -
West, Inc. and Renal Treatment Centers - Southeast, Inc.
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(each a "PRINCIPAL SUBSIDIARY" and together the "PRINCIPAL SUBSIDIARIES"), are
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wholly owned by the Company free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature (each, a "LIEN") and (ii) in
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the case of each other corporate Subsidiary, are otherwise owned directly or
indirectly by the Company, free and clear of any Liens, except such Liens that
would not, singly or in the aggregate, have a Material Adverse Effect. All of
the outstanding partnership interests in each of the Company's partnership
Subsidiaries have been duly authorized by its respective partnership agreement
and validly issued and the partnership interests in such partnerships that are
not owned by unaffiliated third parties are owned directly or indirectly by the
Company, free and clear of any Liens, except such Liens that would not, singly
or in the aggregate, have a Material Adverse Effect, and any partnership capital
contribution obligations of the Company in each partnership Subsidiary have been
satisfied in all material respects. The authorized capital stock of the Company
conforms as to legal matters in all material respects to the description thereof
contained in the Offering Memorandum.
(e) This Agreement has been duly authorized, executed and delivered by
the Company.
(f) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the Company.
When the Indenture has been duly executed and delivered by the Company (assuming
due authorization, execution and delivery by the Trustee), the Indenture will be
a valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms except as the enforceability thereof may be limited by
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors' rights generally and (ii) general principals
of equity and the discretion of the court before which any proceeding therefor
may be brought (regardless of whether such enforcement is considered in a
proceeding at law or in equity). On the Closing Date and on each Option Closing
Date, if any, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or "TRUST
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INDENTURE ACT"), and the rules and regulations of the Commission applicable to
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an indenture which is qualified thereunder.
(g) The Notes have been duly authorized and, on the Closing Date and
on each Option Closing Date, if any, will have been validly issued, executed and
delivered by the Company. When the Notes have been issued, executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Notes will be entitled to the benefits of the Indenture and will
be valid and binding obligations of
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the Company, enforceable in accordance with their terms except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditors' rights generally and (ii) general principals of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity). On the Closing Date and on each Option Closing Date, if any, the
Notes will conform in all material respects to the description thereof contained
in the Offering Memorandum.
(h) The Registration Rights Agreement has been duly authorized by the
Company and, on the Closing Date will have been duly executed and delivered by
the Company. When the Registration Rights Agreement has been duly executed and
delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency reorganization, fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally, (ii) public policy or laws limiting
rights of indemnity or contribution and (iii) general principals of equity and
the discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity). On the Closing Date and on each Option Closing Date, if any, the
Registration Rights Agreement will conform in all material respects to the
description thereof in the Offering Memorandum.
(i) Neither the Company nor any of its Subsidiaries is in violation of
its respective charter, by-laws or partnership agreement, as the case may be, or
in default in any material respect, and no condition exists that with notice or
lapse of time or both would constitute a material default in the performance of
any material obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other material
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which it or any of is Subsidiaries or their
respective property is bound, except to the extent such violation or default, if
any, could not reasonably be expected to have a Material Adverse Effect.
(j) The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company, compliance by the Company with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not, assuming the Notes are sold in the
manner described in this Agreement, require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may
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be required under the securities or Blue Sky laws of the various states and,
with respect to the Registration Rights Agreement, the Securities Act and the
Trust Indenture Act) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws of the
Company or any of its Subsidiaries or any agreement, indenture or other
instrument to which it or any of its Subsidiaries is party or by which it or any
of its Subsidiaries or their respective property is bound, or violate or
conflict with any laws, administrative regulations or rulings or court decrees
applicable to the Company, any of its Subsidiaries or their respective
property.
(k) Except as otherwise set forth or incorporated by reference in the
Offering Memorandum, there are no legal or governmental proceedings pending or,
to the best of the Company's knowledge, threatened to which the Company or any
of its Subsidiaries is a party or to which any of their respective property is
the subject which would, singly or in the aggregate, have a Material Adverse
Effect.
(l) Neither the Company nor any of its Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), nor any federal or
------------------
state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated thereunder, which in each case might
result in any material adverse change in the business, prospects, financial
condition or results of operation of the Company and its Subsidiaries, taken
as a whole.
(m) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect.
(n) The Company and each of its Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") including, without limitation, under any applicable
Environmental Laws, as are
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necessary to own, lease and operate its respective properties and to conduct its
business; the Company and each of its Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder of any such permit; and, except as described in the Offering
Memorandum, such permits contain no restrictions that are materially burdensome
to the Company or any of its Subsidiaries.
(o) The accountants, PricewaterhouseCoopers LLP, that have certified
the financial statements and supporting schedules included or incorporated by
reference in the Preliminary Offering Memorandum and the Offering Memorandum are
independent public accountants with respect to the Company, as required by the
Act and the Exchange Act. The historical financial statements, together with
related schedules and notes, set forth or incorporated by reference in the
Preliminary Offering Memoran dum and the Offering Memorandum comply as to form
in all material respects with the requirements applicable to registration
statements on Form S-3 under the Act.
(p) The historical financial statements presented or incorporated by
reference in the Preliminary Offering Memorandum and the Offering Memorandum,
together with related schedules and notes forming part of the Offering
Memorandum (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated or incorporated
by reference in the Offering Memorandum at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
set forth or incorporated by reference in the Preliminary Offering Memorandum
and the Offering Memorandum (and any amendment or supplement thereto) are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company.
(q) Except as otherwise set forth or incorporated by reference in the
Offering Memorandum or such as are not material to the business, prospectus,
financial condition or results of operation of the Company and its
Subsidiaries, taken as a whole, the Company and each of its Subsidiaries has
good and marketable title, free and clear of all Liens, claims, encumbrances and
restrictions except Liens for taxes not yet due and payable, to all property and
assets described in the Offering Memorandum as being owned by it. All leases to
which the Company or any of its subsidiaries is a party are
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valid and binding and no default has occurred or is continuing thereunder, which
might result in any material adverse change in the business, prospects,
financial condition or results of operation of the Company and its Subsidiaries
taken as a whole, and the Company and its Subsidiaries enjoy a peaceful and
undisturbed possession under all such leases to which any of them is a party as
lessee with such exceptions as do not materially interfere with the use made by
the Company or such Subsidiary.
(r) The Company and each of its Subsidiaries maintains reasonably
adequate insurance.
(s) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(t) All material tax returns required to be filed by the Company and
each of its Subsidiaries in any jurisdiction have been filed, taking into
account all applicable extensions, other than those filings being contested in
good faith, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of its Subsidiaries
have been paid, other than those being contested in good faith and for which
adequate reserves have been provided.
(u) All indebtedness of the Company and each of its Subsidiaries that
will be repaid with the proceeds of the issuance and sale of the Notes was
incurred, and the indebtedness represented by the Notes is being incurred, for
proper purposes and in good faith and the Company and each such Subsidiary was,
at the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Notes, and will be on the Closing Date
or any Option Closing Date, as the case may be (after giving effect to the
application of the proceeds from the issuance of the Notes) solvent, and had at
the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Notes and will have on the Closing Date
or any Option Closing Date, as the case may be (after giving effect to the
application of the proceeds from the issuance of the Notes) sufficient capital
for carrying
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on its business and was, at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the Notes, and will
be on the Closing Date or any Option Closing Date, as the case may be (after
giving effect to the application of the proceeds from the issuance of the Notes)
able to pay its debts as they mature.
(v) No action has been taken and no law, statute, rule or regulation
or order has been enacted, adopted or issued by any governmental agency or body
which prevents the execution, delivery and performance of any of the Operative
Documents, the issuance of the Notes or the Common Stock issuable upon the
conversion thereof, or suspends the sale of the Notes or the Common Stock
issuable upon the conversion thereof in any jurisdiction referred to in Section
5(e); and no injunction, restraining order or other order or relief of any
nature by a federal or state court or other tribunal of competent jurisdiction
has been issued with respect to the Company or any of its Subsidiaries which
would prevent or suspend the issuance or sale of the Notes or the Common Stock
issuable upon the conversion thereof in any jurisdiction referred to in Section
5(e).
(w) The capitalization of the Company as of June 30, 1998 is as set
forth in the Offering Memorandum under "Capitalization" (and there have not been
any subsequent issuances of capital stock, other than shares of Common Stock
issued (i) upon exercise of an option or warrant or the conversion of a security
outstanding on such date or (ii) in unregistered transactions in connection with
acquisitions in the ordinary course of business and consistent with past
practices).
(x) The Company is not and, after giving effect to the offering and
sale of the Notes and the application of the net proceeds thereof as described
in the Offering Memorandum, will not be, an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended.
(y) Except for the Registration Rights Agreement and a registration
rights agreement in favor of Tenet Healthcare Corporation relating to one or
more demand registrations, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company or to require the Company to include such securities
with the Notes or the Common Stock issuable upon conversion thereof registered
pursuant to any Registration Statement.
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(z) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Notes to
violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(aa) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company's retaining any rating
assigned to the Company or any securities of the Company or (ii) has indicated
to the Company that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company or any securities of the Company.
(bb) (i) Since the earlier of (A) the date hereof and (B) the
respective date as of which information is given in the Offering Memorandum
(exclusive of any amendments or supplements thereto), (x) there has not
occurred any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the ordinary
course of business, of the Company and its Subsidiaries, taken as a whole, and
(y) there has not been any change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt of the
Company from that set forth in the Offering Memorandum and (ii) the Company and
its Subsidiaries have no liability or obligation, direct or contingent, which is
material to the Company and its Subsidiaries, taken as a whole, other than those
liabilities and obligations reflected in the Offering Memorandum or incurred in
the ordinary course of business.
(cc) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains (including information incorporated therein
by reference) all the information specified in, and meeting the requirements of,
Rule 144A(d)(4) under the Act.
(dd) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
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<PAGE>
(ee) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom the Company make
no representation) in connection with the offer and sale of the Securities
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Notes have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(ff) Assuming the Notes are sold in the manner contemplated by this
Agreement, prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(gg) No registration under the Act of the Securities is required for
the sale of the Securities to the Initial Purchasers as contemplated hereby or
for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(hh) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
(ii) The shares of Common Stock issuable upon conversion of the Notes
have been duly authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued, fully paid and
nonassessable and will conform in all material respects to the description
thereof contained in the Offering Memorandum; the Company will use its
reasonable efforts to ensure that such shares will be duly authorized for
listing on the NYSE (or on another national securities exchange or duly included
for quotation on the Nasdaq National Market); the Company has the authorized and
outstanding capital stock as set forth in the Offering Memorandum; and the
stockholders of the Company or other holders of the Company's securities have no
preemptive or similar rights with respect to the Notes or the Common Stock
issuable upon conversion of the Notes.
(jj) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens related to
or entitling any
20
<PAGE>
person to purchase or otherwise to acquire any shares of the capital stock of,
or other ownership interest in, the Company or any Subsidiary thereof except as
otherwise disclosed in the Offering Memorandum or the Incorporated Documents, or
actions since the 1997 Form 10-K (as defined below).
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
--------------------------------------------------
Initial Purchasers represents and warrants to, and agrees with, the Company:
(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Notes.
(b) Such Initial Purchaser (A) is not acquiring the Securities with a
view to any distribution thereof or with any present intention of offering or
selling any of the Securities in a transaction that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Securities only to (x)
QIBs in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A and (y) Accredited Institutions that make certain
representations and agreements to the Company.
(c) Such Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Act) has
been or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of the Securities pursuant hereto, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Securities only
from, and will offer to sell the Securities only to, Eligible Purchasers. Such
Initial Purchaser further agrees that it will not resell or otherwise transfer
the Securities except (A) to the Company or any of its subsidiaries, (B) to a
person whom such Initial Purchaser
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reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A, (C) to an
Accredited Institution that, prior to such transfer, furnishes the Trustee a
signed letter containing certain representations and agreements relating to the
transfer of the Securities, (D) in a transaction meeting the requirements of
Rule 144 under the Act, (E) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of counsel
acceptable to the Company) or (F) pursuant to an effective registration
statement and, in each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable jurisdiction. Such
Initial Purchaser further agrees that it will deliver to each person to whom the
Securities or an interest therein is transferred a notice substantially to the
effect of the foregoing.
Such Initial Purchaser acknowledges that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
---------------
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, its directors, its officers and each person, if any, who controls
such Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in the
Offering Memorandum (or any amendment or supplement thereto), the Preliminary
Offering Memorandum or any Rule 144A Information provided by the Company to any
holder or prospective purchaser of Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon and
made in conformity with information relating to such Initial Purchaser furnished
in writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial
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Purchasers who failed to deliver an Offering Memorandum (as then amended or
supplemented, provided by the Company to the Initial Purchasers in the requisite
quantity and on a timely basis to permit proper delivery on or prior to the
Closing Date) to the person asserting any losses, claims, damages, liabilities
and judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Offering Memorandum.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company and its directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company, to the same extent as the foregoing
indemnity from the Company to the Initial Purchasers but only with reference to
information relating to such Initial Purchaser furnished in writing to the
Company by such Initial Purchaser (and not with respect to the information
provided by any other Initial Purchaser) expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
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against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
------------ -----
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the
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indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein (except as
provided in Section 8(a)), then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchasers,
on the other hand, from the offering of the Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion
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as is appropriate to reflect not only the relative benefits referred to in
clause 8(d)(i) above but also the relative fault of the Company, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Initial Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes (after
underwriting discounts and commissions, but before deducting expenses) received
by the Company, and the total discounts and commissions received by the Initial
Purchasers, bear to the total price to investors of the Notes. The relative
fault of the Company, on the one hand, and the Initial Purchasers, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Initial Purchasers, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even of the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, each Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total discounts and commissions received by such Initial Purchaser
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Notes purchased by each of the Initial Purchasers hereunder and not joint.
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(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
---------------------------------------------
of the Initial Purchasers to purchase the Firm Notes under this Agreement on the
Closing Date and the Additional Notes, if any, on the Option Closing Date are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained
in this Agreement that are qualified as to materiality shall be true and correct
on the Closing Date and on each Option Closing Date, if any, and such
representations and warranties that are not so qualified shall be true and
correct in all material respects on the Closing Date and on each Option Closing
Date, if any, in each case with the same force and effect as if made on and as
of the Closing Date or Option Closing Date, as the case may be.
(b) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal of, or
of any review (or of any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
the Company or any securities of the Company (including, without limitation, the
placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is defined
for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred
any adverse change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or any securities
of the Company by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is considering
assigning) a lower rating to the Notes than that on which the Notes were
marketed.
(c) (i) Since the earlier of (A) the date hereof and (B) the
respective dates as of which information is given in the Offering Memorandum
(exclusive of any amendments or supplements thereto), (x) there shall not have
occurred any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the ordinary
course of business, of the Company and its Subsidiaries, taken as a whole, (y)
and there shall not have been any change, or any
26
<PAGE>
development involving a prospective material adverse change, in the capital
stock or in the long-term debt of the Company from that set forth in the
Offering Memorandum and (ii) the Company and its Subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the Company
and its Subsidiaries, taken as a whole, other than those liabilities and
obligations reflected in the Offering Memorandum or incurred in the ordinary
course of business.
(d) The Initial Purchasers shall have received on the Closing Date a
certificate dated the Closing Date, and on each Option Closing Date, if any,
dated such Option Closing Date, signed by the Chief Executive Officer and the
Chief Financial Officer of the Company, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) and stating that the Company has complied with all
the agreements and satisfied all of the conditions herein contained and required
to be complied with or satisfied on or prior to the Closing Date or Option
Closing Date, as the case may be.
(e) The Initial Purchasers shall have received on the Closing Date and
on each Option Closing Date, if any, an opinion (satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers), dated the Closing Date or
Option Closing Date, as the case may be, of Riordan & McKinzie, counsel for the
Company, to the effect that:
(i) the Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers
in accordance with the terms of this Agreement, will be entitled
to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their
terms, subject to certain exceptions customarily taken in
connection with enforceability opinions given under California
law;
(ii) the Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with
its terms, subject to certain exceptions customarily taken in
connection with enforceability opinions given under California
law;
27
<PAGE>
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is a valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to (x) certain
exceptions customarily taken in connection with enforceability
opinions given under California law and (y) public policy or laws
limiting rights of indemnity and contribution;
(v) the statements under the captions "Description of
Notes," "Description of Capital Stock," "Description of
Indebtedness" and "Certain U.S. Federal Income Tax Consequences"
in the Offering Memorandum, insofar as such statements constitute
a summary of legal matters or provisions of documents referred to
therein, provide a fair summary of such legal matters or
provisions in all material respects;
(vi) the execution, delivery and performance of this
Agreement by the Company, compliance by the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any California or Federal court,
regulatory body, administrative agency or other governmental body
(except as such may be required under the Act or other securities
or Blue Sky laws) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under,
the Company's Amended and Restated Revolving Credit Agreement and
Amended and Restated Term Loan Agreement, each dated April 30,
1998, as amended through the date of such opinion, or the charter
or by-laws of the Company;
(vii) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(viii) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which
28
<PAGE>
is qualified thereunder. It is not necessary in connection with
the offer, sale and delivery of the Notes to the Initial
Purchasers in the manner contemplated by this Agreement or in
connection with the Exempt Resales to qualify the Indenture under
the TIA;
(ix) no registration under the Act of the Securities is
required for the sale of the Securities to the Initial Purchasers
as contemplated by this Agreement or for the Exempt Resales
assuming (i) each Initial Purchaser is either a QIB or an
Accredited Institution, (ii) the accuracy of, and compliance
with, the Initial Purchasers' representations and agreements
contained in Section 7 of this Agreement and the Company's
representations contained in Sections 6(x), (cc), (dd) and (ee)
and (iii) the Company's compliance with its agreement set forth
in Section 5(h) of this Agreement;
(x) the shares of Common Stock initially issuable upon
conversion of the Notes have been duly authorized and reserved
for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable
and will conform in all material respects to the description
thereof contained in the Offering Memorandum;
(xi) the Company's Annual Report on Form 10-K for its fiscal
year ended December 31, 1997 (the "1997 Form 10-K") filed
pursuant to the Exchange Act and incorporated by reference in the
Offering Memorandum (except for financial statements, schedules
and other financial data as to which no opinion need be
expressed) complied when so filed as to form in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder.
In addition, such counsel shall state that in its capacity as special
counsel for the Company such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Initial Purchasers at which the contents of the Offering Memorandum and related
matters were discussed and, although such counsel is not passing upon, and does
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by
29
<PAGE>
reference in the Offering Memorandum (except as indicated in clause (v) above)
and has made no independent check or verification thereof, on the basis of the
foregoing (relying as to materiality to a large extent upon the statements of
officers and other representatives of the Company), no facts have come to such
counsel's attention that have caused such counsel to believe that the Offering
Memorandum (including the Incorporated Documents), as of its date and as of the
Closing Date and each Option Closing Date, if any, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such counsel need
express no opinion or belief with respect to the financial statements or other
financial and statistical data included or incorporated by reference in the
Offering Memorandum.
In giving the opinions specified in (i), (ii) and (iv) above, such
counsel may assume that the laws of the State of California govern the
referenced documents. In giving the opinion specified in (vi) above, such
counsel may rely upon an opinion or opinions of McDermott, Will & Emery,
regulatory counsel for the Company rendered pursuant to paragraph (h) below.
(f) The Initial Purchasers shall have received on the Closing Date and
on each Option Closing Date, if any, an opinion, dated the Closing Date or
Option Closing Date, as the case may be, of Skadden, Arps, Slate, Meagher & Flom
LLP, counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.
(g) The Initial Purchasers shall have received on the Closing Date and
on each Option Closing Date, if any, an opinion (satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers), dated the Closing Date or
Option Closing Date, as the case may be, of Barry C. Cosgrove, General Counsel
of the Company, to the effect that:
(i) the Company is duly incorporated, validly existing and
in good standing as a corporation under the laws of the State of
Delaware and has the corporate power and authority required to
carry on its business as it is currently being conducted and to
own, lease and operate its properties;
(ii) each Principal Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in
30
<PAGE>
good standing under the laws of its jurisdiction of
incorporation, has the corporate power and authority to carry on
its business as it is currently being conducted and to own, lease
and operate its properties, is duly qualified and is in good
standing as a foreign corporation and is authorized to do
business in each jurisdiction in which the nature of its business
or its ownership or leasing of property requires such
qualification or authorization, except where the failure to be so
qualified or authorized and be in good standing could not, in the
aggregate, reasonably be expected to have a material adverse
effect on the business, operations, properties, or financial or
other condition of the Company and its Subsidiaries, considered
as a whole;
(iii) except as disclosed in the Offering Memorandum, all of
the outstanding shares of capital stock of each of the Company's
corporate Subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable and, (i) in the
cases of the Principal Subsidiaries, are wholly owned by the
Company free and clear of any Liens and (ii) in the case of each
other corporate Subsidiary, are otherwise owned directly or
indirectly by the Company free and clear of any Liens, except
such Liens that would not, singly or in the aggregate, have a
Material Adverse Effect. All of the outstanding partnership
interests in each of the Company's partnership Subsidiaries have
been duly authorized by its respective partnership agreement and
validly issued and to such counsel's knowledge after due inquiry
the partnership interests in such partnerships that are not owned
by unaffiliated third parties are owned directly or indirectly by
the Company, free and clear of any Liens, except such Liens that
would not, singly or in the aggregate, have a Material Adverse
Effect, and, to such counsel's knowledge, any partnership capital
contribution obligations of the Company in each partnership
Subsidiary have been satisfied;
(3) all the outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid, non-
assessable and not subject to any preemptive or similar rights;
31
<PAGE>
(4) neither the Company nor any of its Subsidiaries is in
violation of its respective charter, by-laws or partnership
agreement, as the case may be, and, to the best of such counsel's
knowledge after due inquiry, neither the Company nor any of its
Subsidiaries is in default in any material respect, and no
condition exists that with notice or lapse of time or both would
constitute a material default, in the performance of any material
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which it or any of its
Subsidiaries or their respective property is bound except to the
extent such violation or default, if any, could not reasonably be
expected to have a material adverse effect on the business,
operations, properties or financial or other condition of the
Company and its Subsidiaries, considered as a whole;
(5) the execution, delivery and performance of this
Agreement, compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated
hereby will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under any agreement,
indenture or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective properties are bound, or violate
or conflict with any laws, administrative regulations or rulings
or court decrees applicable to the Company or any of its
subsidiaries or their respective properties, except to the extent
such violation, conflict, breach or default, if any, could not
reasonably be expected to have a material adverse effect on the
business, operations, properties or financial or other condition
of the Company and its Subsidiaries, considered as a whole;
(6) after due inquiry, such counsel does not know of any
legal or governmental proceeding pending or threatened to which
the Company or any of its Subsidiaries is a party or to which any
of their respective property is subject which is required to be
described in the Offering Memorandum and is not so described;
32
<PAGE>
(7) other than as described in the Offering Memorandum, to
the best of such counsel's knowledge, after due inquiry, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the
Company to include such securities with the Notes or the Common
Stock issuable upon conversion thereof registered pursuant to any
Registration Statement;
(8) each of the Facilities (as defined below) has such
licenses, certifications and authorizations of governmental or
regulatory authorities which are required in connection with the
provision by the Facilities of dialysis services under applicable
licensure, Medicare or Medicaid laws in the manner described in
the Offering Memorandum and which are required to be held by the
Facilities as providers of dialysis services under the Medicare
or Medicaid programs, except such licenses, certificates and
authorizations the failure of which to obtain would not, singly
or in the aggregate, have a Material Adverse Effect; and
(9) each document filed pursuant to the Exchange Act and
incorporated by reference in the Offering Memorandum (except for
financial statements, schedules and other financial data as to
which no opinion need be expressed) complied when so filed as to
form in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder.
In addition, such counsel shall state that in his capacity as general
counsel for the Company such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Initial Purchasers at which the contents of the Offering Memorandum and related
matters were discussed and, although such counsel is not passing upon, and does
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Offering Memorandum and
has made no independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's
33
<PAGE>
attention that have caused such counsel to believe that the Offering Memorandum
(including the Incorporated Documents), as of its date and as of the Closing
Date and each Option Closing Date, if any, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such counsel need
express no opinion or belief with respect to the financial statements or other
financial and statistical data included or incorporated by reference in the
Offering Memorandum.
In giving the opinions specified in (vi), (vii) and (x) above, such
counsel may rely upon an opinion or opinions of McDermott, Will & Emery,
regulatory counsel for the Company rendered pursuant to paragraph (h) below.
(8) The Initial Purchasers shall have received on the Closing Date
and on each Option Closing Date, if any, an opinion (satisfactory to the Initial
Purchasers and to our counsel), dated the Closing Date or Option Closing Date,
as the case may be, of McDermott, Will & Emery, regulatory counsel for the
Company, to the effect that:
(1) the statements under the captions "Risk Factors--
Dependence on Medicare, Medicaid and Other Sources of
Reimbursement" and "--Operations Subject to Government
Regulation" in the Offering Memorandum and "Business-Operations-
Medicare Reimbursement" and "Business-Governmental Regulation" in
the 1997 Form 10-K insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to
therein, are fair summaries in all material respects of the
information called for with respect to such legal matters,
documents and proceedings; and
(2) the execution, delivery and performance of this
Agreement by the Company will not require any consent, approval,
authorization or order of any court, regulatory body,
administrative agency or other governmental body in connection
with the provision by the dialysis facilities owned by the
Company or its Subsidiaries (the "FACILITIES") of dialysis
----------
services under applicable licensure, Medicare and Medicaid laws
in the manner described in the Offering Memorandum or which could
affect the status of the Facilities as providers of dialysis
services under the Medicare or Medicaid programs other than
34
<PAGE>
presently effective actions, consents disclosures or filings that
have already been made on or prior to the date hereof.
(9) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date and on each Option Closing Date,
if any, letters dated the date hereof or the Closing Date or Option Closing
Date, as the case may be, in form and substance satisfactory to the Initial
Purchasers from PricewaterhouseCoopers LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(10) The Notes shall have been approved by the NASD for trading and
duly listed in PORTAL.
(11) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(12) The Company shall have executed the Registration Rights Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company.
(13) The Company shall not have failed at or prior to the Closing Date
or each Option Closing Date, as the case may be, to perform or comply with any
of the agreements herein contained and required to be performed or complied with
by the Company at or prior to the Closing Date or Option Closing Date, as the
case may be.
(14) The Company shall have delivered an agreement executed by each
director and executive officer of the Company and by Tenet Healthcare
Corporation to the effect that such person will not, during the period
commencing on the date such person signs such agreement and ending 90 days after
the Closing Date without the prior written consent of DLJ, (A) engage in any of
the transactions described in the first sentence of Section 5(m) or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any Other Securities.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
------------------------------------------
become effective upon the execution and delivery of this Agreement by the
parties hereto.
35
<PAGE>
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Notes on the terms
and in the manner contemplated in the Offering Memorandum, (ii) the suspension
or material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market,
(iii) the suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, operations, properties, or financial condition of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Notes which it or they have agreed to purchase
hereunder on such date and the aggregate principal amount of the Notes which
such defaulting Initial Purchaser or Initial Purchasers, as the case may be,
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Notes to be purchased on such date by all
Initial Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Notes set forth
opposite its name in Schedule B bears to the aggregate principal amount of the
Notes which all the non-defaulting Initial Purchasers, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase on such date; provided,
that in no event shall the aggregate principal amount of the Notes which any
Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Notes without the written consent of such Initial
Purchaser. If on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase the Notes and the aggregate principal amount of
the Notes with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of the Notes to be purchased by all Initial
Purchasers and
36
<PAGE>
arrangements satisfactory to the Initial Purchasers and the Company for purchase
of such Notes are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Initial
Purchaser and the Company. In any such case which does not result in termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of any such Initial Purchaser under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (i) if to the Company, to Total Renal
Care Holdings, Inc., Suite 800, 21250 Hawthorne Boulevard, Torrance, California
90503-5517, Attn: John E. King and (ii) if to the Initial Purchasers, to
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Notes,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchasers, the officers or directors of the
Initial Purchasers, any person controlling the Initial Purchasers, the Company,
the officers or directors of the Company or any person controlling the Company,
(ii) acceptance of the Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Notes are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Company agrees to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(i) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors of the Company and their respective
successors and assigns, all as and to
37
<PAGE>
the extent provided in this Agreement, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Notes from the Initial
Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York, including, without limitation, New York General
Obligations Law (S)5-1401.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
38
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
TOTAL RENAL CARE HOLDINGS, INC.
By: ___________________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
WARBURG DILLON READ LLC
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: _______________________________
Name:
Title:
<PAGE>
SCHEDULE A
Principal Amount
Initial Purchaser of Notes
----------------- ------------
Donaldson, Lufkin & Jenrette
Securities Corporation........................ $210,000,000
BNY Capital Markets, Inc....................... 30,000,000
Credit Suisse First Boston Corporation......... 30,000,000
Warburg Dillon Read LLC........................ 30,000,000
------------
Total..................................... $300,000,000
============
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT 5.1
December 18, 1998
Ladies and Gentlemen:
I am the General Counsel of Total Renal Care Holdings, Inc., a
Delaware corporation (the "Company") and the holder of stock and options to
purchase stock granted under the Company's employee stock plans which in the
aggregate represent less than 1% of the Company's outstanding Common Stock. I
am delivering this opinion in connection with the registration under the
Securities Act of 1933, as amended (the "1933 Act"), of (i) the resale of up to
10,515,087 shares of Common Stock, $0.001 par value per share (the "Shares"),
issuable upon the conversion of the Notes (as defined below) and (ii) the resale
of $345,000,000 aggregate principal amount of 7% Convertible Subordinated Notes
due 2009 (the "Notes"). This opinion is delivered in accordance with Item
601(b)(5) of Regulation S-K under the 1933 Act in connection with that certain
Registration Statement on Form S-3 (the "Registration Statement") for the
aforementioned resales to be filed with the Securities and Exchange Commission
(the "Commission") under the 1933 Act.
In rendering the opinion set forth herein, I have made such
investigations of fact and law, and examined such documents and instruments, or
copies thereof established to my satisfaction to be true and correct copies
thereof, as I have deemed necessary under the circumstances.
Based upon the foregoing and such other examination of law and fact as
I have deemed necessary, and in reliance thereon, I am of the opinion that (i)
the Notes have been duly authorized and validly issued and are binding
obligations of the Company, except as the enforcement thereof against the
Company may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally or by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law) and may be subject to the discretion of the court before which any
proceeding therefor may be brought, and (ii) the Shares have been duly
authorized, and when issued upon conversion of the Notes in accordance with the
terms of the Indenture dated as of November 18, 1998 between the Company and
United States Trust Company of New York, will be validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus which is a part of the Registration Statement. In
giving such consent, I do not thereby admit that I am in the category of persons
whose consent is required under Section 7 of the 1933 Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ Barry C. Cosgrove
<PAGE>
TOTAL RENAL CARE HOLDINGS, INC.
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SEVEN MONTHS ENDED NINE MONTHS ENDED
YEARS ENDED MAY 31, DECEMBER 31, (1) YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- ------------------- ------------------------ ------------------------------
1993 1994 1995 1994 1995 1995 1996 1997 1997 1998 1998
------- ------- ------- --------- --------- ------- ------- -------- ------- ------- --------------
(IN THOUSANDS, EXCEPT FOR RATIO (SUPPLEMENTAL)
DATA)
(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income before
income taxes,
minority
interest,
extraordinary
items and
cumulative
effect of a
charge in
accounting
principle....... $15,932 $18,753 $24,323 $14,174 $26,436 $39,685 $60,945 $ 99,741 $71,744 $29,641 $132,299
Minority
Interest........ 775 1,046 1,593 878 1,784 2,544 3,578 4,502 3,193 4,817 4,817
------- ------- ------- --------- --------- ------- ------- -------- ------- ------- --------
15,157 17,707 22,730 13,296 24,652 37,141 57,367 95,239 68,551 24,824 127,482
------- ------- ------- --------- --------- ------- ------- -------- ------- ------- --------
Fixed Charges:
Interest expense
and amortization
of debt issuance
costs and
discounts on all
indebtedness.... 1,442 1,575 9,087 4,676 8,007 13,375 14,075 30,289 18,512 61,869 52,046
Preferred
dividends....... 2,075
Interest portion
of rental
expense......... 1,352 1,926 2,475 1,438 1,950 3,347 5,301 8,196 5,761 9,531 9,531
------- ------- ------- --------- --------- ------- ------- -------- ------- ------- --------
Total fixed
charges......... 4,869 3,501 11,562 6,114 9,957 16,722 19,376 38,485 24,273 71,400 61,577
------- ------- ------- --------- --------- ------- ------- -------- ------- ------- --------
Earnings before
income taxes,
minority
interest,
extraordinary
items,
cumulative
effect of a
change in
accounting
principle and
fixed charges... $20,026 $21,208 $34,292 $19,410 $34,609 $53,863 $76,743 $133,202 $92,824 $96,224 $189,059
======= ======= ======= ========= ========= ======= ======= ======== ======= ======= ========
Ratio of
earnings to
fixed charges... 4.11 6.06 2.97 3.17 3.48 3.22 3.96 3.47 3.82 1.35 3.07
======= ======= ======= ========= ========= ======= ======= ======== ======= ======= ========
</TABLE>
- -----------
(1) In 1995, we changed our fiscal year end to December 31 from May 31.
(2) A supplemental calculation of the ratio of earnings to fixed charges is
presented to exclude nonrecurring merger costs and interest rate swap
termination costs. During the nine months ended September 30, 1998, we
recorded $92.8 million of fees and expenses related to the Merger and to
the integration of the combined companies. In April 1998, we recorded $9.8
million related to interest rate swap termination costs.
The ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings. Earnings is defined as pretax income from continuing
operations adjusted by adding fixed charges and excluding interest
capitalized during the period. Fixed charges means the total of interest
expenses and amortization of financing costs, the estimated interest
component of rental expense on operating leases and preferred stock
dividends.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 16, 1998, except as to the pooling of interest with Renal
Treatment Centers, Inc. which is as of May 14, 1998, appearing on page F-2 of
the Total Renal Care Holdings, Inc. Annual Report on Form 10K/A Amendment No. 2
for the year ended December 31, 1997. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears on
page S-1 of that Form 10K/A Amendment No. 2.
PricewaterhouseCoopers LLP
Seattle, Washington
December 18, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
TOTAL RENAL CARE HOLDINGS, INC.
(Exact name of REGISTRANT as specified in its charter)
Delaware 51-0354549
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
21250 Hawthorne Boulevard 90503-5517
Suite 800 (Zip code)
Torrance, California
(Address of principal executive offices)
__________________________
7% Convertible Subordinated Notes due 2009
(Titles of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
- 2 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
The registrant is currently not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of New
York Banking Department to transact business as a Trust Company,
is incorporated by reference to Exhibit T-1.1 to Form T-1 filed
on September 15, 1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
<PAGE>
- 3 -
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form T-
1 filed on September 15, 1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee pursuant
to law or the requirements of its supervising or examining
authority.
NOTE
As of December 9, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and will
rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
_____________________
<PAGE>
- 4 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 9th day of December 1998.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Patricia Stermer
----------------------------------
Patricia Stermer
Assistant Vice President
PST/kk
(rev:120998)
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Gerard F. Ganey
---------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1998
------------------
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
- ------
Cash and Due from Banks $ 339,287
Short-Term Investments 161,493
Securities, Available for Sale 563,176
Loans 1,954,456
Less: Allowance for Credit Losses 16,860
----------
Net Loans 1,937,596
Premises and Equipment 58,809
Other Assets 120,308
----------
TOTAL ASSETS $3,180,669
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 646,593
Interest Bearing 1,838,108
----------
Total Deposits 2,484,701
Short-Term Credit Facilities 375,849
Accounts Payable and Accrued Liabilities 142,513
----------
TOTAL LIABILITIES $3,003,063
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 109,648
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 3,422
----------
TOTAL STOCKHOLDER'S EQUITY 177,606
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,180,669
==========
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
November 2, 1998
