-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O0W4+weS/dD2oEhgAFhj1KEFpVLR1+XOuHXQHmj8TexO8ZYAK+eFCO9gubZvYo00 At7pR7UXDpm40us123280w== 0000912057-97-013343.txt : 19970418 0000912057-97-013343.hdr.sgml : 19970418 ACCESSION NUMBER: 0000912057-97-013343 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970417 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENET HEALTHCARE CORP CENTRAL INDEX KEY: 0000070318 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 952557091 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-24955 FILM NUMBER: 97582499 BUSINESS ADDRESS: STREET 1: 3820 STATE STREET CITY: SANTA BARBARA STATE: CA ZIP: 93105- BUSINESS PHONE: 8055637000 MAIL ADDRESS: STREET 1: P O BOX 4070 CITY: SANTA MONICA STATE: CA ZIP: 90404 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL MEDICAL ENTERPRISES INC /NV/ DATE OF NAME CHANGE: 19920703 S-3/A 1 FORM S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1997 REGISTRATION NO. 333-24955 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ TENET HEALTHCARE CORPORATION (Exact name of registrant as specified in its charter) NEVADA 8062 95-2557091 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of Classification Code Number) Identification incorporation or organization) Number)
3820 STATE STREET SANTA BARBARA, CALIFORNIA 93105 (805) 563-7000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) SCOTT M. BROWN, ESQ. SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY TENET HEALTHCARE CORPORATION 3820 STATE STREET SANTA BARBARA, CALIFORNIA 93105 (805) 563-7000 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ WITH COPIES TO: ALISON S. RESSLER, ESQ. PAUL S. BIRD, ESQ. Sullivan & Cromwell Debevoise & Plimpton 444 South Flower Street, 12th Floor 875 Third Avenue Los Angeles, California 90071 New York, New York 10022 (213) 955-8000 (212) 909-6000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time, as determined by market conditions, 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 offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, 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
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(1) COMMON STOCK, PAR VALUE $0.075 PER SHARE... 9,580,644 $26.50 $253,887,066.00 $76,935.00 PREFERRED STOCK PURCHASE RIGHTS............ (2) N/A N/A N/A
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended. Pursuant to Rule 457, the maximum offering price of the shares of Tenet Common Stock being registered is $26.50 per share, the average of the high and low reported sales prices of a share of Tenet Common Stock reported on the New York Stock Exchange Composite Tape on April 8, 1997, and the maximum aggregate offering price is the product of $26.50 and 9,580,644, the number of shares of Tenet Common Stock being registered. The Registration Fee was paid on April 9, 1997. (2) Represents the right to 0.0005 of a share of Series A Junior Participating Preferred Stock of Tenet. 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 WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED APRIL 17, 1997 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL , 1997 [LOGO] TENET HEALTHCARE CORPORATION 6,653,474 SHARES OF COMMON STOCK (PAR VALUE $0.075) -------------- This Prospectus Supplement relates to 6,653,474 shares (the "Shares") of par value $0.075 Common Stock (the "Common Stock") of Tenet Healthcare Corporation ("Tenet," the "Registrant" or the "Company") to be offered in an underwritten public offering by the persons listed under the heading "Selling Shareholders" (the "Selling Shareholders"). The Shares originally were issued to Joseph Littlejohn & Levy Fund, L.P. ("JLL") in connection with the acquisition of OrNda HealthCorp by Tenet in January 1997. Prior to the consummation of the offering, JLL will distribute the Shares to the Selling Shareholders who are limited partners of JLL. See "Underwriting" and "Selling Shareholders." The Company will not receive any of the proceeds from the sale of the Shares made hereunder. See "Use of Proceeds." The Common Stock and the Shares offered hereby currently are listed on the New York Stock Exchange and the Pacific Stock Exchange under the symbol "THC." On April , 1997, the closing price of the Common Stock on the New York Stock Exchange Composite Tape was $ . THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE UNDERWRITING PROCEEDS TO TO THE DISCOUNTS AND SELLING PUBLIC COMMISSIONS(1) SHAREHOLDERS(2) Per Share.......................................... Total..............................................
(1) The Company and the Selling Shareholders have agreed to indemnify the Underwriters (as defined herein) against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). See "Underwriting." (2) Estimated expenses of $200,000 will be paid by the Company. ------------------- The Shares offered hereby are offered by the Underwriters, subject to prior sale, when, as and if delivered to and accepted by them and subject to various prior conditions, including the right to reject any order in whole or in part. It is expected that delivery of the Shares will be made in New York, New York on or about April , 1997. ------------------- MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. J.P. MORGAN & CO. April , 1997 CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SHARES OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITIONS OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." THE COMPANY Tenet is the second largest investor-owned healthcare services company in the United States. At February 28, 1997, Tenet's subsidiaries owned or leased and operated 127 general hospitals (with 27,366 licensed beds) and related healthcare facilities serving urban and rural communities in 22 states. Tenet's subsidiaries and affiliates also owned or leased and operated various ancillary healthcare businesses, including outpatient surgery centers, home healthcare programs, ambulatory, occupational and rural healthcare clinics, a health maintenance organization, a preferred provider organization and a managed care insurance company as well as a small number of rehabilitation hospitals, specialty hospitals, long-term care facilities and psychiatric facilities. In addition, Tenet's subsidiaries hold the following investments in other healthcare companies: (i) an approximately 12.1% interest in Vencor, Inc., which operates nursing homes and other healthcare businesses, (ii) an approximately 11.3% interest in Total Renal Care Holdings, Inc., which operates kidney dialysis units and certain related healthcare businesses and (iii) an approximately 23% interest in Health Care Property Partners. On January 30, 1997, Tenet completed its acquisition (the "Merger") of OrNda HealthCorp ("OrNda"), which, with 49 general hospitals (9,599 licensed beds) at November 30, 1996, was the third largest investor-owned healthcare services company in the United States. Many of the hospitals acquired in the Merger are located in geographic areas where Tenet was already operating hospitals, including southern California and south Florida. The Merger also expanded Tenet's operations into several new geographic areas, including Arizona, Iowa, Massachusetts, Mississippi, Nevada, Oregon, Washington, West Virginia and Wyoming. The Merger was accounted for on a pooling of interests basis. OrNda (now known as Tenet HealthSystem HealthCorp) is now a wholly owned subsidiary of Tenet. The Company's principal executive offices are located at 3820 State Street, Santa Barbara, California 93105, and its telephone number is (805) 563-7000. USE OF PROCEEDS All of the Shares offered hereby are being offered by the Selling Shareholders. The Company will not receive any proceeds from the sale of the Shares. See "Selling Shareholders." SELLING SHAREHOLDERS The following table sets forth information with respect to the number of Shares owned by each of the Selling Shareholders and the number of Shares that may be offered hereby by each Selling Shareholder. The Company has agreed to pay the fees and expenses of registration, including the fees and expenses (not to exceed $50,000) for one counsel on behalf of the Selling Shareholders, in connection with the sale of the S-2 Shares offered hereby (other than underwriting discounts and commissions, which will be paid by the Selling Shareholders).
NUMBER OF NUMBER OF SHARES OWNED SHARES NUMBER OF PRIOR TO BEING SHARES OWNED NAME OFFERING(1) OFFERED(1) AFTER THE OFFFERING - ------------------------------------------------------------- ------------- --------------- ----------------------- California Public Employees' Retirement System (2)........... 1,835,930 1,835,930 0 New York State Common Retirement Fund (3).................... 815,034 815,034 0 Pension Reserves Investment Management Board................. 734,402 734,402 0 The Rockefeller Foundation................................... 367,275 367,275 0 State of Wisconsin Investment Board.......................... 367,275 367,275 0 Virginia Retirement System................................... 734,402 734,402 0 Yale University.............................................. 367,275 367,275 0 Oregon Public Employees' Retirement System................... 1,101,528 1,101,528 0 EES Distressed Securities Fund L.P........................... 183,563 183,563 0 Montana Board of Investments................................. 18,312 18,312 0 State Universities Retirement System......................... 55,084 55,084 0 Orange County Employees Retirement System.................... 73,396 73,396 0 - ------------- --------------- Total.................................................... 6,653,474 6,653,474 0
- ------------------------ 1. Estimated amounts assuming a distribution to such Selling Shareholders by JLL calculated using a price per share of Common Stock of $24.50, the closing price of the Common Stock as reported on the New York Stock Exchange Composite Tape on April 15, 1997. The actual amounts to be sold by such Selling Shareholders will be determined on the basis of the price to the public less the underwriting discount at the time of the sale of the Shares by such Selling Shareholders in the offering made hereby. 2. Does not include approximately 4,080,012 shares owned as of the date hereof by California Public Employees' Retirement System in addition to the shares received in the distribution from JLL. 3. Does not include approximately 2,731,000 shares of Common Stock owned as of the date hereof by the New York State Common Retirement Fund in addition to the shares received in the distribution from JLL. S-3 UNDERWRITING Subject to the terms and conditions set forth in the purchase agreement (the "Purchase Agreement") among the Company, the Selling Shareholders and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Goldman, Sachs & Co. and J.P. Morgan Securities Inc. ("JPMSI") (collectively, the "Underwriters"), the Selling Shareholders severally have agreed to sell to each of the Underwriters, and each of the Underwriters has agreed to purchase from the Selling Shareholders the Shares, at the public offering price set forth on the cover page of this Prospectus Supplement, less the underwriting discounts and commissions. The respective number of Shares that each Underwriter has agreed to purchase is set forth opposite its name:
UNDERWRITER SHARES PURCHASED - ------------------------------------------------------------------------------------------------ ---------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................................. Donaldson, Lufkin & Jenrette Securities Corporation............................................. Goldman, Sachs & Co............................................................................. J.P. Morgan Securities Inc...................................................................... ------- Total....................................................................................... ------- -------
In the Purchase Agreement, the Underwriters have agreed, subject to the terms and conditions set forth in the Purchase Agreement, to purchase all of the Shares being sold pursuant to the Purchase Agreement if any of such Shares being sold pursuant to the Purchase Agreement are purchased. The Underwriters have advised the Selling Shareholders that they propose to offer the Shares offered hereby to the public initially at the public offering price set forth on the cover page of this Prospectus Supplement and to certain dealers at such price less a concession not in excess of $. per Share. The Underwriters may allow, and such dealers may reallow, a discount not in excess of $. per Share on sales to certain other dealers. After the offering, the public offering price, concession and discount may be changed. The Common Stock is traded on the New York Stock Exchange and the Pacific Stock Exchange. The Underwriters are permitted to engage in certain transactions that stabilize the price of the Common Stock. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Common Stock. If the Underwriters create a short position in the Common Stock in connection with the offering, i.e., if, they sell more shares of Common Stock than are set forth on the cover page of this Prospectus Supplement, the Underwriters may reduce that short position by purchasing Common Stock in the open market. The Underwriters may also impose a penalty bid on certain selling group members. This means that if the Underwriters purchase shares of Common Stock in the open market to reduce the Underwriters short position or to stabilize the price of the Common Stock, they may reclaim the amount of the selling concession from the selling group members who sold those shares as part of the offering. In general, purchases of a security for the purpose of stabilization or to reduce a short position could cause the price of the security to be higher than it might be in the absence of such purchases. The imposition of a penalty bid might also have an effect on the price of a security to the extent that it were to discourage resales of the security. Neither the Company nor the Underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Common S-4 Stock. In addition, neither the Company nor the Underwriters make any representation that the Underwriters will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. DLJ has provided and is currently retained to provide certain investment banking services to the Company for which it has received and is entitled to receive usual and customary fees. JPMSI and certain of its affiliates have provided and are expected to continue to provide certain investment banking and commercial banking services to the Company for which they have received or will receive usual and customary fees. Morgan Guaranty, an affiliate of JPMSI, was the arranging agent for the Company's existing credit facility. The Company and the Selling Shareholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters with respect to the Shares offered hereby will be passed upon for the Company by Scott M. Brown, Senior Vice President, Secretary and General Counsel of the Company. As of March 31, 1997, Mr. Brown owned 2,794 shares of Common Stock and had outstanding options to purchase 201,634 shares of Common Stock pursuant to Company benefit plans. The validity of the Shares offered hereby will be passed upon for the Underwriters by Sullivan & Cromwell, Los Angeles, California. S-5 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED APRIL 17, 1997 PROSPECTUS APRIL , 1997 [LOGO] TENET HEALTHCARE CORPORATION 9,580,644 SHARES OF COMMON STOCK (PAR VALUE $0.075) ------------------ This Prospectus relates to 9,580,644 shares (the "Shares") of par value $0.075 Common Stock (the "Common Stock") of Tenet Healthcare Corporation ("Tenet," the "Registrant" or the "Company") to be offered for sale by the persons listed under the heading "Selling Shareholders" (the "Selling Shareholders"). The Shares originally were issued by Tenet to Joseph Littlejohn & Levy Fund, L.P. ("JLL") in connection with the acquisition of OrNda HealthCorp ("OrNda") by Tenet in January 1997 (the "Merger") and are being registered under the Securities Act of 1933, as amended (the "Securities Act") pursuant to a registration rights agreement entered into between JLL and Tenet at that time. The Selling Shareholders may include JLL and partners in JLL who receive distributions of Shares from JLL. See "Selling Shareholders." The distribution of the Shares by the Selling Shareholders may be effected from time to time in underwritten public offerings, in ordinary brokerage transactions on the New York Stock Exchange or the Pacific Stock Exchange (collectively, the "Exchanges") at market prices prevailing at the time of sale or in one or more negotiated transactions at prices acceptable to the Selling Shareholders. In addition, the Selling Shareholders may sell the Shares through or to brokers in the over-the-counter market. The brokers or dealers through or to whom the Shares may be sold may be deemed underwriters of the Shares within the meaning of the Securities Act, in which event all brokerage commissions or discounts and other compensation received by such brokers or dealers may be deemed to be underwriting compensation. To the extent required, the names of any underwriter and applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in an accompanying Prospectus Supplement. See "Plan of Distribution." The Company will not receive any of the proceeds from sales of the Shares made hereunder. See "Use of Proceeds." The Common Stock and the Shares offered hereby currently are listed on the Exchanges under the symbol "THC." On April , 1997, the closing price of the Common Stock on the New York Stock Exchange Composite Tape was $ . SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS IN EVALUATING AN INVESTMENT IN THE COMMON STOCK. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements, registration statements and other information filed by the Company with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: New York Regional Office, Seven World Trade Center, New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and copies of such material can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a Web site at http:// www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Commission. The reports, proxy statements and other information filed by the Company also may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and at the offices of the Pacific Stock Exchange Incorporated, 301 Pine Street, San Francisco, California 94104. The Common Stock is listed on such Exchanges. This Prospectus constitutes part of a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") filed by the Company with the Commission under the Securities Act. This Prospectus does not contain all of the information contained in the Registration Statement and the exhibits and schedules thereto, and reference is hereby made to the Registration Statement for further information with respect to the Company and the Shares offered hereby. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission are not necessarily complete, and in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission pursuant to the Exchange Act (File No. I-7293) are incorporated in this Prospectus by reference and are made a part hereof: (i) Annual Report on Form 10-K for the fiscal year ended May 31, 1996, filed with the Commission on August 26, 1996 (the "Tenet 10-K"); (ii) Quarterly Report on Form 10-Q for the quarterly period ended August 31, 1996, filed with the Commission on October 11, 1996; (iii) Quarterly Report on Form 10-Q for the quarterly period ended November 30, 1996, filed with the Commission on January 13, 1997; (iv) Quarterly Report on Form 10-Q for the quarterly period ended February 28, 1997, filed with the Commission on April 15, 1997; (v) Current Report on Form 8-K, dated November 5, 1996, filed with the Commission on November 5, 1996; (vi) Current Report on Form 8-K, dated February 12, 1997, filed with the Commission on February 13, 1997; (vii) Current Report on Form 8-K, dated April 10, 1997, filed with the Commission on April 11, 1997; (viii) Current Report on Form 8-K, dated April 16, 1997, filed with the Commission on April 17, 1997; (ix) the description of the Common Stock of the Company, which is contained in the Company's Registration Statement on Form 8-A filed with the Commission on April 8, 1971, including any amendments or reports filed for the purpose of updating such description; and (x) the description of certain preferred stock purchase rights that have attached to the Common Stock, which is contained in the Company's Registration Statement on Form 8-A filed with the Commission on December 9, 1988, including any amendments or reports filed for the purpose of updating such description. All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering hereby of the Common Stock, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified 2 or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. This Prospectus incorporates documents by reference which are not presented herein or delivered herewith. Copies of all documents incorporated by reference in this Prospectus (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents) will be provided without charge to each person to whom a copy of this Prospectus is delivered, upon written or oral request of such person. Request for such copies should be directed to Scott M. Brown, Secretary, Tenet Healthcare Corporation, P.O. Box 31907, Santa Barbara, California 93130, telephone number (805) 563-7000. RISK FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY. CERTAIN FINANCING CONSIDERATIONS; LEVERAGE As of February 28, 1997, Tenet had $4.9 billion of outstanding indebtedness, which amounted to approximately 58.5% of its total capitalization including short-term borrowings and notes and the current portion of long-term debt. In connection with the Merger, on January 30, 1997, Tenet entered into a new $2.3 billion credit agreement (the "New Credit Facility"). The New Credit Facility includes covenants limiting, among other things, borrowings by, and liens on the assets of, Tenet and its subsidiaries, investments, the sale of all or substantially all assets and prepayment of subordinated debt, and prohibiting the repurchase of Tenet stock or the payment of dividends, in addition to a minimum consolidated net worth requirement and certain coverage ratio tests. In addition, the indentures governing Tenet's outstanding public debt include, among other things, covenants limiting the incurrence of additional debt and liens and the payment of dividends. Tenet's failure to comply with any of these covenants could result in an event of default under the New Credit Facility or the public debt indentures, which in turn could cause an event of default to occur under substantially all of Tenet's debt. An event of default could have a material adverse effect on Tenet's business, financial condition and results of operations. The degree to which Tenet is leveraged and the covenants applicable to its outstanding indebtedness may adversely affect Tenet's ability to finance its future operations and could limit its ability to pursue business opportunities that may be in the interests of Tenet and its securityholders. In particular, changes in medical technology, existing, proposed and future legislation, regulations and the interpretation thereof, and the increasing importance of managed care contracts and integrated healthcare delivery systems may require significant investment in facilities, equipment, personnel or services. Although Tenet believes that cash generated from operations, amounts available under its New Credit Facility and its ability to access capital markets will be sufficient to allow it to make such investments, there can be no assurance that Tenet will be able to obtain the funds necessary to make such investments. Furthermore, tax-exempt or government-owned competitors have certain financial advantages such as endowments, charitable contributions, tax-exempt financing and exemption from sales, property and income taxes not available to Tenet, providing them with a potential competitive advantage in making such investments. RISKS ASSOCIATED WITH ACQUISITION STRATEGY Tenet's ability to continue to compete successfully for managed care contracts or to expand and enhance its integrated healthcare delivery systems may depend upon, among other things, Tenet's ability to increase the number of its facilities and services offered. Part of Tenet's business strategy is to expand its 3 healthcare delivery systems and services through the acquisition of and partnerships with hospitals, groups of hospitals, other healthcare businesses, ancillary healthcare providers, physician practices and physician practice assets. There can be no assurance that suitable acquisitions and partnerships can be consummated on terms favorable to Tenet or that financing, if necessary, can be obtained for such acquisitions. Further, there is no assurance that, as Tenet continues to acquire or enter into partnerships with additional facilities and related healthcare service providers in the geographic areas in which it currently operates, it will not face constraints on its ability to grow from Federal and state regulatory agencies. In addition, there can be no assurance that Tenet will be able to operate profitably any hospitals, facilities, businesses or other assets it may acquire or enter into partnerships with, effectively integrate the operations of such acquisitions or partnerships or otherwise achieve the intended benefits of such acquisitions and partnerships. While management believes that certain cost savings may be realized as a result of the Merger, there can be no assurance that any such savings will actually be realized or as to the timing thereof. COMPETITION The healthcare industry has been characterized in recent years by increased competition for patients and staff physicians, excess capacity at general hospitals, a shift from inpatient to outpatient treatment settings and increased consolidation. New competitive strategies of hospitals and other healthcare providers place increasing emphasis on the use of alternative healthcare delivery systems (such as home health services, outpatient surgery and emergency and diagnostic centers) that eliminate or reduce lengths of hospital stays. The principal factors contributing to these trends are advances in medical technology and pharmaceuticals, cost-containment efforts by managed care payors, employers and traditional health insurers, changes in regulations and reimbursement policies, increases in the number and type of competing healthcare providers and changes in physician practice patterns. The revenues and operating results of most of Tenet's hospitals are significantly affected by the hospitals' ability to negotiate favorable contracts with managed care payors. Tenet's future success will depend, in part, on the ability of Tenet's hospitals to continue to attract and retain staff physicians, to enter into managed care contracts and to organize and structure integrated healthcare delivery systems with other healthcare providers and physician practice groups. There can be no assurance that Tenet's hospitals will continue to be able to, on terms favorable to Tenet, attract and retain physicians to their staffs, enter into managed care contracts or organize and structure integrated healthcare delivery systems, for which other healthcare companies with greater financial resources or a wider range of services may be competing. LIMITS ON REIMBURSEMENT Tenet derives a substantial portion of its net operating revenues from third-party payors, including the Medicare and Medicaid programs. Changes in government reimbursement programs have resulted in limitations on, increases in, and in some cases reduced levels of, reimbursement for healthcare services, and additional changes are anticipated. Such changes are likely to result in further limitations on reimbursement levels especially because, in order to reach a balanced budget, the U.S. Congress and the President are in favor of legislating savings under both the Medicare and Medicaid programs. In addition, private payors, including managed care payors, increasingly are demanding discounted fee structures or the assumption by healthcare providers of all or a portion of the financial risk through prepaid capitation arrangements. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required pre-admission authorization and utilization review and by payor pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill patients. In addition, efforts to impose reduced allowances, greater discounts and more stringent cost controls by government and other payors are expected to continue. Although Tenet is unable to predict the effect these changes will have on its operations, as the number of patients covered by managed care payors increases, significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on its business, financial condition and results of operations. 4 EXTENSIVE REGULATION The healthcare industry is subject to extensive Federal, state and local regulation relating to licensure, conduct of operations, ownership of facilities, addition of facilities and services and prices for services. In particular, Medicare and Medicaid antikickback, antifraud and abuse amendments codified under Section 1128B(b) of the Social Security Act (the "Antikickback Amendments") prohibit certain business practices and relationships that might affect the provision and cost of healthcare services reimbursable under Medicare and Medicaid, including the payment or receipt of remuneration for the referral of patients whose care will be paid for by Medicare or other governmental programs. Sanctions for violating the Antikickback Amendments include criminal penalties and civil sanctions, including fines and possible exclusion from government programs such as the Medicare and Medicaid programs. Pursuant to the Medicare and Medicaid Patient and Program Protection Act of 1987, the Department of Health and Human Services ("HHS") has issued regulations that describe some of the conduct and business relationships permissible under the Antikickback Amendments ("Safe Harbors"). The fact that a given business arrangement does not fall within a Safe Harbor does not render the arrangement PER SE illegal. Business arrangements of healthcare service providers that fail to satisfy the applicable Safe Harbor criteria, however, risk increased scrutiny by enforcement authorities. Because Tenet may be less willing than some of its competitors to enter into business arrangements that do not clearly satisfy the Safe Harbors, it could be at a competitive disadvantage in entering into certain transactions and arrangements with physicians and other healthcare providers. See "--Certain Legal Proceedings." The "Health Insurance Portability and Accountability Act of 1996," which became effective January 1, 1997, amends, among other things, Title XI (42 U.S.C. 1301 ET SEQ.) to broaden the scope of current fraud and abuse laws to include all health plans, whether or not they are reimbursed as a Federal program. In addition, Section 1877 of the Social Security Act, which restricts referrals by physicians of Medicare and other government-program patients to providers of a broad range of designated health services with which they have ownership or certain other financial arrangements, was amended effective January 1, 1995, to significantly broaden the scope of prohibited physician referrals under the Medicare and Medicaid programs to providers with which they have ownership or certain other financial arrangements (the "Self-Referral Prohibitions"). Many states have adopted or are considering similar legislative proposals, some of which extend beyond the Medicaid program to prohibit the payment or receipt of remuneration for the referral of patients and physician self-referrals regardless of the source of the payment for the care. Tenet's participation in and development of joint ventures and other financial relationships with physicians and others could be adversely affected by these amendments and similar state enactments. The Company systematically reviews all of its operations to ensure that it complies with the Social Security Act and similar state statutes. Both Federal and state government agencies have announced heightened and coordinated civil and criminal enforcement efforts. One pilot project, Operation Restore Trust, is focused on investigating healthcare providers in the home health and nursing home industries as well as on medical suppliers to these providers in California, Florida, Texas, Illinois and New York. Tenet provides home health and nursing home care in California, Florida and Texas. Some states require state approval for construction and expansion of healthcare facilities, including findings of need for additional or expanded healthcare facilities or services. Certificates of Need, which are issued by governmental agencies with jurisdiction over healthcare facilities, are at times required for capital expenditures exceeding a prescribed amount, changes in bed capacity or services and certain other matters. Following a number of years of decline, the number of states requiring Certificates of Need is once again on the rise as state legislators once again are looking at the Certificate of Need process as a way to contain rising healthcare costs. At February 28, 1997, Tenet operated hospitals in 18 states that require state approval under Certificate of Need programs. Tenet is unable to predict whether it will be able to obtain any Certificates of Need in any jurisdiction where such Certificates of Need are required. 5 Tenet is unable to predict the future course of Federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations. Further changes in the regulatory framework could have a material adverse effect on Tenet's business, financial condition and results of operations. HEALTHCARE REFORM LEGISLATION Healthcare is one of the largest industries in the United States and continues to attract much legislative interest and public attention. Medicare, Medicaid, mandatory and other public and private hospital cost-containment programs, proposals to limit healthcare spending, proposals to limit prices and industry competitive factors are highly significant to the healthcare industry. In addition, the healthcare industry is governed by a framework of Federal and state laws, rules and regulations that are extremely complex and for which the industry has the benefit of little or no regulatory or judicial interpretation. Although Tenet believes it is in compliance in all material respects with such laws, rules and regulations, if a determination is made that the Company was in material violation of such laws, rules or regulations, its business, financial condition and results of operations could be materially adversely affected. There continue to be Federal and state proposals that would, and actions that do, impose more limitations on government and private payments to providers such as Tenet and proposals to increase co-payments and deductibles from program and private patients. At the Federal level, both Congress and the President have in the past, and are expected to in the future, propose healthcare budgets that substantially reduce payments under the Medicare and Medicaid programs. For example, in May 1996, both houses of Congress passed bills that would have significantly reduced Medicare and Medicaid funding by limiting future increases to the funding for such programs. Although President Clinton vetoed those bills, the President's own proposals also propose to limit or reduce increases in future Medicare and Medicaid payments. Many states have enacted or are considering enacting measures that are designed to reduce their Medicaid expenditures and to make certain changes to private healthcare insurance. Various states have applied, or are considering applying, for a Federal waiver from current Medicaid regulations to allow them to serve some of their Medicaid participants through managed care providers. Tennessee has implemented such a revision and Texas has passed a law mandating the state to apply for such a waiver. Louisiana also is considering wider use of managed care for its Medicaid populations. California has created a voluntary health insurance purchasing cooperative that seeks to make healthcare coverage more affordable for businesses with five to 50 employees and, effective January 1, 1995, began changing the payment system for participants in its Medicaid program in certain counties from fee-for-service arrangements to managed care plans. Florida limits the amount by which a hospital's net revenues per admission may be increased each year, has enacted a program creating a system of local purchasing cooperatives and has proposed other changes that have not yet been enacted. Florida has adopted, and other states are considering adopting, legislation imposing a tax on revenues of hospitals to help finance or expand those states' Medicaid systems. A number of other states are considering the enactment of managed care initiatives designed to provide universal low-cost coverage. These proposals also may attempt to include coverage for some people who presently are uninsured. While Tenet anticipates that payments to hospitals will be reduced as a result of future federal and state legislation, it is uncertain at this time what legislation regarding healthcare reform may ultimately be enacted or whether other changes in the administration or interpretation of governmental healthcare programs will occur. There can be no assurance that future healthcare legislation or other changes in the administration or interpretation of governmental healthcare programs will not have a material adverse effect on Tenet's business, financial condition and results of operations. A significant reduction in the amount of payments received by hospitals under government programs such as Medicare and Medicaid could have a material adverse effect on Tenet's business, financial condition and results of operations. 6 CERTAIN LEGAL PROCEEDINGS Tenet continues to defend a greater than normal level of litigation relating to its subsidiaries' former psychiatric operations. The majority of the lawsuits filed contain allegations of medical malpractice as well as allegations of fraud and conspiracy against Tenet and certain of its subsidiaries and former employees. Also named as defendants are numerous doctors and other healthcare professionals. Tenet believes that the increase in litigation arose primarily from advertisements made by certain lawyers seeking former psychiatric patients in order to file claims against Tenet and certain of its subsidiaries. The advertisements focused, in many instances, on Tenet's settlement of past disputes involving the operations of its discontinued psychiatric business, including Tenet's 1994 resolution of the Federal government's investigation and a corresponding criminal plea agreement involving such discontinued psychiatric business of Tenet. Among the suits filed during fiscal 1995 were two lawsuits in Texas state court with approximately 740 individual plaintiffs at present who purport to have been patients in certain Texas psychiatric facilities. During fiscal 1996, 64 plaintiffs voluntarily withdrew from one of the lawsuits and Tenet's motion to recuse the original trial judge in that lawsuit has been granted. The cases of three of the 740 individual plaintiffs within one of the lawsuits currently are set for trial in April 1997. During fiscal 1995 and 1996, lawsuits with approximately 210 plaintiffs at present who purport to have been patients in certain Washington, D.C. psychiatric facilities, containing allegations similar to those contained in the Texas cases described above, were filed in the District of Columbia. In addition to the above, a purported class action was filed in Texas state court in May 1995, containing allegations of fraud and conspiracy similar to those described in the preceding paragraphs. The plaintiff purports to represent all persons who were voluntarily admitted to one of 11 psychiatric hospitals in Texas between January 1, 1981 and December 31, 1991, and satisfied certain other criteria. In February 1996, this case was removed to Federal court. A motion by the plaintiff to remand the case to Texas state court has been denied. A class has not been certified and Tenet believes that a class is not capable of being certified. Tenet expects that additional lawsuits with similar allegations will be filed. Tenet believes it has a number of defenses to each of these actions and will defend these and any additional lawsuits vigorously. Until the lawsuits are resolved, however, Tenet will continue to incur substantial legal expenses. Although, based upon information currently available to it, management believes that the amount of damages, if any, in excess of the reserves Tenet has recorded for unusual litigation costs that may be awarded in any of the foregoing unresolved legal proceedings cannot reasonably be estimated, management does not believe it is likely that any such damages will have a material adverse effect on Tenet's business, financial condition and results of operations. There can be no assurance, however, that the ultimate liability will not exceed such reserves, which primarily represent the estimated costs of defending the actions. Two additional Federal class actions filed in August 1993 were consolidated into one action pending in the U.S. District Court in the Central District of California captioned In re: National Medical Enterprises Securities Litigation II. These consolidated actions are on behalf of a purported class of shareholders who purchased or sold stock of Tenet between January 14, 1993 and August 26, 1993, and allege that each of the defendants violated Section 10(b) of the Exchange Act. Based on these claims, plaintiffs seek compensatory damages, injunctive relief, attorneys' fees, interest and costs. Tenet believes it has meritorious defenses to this action and will defend this litigation vigorously. 7 THE COMPANY Tenet is the second largest investor-owned healthcare services company in the United States. At February 28, 1997, Tenet's subsidiaries owned or leased and operated 127 general hospitals (with 27,366 licensed beds) and related healthcare facilities serving urban and rural communities in 22 states. Tenet's subsidiaries and affiliates also owned or leased and operated various ancillary healthcare businesses, including outpatient surgery centers, home healthcare programs, ambulatory, occupational and rural healthcare clinics, a health maintenance organization, a preferred provider organization and a managed care insurance company as well as a small number of rehabilitation hospitals, specialty hospitals, long-term care facilities and psychiatric facilities. In addition, Tenet's subsidiaries hold the following investments in other healthcare companies: (i) an approximately 12.1% interest in Vencor, Inc., which operates nursing homes and other healthcare businesses, (ii) an approximately 11.3% interest in Total Renal Care Holdings, Inc., which operates kidney dialysis units and certain related healthcare businesses and (iii) an approximately 23% interest in Health Care Property Partners. On January 30, 1997, Tenet completed its acquisition of OrNda, which, with 49 general hospitals (9,599 licensed beds) at November 30, 1996, was the third largest investor-owned healthcare services company in the United States. Many of the hospitals acquired in the Merger are located in geographic areas where Tenet was already operating hospitals, including southern California and south Florida. The Merger also expanded Tenet's operations into several new geographic areas, including Arizona, Iowa, Massachusetts, Mississippi, Nevada, Oregon, Washington, West Virginia and Wyoming. The Merger was accounted for on a pooling of interests basis. OrNda (now known as Tenet HealthSystem HealthCorp) is now a wholly owned subsidiary of Tenet. The Company's principal executive offices are located at 3820 State Street, Santa Barbara, California 93105, and its telephone number is (805) 563-7000. USE OF PROCEEDS All of the Shares offered hereby are being offered by the Selling Shareholders. The Company will not receive any proceeds from the sale of the Shares. See "Selling Shareholders." BUSINESS STRATEGY The Company's strategic objective is to provide quality healthcare services responsive to the current managed care environment. Tenet believes that competition among healthcare providers occurs primarily at the local level. Accordingly, the Company tailors its local strategies to address the specific competitive characteristics of the geographic areas in which it operates, including the number of facilities operated by Tenet, the nature and structure of physician practices and physician groups, the extent of managed care penetration, the number and size of competitors and the demographic characteristics of the area. Key elements of the Company's strategy are: - to develop integrated healthcare delivery systems by coordinating the operations and services of the Company's facilities with other hospitals and ancillary care providers and through alliances with physicians and physician groups; - to reduce costs through enhanced operating efficiencies while improving the quality of care provided; - to develop and maintain its strong relationships with physicians and generally to foster a physician-friendly culture; - to enter into discounted fee for service arrangements, capitated contracts and other managed care contracts with third party payors; and 8 - to acquire and enter into strategic partnerships with hospitals, groups of hospitals, other healthcare businesses, ancillary healthcare providers, physician practices and physician practice assets where appropriate to expand and enhance quality integrated healthcare delivery systems responsive to the current managed care environment. BUSINESS DESCRIPTION The Company's subsidiaries own or lease and operate 127 general hospitals (27,366 licensed beds) serving communities in 22 states. In addition, the Company's subsidiaries own or lease and operate numerous ancillary healthcare facilities, including a small number of rehabilitation hospitals, long-term care facilities and psychiatric facilities located on the same campus as, or nearby, their general hospitals, and operated all or a substantial part of 145 medical office buildings as of February 28, 1997. With the exception of one general hospital that was acquired in fiscal 1996 and is in the process of becoming accredited for the first time, each of the Company's facilities that is eligible for accreditation is fully accredited by the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO"), or another appropriate accreditation agency. With such accreditation, the Company's hospitals are eligible to participate in the Medicare and Medicaid programs. Each of Tenet's general hospitals offers acute care services and most offer operating and recovery rooms, radiology services, intensive care and coronary care nursing units, pharmacies, clinical laboratories, respiratory therapy services, physical therapy services and outpatient facilities. A number of the hospitals also offer tertiary care services such as open heart surgery, neonatal intensive care, neuroscience, orthopedics services and oncology services. Three of the Company's hospitals, Memorial Medical Center (formerly known as MercyBaptist Medical Center), USC University Hospital and Sierra Medical Center, offer quartenary care in such areas as heart, lung, liver and kidney transplants and USC University Hospital and Sierra Medical Center also offer gamma knife brain surgery. Technological developments permitting more procedures to be performed on an outpatient basis, in conjunction with pressures to contain healthcare costs, have led to a shift from inpatient care to ambulatory or outpatient care. Tenet has responded to this trend by enhancing its hospitals' outpatient service capabilities, including (i) establishing freestanding outpatient surgery centers at or near certain of its hospital facilities, (ii) reconfiguring certain hospitals to more effectively accommodate outpatient treatment by, among other things, providing more convenient registration procedures and separate entrances, and (iii) restructuring existing surgical capacity to allow a greater number and range of procedures to be performed on an outpatient basis. Tenet's facilities will continue to emphasize those outpatient services that can be provided on a quality, cost-effective basis and that the Company believes will experience increased demand. The patient volumes and net operating revenues at both the Company's general hospitals and its outpatient surgery centers are subject to seasonal variations caused by a number of factors, including but not necessarily limited to, seasonal cycles of illness, climate and weather conditions, vacation patterns of both patients and physicians and other factors relating to the timing of elective procedures. In addition, inpatient care is continuing to move from acute care to sub-acute care, where a less-intensive level of care is provided. Tenet has been proactive in the development of a variety of sub-acute inpatient services to utilize a portion of its unused capacity, thereby retaining a larger share of overall healthcare expenditures. By offering cost-effective ancillary services in appropriate circumstances, Tenet is able to provide a continuum of care where the demand for such services exists. For example, in certain hospitals the Company has developed transitional care, rehabilitation and long-term care sub-acute units. Such units utilize less intensive staffing levels to provide the range of services sought by payers with a lower cost structure. Tenet's subsidiaries, including OrNda, have acquired 17 general hospitals (or interests in general hospitals) since June 1, 1995: (1) in July 1995, a one-third interest (which subsequently was increased to a 9 50% interest) in the 82-bed St. Clair Hospital located outside of Birmingham, Alabama, which formerly was a not-for-profit general hospital; (2 and 3) in August 1995, Memorial Medical Center (formerly known as MercyBaptist Medical Center), formerly a not-for-profit system, consisting of two general hospitals with an aggregate of 759 licensed beds located in New Orleans, Louisiana, and related physician practices; (4) in September 1995, Providence Memorial Hospital located in El Paso, Texas, which also was a not-for-profit general hospital. Providence is licensed for 471 general hospital beds (34 of which may be used as skilled nursing beds) and is licensed for 30 additional rehabilitation and subacute care beds; (5) in October 1995, a long-term lease of the 49-bed Medical Center of Manchester and its home health business, in central Tennessee; (6) in November 1995, the 104-bed Methodist Hospital of Jonesboro, a not-for-profit general hospital located in Jonesboro, Arkansas. That hospital now is owned by a limited liability company of which Tenet owns 95% and is the manager and Tenet's not-for-profit partner St. Vincent TotalHealth Corporation, owns 5%; (7) in November 1995, the 202-bed University Medical Center (subsequently re-named Florida Medical Center--South) located in Plantation, Florida; (8) in January 1996, the 498-bed Houston Northwest Medical Center located in Houston, Texas; (9) in June 1996, the 378-bed Hialeah Hospital located in Hialeah, Florida; (10) in July 1996, the 136-bed Cypress Fairbanks Medical Center located in Houston, Texas; (11) in August 1996, the 400-bed Centinela Hospital Medical Center located in Inglewood, California; (12) in September 1996, the 329-bed Saint Vincent Hospital located in Worcester, Massachusetts; (13) in October 1996, the 319-bed Lloyd Noland Hospital located in Birmingham, Alabama; (14 and 15) in December 1996, the 296-bed Western Medical Center located in Santa Ana, California and the 193-bed Western Medical Center-Anaheim located in Anaheim, California; (16 and 17) in January 1997, the 357-bed North Shore Medical Center located in Miami, Florida and a long-term lease of the 312-bed Brookside Hospital located in San Pablo, California. In addition, in August 1995, Tenet entered into an agreement with the Cleveland Clinic Florida to develop a new 150-bed general hospital in western Broward County, Florida. Completion of that project is subject to governmental approvals. In the fourth quarter of fiscal 1996, Tenet converted the Jo Ellen Smith general hospital in New Orleans, Louisiana, into a specialty hospital. In April 1997, Tenet signed a definitive agreement for a long-term lease of the 398-bed Desert Hospital located in Palm Springs, California. That transaction is expected to close by the end of May. KEY ELEMENTS OF TENET'S STRATEGY DEVELOP INTEGRATED HEALTHCARE DELIVERY SYSTEMS. In most geographic areas it serves, Tenet has established or is developing an integrated healthcare delivery system to offer a full range of quality patient care responsive to the current managed care environment by coordinating the services offered by its hospitals and related facilities with the services offered by other providers. The Company believes that general hospitals will serve as the hubs for the development of integrated healthcare delivery systems due to their highly developed infrastructure, extensive service base, sophisticated equipment and skilled personnel. The Company's strategy is implemented in a number of ways depending upon the characteristics of the local area. In areas where there is significant managed care penetration or in which the Company anticipates such penetration, the Company encourages physicians practicing at its hospitals to form independent physician associations ("IPAs"). As part of its strategy, the Company intends to form physician hospital organizations ("PHOs") that bring together its hospitals and IPAs, physicians or physician groups under a variety of arrangements to negotiate for managed care contracts, including capitated contracts. Tenet has formed a PHO for the New Orleans area and is in the process of forming PHOs in several other geographic areas. The Company also has formed management service organizations ("MSOs"), which provide management and administrative services to physicians, physician group practices and IPAs, and which enter into managed care contracts on behalf of these groups and, in certain circumstances in the future, PHOs. Where appropriate, the Company also purchases physician and physician group practices and employs such physicians or purchases the assets of those practices and manages such practices through its MSOs or otherwise. 10 The Company uses various combinations of one or all of the foregoing methods in each geographic area to create a community of interest between its hospitals and the physicians who practice there, to which it adds additional resources, where necessary, to create an integrated healthcare delivery system capable of providing a full range of healthcare services to the community. In areas where the Company has a significant presence, such as southern California, south Florida, and the greater New Orleans area, it uses its own resources to establish and expand its integrated healthcare delivery systems. For example, in California, the Company is developing the Tenet California HealthSystem, an integrated healthcare delivery system linking Tenet's 45 general hospitals (33 of which are in southern California) and other health care facilities in California with physicians and other healthcare professionals as well as other healthcare providers' facilities in geographic areas throughout the state. In south Florida, the Company has created the Tenet South Florida HealthSystem, an integrated healthcare delivery system consisting of 12 general hospitals (six of which are tertiary care hospitals), and numerous related healthcare operations. In the greater New Orleans area the Company has established and is expanding the Tenet Louisiana HealthSystem, an integrated healthcare delivery system with eight general hospitals, several specialty care hospitals and numerous other healthcare operations. Another example of how this integrated delivery strategy is being implemented is the Company's Redding Medical Center, a tertiary care hospital located in a primarily rural area in northern California, around which hospital the Company is developing such a system, with the hospital itself acting as the hub. Affiliations with physician practices, non-Tenet primary care hospitals, an outpatient surgery center developed in partnership with local physicians and affiliated ancillary care providers in the surrounding area enable this system to provide a full range of healthcare services. In addition, the Company has introduced its HMO product to this geographic area. The Company believes that the development of such integrated healthcare delivery systems will enhance its ability to contract with payors in those areas that have experienced or will experience a high degree of managed care penetration. REDUCE COSTS THROUGH ENHANCED OPERATING EFFICIENCY WHILE IMPROVING THE QUALITY OF CARE. The Company continues to position itself as a provider of quality healthcare services responsive to the current managed care environment by enhancing operating efficiencies at the hospital, regional and corporate levels. For example, the Company has implemented programs at the hospital level to monitor and adjust staffing levels in response to patient acuity and hospital census, and to improve service and the quality of outcomes while reducing operating expenses through the reengineering of the delivery of patient care in its hospitals. At several of the Company's hospitals, job functions have been redefined and services have been moved directly to the patient floors. Tenet believes that increasing the amount of patient care delivered at the bedside will increase patient satisfaction while reducing costs. This initiative also has enhanced the ability of professionals to focus their attention on higher levels of patient care. In order to reduce costs and achieve economies of scale at the regional level, the Company has combined the hospital business offices of facilities located in close geographic proximity. Consolidating business offices allows the Company's hospitals to reduce staffing levels while enhancing the effectiveness of their billing and collection efforts. The Company also has reduced costs and achieved economies of scale at the hospital, regional and corporate levels by consolidating the collection of accounts receivable through its Syndicated Office Systems debt collection subsidiary and negotiating purchase contracts that take greater advantage of its group purchasing program. In addition, management believes that certain cost savings may be realized following the Merger. No assurances can be made as to the amount of cost savings, if any, that actually will be realized. DEVELOP AND MAINTAIN STRONG RELATIONSHIPS WITH PHYSICIANS. Tenet believes that its success will depend in large part on maintaining strong relationships with physicians. To better serve the needs of its patients, Tenet has devoted substantial management effort and resources to establishing and maintaining such relationships and to fostering a physician-friendly culture at each of its hospitals. The Company attracts physicians to its hospitals by equipping its hospitals with technologically advanced equipment, sponsoring 11 training programs to educate physicians on advanced medical procedures, using governing boards for each hospital, the primary voting members of which are physicians and community members and otherwise creating an environment within which physicians prefer to practice. The Company often is at the forefront in introducing new services, medical equipment and medical technologies designed to improve patient care and assist physicians. These efforts serve the dual purposes of developing and maintaining strong relationships with physicians and better serving the needs of patients. The Company looks to physicians to play an active role in the governance of its hospitals. For example, each of the Company's hospitals has a governing board, the members of which primarily are physicians who are members of the medical staff and local community members. These boards develop short and long-term plans for the hospitals and review and approve, as appropriate, actions of the medical staff, including staff appointments, credentialing, peer review and quality assurance. The Company also maintains a physician advisory board that provides advice to the Company with respect to long-term strategy, emerging technologies, training programs and significant hospital operational issues. This advisory board serves as another vehicle through which physicians on the staffs of the Company's hospitals can communicate their views to the Company. ENTER INTO MANAGED CARE CONTRACTS. The Company believes that its extensive experience operating in California, which has a high degree of managed care penetration, will enhance its ability to compete successfully in other geographic areas that are experiencing an increase in managed care. Pressures to control healthcare costs have resulted in a continuing increase in the percentage of the United States population that is covered by managed healthcare plans. To increase the cost-effectiveness of healthcare delivery, managed care payors have introduced new utilization review systems, increased the use of discounted and capitated fee arrangements and have attempted, where appropriate, to direct patients to less intensive alternatives along the continuum of patient care. Managed care payors typically require members or provide financial incentives for members to utilize only those healthcare providers that have contracted with such payors to provide care on a discounted or capitated basis. Accordingly, in order to maintain and increase their patient base as managed care penetration increases, it is important for providers to enter into such contracts. In determining with which providers to contract, payors consider, among other factors, the quality of care provided, the range of services, the geographic coverage and the cost-effectiveness of the care provided. Tenet believes that the development and expansion of its integrated healthcare delivery systems will enable it to better compete for managed care contracts, which, in turn, should allow it to expand its patient volume and cash flow, notwithstanding the reduced rates at which services may be provided under such contracts. PURSUE STRATEGIC ACQUISITIONS AND PARTNERSHIPS. The Company intends to continue to pursue aggressively strategic acquisitions of and partnerships with hospitals, other healthcare businesses, ancillary healthcare providers, physician practices and physician practice assets, where appropriate, to expand and enhance its integrated healthcare delivery systems. Examples of recent strategic acquisitions are the Company's June 1996 acquisition of Hialeah Hospital, a 378-bed general hospital located in Hialeah, Florida and the January 1997 acquisition of North Shore Medical Center, a 357-bed general hospital located in Miami, Florida. Hialeah Hospital's location in Hialeah and North Shore Medical Center's location in Miami, both in north Dade County, have enhanced the geographic coverage of the Tenet South Florida HealthSystem and increased the number of general hospitals in that system to 12. Tenet believes that significant opportunities exist to enter into additional partnerships and make strategic acquisitions, where appropriate, in the furtherance of its strategy. 12 DOMESTIC PROPERTIES The following table sets forth certain information relating to each of the 127 hospitals (27,366 licensed beds) operated by the Company at February 28, 1997. Two of those hospitals currently are being independently managed pursuant to an agreement entered into with the Federal Trade Commission in connection with the Merger, one of which the Company expects to sell by August 1, 1997, and the other of which will resume being managed by the Company upon the sale of the first.
LICENSED GEOGRAPHIC AREA/STATE FACILITY LOCATION BEDS - ------------------------------- --------------------------------------------------- --------------------- ------------- Southern California Alvarado Hospital Medical Center San Diego 231 Brotman Medical Center Culver City 438 Centinela Hospital Medical Center Inglewood 400 Century City Hospital (1) Los Angeles 190 Chapman Medical Center (1) Orange 135 Coastal Communities Hospital (2) Santa Ana 177 Community Hospital of Huntington Park (1) Huntington Park 99 Encino Hospital (1)(3) Encino 151 Fountain Valley Regional Hospital and Medical Center Fountain Valley 413 Garden Grove Hospital and Medical Center Garden Grove 167 Garfield Medical Center Monterey Park 211 Greater El Monte Community Hospital South El Monte 113 Harbor View Medical Center San Diego 156 Irvine Medical Center (1) Irvine 176 John F. Kennedy Memorial Hospital Indio 130 Lakewood Regional Medical Center Lakewood 161 Los Alamitos Medical Center Los Alamitos 173 Medical Center of North Hollywood North Hollywood 160 Midway Hospital Medical Center Los Angeles 225 Mission Hospital of Huntington Park Huntington Park 127 Monterey Park Hospital Monterey Park 102 Placentia Linda Community Hospital Placentia 114 San Dimas Community Hospital San Dimas 93 Santa Ana Hospital Medical Center (1) Santa Ana 90 South Bay Medical Center (1) Redondo Beach 201 St. Luke Medical Center Pasadena 165 Suburban Medical Center (1) Paramount 184 Tarzana Regional Medical Center (1)(3) Tarzana 233 USC University Hospital (4) Los Angeles 286 Western Medical Center--Anaheim Anaheim 193 Western Medical Center Santa Ana 296 Whittier Hospital Medical Center Whittier 159 Woodruff Community Hospital Long Beach 96 Northern and Other California Brookside Hospital (1) San Pablo 312 Community Hospital & Rehabilitation Center of Los Gatos (1) Los Gatos 164 Doctors Hospital of Manteca Manteca 73 Doctors Medical Center of Modesto Modesto 433 Doctors Hospital of Pinole (1) Pinole 137 French Hospital Medical Center (5) San Luis Obispo 147 Redding Medical Center Redding 185 San Ramon Regional Medical Center San Ramon 123 Sierra Vista Regional Medical Center San Luis Obispo 199 Twin Cities Community Hospital Templeton 84 Valley Community Hospital (1)(6) Santa Maria 70 South Florida Coral Gables Hospital (7) Coral Gables 273 Delray Community Hospital Delray Beach 224 Florida Medical Center (8) Ft. Lauderdale 459 Florida Medical Center, South (8) Plantation 202 GEOGRAPHIC AREA/STATE STATUS - ------------------------------- --------- Southern California Owned Owned Owned Leased Leased Owned Leased Leased Owned Owned Owned Owned Owned Leased Owned Owned Owned Owned Owned Owned Owned Owned Owned Leased Leased Owned Leased Leased Leased Owned Owned Owned Owned Northern and Other California Leased Leased Owned Owned Leased Owned Owned Owned Owned Owned Leased South Florida Owned Owned Owned Owned
13
LICENSED GEOGRAPHIC AREA/STATE FACILITY LOCATION BEDS - ------------------------------- --------------------------------------------------- --------------------- ------------- Hialeah Hospital Hialeah 378 Hollywood Medical Center Hollywood 324 North Ridge Medical Center Ft. Lauderdale 391 North Shore Medical Center Miami 357 Palm Beach Gardens Medical Center (1) Palm Beach Gardens 204 Palmetto General Hospital Hialeah 360 Parkway Regional Medical Center (9) North Miami 689 West Boca Medical Center Boca Raton 185 Tampa/St. Petersburg, Florida Memorial Hospital of Tampa Area Tampa 174 North Bay Medical Center New Port Richey 122 Palms of Pasadena Hospital St. Petersburg 310 Seven Rivers Community Hospital Crystal River 128 Town and Country Hospital Tampa 201 New Orleans, Louisiana Area Doctors Hospital of Jefferson (1) Metairie 138 Kenner Regional Medical Center Kenner 300 Meadowcrest Hospital Gretna 200 Memorial Medical Center Mid-City New Orleans 272 Memorial Medical Center Uptown New Orleans 526 Northshore Regional Medical Center (1) Slidell 174 St. Charles General Hospital New Orleans 173 Phoenix/Tucson, Arizona Community Hospital Medical Center Phoenix 43 Mesa General Hospital Medical Center (1) Mesa 125 St. Luke's Medical Center (1) Phoenix 276 Tempe St. Luke's Hospital (1) Tempe 110 Tucson General Hospital Tucson 119 Dallas, Texas Area Doctors Hospital Dallas 268 Garland Community Hospital Garland 113 Lake Pointe Medical Center (10) Rowlett 92 RHD Memorial Medical Center (1) Dallas 190 Trinity Medical Center (1) Carrollton 149 Houston, Texas Area Cypress Fairbanks Medical Center Houston 149 Houston Northwest Medical Center (11) Houston 498 Park Plaza Hospital (12) Houston 468 Sharpstown General Hospital Houston 190 Twelve Oaks Hospital Houston 336 Other Texas Brownsville Medical Center Brownsville 177 Mid-Jefferson Hospital Nederland 138 Nacogdoches Medical Center Nacogdoches 150 Odessa Regional Hospital (13) Odessa 100 Park Place Medical Center Port Arthur 244 Providence Memorial Hospital El Paso 471 Sierra Medical Center El Paso 365 South Park Hospital and Medical Center Lubbock 101 Southwest General Hospital San Antonio 286 Trinity Valley Medical Center Palestine 150 Alabama Brookwood Medical Center Birmingham 586 Lloyd Noland Hospital Birmingham 319 St. Clair Hospital (1)(14) Birmingham 82 Arkansas Central Arkansas Hospital Searcy 193 Methodist Hospital of Jonesboro (15) Jonesboro 104 National Park Medical Center Hot Springs 165 St. Mary's Regional Hospital Russellville 170 Georgia North Fulton Regional Hospital (1) Roswell 167 Spalding Regional Hospital Griffin 160 Indiana Culver Union Hospital Crawfordsville 120 Winona Memorial Hospital Indianapolis 148 Missouri Columbia Regional Hospital (16) Columbia 265 Lucy Lee Hospital (1) Poplar Bluff 201 Lutheran Medical Center St. Louis 408 GEOGRAPHIC AREA/STATE STATUS - ------------------------------- --------- Owned Owned Owned Owned Leased Owned Owned Owned Tampa/St. Petersburg, Florida Owned Owned Owned Owned Owned New Orleans, Louisiana Area Leased Owned Owned Owned Owned Leased Owned Phoenix/Tucson, Arizona Owned Leased Leased Leased Owned Dallas, Texas Area Owned Owned Owned Leased Leased Houston, Texas Area Owned Owned Owned Owned Owned Other Texas Owned Owned Owned Owned Owned Owned Owned Owned Owned Owned Alabama Owned Owned Leased Arkansas Owned Owned Owned Owned Georgia Leased Owned Indiana Owned Owned Missouri Owned Leased Owned
14
LICENSED GEOGRAPHIC AREA/STATE FACILITY LOCATION BEDS - ------------------------------- --------------------------------------------------- --------------------- ------------- Twin Rivers Regional Medical Center Kennett 118 North Carolina Central Carolina Hospital Sanford 137 Frye Regional Medical Center (1) Hickory 355 Oregon Eastmoreland Hospital Portland 100 Woodland Park Hospital (4) Portland 209 South Carolina East Cooper Community Hospital Mount Pleasant 100 Hilton Head Hospital (17) Hilton Head 64 Piedmont Medical Center Rock Hill 268 Tennessee John W. Harton Regional Medical Center Tullahoma 137 Medical Center of Manchester (1) Manchester 49 Saint Francis Hospital Memphis 693 University Medical Center Lebanon 261 Nine additional states Davenport Medical Center Davenport, IA 150 Gulf Coast Medical Center Biloxi, MI 189 Lake Meade Hospital Medical Center North Las Vegas, NV 198 Lander Valley Medical Center Lander, WY 102 Minden Medical Center Minden, LA 121 Plateau Medical Center Oak Hill, WV 91 Puget Sound Hospital Tacoma, WA 160 Saint Joseph Hospital (18) Omaha, NE 374 Saint Vincent Hospital Worcester, MA 329 GEOGRAPHIC AREA/STATE STATUS - ------------------------------- --------- Owned North Carolina Owned Leased Oregon Owned Leased South Carolina Owned Owned Owned Tennessee Owned Leased Owned Owned Nine additional states Owned Owned Owned Owned Owned Owned Owned Owned Owned
- ------------------------------ (1) Leased from a third party. (2) Owned by a partnership in which a Tenet subsidiary owns 50% and is the managing general partner and individual physicians own the remaining interests. (3) Leased by a partnership in which Tenet's subsidiaries own a 75% interest. (4) On leased land. (5) Independently managed and being held for sale. (6) Independently managed until French Hospital Medical Center is sold, at which time Valley Community Hospital will resume being managed by a Tenet subsidiary. (7) Owned by a partnership in which Tenet's subsidiaries own a 94% interest and individual physicians own the remaining interests. (8) Owned by a partnership in which Tenet's subsidiaries own an 95% interest and individual physicians own the remaining interests. (9) Effective September 1, 1996, the 352 bed license of Golden Glades Medical Center was combined with the license of this nearby hospital resulting in this hospital's licensed beds increasing to 689 licensed beds. (10) Owned by a partnership in which Tenet's subsidiaries own an 80% interest and individual physicians own the remaining interests. (11) Owned by a partnership in which Tenet's subsidiaries own a 70% interest and individual physicians own the remaining interests. (12) Excludes the 38-bed Plaza Specialty Hospital in Houston, Texas, the financial results of which are combined with Park Plaza Hospital. (13) Owned by a partnership in which Tenet's subsidiaries own an 78% interest and individual physicians own the remaining interests. (14) A Tenet subsidiary owns a 50% interest in the limited liability company that leases this hospital. This hospital's financial results are not consolidated with Tenet's financial results and it is not included in the count of the total number of hospitals owned or leased by Tenet because Tenet does not manage or control the management of this hospital. (15) Owned by a limited liability company of which a Tenet subsidiary owns 95% and is the managing member. (16) Excludes the 64-bed Keller Memorial Hospital in Columbia, Missouri, the financial results of which were combined with the Columbia Regional Hospital. The lease for Keller Memorial Hospital was terminated during the first quarter of fiscal 1996. (17) Owned by a partnership in which Tenet's subsidiaries own a 70% interest. (18) Owned by a limited liability company in which a Tenet subsidiary owns a 74% interest and is the managing member. 15 SELLING SHAREHOLDERS The following table sets forth information with respect to the number of Shares owned by each of the Selling Shareholders and the number of Shares that may be offered hereby by each Selling Shareholder. The number of Shares set forth for each Selling Shareholder other than JLL is based on the maximum number of Shares that may be distributed to such Selling Shareholder by JLL assuming a price per share of Tenet Common Stock of $26, the closing price of Tenet Common Stock as reported on the New York Stock Exchange Composite Tape on April 8, 1997. In connection with any offering and sale of the Shares, the names of the Selling Shareholders participating in such offering and the respective number of Shares being offered by each Selling Shareholder will be set forth in an accompanying Prospectus Supplement and will be determined on the basis of the price to the public and the underwriting discount, if any, at the time of the sale of such Shares. The aggregate number of shares of Common Stock held by the Selling Shareholders is 9,580,644. The Company has agreed to pay the fees and expenses of registration, including the fees and expenses (not to exceed $50,000) for one counsel on behalf of the Selling Shareholders, in connection with the sale of the Shares offered hereby (other than underwriting discounts and commissions, which will be paid by the Selling Shareholders).
NUMBER OF SHARES OWNED NUMBER OF NUMBER OF PRIOR TO SHARES SHARES OWNED NAME OFFERING BEING OFFERED AFTER THE OFFERING - --------------------------------------------------------------- --------------- ------------- ----------------------- Joseph Littlejohn & Levy Fund, L.P.(1)......................... 9,580,644 9,580,644 0 JLL Partners: - ----------- California Public Employees' Retirement System(2)(3)........... 1,835,930 1,835,930 0 New York State Common Retirement Fund(2)(4).................... 815,034 815,034 0 Pension Reserves Investment Management Board(2)................ 734,402 734,402 0 The Rockefeller Foundation(2).................................. 367,275 367,275 0 State of Wisconsin Investment Board(2)......................... 367,275 367,275 0 Virginia Retirement System(2).................................. 734,402 734,402 0 Yale University(2)............................................. 367,275 367,275 0 Oregon Public Employees' Retirement System(2).................. 1,101,528 1,101,528 0 EES Distressed Securities Fund L.P.(2)......................... 183,563 183,563 0 Montana Board of Investments(2)................................ 18,312 18,312 0 State Universities Retirement System(2)........................ 55,084 55,084 0 Orange County Employees Retirement System(2)................... 73,396 73,396 0 Public Employees' Retirement Association of Colorado(2)(5)..... 1,101,528 1,101,528 0 JLL Associates, L.P.(1)(2)..................................... 1,825,641 1,825,641 0 - --------------- ------------- Total.......................................................... 9,580,644 9,580,644 0
- ------------------------ 1. Peter A. Joseph and Paul S. Levy, the general partners of JLL Associates, L.P., the general partners of JLL, were members of the Company's Board of Directors from January 30, 1997 until April 9, 1997. 2. Estimated amounts assuming a distribution to such Selling Shareholders by JLL calculated using a price per share of Common Stock of $24.50, the closing price of the Common Stock as reported on the New York Stock Exchange Composite Tape on April 15, 1997. The actual amounts to be sold by such Selling Shareholders will be determined on the basis of the price to the public less the underwriting discount at the time of the sale of the Shares by such Selling Shareholders. 3. Does not include approximately 4,080,012 shares owned as of the date hereof by California Public Employees' Retirement System in addition to such shares as may be received in a distribution from JLL. 16 4. Does not include approximately 2,731,000 shares of Common Stock owned as of the date hereof by the New York State Common Retirement Fund in addition to such shares as may be received in a distribution from JLL. 5. Does not include approximately 12,200 shares of Common Stock owned as of the date hereof by the Public Employees' Retirement Association of Colorado in addition to such shares as may be received in a distribution from JLL. PLAN OF DISTRIBUTION The shares may be sold from time to time by the Selling Shareholders in underwritten public offerings, in any one or more transactions (which may involve block transactions) on the Exchanges, in the over-the-counter market, on NASDAQ, on any exchange on which the Common Stock may then be listed or otherwise in negotiated transactions, or a combination of such methods of sale, at market prices prevailing at the time of sale or at negotiated prices. The Selling Shareholders may effect such transactions by selling shares to or through broker-dealers, and such broker-dealers may sell the shares as agent or may purchase such shares as principal and resell them for their own account pursuant to this Prospectus. Such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Shareholders and/or purchasers of shares for whom they may act as agent (which compensation may be in excess of customary commissions). To the extent required, the names of any underwriter and applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in an accompanying Prospectus Supplement. In connection with such sales, the Selling Shareholders and any participating brokers or dealers may be deemed to be "underwriters" as defined in the Securities Act, in which event all brokerage commissions or discounts and other compensation received by such brokers or dealers may be deemed underwriting compensation under the Securities Act. In addition, any of the securities that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. LEGAL MATTERS Certain legal matters with respect to the Shares offered hereby will be passed upon for the Company by Scott M. Brown, Senior Vice President, Secretary and General Counsel of the Company. As of March 31, 1997, Mr. Brown owned 2,794 shares of Common Stock and had outstanding options to purchase 201,634 shares of Common Stock pursuant to Company benefit plans. EXPERTS The supplemental consolidated financial statements and the consolidated financial statements and schedule of Tenet Healthcare Corporation as of May 31, 1996 and 1995, and for each of the years in the three-year period ended May 31, 1996, have been incorporated by reference herein and in the Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The reports of KPMG Peat Marwick LLP covering the supplemental consolidated financial statements and the consolidated financial statements refer to a change in the method of accounting for income taxes in 1994. The consolidated financial statements of OrNda HealthCorp at August 31, 1996 and 1995, and for each of the three years in the period ended August 31, 1996, incorporated by reference in the Tenet Healthcare Corporation Current Report on Form 8-K dated February 12, 1997 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon and incorporated by reference therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 17 FORWARD LOOKING STATEMENTS Prospective investors are cautioned that the statements in this Prospectus and in documents incorporated by reference herein that are not descriptions of historical facts constitute forward looking statements that are subject to risks and uncertainties. The Company's actual results could differ materially from those currently anticipated in these forward looking statements due to, among other things, certain factors described in documents incorporated by reference herein, including, without limitation, the Tenet 10-K. 18 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS SUPPLEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ------------------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- The Company............................................................... S-2 Use of Proceeds........................................................... S-2 Selling Stockholders...................................................... S-2 Underwriting.............................................................. S-4 Legal Matters............................................................. S-5
PROSPECTUS Available Information..................................................... 2 Incorporation of Certain Documents by Reference........................... 2 Risk Factors.............................................................. 3 The Company............................................................... 8 Use of Proceeds........................................................... 8 Business Strategy......................................................... 8 Business Description...................................................... 9 Key Elements of Tenet's Strategy.......................................... 10 Domestic Properties....................................................... 13 Selling Shareholders...................................................... 16 Plan of Distribution...................................................... 17 Legal Matters............................................................. 17 Experts................................................................... 17 Forward Looking Statements................................................ 18
SHARES TENET HEALTHCARE CORPORATION COMMON STOCK (PAR VALUE $0.075) --------------------- PROSPECTUS SUPPLEMENT --------------------- MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. J.P. MORGAN & CO. APRIL , 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission fee............................................ $ 76,935 Printing and Engraving fees....................................................... $ 40,000 Accounting fees and expenses...................................................... $ 15,000 Legal fees and expenses........................................................... $ 60,000 Blue sky fees and expenses........................................................ $ 1,000 Miscellaneous fees and expenses................................................... $ 7,065 Total fees and expenses........................................... $ 200,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 78.751 of the Nevada General Corporation Law ("Nevada Law") provides generally and in pertinent part that a Nevada corporation may indemnify its directors and officers against expenses, judgments, fines, and settlements actually and reasonably incurred by them in connection with any civil suit or action, except actions by or in the right of the corporation, or any administrative or investigative proceeding if, in connection with the matters in issue, they acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and in connection with any criminal suit or proceeding, if in connection with the matters in issue, they had no reasonable cause to believe their conduct was unlawful. Section 78.751 further provides that, in connection with the defense or settlement of any action by or in the right of the corporation, a Nevada corporation may indemnify its directors and officers against expenses actually and reasonably incurred by them if, in connection with the matters in issue, they acted in good faith, in a manner they reasonably believed to be in, or not opposed to, the best interest of the corporation. Section 78.751 further permits a Nevada corporation to grant its directors and officers additional rights of indemnification through by-law provisions and otherwise. Article X of the Restated Articles of Incorporation, as amended, of the Registrant (the Restated Articles") and Article IX of the Restated By-Laws, as amended, of the Registrant (the "Restated Bylaws") provide that the Registrant shall indemnify its directors and officers to the fullest extent permitted by Nevada Law. The Registrant has entered into indemnification agreements with each of its directors and executive officers. Such indemnification agreements are intended to provide a contractual right to indemnification, to the maximum extent permitted by law, for expenses (including attorneys' fees), judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by the person to be indemnified in connection with any proceeding (including, to the extent permitted by applicable law, any derivative action) to which they are, or are threatened to be made, a party by reason of their status in such positions. Such indemnification agreements do not change the basic legal standards for indemnification set forth under Nevada Law, the Restated Articles or the Restated Bylaws. Such agreements are intended to be in furtherance, and not in limitation of, the general right to indemnification provided in the Restated Articles and Restated Bylaws. Section 78.037 of the Nevada Law provides that the articles of incorporation may contain, and Tenet's Restated Articles do contain, a provision eliminating or limiting the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director provided that such provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct or a knowing violation of law, or (ii) under Section 78.300 of the Nevada Law (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock). The Company's Restated Articles and Restated Bylaws II-1 permit indemnification of directors and officers in terms sufficiently broad to indemnify officers and directors under certain circumstances for liabilities (including expense reimbursement) arising under the Securities Act. The Company also maintains an indemnification agreement with each of its Directors and any officer designated by the Company's Board of Directors insuring them against certain liabilities incurred by them in the performance of their duties, including liabilities under the Securities Act. In addition, the Company has directors and officers liability insurance policies. ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION - ------ -------------------------------------------------------------------------- 1.1 Form of Purchase Agreement among Tenet Healthcare Corporation, the Selling Shareholders and the Underwriters *5.1 Opinion of Scott M. Brown 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Ernst & Young LLP *23.3 Consent of Scott M. Brown (included in his opinion filed as Exhibit 5.1) *24.1 Power of Attorney (included on page II-4 of this Registration Statement)
- ------------------------ * Previously filed. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities II-2 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. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, the Nevada Law, the Restated Articles of Incorporation, and the Restated Bylaws, as amended, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of such issue. (d) (i) For purposes of determining liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a 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. (ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, in the City of Santa Barbara, State of California on April 17, 1997. TENET HEALTHCARE CORPORATION By: /s/ SCOTT M. BROWN ----------------------------------------- Scott M. Brown SENIOR VICE PRESIDENT Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed below on April 17, 1997, by the following persons in the capacities indicated: Tenet Healthcare Corporation
NAME TITLE - ------------------------------ -------------------------- Executive Vice President TREVOR FETTER* Chief Financial Officer - ------------------------------ (Principal Financial Trevor Fetter Officer) Senior Vice President and RAYMOND L. MATHIASEN* Chief Accounting Officer - ------------------------------ (Principal Accounting Raymond L. Mathiasen Officer) /s/ SCOTT M. BROWN - ------------------------------ Senior Vice President Scott M. Brown Chairman, Chief Executive JEFFREY C. BARBAKOW* Officer and Director - ------------------------------ (Principal Executive Jeffrey C. Barbakow Officer) MICHAEL H. FOCHT, SR.* - ------------------------------ President, Chief Operating Michael H. Focht, Sr. Officer and Director
II-4
NAME TITLE - ------------------------------ -------------------------- BERNICE BRATTER* - ------------------------------ Director Bernice Bratter MAURICE J. DEWALD* - ------------------------------ Director Maurice J. DeWald PETER DE WETTER* - ------------------------------ Director Peter de Wetter EDWARD EGBERT, M.D.* - ------------------------------ Director Edward Egbert, M.D. RAYMOND A. HAY* - ------------------------------ Director Raymond A. Hay JAMES P. LIVINGSTON* - ------------------------------ Director James P. Livingston RICHARD S. SCHWEIKER* - ------------------------------ Director Richard S. Schweiker *By: /s/ SCOTT M. BROWN - ------------------------------ Scott M. Brown Attorney-in-Fact
II-5 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NO. DESCRIPTION PAGE - ----------- ----------------------------------------------------------------------------------------- -------------- 1.1 Form of Purchase Agreement among Tenet Healthcare Corporation, the Selling Shareholders and the Underwriters *5.1 Opinion of Scott M. Brown 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Ernst & Young LLP *23.3 Consent of Scott M. Brown (included in his opinion filed as Exhibit 5.1) *24.1 Power of Attorney (included on page II-4 of this Registration Statement)
- ------------------------ * Previously filed. EX-1.1 2 EX 1.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TENET HEALTHCARE CORPORATION (a Nevada corporation) _____ Shares of Common Stock PURCHASE AGREEMENT Dated: April __, 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS SECTION 1. Representations and Warranties. . . . . . . . . . . . . . . . 3 (a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY . . . . . . . . 3 (i) Compliance with Registration Requirements. . . . . . . 3 (ii) Incorporated Documents . . . . . . . . . . . . . . . . 3 (iii) Capitalization; Authorization and Description of Securities . . . . . . . . . . . . . . . . . . . . . . 4 (iv) Authorization of Agreement . . . . . . . . . . . . . . 4 (v) Absence of Defaults and Conflicts. . . . . . . . . . . 4 (vi) Absence of Further Requirements. . . . . . . . . . . . 5 (vii) Listing. . . . . . . . . . . . . . . . . . . . . . . . 5 (viii) Good Standing of the Company.. . . . . . . . . . . . . 5 (ix) Subsidiaries . . . . . . . . . . . . . . . . . . . . . 5 (x) Absence of Proceedings . . . . . . . . . . . . . . . . 6 (xi) Independent Accountants. . . . . . . . . . . . . . . . 6 (xii) No Material Adverse Change in Business . . . . . . . . 6 (xiii) Possession of Licenses and Permits . . . . . . . . . . 7 (xiv) Investment Company Act . . . . . . . . . . . . . . . . 7 (xv) Accuracy of Exhibits . . . . . . . . . . . . . . . . . 7 (xvi) Title to Property. . . . . . . . . . . . . . . . . . . 7 (b) REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS. . 8 (i) Accurate Disclosure. . . . . . . . . . . . . . . . . . 8 (ii) Authorization of Agreements. . . . . . . . . . . . . . 8 (iii) Good and Valid Title . . . . . . . . . . . . . . . . . 8 (iv) Due Execution of Power of Attorney and Custody Agreement. . . . . . . . . . . . . . . . . . . . . . . 8 (v) Absence of Manipulation. . . . . . . . . . . . . . . . 8 (vi) Absence of Further Requirements. . . . . . . . . . . . 9 (vii) Certificates Suitable for Transfer . . . . . . . . . . 9 (viii) No Association with NASD . . . . . . . . . . . . . . . 9 (ix) No Legal Proceedings Against Sale. . . . . . . . . . . 9 (x) No Violation of Charter. . . . . . . . . . . . . . . . 9 (xi) Due Execution of Agreement . . . . . . . . . . . . . . 9 (c) OFFICER'S CERTIFICATES. . . . . . . . . . . . . . . . . . . . 9 SECTION 2. Sale and Delivery to Underwriters; Closing . . . . . . . . . . 10 (a) SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 10 (b) PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (c) DENOMINATIONS; REGISTRATION . . . . . . . . . . . . . . . . . 10 SECTION 3. Covenants of the Company . . . . . . . . . . . . . . . . . . . 11 (a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11 -i- (b) FILING OF AMENDMENTS. . . . . . . . . . . . . . . . . . . . . 11 (c) DELIVERY OF REGISTRATION STATEMENTS . . . . . . . . . . . . . 11 (d) DELIVERY OF PROSPECTUSES. . . . . . . . . . . . . . . . . . . 11 (e) CONTINUED COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . . 12 (f) BLUE SKY QUALIFICATIONS . . . . . . . . . . . . . . . . . . . 12 (g) RULE 158. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (h) REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . 12 SECTION 4. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . 12 (a) EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (b) EXPENSES OF THE SELLING SHAREHOLDERS. . . . . . . . . . . . . 13 (c) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . 13 (d) ALLOCATION OF EXPENSES. . . . . . . . . . . . . . . . . . . . 13 SECTION 5. Conditions of Underwriters' Obligations. . . . . . . . . . . . 13 (a) EFFECTIVENESS OF REGISTRATION STATEMENT . . . . . . . . . . . 13 (b) OPINION OF COUNSEL FOR COMPANY. . . . . . . . . . . . . . . . 14 (c) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS . . . . . . . 14 (d) OPINION OF COUNSEL FOR UNDERWRITERS . . . . . . . . . . . . . 14 (e) OFFICERS' CERTIFICATE . . . . . . . . . . . . . . . . . . . . 14 (f) CERTIFICATE OF SELLING SHAREHOLDERS . . . . . . . . . . . . . 14 (g) ACCOUNTANT'S COMFORT LETTER . . . . . . . . . . . . . . . . . 14 (h) BRING-DOWN COMFORT LETTER . . . . . . . . . . . . . . . . . . 15 (i) NO OBJECTION. . . . . . . . . . . . . . . . . . . . . . . . . 15 (j) ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . 15 (k) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . 15 SECTION 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 15 (a) INDEMNIFICATION OF UNDERWRITERS . . . . . . . . . . . . . . . 15 (b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 16 (c) ACTIONS AGAINST PARTIES; NOTIFICATION . . . . . . . . . . . . 17 (d) SELLING SHAREHOLDERS' LIMITATION. . . . . . . . . . . . . . . 17 (e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. . . . . . 17 (f) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. . . . . . . 18 SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 8. Representations, Warranties and Agreements to Survive Delivery 20 SECTION 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . 20 (a) TERMINATION; GENERAL. . . . . . . . . . . . . . . . . . . . . 20 (b) LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 21 -ii- SECTION 10. Default by One or More of the Underwriters. . . . . . . . . . 21 SECTION 11. Default by one or more of the Selling Shareholders. . . . . . 21 SECTION 12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 13. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 14. GOVERNING LAW AND TIME. . . . . . . . . . . . . . . . . . . . 22 SECTION 15. Effect of Headings. . . . . . . . . . . . . . . . . . . . . . 22 SCHEDULES Schedule A - List of Underwriters...................................Sch A-1 Schedule B - List of Selling Shareholders...........................Sch B-1 Schedule C - Pricing Information....................................Sch C-1 -iii- TENET HEALTHCARE CORPORATION (a Nevada corporation) ______________ Shares of Common Stock (Par Value $0.075 Per Share) PURCHASE AGREEMENT April __, 1997 MERRILL LYNCH & CO. MERRILL LYNCH PIERCE, FENNER & SMITH INCORPORATED DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. as Representatives of the several Underwriters c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Tenet Healthcare Corporation (the "Company") and the persons and entities listed in Schedule B hereto (the "Selling Shareholders") confirm their respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Goldman, Sachs & Co. ("Goldman, Sachs"), J.P. Morgan Securities Inc. ("J.P. Morgan") and each of the other Underwriters, if any, named in Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch, DLJ, Goldman, Sachs and J.P. Morgan are acting as representatives (in such capacity, the "Representatives"), with respect to the sale by the Selling Shareholders, acting severally and not jointly, and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of Common Stock, par value $0.075 per share, of the Company ("Common Stock") set forth in Schedules A and B hereto. The aforesaid _________ shares of Common Stock to be purchased by the Underwriters are hereinafter called the "Securities." The Company and the Selling Shareholders understand that the Underwriters propose to make a public offering of the Securities as soon as the Representatives deem it advisable after this Agreement has been executed and delivered. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-24955) covering the registration of the Securities (which registration may include certain additional securities) under the Securities Act of 1933, as amended (the "1933 Act"), including the related preliminary prospectus or prospectuses. Promptly after execution and delivery of this Agreement, the Company will either (i) prepare and file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b) or (iii) prepare and file a prospectus, including a prospectus supplement describing the terms of offer and distribution of the Securities, if the Registration Statement is already effective and if the offer and distribution of the Securities are to proceed on a "shelf" registration basis. The information included in such prospectus or in such Term Sheet, as the case may be, that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used before such registration statement became effective, and any prospectus that omitted, as applicable, the Rule 430A Information or the Rule 434 Information, that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a "preliminary prospectus." Such registration statement, including the exhibits thereto, schedules thereto, if any, and the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became effective and including the Rule 430A Information and the Rule 434 Information, as applicable, is herein called the "Registration Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b) Registration Statement," and after such filing the term "Registration Statement" shall include the Rule 462(b) Registration Statement. The final prospectus, including any prospectus supplement, and including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for use in connection with the offering of the Securities is herein called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the preliminary prospectus dated April __, 1997, together with the Term Sheet and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. For purposes of this Agreement, all references to any preliminary prospectus or the Prospectus shall include any prospectus supplement that is or was included and distributed therewith. For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement, any preliminary prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by reference in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be. -2- SECTION 1. REPRESENTATIONS AND WARRANTIES. (a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents and warrants to each Underwriter as of the date hereof, as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows: (i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the requirements for use of Form S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b) Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. At the respective times the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto became effective and at the Closing Time , the Registration Statement, the Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not and 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 not misleading. Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued and at the Closing Time, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If Rule 434 is used, the Company will comply with the requirements of Rule 434. The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through Merrill Lynch expressly for use in the Registration Statement or Prospectus. Each preliminary prospectus and the Prospectus, including any prospectus supplement, filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus, including any prospectus supplement, delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), as applicable, and, when read together with the other information in the Prospectus, at the time the Registration Statement became effective, at the time the Prospectus -3- was issued and at the Closing Time, did not and 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 not misleading. (iii) CAPITALIZATION; AUTHORIZATION AND DESCRIPTION OF SECURITIES. The shares of issued and outstanding capital stock, including the Securities to be purchased by the Underwriters from the Selling Shareholders, have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock, including the Securities to be purchased by the Underwriters from the Selling Shareholders, was issued in violation of the preemptive or other similar rights of any security holder of the Company. The Common Stock conforms to all statements relating thereto contained in the Prospectus and such description conforms to the rights set forth in the instruments defining the same; no holder of the Securities will be subject to personal liability by reason of being such a holder; and the issuance of the Securities is not subject to the preemptive or other similar rights of any security holder of the Company. (iv) AUTHORIZATION OF AGREEMENT. This Agreement has been duly authorized, executed and delivered by the Company. (v) ABSENCE OF DEFAULTS AND CONFLICTS. The execution and delivery of this Agreement and the sale of the Securities by the Selling Shareholders, the performance by the Company of this Agreement and the consummation of the transactions contemplated by this Agreement will not conflict with or result in a breach or violation of any of the respective charters or by-laws of the Company or any of the Company's subsidiaries (each, a "Subsidiary" and collectively, the "Subsidiaries") or any of the terms or provisions of, or constitute a default or cause an acceleration of any obligation under or result in the imposition or creation of (or the obligation to create or impose) any security interest, mortgage, pledge, claim, lien, encumbrance or adverse interest of any nature (each, a "Lien") with respect to, any obligation, bond, agreement, note, debenture, or other evidence of indebtedness, or any indenture, mortgage, deed of trust or other agreement, lease or instrument (collectively, "Agreements") to which the Company or any of the Subsidiaries is a party or by which it or any of them is bound, or to which any properties of the Company or any of the Subsidiaries is or may be subject, or any order of any court or governmental agency, body or official having jurisdiction over the Company or any of the Subsidiaries or any of their properties, or violate or conflict with any statute, rule or regulation or administrative regulation or decree or court decree applicable to the Company or any of the Subsidiaries, or any of their respective assets or properties, where, in any such instance, such conflict, breach, violation, default, acceleration of indebtedness or Lien would have, singly or in the aggregate, a material adverse effect on the business, financial condition, results of operations or prospects of the Company and the Subsidiaries, taken as a whole (a "Material Adverse Effect"). None of the Company or the Significant Subsidiaries is in violation of its respective charter or by-laws and none of the Company or the Subsidiaries is in default in the performance of any obligation, bond, agreement, debenture, note or any other evidence of indebtedness, or any indenture, mortgage, deed of trust or other contract, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them is bound, or to which any -4- of the property or assets of the Company or any of the Subsidiaries is subject, except as would not have, singly or in the aggregate, a Material Adverse Effect. (vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder, in connection with the sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or as may be required under the 1933 Act or the 1933 Act Regulations or state securities laws. Neither the Company nor, to the best of the Company's knowledge, any of its affiliates is presently doing business with the government of Cuba or with any persons of affiliates located in Cuba. (vii) LISTING. The Securities have been listed on the New York and Pacific Stock Exchanges. (viii) GOOD STANDING OF THE COMPANY. The Company has been duly organized, is validly existing as a corporation in good standing under the laws of the State of Nevada and has the requisite power and authority to carry on its business as it is currently being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement, and is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction where the operation, ownership or leasing of property or the conduct of its business requires such qualification and where failure to be so qualified or in good standing would have a Material Adverse Effect. Each of the Subsidiaries that (i) directly or indirectly own or lease any interest in any general hospitals or (ii) are otherwise material to the Company and the Subsidiaries, taken as a whole (collectively, the "Significant Subsidiaries"), has been duly organized, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the requisite power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties and each is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction where the operation, ownership or leasing of property or the conduct of its business requires such qualifications and where failure to be so qualified or in good standing would have a Material Adverse Effect. (ix) SUBSIDIARIES. Except as otherwise disclosed in the Registration Statement, all of the issued and outstanding shares of capital stock of, or other ownership interests in, each of the Significant Subsidiaries have been duly authorized and validly issued, and all of the shares of capital stock of, or other ownership interests in, each of the Significant Subsidiaries (over 80% in the case of Healthcare Underwriting Group) are owned, directly or through Subsidiaries, by the Company. All such shares of capital stock are fully paid and nonassessable, and are owned free and clear of any Lien, and, except as disclosed in a certificate or opinion delivered to the Underwriters, there are no outstanding subscriptions, rights, warrants, options, calls, convertible or exchangeable securities, commitments of sale, or Liens related to or entitling any person to purchase or otherwise to acquire any shares of the capital stock of, or other ownership interest in, any of the Subsidiaries. -5- (x) ABSENCE OF PROCEEDINGS. Except as disclosed in the Registration Statement or the Prospectus, there is no action, suit, proceeding or investigation before or by any court, governmental agency or body, arbitration board or tribunal, or governmental or private accrediting body, domestic or foreign, pending against or affecting the Company or any of the Subsidiaries, or any of their respective assets or properties, which is required to be disclosed in the Registration Statement or the Prospectus, or in which there is a reasonable possibility of adverse decisions which in the aggregate could reasonably be expected to have a Material Adverse Effect, or which might materially and adversely affect the Company's or any of the Subsidiaries' performance of its obligations, as applicable, pursuant to this Agreement or the transactions contemplated hereby, and to the best of the Company's knowledge, after due inquiry, no such action, suit, or proceeding is contemplated or threatened. Except as disclosed in the Registration Statement or the Prospectus, none of the Company or the Subsidiaries is subject to any judgment, order or decree of any court, governmental authority or arbitration board or tribunal which has had, or which can reasonably be expected to have, a Material Adverse Effect. (xi) INDEPENDENT ACCOUNTANTS. The firms of accountants that have certified or shall certify the applicable consolidated financial statements and supporting schedules and the notes thereto of the Company and OrNda HealthCorp, a Delaware Corporation ("OrNda"), filed or to be filed with the Commission as part of the Registration Statement and the Prospectus or incorporated therein by reference are, to the best of the Company's knowledge, independent public accountants with respect to the Company and its Subsidiaries and OrNda and its Subsidiaries, as the case may be, as required by the Act. The consolidated financial statements, together with related schedules and notes, set forth or incorporated by reference in the Prospectus and the Registration Statement, comply as to form in all material respects with the requirements of the Act and fairly present the consolidated financial position of the Company and its Subsidiaries and OrNda and its Subsidiaries, as the case may be, at the respective dates indicated, and the results of their operations and their cash flows for the respective periods indicated, in accordance with generally accepted accounting principles in the United States of America ("GAAP") consistently applied throughout such periods and in accordance with Regulation S-X. The PRO FORMA financial statements and the related notes thereto incorporated in the Registration Statement present fairly the information shown therein, have been prepared in conformity with the Commission's rules and guidelines with respect to PRO FORMA financial statements and have been properly compiled on the basis described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. The other financial and statistical information and data of the Company included or incorporated by reference in the Prospectus and in the Registration Statement, historical and PRO FORMA, are in all material respects accurately presented and prepared on a basis consistent with the books and records of the Company. (xii) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Except as contemplated by the Registration Statement and the Prospectus, subsequent to the respective dates as of which information is presented in the Registration Statement and the Prospectus (i) none of the Company or the Subsidiaries has incurred any liabilities or obligations, direct or contingent, or entered into any transaction not in the ordinary course of business, which could reasonably be expected to have a Material Adverse Effect, (ii) there has been no decision or judgment in the -6- nature of litigation or arbitration that could reasonably be expected to have a Material Adverse Effect, (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock and (iv) there has not been any material adverse change, or any development which could involve a material adverse change, in the business, financial condition, results of operations or prospects of the Company and its Subsidiaries, taken as a whole (any of the items set forth in clauses (i), (ii), (iii) or (iv) above, a "Material Adverse Change"). (xiii) POSSESSION OF LICENSES AND PERMITS. (i) Except as described in the Registration Statement or Prospectus or as could not reasonably be expected to have a Material Adverse Effect, each of the Company and the Subsidiaries has all certificates, consents, exemptions, orders, permits, licenses, authorizations, accreditations or other approvals or rights (each, an "Authorization") of and from, and has made all declarations and filings with, all Federal, state, local and other governmental authorities, all self-regulatory organizations, all governmental and private accrediting bodies and all courts and other tribunals, necessary or required to own, lease, license, and use its properties and assets and to conduct its business in the manner described in the Prospectus, (ii) all such Authorizations are valid and in full force and effect, except as could not reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect, (iii) the Company and the Subsidiaries are in compliance with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities and governing bodies having jurisdiction with respect thereto except as could not reasonably be expected to have a Material Adverse Effect and (iv) none of the Company or the Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Authorization. (xiv) INVESTMENT COMPANY ACT. The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). (xv) ACCURACY OF EXHIBITS. There are no contracts or documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required. (xvi) TITLE TO PROPERTY. The Company and its Subsidiaries have good and marketable title to all real property owned by the Company and its Subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in the Prospectus or (b) do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Prospectus, are in full force and effect, and neither the Company nor any Subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease. -7- (B) REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS. Each Selling Shareholder severally represents and warrants to each Underwriter as of the date hereof and as of the Closing Time, and agrees with each Underwriter as follows: (i) ACCURATE DISCLOSURE. To the best knowledge of such Selling Shareholder, the information with respect to such Selling Shareholder contained in the Registration Statement and the Prospectus and in the prospectus supplement relating to the pricing of the offering and sale of the Securities, in each case under the caption "Selling Shareholders," complies in all material respects with the requirements of Item 507 of the Commission's Regulation S-K. Such Selling Shareholder hereby agrees that it has provided, or shall be deemed to have provided, such information pertaining to it in writing to the Company for use in preparing such documents. (ii) AUTHORIZATION OF AGREEMENTS. Such Selling Shareholder has the full right, power and authority to enter into this Agreement, a Power of Attorney (the "Power of Attorney") and a Custody Agreement (the "Custody Agreement") and to sell, transfer and deliver the Securities to be sold by such Selling Shareholder hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by such Selling Shareholder. (iii) GOOD AND VALID TITLE. Such Selling Shareholder has and will at the Closing Time have good and valid title to the Securities to be sold by such Selling Shareholder hereunder, free and clear of any security interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind, other than pursuant to this Agreement; and upon delivery of such Securities and payment of the purchase price therefor as herein contemplated, assuming each such Underwriter has no notice of any adverse claim, each of the Underwriters will receive good and valid title to the Securities purchased by it from such Selling Shareholder, free and clear of any security interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind. (iv) DUE EXECUTION OF POWER OF ATTORNEY AND CUSTODY AGREEMENT. Such Selling Shareholder has duly executed and delivered, in the form heretofore furnished to the Representatives, the Power of Attorney with Joseph Littlejohn & Levy, Inc., as attorney-in-fact (through one or more of Peter A. Joseph or Paul S. Levy, (each of Messrs. Joseph and Levy, a "Proxy")) (the "Attorney-in-Fact") and such Selling Shareholder, acting through its Attorney-in-Fact, has duly executed and delivered the Custody Agreement with The Bank of New York, as custodian (the "Custodian"); the Custodian is authorized to deliver the Securities to be sold by such Selling Shareholder hereunder and to accept payment therefor; and each Attorney-in-Fact is authorized to execute and deliver this Agreement and the certificate referred to in Section 5(f) or that may be required pursuant to Section 5(j) on behalf of such Selling Shareholder, to sell, assign and transfer to the Underwriters the Securities to be sold by such Selling Shareholder hereunder, to determine the purchase price to be paid by the Underwriters to such Selling Shareholder, as provided in Section 2(a) hereof, and otherwise to act on behalf of such Selling Shareholder in connection with this Agreement. (v) ABSENCE OF MANIPULATION. Such Selling Shareholder has not taken, and will not take, directly or indirectly, any action which is designed to or which has constituted or which -8- might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities. (vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent, approval authorization, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the execution and delivery by such Selling Shareholder of this Agreement or the Power of Attorney or the Custody Agreement, or for the valid sale and delivery of the Securities hereunder by such Selling Shareholder, except such as may have previously been made or obtained or as may be required under the 1933 Act or the 1933 Act Regulations or state securities or blue sky laws. (vii) CERTIFICATES SUITABLE FOR TRANSFER. If the delivery of the Securities to be sold by such Selling Shareholder pursuant to this Agreement to the Underwriters takes place in certificated form (as opposed to a book-entry transfer), then the certificates for such Securities so delivered as part of the closing procedures will be in suitable form for transfer by delivery or be accompanied by duly executed instruments of transfer or assignment in blank with signatures guaranteed. (viii) NO ASSOCIATION WITH NASD. Except as previously disclosed in writing to Merrill Lynch on behalf of the Underwriters, neither such Selling Shareholder nor any of its affiliates directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, or has any other association with any member firm of the National Association of Securities Dealers, Inc. (ix) NO LEGAL PROCEEDINGS AGAINST SALE. Except as set forth in the Registration Statement, there is no action, suit, investigation (of which such Selling Shareholder has received written notice) or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the knowledge of such Selling Shareholder, threatened, to which such Selling Shareholder is a party or to which the property of such Selling Shareholder is subject, that (i) seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the sale of the Securities by such Selling Shareholder or any of the other transactions contemplated hereby or (ii) questions the legality or validity of any such transactions or seeks to recover damages or obtain other relief in connection with any such transactions. (x) NO VIOLATION OF CHARTER. The execution and delivery of this Agreement, and the consummation of the transactions contemplated herein, including the sale to the Underwriters of the Securities, will not result in a violation of the charter, by-laws or other governing document (if any) of such Selling Shareholder. (xi) DUE EXECUTION OF AGREEMENT. Such Selling Shareholder has duly executed and delivered this Agreement by and through its Attorney-in-Fact as appointed under the Power of Attorney. (c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the Company or any of the Subsidiaries delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby; and -9- any certificate signed by or on behalf of the Selling Shareholders as such and delivered to the Representatives or to counsel for the Underwriters pursuant to the terms of this Agreement shall be deemed a representation and warranty by such Selling Shareholder to the Underwriters as to the matters covered thereby. SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING. (a) SECURITIES. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, each Selling Shareholder, severally and not jointly, agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from each Selling Shareholder, at the price per share set forth in Schedule C, that proportion of the number of Securities being sold by each such Selling Shareholder set forth in Schedule B opposite the name of such Selling Shareholder which the number of Securities set forth in Schedule A opposite the name of such Underwriter (plus any additional number of Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof) bears to the total number of Securities, subject, in each case, to such adjustments among the Underwriters as the Representatives in their sole discretion shall make to eliminate any sales or purchase of fractional securities. (b) PAYMENT. The closing of the payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the offices of Sullivan & Cromwell in Los Angeles, or at such other place as shall be agreed upon by the Representatives and the Company and the Selling Shareholders, at 7:00 A.M. (California time) on the third business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten (10) business days after such date as shall be agreed upon by the Representatives and the Company and the Selling Shareholders (such time and date of payment and delivery being herein called "Closing Time"). Payment shall be made to the Selling Shareholders by wire transfer of immediately available funds to a bank account or accounts designated by the Custodian pursuant to the Custody Agreement, against delivery to the Representatives for the respective accounts of the Underwriters of the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder. (c) DENOMINATIONS; REGISTRATION. Certificates for the Securities shall be in such denominations and registered in such names as the Representatives may request in writing at least one full business day before the Closing Time. The certificates for the Securities will be made available for examination and packaging by the Representatives in the City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time, and upon the closing such certificates will be delivered in the City of New York. -10- SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each Underwriter as follows: (a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A or Rule 434, as applicable, and will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424(b) and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) FILING OF AMENDMENTS. The Company will give the Representatives notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b)), any Term Sheet or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or the Prospectus, whether pursuant to the 1933 Act, or the 1934 Act or otherwise, will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object. (c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or will deliver to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibit) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) DELIVERY OF PROSPECTUSES. The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically -11- transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. (f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect for a period of not less than one year from the later of the effective date of the Registration Statement and any Rule 462(b) Registration Statement; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement and any Rule 462(b) Registration Statement. (g) RULE 158. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. (h) REPORTING REQUIREMENTS. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of -12- the Registration Statement (including financial statements and exhibits) as originally filed and each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, any Agreement among Underwriters and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) except for any expenses paid by the Selling Shareholders pursuant to clause (b) below, the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, including any stock or other transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors and the fees and expenses (not to exceed $50,000) for one counsel for the Selling Shareholders, (v) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Term Sheets and of the Prospectus and any amendments or supplements thereto, (vii) the preparation, printing and delivery to the Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of any transfer agent or registrar for the Securities, and (ix) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities. (b) EXPENSES OF THE SELLING SHAREHOLDERS. Each of the Selling Shareholders will pay (i) transfer taxes attributable to the sale by such Selling Shareholder of the Securities, (ii) the fees and disbursements of such Selling Shareholder's counsel and accountants, if any, not paid or payable by the Company pursuant to Section 4(a) or otherwise and (iii) the fees and expenses of the Custodian under the Custody Agreement. (c) TERMINATION OF AGREEMENT. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters or, in the case of any termination pursuant to Section 11 hereof, the defaulting Selling Shareholder(s) causing the same shall reimburse the Underwriters for such out-of-pocket expenses. (d) ALLOCATION OF EXPENSES. The provisions of this Section shall not affect any agreement that the Company and the Selling Shareholders may make for the payment of such costs and expenses. SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company and the Selling Shareholders contained in Section 1 hereof or in certificates of any officer of the Company or any Subsidiary of the Company or on behalf of any Selling Shareholder delivered pursuant to the provisions hereof, to the performance by the Company and the Selling Shareholders of their respective covenants and other obligations hereunder, and to the following further conditions: (a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective and at Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for -13- additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing the Rule 430A Information shall have been filed with the Commission in accordance with Rule 424(b) (or a post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434, a Term Sheet shall have been filed with the Commission in accordance with Rule 424(b) or, if the offer and distribution of the Securities are to proceed on a "shelf" registration basis, a prospectus, including a prospectus supplement describing the terms of offer and distribution of the Securities, shall have been filed with the Commission in accordance with Rule 424(b). (b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Representatives shall have received the favorable opinions, dated as of Closing Time, of Scott M. Brown, Esq. and of Woodburn and Wedge, respectively, counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters. (c) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS. At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Debevoise & Plimpton, counsel for the Selling Shareholders, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters. (d) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the Underwriters shall have received an opinion, dated the Closing Date, of Sullivan & Cromwell, counsel for the Underwriters, in form and substance reasonably satisfactory to the Underwriters. (e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for the purpose have been instituted or are pending or are contemplated by the Commission. (f) CERTIFICATE OF SELLING SHAREHOLDERS. At Closing Time, the Representatives shall have received a certificate of an Attorney-in-Fact on behalf of each Selling Shareholder, dated as of Closing Time, to the effect that (i) the representations and warranties of each Selling Shareholder contained in Section 1(b) hereof are true and correct in all respects with the same force and effect as though expressly made at and as of Closing Time and (ii) each Selling Shareholder has complied in all material respects with all agreements and all conditions on its part to be performed under this Agreement at or prior to Closing Time. (g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this Agreement, the Representatives shall have received from KPMG Peat Marwick LLP and Ernst & Young LLP, independent public accountants to the Company and OrNda, respectively, letters dated such date, in form and -14- substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statement and certain financial information contained in the Registration Statement and the Prospectus. (h) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives shall have received from KPMG Peat Marwick LLP and Ernst & Young LLP letters, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (g) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time. (i) NO OBJECTION. The NASD has confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements. (j) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company and the Selling Shareholders at or prior to the Closing Time in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representatives and counsel for the Underwriters. (k) TERMINATION OF AGREEMENT. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Company and the Selling Shareholders at any time at or prior to Closing Time and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 6 and 7 shall survive any such termination and remain in full force and effect. SECTION 6. INDEMNIFICATION. (a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the extent and in the manner set forth in clauses (i), (ii) and (iii) below. In addition, subject to subsection (d), and subject to the other limitations mentioned below, each Selling Shareholder, severally and not jointly (in the proportion that the number of Securities being sold by such Selling Shareholder bears to the total number of Securities and to the extent permitted by law), agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or -15- supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission provided that (subject to Section 6(e) below) any such settlement is effected with the written consent of the Company and the Selling Shareholders; and (iii) against any and all expense whatsoever, as incurred (including, subject to the sixth sentence of Section 6(c), the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; PROVIDED, HOWEVER, that (x) this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), (y) such indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter (or any persons controlling such Underwriter) from whom the person asserting such loss, claim, damage or liability purchased the Securities which are the subject thereof if such person did not receive a copy of the Prospectus (or the Prospectus as amended or supplemented) at or prior to the confirmation of the sale of such Securities to such person in any case where such delivery is required by the 1933 Act and the untrue statement or omission or alleged untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented), and (z) with respect to the indemnity by each Selling Shareholder, the indemnity shall, in each case, apply only to the extent that any untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement (or any amendment thereto) in reliance upon and in conformity with written information furnished by or on behalf of such Selling Shareholder to the Company expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information, if applicable, or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING SHAREHOLDERS. Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each Selling Shareholder and each person, if any, who controls any Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, -16- but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. If it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving the notice required under the first sentence hereof, may assume the defense of such action with counsel chosen by it and approved by the indemnified parties defendant in such action, unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them which are different from or in addition to those available to such indemnifying party. In the absence of such an election by an indemnifying party within a reasonable time after receipt of such notice to assume the defense of such an action, in the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company. If an indemnifying party assumes the defense of such action, the indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability for all claims that were or could have been made by all parties to such claims arising out of such litigation, investigation, proceeding or claim 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 any indemnified party. (d) SELLING SHAREHOLDERS' LIMITATION. No Selling Shareholder shall be responsible for the payment of an amount, pursuant to this Section 6, which exceeds the net proceeds (I.E., net of the underwriting discount) received by the Selling Shareholder from the sale of the Securities by such Selling Shareholder hereunder. (e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. Subject to Section 6(c) and, in the case of the Selling Shareholders, Section 6(d), if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such -17- indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a) (ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (f) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. (i) Each Selling Shareholder, subject to Section 6(d), severally and not jointly (in the proportion that the number of Securities being sold by such Selling Shareholder bears to the total number of Securities and to the extent permitted by law) agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statement or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Selling Shareholder expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (ii) The Company agrees to indemnify and hold harmless each Selling Shareholder, and each person, if any, who controls such Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, PROVIDED, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any such Selling Shareholder expressly for use in the Registration Statement (or any amendment thereto) including the Rule 430 Information and the Rule 434 Information, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto). SECTION 7. CONTRIBUTION. (a) If the indemnification provided for in Sections 6(a) or (b) hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party thereunder shall severally contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Selling Shareholders on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the -18- offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the Selling Shareholders and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus (or the applicable prospectus supplement), or, if Rule 434 is used, the corresponding location on the Term Sheet bear to the aggregate initial public offering price of the Securities as set forth on such cover. The relative fault of the Company and the Selling Shareholders on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Shareholders or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7(a) were determined by pro rata allocation (even if the Underwriters 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 above in this Section 7(a). The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7(a) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any 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 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, each Selling Shareholder and each director, officer or employee thereof and each person, if any, who controls the Company or any Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company or such Selling Shareholder, as the case may be. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Securities set forth opposite their respective names in Schedule A hereto and not joint. Notwithstanding the provisions of this Section 7 or Section 6(a) or 6(f), no Selling Shareholder shall be required to contribute any amount under this Section 7 in excess of the amount by which the net proceeds received by such Selling Shareholder in connection herewith exceed the aggregate amount such Selling Shareholder has otherwise paid pursuant to Section 6(a) and 6(f), and no Selling Shareholder shall be required to contribute except to the -19- extent that such Selling Shareholder would have been liable to indemnify under Section 6(a) if such indemnification were enforceable under applicable law. (b) If the indemnification provided for in Section 6(f) hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party thereunder shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative benefits to and faults of the indemnifying party on the one hand and the indemnified party on the other in connection with the offering of Securities pursuant to this Agreement and the statements or omissions or alleged statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statements or omissions. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. No party shall be liable for contribution under this Section 7(b) except to the extent and under such circumstances as such party would have been liable to indemnify under Section 6(f) if such indemnification were enforceable under applicable law. SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its Subsidiaries or the Selling Shareholders submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company or the Selling Shareholders, and shall survive delivery of the Securities to the Underwriters. SECTION 9. TERMINATION OF AGREEMENT. (a) TERMINATION; GENERAL. The Representatives may terminate this Agreement, by notice to the Company and the Selling Shareholders, at any time at or prior to Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States, any outbreak of hostilities or escalation thereof or other calamity or crisis, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the New York or Pacific Stock Exchanges, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or (iv) if a banking moratorium has been declared by either Federal, California -20- or New York authorities, or (v) any Securities of the Company or any of its subsidiaries shall have been downgraded or placed on any "watch list" for possible downgrading or reviewed for a possible negative change by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) of the 1993 Act. (b) LIABILITIES. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 6 and 7 shall survive such termination and remain in full force and effect. SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of the Underwriters shall fail at Closing Time to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then: (a) if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either (i) the Representatives or (ii) the Company or the Selling Shareholders shall have the right to postpone Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 10. SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING SHAREHOLDERS. (a) If one or more Selling Shareholders holding in the aggregate more than 10% of the Securities to be sold pursuant to this Agreement shall fail at Closing Time to sell and deliver the number of Securities which such Selling Shareholder or Selling Shareholders are obligated to sell hereunder, then the Underwriters may, at the option of the Representatives, by notice from the Representatives to the Company and the non-defaulting Selling Shareholders, either (a) terminate this Agreement without any liability on the fault of any non-defaulting party except that the provisions of Sections 4, 6 and 7 shall remain in full force and effect or (b) elect to purchase the Securities which the non-defaulting Selling Shareholders have agreed to sell hereunder. No action taken pursuant to this Section 11 shall relieve any Selling Shareholder so defaulting from liability, if any, in respect of such default. -21- In the event of a default by any Selling Shareholder as referred to in this Section 11, each of the Representatives, the Company and the non-defaulting Selling Shareholders shall have the right to postpone Closing Time for a period not exceeding seven days in order to effect any required change in the Registration Statement or Prospectus or in any other documents or arrangements. SECTION 12. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representatives at North Tower, World Financial Center, New York, New York 10281-1201, attention of Mr. Raymond Wong with copies to 10900 Wilshire Boulevard, Suite 900, Los Angeles, California 90024, attention of Mr. Matt Pendo; notices to the Company shall be directed to it at 3820 State Street, Santa Barbara, California 93105, attention of Chief Financial Officer with a copy to the attention of General Counsel; and notices to the Selling Shareholders shall be directed to Joseph Littlejohn & Levy, Inc., 450 Lexington Avenue, Suite 3350, New York, NY 10017, attention of Mr. Peter A. Joseph or Mr. Paul S. Levy. SECTION 13. PARTIES. This Agreement shall each inure to the benefit of and binding upon the Underwriters, the Company and the Selling Shareholders and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Company and the Selling Shareholders and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters, the Company and the Selling Shareholders and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. -22- If the foregoing is in accordance with your understanding of your agreement, please sign and return to the Company and the Attorney-in-Fact for the Selling Shareholders a counterpart hereof, whereupon this instrument, along with all counterparts, will be come a binding agreement among the Underwriters, the Company and the Selling Shareholders in accordance with its terms. Very truly yours, TENET HEALTHCARE CORPORATION By -------------------------- Title: ---------------------- THE SELLING SHAREHOLDERS By -------------------------- Name: --------------------- As Attorney-in-Fact acting on behalf of the Selling Shareholders named in Schedule B hereto CONFIRMED AND ACCEPTED, As of the date first above written: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By --------------------------------- Authorized Signatory For themselves and as Representatives of the other Underwriters, if any, named in Schedule A hereto. -23- SCHEDULE A Name of Underwriter Number of ------------------- Securities ---------- Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . Donaldson, Lufkin & Jenrette Securities Corporation. . . . . . Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . J.P. Morgan Securities Inc.. . . . . . . . . . . . . . . . . . --------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . --------- Sch A-1 SCHEDULE B Name of Selling Shareholder Number of --------------------------- Securities ---------- California Public Employees' Retirement System . . . . . . . . New York State Common Retirement Fund. . . . . . . . . . . . . Pension Reserves Investment Management Board . . . . . . . . . The Rockefeller Foundation . . . . . . . . . . . . . . . . . . State of Wisconsin Investment Board. . . . . . . . . . . . . . Virginia Retirement System . . . . . . . . . . . . . . . . . . Yale University. . . . . . . . . . . . . . . . . . . . . . . . Oregon Public Employees' Retirement System . . . . . . . . . . EES Distressed Securities Fund L.P. . . . . . . . . . . . . . Montana Board of Investments . . . . . . . . . . . . . . . . . State Universities Retirement System . . . . . . . . . . . . . Orange County Employees Retirement System. . . . . . . . . . . ---------- Total . . . . . . . . . . . . . . . . . . . . . . . . ---------- ---------- Sch B-1 SCHEDULE C TENET HEALTHCARE CORPORATION _________ Shares of Common Stock (Par Value $0.075 Per Share) 1. The initial public offering price per share for the Securities, determined as provided in said Section 2, shall be $______. 2. The purchase price per share for the Securities to be paid by the several Underwriters shall be $_____, being an amount equal to the initial public offering price set forth above less $_____ per share. Sch C-1 EX-23.1 3 CONSENT OF KPMG PEAT MARWICK LLP EXHIBIT 23.1 AUDITORS' CONSENT The Board of Directors Tenet Healthcare Corporation: We consent to the incorporation by reference in the registration statement on Form S-3 of Tenet Healthcare Corporation of our report dated February 1, 1997, with respect to the supplemental consolidated balance sheets of Tenet Healthcare Corporation and subsidiaries as of May 31, 1995 and 1996, and the related supplemental consolidated statements of operations, changes in shareholders' equity and cash flows for each of the years in the three-year period ended May 31, 1996 and to the incorporation by reference in the Registration Statement on Form S-3 of Tenet Healthcare Corporation of our report dated July 25, 1996, with respect to the consolidated balance sheets of Tenet Healthcare Corporation and subsidiaries as of May 31, 1996 and 1995, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for each of the years in the three-year period ended May 31, 1996, and the related schedule, and to the reference to our firm under the heading "Experts" in the prospectus. Our reports on the supplemental consolidated financial statements and on the consolidated financial statements refer to a change in the method of accounting for income taxes in 1994. KPMG PEAT MARWICK LLP Los Angeles, California April 16, 1997 EX-23.2 4 CONSENT OF ERNST & YOUNG EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in Amendment No. 1 to the Registration Statement (Form S-3) and related Prospectus of Tenet Healthcare Corporation for the registration of 9,580,644 shares of the common stock of Tenet Healthcare Corporation and to the incorporation by reference of our report dated October 25, 1996 with respect to the consolidated financial statement of OrNda HealthCorp at August 31, 1996 and 1995, and for each of the three years in the period ended August 31, 1996, incorporated by reference in the Tenet Healthcare Corporation Current Report on Form 8-K dated February 12, 1997. ERNST & YOUNG LLP Nashville, Tennessee April 16, 1997 -----END PRIVACY-ENHANCED MESSAGE-----